Wan v BT Funds Management Limited

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FEDERAL COURT OF AUSTRALIA

Wan v BT Funds Management Limited [2022] FCAFC 189

Appeal from: Wan v BT Funds Management Limited [2022] FCA 302
File number(s): VID 222 of 2022
Judgment of: MARKOVIC, MCELWAINE AND MCEVOY JJ
Date of judgment: 29 November 2022
Catchwords: SUPERANNUATION – whether the primary judge and the Australian Financial Complaints Authority erred in accepting that the decision of the trustee of a superannuation fund to distribute a member’s superannuation death benefit to his estate rather than the appellant was fair and reasonable – whether the appellant was a “dependant” of the deceased, being either a spouse or in an interdependency relationship with the deceased at the time of his death, for the purposes of s 10 and s 10A of the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act) – construction of the expressions “lives with” and “lives together” for the purposes of the SIS Act – primary judge made no legal error in concluding that the Authority’s determination was fair and reasonable in the circumstances – the Authority’s determination must be read in its proper context – neither the Authority nor the primary judge imported a requirement that the living arrangement had to be full time or permanent, nor did they elevate the significance of “common residence” in their assessment of “dependant” under the SIS Act – neither the Authority nor the primary judge erred in considering the provision made for the appellant in the deceased’s will – a wider construction of the term “dependant” was not required by either the Authority or the primary judge – appeal dismissed with costs.
Legislation:

Administrative Appeals Tribunal Act 1975 (Cth) s 44

Corporations Act 2001 (Cth) ss 1053, 1055, 1056A and 1057

Superannuation Industry (Supervision) Act 1993 (Cth) s10 and s 10A

Federal Court Rules 2011 (Cth) Div 33.2

Superannuation Industry (Supervision) Regulations 1994 (Cth) reg 1.04AAAA and reg 6.22
Cases cited:

Collector of Customs v Pozzolanic Enterprises Pty Ltd (1993) 43 FCR 280; [1993] FCA 456

Drury v Smith [2012] NSWSC 1067

Edwards v Postsuper Pty Ltd [2007] FCAFC 83

Fairbairn v Radecki (2022) 400 ALR 613; [2022] HCA 18

Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611; [2010] HCA 16

Minister for Immigration and Ethnic Affairs v Gungor (1982) 4 ALD 575

Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259; [1996] HCA 6

Minister for Immigration and Multicultural Affairs v Thiyagarajah (2000) 199 CLR 343; [2000] HCA 9

Moby v Schulter (2010) FLC 93-447; [2010] FamCA 748

Plaintiff M1/2021 v Minister for Home Affairs (2022) 400 ALR 417; [2022] HCA 17

Plaintiff M64/2015 v Minister for Immigration and Broder Protection (2015) 258 CLR 173; [2015] HCA 50

Port of Newcastle Operations Pty Ltd v Glencore Coal Assets Australia Pty Ltd (2021) 395 ALR 209; [2021] HCA 39

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

Re…

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Details
Case
[2022] FCAFC 189
Decision Date

CaseChat Overview and Summary

In the case of Wan v BT Funds Management Limited, the court was tasked with determining whether the primary judge and the Australian Financial Complaints Authority (AFCA) erred in concluding that the decision of the trustee of a superannuation fund to distribute a member's superannuation death benefit to his estate, rather than to the appellant, was fair and reasonable. The primary issue was whether the appellant qualified as a "dependant" of the deceased under sections 10 and 10A of the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act). This hinged on the interpretation of the terms "lives with" and "lives together" within the context of the SIS Act. The appellant argued that both the Authority and the primary judge erred in their construction of these terms and in their consideration of the deceased's will provisions.

The court found that neither the Authority nor the primary judge made any legal error in their determination. The court emphasised that the Authority's determination must be read in its proper context and that the Authority did not require the living arrangement to be full-time or permanent. The court also noted that neither the Authority nor the primary judge elevated the significance of "common residence" in their assessment of whether the appellant was a dependant under the SIS Act. Additionally, the court held that the primary judge was correct in considering the provisions made for the appellant in the deceased's will, and that a wider construction of the term "dependant" was not required.

Consequently, the court upheld the primary judge's conclusion that the Authority made no legal error in determining that the decision of the Trustee was fair and reasonable and within power. The appeal was dismissed, and the appellant was ordered to pay the costs of the appeal as agreed or assessed. The second respondent was required to file and serve any application for costs within 14 days of the date of the order.

Orders

Orders of the court

1. The appeal be dismissed.

2. The appellant pay the third respondent’s costs of and incidental to the appeal as agreed or assessed.

3. The second respondent file and serve any application for costs of and incidental to the appeal within 14 days of the date of this order.

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

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

In assessing the balance of ground two it is necessary to pay careful attention to that part of the Authority’s determination identified by the appellant as the source of the operative errors. The relevant section of the Authority’s determination appears on pages 6-7 of its reasons and is as follows: Nature and extent of a common residenceThe complainant has acknowledged that she maintained her own residence, which was provided to her by the government from 2014 through to when the deceased member died. She has explained that, toward the end of 2016, there was a discussion with the deceased member about her continuing to maintain her own residence and the deceased member indicated that he would ‘think about it’. She has explained that due to his declining health she did not raise the issue again.There has been no evidence to suggest to me that the deceased member’s residence was a common residence. It has been accepted that the complainant sometimes stayed at the deceased member’s home and that this increased as his health declined. This would have included having some clothes there, as the photograph submitted by the complainant indicated, however, this does not suggest that it was a common/shared residence. This is particularly the case where the complainant was the recipient of a home provided by the government, which the complainant has stated it would be ‘unimaginably difficult to reapply for’. (Emphasis added) As the third respondent notes, this sub-section, appearing under the heading “The complainant was not the deceased member’s de-facto spouse”, is but one aspect of the Authority’s consideration of eight common law factors it identifies as “indicative” of when two people are “living together” on a genuine domestic basis in a relationship as a couple. This qualified description of the significance of these factors in the inquiry (that they are “indicative”) sits uncomfortably with the appellant’s submission that the Authority impermissibly elevated the significance of a common residence to “an element” or “a requirement” rather than a relevant factor, instead of giving proper consideration to whether the appellant “lives with” the deceased on a genuine domestic basis. The Authority’s reference later in its determination to a sexual relationship being an “element necessary” (at page 7) and to financial support being a “requirement” (at page 10) does not (as the appellant contends) rationally support the submission that the Authority elevated the importance of these indicia, including common residence, in establishing when two people are living together on a genuine domestic basis in a relationship as a couple. I do not consider that the use of these expressions, in context, are to be taken as meaning that the Authority regarded the existence of a sexual relationship or the provision of financial support as elements or requirements, rather than relevant factors “indicative” of when two people are “living together” on a genuine domestic basis in a relationship as a couple.

Decision

Reasons for decision

For the reasons that follow, I have concluded that the primary judge’s conclusion that the Authority made no legal error in determining that the decision of the Trustee was fair and reasonable and within power was correct, and that it was appropriate for his Honour to have made orders dismissing the appeal from the determination of the Authority. Accordingly, this appeal will also be dismissed. THE DECISIONS OF THE TRUSTEE AND THE AUTHORITY To understand the Trustee’s decision that the deceased’s death benefit should be payable to his estate rather than to the appellant, it is necessary to describe certain aspects of the deceased’s personal circumstances. It appears to be uncontroversial that the deceased’s health had been declining from around 2015, with the level of care and assistance he required increasing from early 2017. He was admitted to hospital in June 2017 and died, aged 62, on 11 July 2017. The deceased had never been married, and he did not have any children. He had, however, previously been in two long term de-facto relationships. The first of these was with the mother of the third respondent. Although the third respondent is not the biological child of the deceased, he apparently viewed the deceased as his father and prior to his death held the deceased’s medical and financial powers of attorney. The deceased’s other long term relationship was with a Ms Alison Betts. She, like the third respondent, was also a beneficiary of the deceased’s residuary estate under his will. The primary judge recorded (at [9]) the appellant’s position that she had known the deceased since late 2007, visiting him often from about 2012 and moving in to care for him in about mid-2014. The appellant maintained that as the deceased’s health declined, she cared for him and tended to his everyday needs. Although the appellant retained her own residence, which was government provided public housing that had been difficult to acquire, it was her position that she was living with the deceased as his spouse and in an interdependency relationship with him within the meaning of the SIS Act when he died. It would seem that in or around February 2015 the deceased transferred his superannuation benefits into an account managed by the Trustee. Each of his annual member statements, which were sent to him by the Trustee at the conclusion of relevant financial years, recorded a nomination by the deceased of his estate as the sole beneficiary of his death benefit. On 17 May 2017 the deceased made his final will. Under the terms of that will his residuary estate fell to be distributed in equal shares to the appellant, the deceased’s former partner Ms Betts, and the third respondent. Although the deceased had made a nomination for his estate to be the sole beneficiary of his death benefit, it was common ground that there was no binding death benefit nomination in respect of the deceased’s superannuation benefit held by the Trustee. In these circumstances it was necessary for the Trustee to have regard to the terms of the Trust Deed. As the primary judge recorded (at [19]), in this instance cl 6.3(e)(v) of Sch 2 of the Trust Deed stipulated the manner in which benefits were to be paid on a member’s death. Specifically, that clause provided that the Trustee must pay the death benefit to one or more of the deceased member’s dependants, and/or his legal personal representative or such other person permitted by superannuation law, in its absolute discretion. The same clause also expressly stated that the Trustee may take into account any non-binding nomination made by the deceased, although clearly it was not bound by such a nomination. As the primary judge correctly noted, both of these aspects of the Trust Deed are consonant with the requirements of the SIS Act: see, especially, reg 6.22(2) of the Superannuation Industry (Supervision) Regulations 1994 (Cth) (SIS Regulations).

Ratio Decidendi

Legal Principle Established

The primary judge determined that the Authority had made no legal error in finding that the decision of the Trustee was fair and reasonable in all the circumstances and within its power and thus in affirming the Trustee’s decision pursuant to s 1055(3) of the Corporations Act 2001 (Cth). The central issue in this appeal is whether the Authority’s conclusion that the appellant was not a “dependant” of the deceased within the meaning of s 10 of the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act) constituted an error of law (whether because the appellant was, in fact, the spouse of the deceased or in an interdependency relationship with him). In broad compass, the appellant challenges the conclusions of the primary judge on the bases that his Honour did not give proper consideration to whether the appellant was in an interdependency relationship or a spousal relationship with the deceased by reference to relevant sections of the SIS Act. She also contends that his Honour should not have had regard to the fact that the deceased had left the appellant one-third of his estate in upholding the Authority’s decision, and that his Honour did not give proper consideration to whether the appellant came within the inclusive definition of the term “dependant” in the SIS Act. The focus of the appeal, however, was on the construction to be given to the expression “lives with” in the context of the definition of “spouse” in s 10 of the SIS Act and the expression “live together” in the context of the attributes of an interdependency relationship in s 10A of the SIS Act. The appellant contended that both the Authority and the primary judge erred in the construction of these expressions. The appellant seeks to have the orders of the primary judge set aside, and for the matter to be remitted to the Authority, with an order that it be determined according to law. For the reasons that follow, I have concluded that the primary judge’s conclusion that the Authority made no legal error in determining that the decision of the Trustee was fair and reasonable and within power was correct, and that it was appropriate for his Honour to have made orders dismissing the appeal from the determination of the Authority. Accordingly, this appeal will also be dismissed. THE DECISIONS OF THE TRUSTEE AND THE AUTHORITY To understand the Trustee’s decision that the deceased’s death benefit should be payable to his estate rather than to the appellant, it is necessary to describe certain aspects of the deceased’s personal circumstances. It appears to be uncontroversial that the deceased’s health had been declining from around 2015, with the level of care and assistance he required increasing from early 2017. He was admitted to hospital in June 2017 and died, aged 62, on 11 July 2017. The deceased had never been married, and he did not have any children. He had, however, previously been in two long term de-facto relationships. The first of these was with the mother of the third respondent. Although the third respondent is not the biological child of the deceased, he apparently viewed the deceased as his father and prior to his death held the deceased’s medical and financial powers of attorney. The deceased’s other long term relationship was with a Ms Alison Betts. She, like the third respondent, was also a beneficiary of the deceased’s residuary estate under his will.