Tratter v Aware Super

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FEDERAL COURT OF AUSTRALIA

Tratter v Aware Super [2023] FCA 491

File number: VID 701 of 2021
Judgment of: WHEELAHAN J
Date of judgment: 19 May 2023
Catchwords: SUPERANNUATION — application under s 1057 of the Corporations Act 2001 (Cth) to remit for further determination a decision of the Australian Financial Complaints Authority to affirm a decision of the trustee of a superannuation fund in relation to the apportionment of a death benefit — where the trustee of the fund apportioned the death benefit 70% to the deceased member’s former spouse and 30% to the deceased member’s mother — whether AFCA erred in determining that the trustee’s determination was neither unfair nor unreasonable — adequacy of reasons — no error of law — application dismissed
Legislation:

Acts Interpretation Act 1901 (Cth) s 25D

Corporations Act 2001 (Cth) sections 1051A(4)(e), 1053(1)(j), 1054A, 1055, 1055A, 1057(1) and Div 3 Part 7.10A

Superannuation Industry (Supervision) Act 1993 (Cth) s 10(1)

Superannuation (Resolution of Complaints) Act 1993 (Cth) s 14(2) and s 37

Cases cited:

Attorney-General (Cth) v Breckler [1999] HCA 28; 197 CLR 83

Attorney-General (NSW) v Quin [1990] HCA 21; 170 CLR 1

Board of Trustees of the State Public Sector Superannuation Scheme v Edington [2011] FCAFC 8; 119 ALD 472

British Fame (Owners) v Macgregor (Owners) [1943] AC 197

Cameron v Board of Trustees of the State Public Sector Superannuation Scheme [2003] FCAFC 214; 130 FCR 122

Dwyer v Calco Timbers Pty Ltd [2008] HCA 13; 234 CLR 124

Hornsby v Military Superannuation & Benefits Board of Trustees [No 1] [2003] FCA 54; 126 FCR 484

Mercer Superannuation (Australia) Ltd v Billinghurst [2017] FCAFC 201; 255 FCR 144

Minister for Immigration and Multicultural Affairs v Yusuf [2001] HCA 30; 206 CLR 323

National Mutual Life Association of Australasia Ltd v Campbell [2000] FCA 852; 99 FCR 562

QSuper Board v Australian Financial Complaints Authority Limited [2020] FCAFC 55; 276 FCR 97

Pennington v Norris [1956] HCA 26; 96 CLR 10

Podrebersek v Australian Iron & Steel Pty Ltd [1985] HCA 34; 59 ALR 529

Reeves v Nulis Nominees (Australia) Limited (Trustee) [2022] FCA 627

Retail Employees Superannuation Pty Ltd v Crocker [2001] FCA 1330

Singer v Berghouse [1994] HCA 40; 181 CLR 201
Division: General Division
Registry: Victoria
National Practice Area: Commercial and Corporations
Sub-area: Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs: 52
Date of hearing: 26 April 2023
Counsel for the Applicant: Mr J Ribbands
Counsel for the First Respondent: Mr O Wolahan
Solicitor for the First Respondent: KHQ Lawyers
Counsel for the Second Respondent: The Second Respondent was taken to have filed a submitting notice
Counsel for the Third Respondent: The Third Respondent filed a submitting notice

ORDERS

VID 701 of 2021
BETWEEN:

RENATE TRATTER

Applicant
AND:

AWARE SUPER (FORMERLY FIRST STATE SUPER)

First Respondent

CHRIS ORFANIDIS

Second Respondent

AUSTRALIAN FINANCIAL COMPLAINTS AUTHORITY
Third Respondent

ORDER MADE BY:

WHEELAHAN J

DATE OF ORDER:

19…

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Details
Case
[2023] FCA 491
Decision Date

CaseChat Overview and Summary

The matter of Tratter v Aware Super was heard by the Federal Court of Australia and involved a dispute over the apportionment of a death benefit from a superannuation fund. The applicant, who had been nominated by the deceased member to receive the death benefit, sought to have the decision of the Australian Financial Complaints Authority (AFCA) remitted for further determination, arguing that the AFCA had erred in affirming the Trustee's decision to allocate the death benefit 70% to the deceased member's former spouse and 30% to the deceased member's mother. The applicant contended that the AFCA had failed to consider whether the Trustee's decision was fair and reasonable in its operation in relation to the applicant and had not provided adequate grounds for its determination.

The central legal issues the court had to decide were whether the AFCA had applied the correct test in reviewing the Trustee's decision and if the AFCA's reasons for its determination were adequate. The applicant argued that the AFCA had asked itself the wrong question by focusing on whether the Trustee's decision was open to them, rather than whether the operation of the decision was fair and reasonable in all the circumstances. The applicant also claimed that the AFCA had not provided sufficient grounds for its determination that the Trustee's decision was fair and reasonable.

The Court found that the AFCA had addressed the correct question in its determination and had adequately considered the competing positions of the applicant and the deceased member's former spouse. The Court held that the AFCA's reasons were sufficient to demonstrate that it had considered the nature of the dependency between the deceased member and each of the potential beneficiaries. The Court further found that the Trustee's decision to allocate the death benefit in the proportions it did was within the range of decisions that were open to the Trustee and was therefore fair and reasonable. The Court dismissed the applicant's appeal, finding no error in the AFCA's determination.

The final orders of the Court were that the application is dismissed and there is no order as to costs. The dismissal of the application meant that the decision of the AFCA affirming the Trustee's apportionment of the death benefit was upheld.

Orders

Orders of the court

1. The application is dismissed

2. There is no order as to costs

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

The active parties to this proceeding are the applicant and the Trustee. AFCA filed a submitting notice, and the effect of an interlocutory order of the Court made 29 July 2022 is that the second respondent is to be taken to have filed a submitting notice.Background Mr Tratter joined the Health Super fund on 16 March 2009. On 30 June 2011, Health Super and First State Super merged and Mr Tratter’s account was transferred to the First State Super fund. First State Super was later renamed Aware Super.Nomination of the applicant to receive the death benefit While he was a member of Health Super, Mr Tratter made an online nomination of the applicant to receive 100% of his death benefit. The terms of the Health Super fund trust deed did not allow for binding nominations, so therefore Mr Tratter’s nomination of his mother was not binding on the former trustee. After the merger of the two funds, the Trustee indicated on Mr Tratter’s annual benefit statements that his nomination was non-binding, and from 2014 it included text on his annual benefit statements explaining the implications of having a non-binding nomination and drawing attention to the option of making a binding nomination under the rules of the merged fund.The rules of the Fund The Fund was governed by a trust deed dated 19 February 1999 (the Trust Deed). The Trust Deed has been amended from time to time, including amendments that were effective from 30 June 2011 when members of the Health Super Fund were admitted. The Trust Deed provided for and annexed Rules of the Fund (the Fund Rules). At the relevant time, rule 8.6 of Division 1A of Section 1 of the Fund Rules relevantly provided –Recipient of a member’s benefit – on death8.6Subject to any contrary provision in a Section or Division of these Rules, if a member dies:…(b)On or after the transition date the member’s benefit must be cashed in favour of either or both of:(i)the member’s legal personal representative; and(ii)one or more of the member’s dependants, as the Trustee determines, unless …(Italics in original.) Counsel for the applicant and the Trustee accepted during argument that the reference to the member’s legal personal representative should be construed as being in his or her capacity as a representative of the member’s estate, and not in a personal beneficial capacity. Rules 8.9 and 8.10 provided that a non-binding nomination of the beneficiary of a death benefit was a mandatory relevant consideration for the Trustee, but did not fetter the Trustee’s discretion –8.9The Trustee may permit a member to inform the Trustee (by notice) of the person or persons that the member would prefer to receive the member’s benefit on or after the death of the member (non-binding nomination notice).8.10If the Trustee has received a non-binding nomination notice from a member, the Trustee must consider the notice but must exercise its own discretion as to the person or persons to whom the member’s benefit is to be paid.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In section 2.7 of its reasons, AFCA concluded that the Trustee’s decision was fair and reasonable, stating –2.7 Is the trustee’s decision fair and reasonable? Yes, the trustee’s decision is fair and reasonable in its operation in relation to the complainant and the joined party in all the circumstances. The trustee correctly identified each of the complainant and the joined party as being dependants of the deceased member. It was open to the trustee to allocate the death benefit in the proportions that it identified.The purpose of a superannuation death benefit is to provide for a deceased member’s dependants who were receiving financial support and might reasonably have expected to receive or continue to receive financial support from the deceased member, had they not died.As the deceased member’s spouse, the complainant could reasonably have expected to receive financial support from the deceased member for the remainder of their lives together.As a person who was partially financially dependent on the deceased member, the joined party could reasonably have expected to receive some financial support from the deceased member for the remainder of her life.…With the exercise of a trustee discretion, there is often a range of decisions that might be considered fair and reasonable, if the trustee’s decision falls within that range, it must be affirmed. I am satisfied it was open to the trustee to allocate the death benefit in the manner and proportions it did.The appeal to this Court By a second further amended notice of appeal, the applicant raises the following questions of law –1. The test to be applieda.What is the correct test to be applied in reviewing the determination of the First Respondent when that determination was within the range of decisions that were open to the First Respondent; andb.[Deleted]2. Fair and reasonable determinationa.What is required to conclude that the operation of the Decision is fair and reasonable in all the circumstances, as required by section 1055 Corporations Act; andb.[Deleted]3.Grounds for reasonsHas the Third Respondent failed to give any or any adequate grounds for its decision at [2.7] of its determination The applicant relies on two grounds of appeal –1.The Third Respondent erred in making the Decision in that it asked itself the wrong question, namely whether the determination of the First Respondent was open to the First Respondent when it should have enquired, inter alia, whether the operation of the Decision in relation to the Applicant was fair and reasonable in all the circumstances;2.[Deleted] 3.The Third Respondent has failed to provide any or any adequate grounds as to the basis for its determination at [2.7] that “the trustee’s decision is fair and reasonable in its operation in relation to the complainant and the joined party in all the circumstances. The trustee correctly identified each of the complainant and joined party as being dependants of the deceased member. It was open to the trustee to allocate the death benefit in the proportions that it identified.”The applicant’s submissions

Ratio Decidendi

Legal Principle Established

In relation to the applicant’s submission that the absence of a binding nomination in favour of the applicant operated against the applicant, counsel for the Trustee submitted that this was not a fair or accurate characterisation of AFCA’s consideration of the relevance of the death benefit nomination. It was submitted that AFCA considered the relevance of the nomination in order to address a submission to AFCA by the applicant that the deceased had not received clear information about the status of his nomination. It was submitted that it was in this context that AFCA determined that the Trustee had acted appropriately in the consideration it gave to the non-binding nomination.Consideration AFCA is not a judicial body. Its obligation to give reasons for its determinations is statutory, and is subject to the standard of reasons established by the Acts Interpretation Act, s 25D, which has been described as imposing limited obligations: QSuper at [202]. It is axiomatic that in evaluating AFCA’s reasons for its determination the reasons are to be read as a whole, and not in an over-zealous way with an eye keenly attuned to error. I do not accept the applicant’s claim that AFCA asked itself the wrong question in considering the competing positions of the applicant and the second respondent. It is clear from AFCA’s reasons that it addressed itself to the correct question, namely whether the Trustee’s decision was fair and reasonable in its operation in relation to the applicant and the second respondent in all the circumstances. AFCA addressed this issue directly when identifying the issues and key findings in section 1.2 of its statement of reasons which I extracted at [23] above. The key findings reflected AFCA’s conclusion at 2.7, which I have extracted at [30] above. After identifying its key findings, AFCA set out its reasons for determining that both the applicant and the second respondent were qualified to be considered as beneficiaries of the death benefit, holding that the second respondent was the deceased’s spouse, and that the applicant was financially dependent upon the deceased to the extent identified in AFCA’s reasons. AFCA considered this issue at some length in response to the competing submissions of the applicant and the second respondent, each contending before AFCA that the other was not a dependent. AFCA then identified the nature of their dependency, making the findings at 2.5 and 2.6 which I have extracted at [28] and [29] above. In a nutshell, the nature of the second respondent’s expected dependency was that of a spouse, involving combined financial resources. The nature of the applicant’s expected dependency was in relation to expenses arising in connection with the jointly owned property, but noting that the applicant took the jointly-owned property as the survivor. Both the applicant and the second respondent were found by AFCA at 2.7 of its statement of reasons to be persons who could reasonably have expected to receive some financial support from the deceased. In the case of the second respondent that was for the remainder of their lives together, and in the case of the applicant for the remainder of her life. As to the apportionment between them, AFCA’s determination was that the Trustee’s exercise of discretion was within the range.