Wan v BT Funds Management Limited
[2022] FCA 302
•30 March 2022
FEDERAL COURT OF AUSTRALIA
Wan v BT Funds Management Limited [2022] FCA 302
File number: VID 622 of 2020 Judgment of: ANASTASSIOU J Date of judgment: 30 March 2022 Catchwords: SUPERANNUATION – financial services – superannuation complaints – power of the Australian Financial Complaints Authority (AFCA) to determine superannuation complaints under s 1055 of the Corporations Act 2001 (Cth) – where AFCA required to determine whether trustee of superannuation fund acted unreasonably or unfairly in distributing member’s death benefit – where Applicant claims to be a dependant of the deceased – proper construction of dependant in trust deed – where trustee initially distributed 100% of death benefit to Applicant – where trustee set aside initial decision and made decision to distribute 100% of death benefit to deceased’s estate – where AFCA affirmed the decision of the trustee – whether AFCA erred in affirming decision of trustee – appeal to Federal Court of Australia under s 1057 of the Corporations Act – appeal dismissed Legislation: Corporations Act 2001 (Cth), ss 1054A3, 1054B, 1054C, 1055, 1055A, 1056A, 1057
Federal Court of Australia Act 1976 (Cth), s 32
Superannuation Industry (Supervision) Act 1993 (Cth), ss 10, 10A, 31, 34, 52, 55A
Trustee Act 1925 (NSW), s 63
Superannuation Industry (Supervision) Regulations 1994 (Cth), regs 1.04AAAA, 6.22
Supreme Court (General Civil Procedure) Rules 2015 (Vic), r 54.02
Cases cited: Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue [2009] HCA 41; 239 CLR 27
Attorney-General of the Commonwealth v Breckler [1999] HCA 28; 197 CLR 83
Ayoub v Minister for Immigration and Border Protection [2015] FCAFC 83; 231 FCR 513
Board of Trustees of the State Public Sector Superannuation Scheme v Edington [2011] FCAFC 8; 119 ALD 472
Carrascalao v Minister for Immigration and Border Protection [2017] FCAFC 107; 252 FCR 352
Collector of Customs v Pozzolanic Enterprises Pty Ltd [1993] FCA 456; 43 FCR 280
Commissioner of Taxation v The Trustee for the Michael Hayes Family Trust [2019] FCAFC 226; 237 FCR 567
Construction Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 3) [2012] FCA 61
Cummins v Petterd [2021] FCA 646
Drury v Smith [2012] NSWSC 1067
Edwards v PostSuper Pty Ltd [2007] FCAFC 83
Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55; 250 CLR 503
Finch v Telstra Super Pty Ltd [2010] HCA 26; 242 CLR 254
Fitzgerald v Masters [1956] HCA 53; 95 CLR 420
Haritos v Commissioner of Taxation [2015] FCAFC 92; 233 FCR 315
Karger v Paul [1984] VR 161
Lock v Westpac Banking Corporation (1991) 25 NSWLR 593
Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; 237 CLR 66
Maciejewski v Telstra Super Pty. Limited [1999] NCWSC 341
Mettoy Pension Trustees Ltd v Evans [1990] 1 WLR 1587
Minister for Immigration and Ethnic Affairs v Gungor (1982) 42 ALR 209
Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6; 185 CLR 259
Minister for Immigrations and Multicultural Affairs v Thiyagarajah [2000] HCA 9; 199 CLR 343
Navoto v Minister for Home Affairs [2019] FCAFC 135
QSuper Board v Australian Financial Complaints Authority Ltd [2020] FCAFC 55; 276 FCR 97
Rushton v Commonwealth Superannuation Corporation (No 3) [2021] FCA 358
Telstra Super Pty Ltd v Flegeltaub [2000] VSCA 180; 2 VR 276
Tony Azzi Automobiles Pty Ltd v Volvo [2006] NSWSC 283
Wilkinson v Clerical Administrative and Related Employees Superannuation Pty Ltd [1998] FCA 51; 79 FCR 469
Williams v IS Industry Fund Pty Ltd [2018] FCAFC 219; 266 FCR 370
Wooster v Morris [2013] VSC 5994
Yesilhat v Calokerinos [2021] NSWCA 110
Division: General Division Registry: Victoria National Practice Area: Administrative and Constitutional Law and Human Rights Number of paragraphs: 199 Dates of hearing: 30 March 2021
11 May 2021
4 August 2021Counsel for the Applicant: Mr C. H Truong QC with Ms L. Martin (30 March 2021)
Mr S. A Tisher (11 May 2021 and 4 August 2021)Solicitor for the Applicant: Herald Legal Counsel for the First Respondent: The First Respondent filed a submitting notice save as to costs Solicitor for the First Respondent: Dentons Counsel for the Second Respondent: The Second Respondent filed a submitting notice save as to costs Solicitor for the Second Respondent: Arslan Lawyers Counsel for the Third Respondent: Mr A. Dickenson Solicitor for the Third Respondent: Clancy & Triado ORDERS
VID 622 of 2020 BETWEEN: JING WAN
Applicant
AND: BT FUNDS MANAGEMENT LIMITED
First Respondent
AUSTRALIAN FINANCIAL COMPLAINTS AUTHORITY
Second Respondent
MATTHIAS GUY DERODY
Third Respondent
ORDER MADE BY:
ANASTASSIOU J
DATE OF ORDER:
30 MARCH 2022
THE COURT ORDERS THAT:
1.The appeal is dismissed.
2.The Applicant pay the Third Respondents’ costs of and incidental to the appeal.
3.The costs of the First and Second Respondents are reserved for later determination.
4.In the event that the Applicant and the First and Second Respondents are unable to reach agreement concerning the reserved costs in order 3 within 7 days, the First Respondent is to inform the Court that agreement has not been reached and thereupon any question concerning the entitlement to costs of the First and Second Respondents, and the quantum of those costs, be referred to a Registrar of the Court for determination.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.
REASONS FOR JUDGMENT
ANASTASSIOU J:
INTRODUCTION
By further amended notice of appeal dated 17 February 2021, the Applicant, Ms Jing Wan, appeals against the decision of the Second Respondent, the Australian Financial Complaints Authority (AFCA), pursuant to s 1057(1) of the Corporations Act 2001 (Cth).
The appeal concerns a determination made by AFCA on 13 August 2020 by which AFCA affirmed a decision of the First Respondent, BT Funds Management Limited (the Trustee). More specifically, AFCA affirmed a decision made by the Trustee on 26 April 2019 to distribute the death benefit payable to one of its members, Mr Maxwell Rodney Walker (the deceased), to his estate rather than to the Applicant.
The contending positions on appeal were as follows. The Applicant submitted that AFCA erred in law by failing to conclude that the Applicant was a de-facto spouse of the deceased or in an interdependency relationship with the deceased at the time of his death. Having erred in that way, she contended that AFCA’s determination should be set aside. The Applicant also sought a declaration that she was a “dependant” of the deceased and an order that the entirety of the deceased’s death benefit be paid to her or, alternatively, that the matter be remitted to AFCA with a direction that the Applicant was a “dependant” of the deceased.
The Third Respondent, Mr Matthias Guy Derody, actively opposed the appeal in his capacity as the legal personal representative (LPR) and executor of the deceased’s estate. The Third Respondent contended that AFCA’s determination as to the fairness and reasonableness of the Trustee’s decision was not occasioned by any legal error, having regard to the broad discretion conferred on the Trustee. For that reason, the Third Respondent submitted the appeal should be dismissed.
Neither the First Respondent nor the Second Respondent participated in the appeal. Rather, each filed submitting notices save as to costs.
Embedded in the parties’ respective contentions are questions of fact and law that are central to the resolution of this appeal. For the reasons that follow, I have concluded that the appeal should be dismissed. I do not accept the Applicant’s contention that AFCA erred in concluding that the Trustee’s decision was fair and reasonable. Before considering those issues in detail, it is necessary to delve further into the background to the appeal.
BACKGROUND
The deceased
The deceased’s health had been declining from around 2015, with the level of care and assistance he required increasing from early 2017. The deceased was eventually taken to hospital in June 2017 and died shortly thereafter, aged 62, on 11 July 2017.
At the time of his death, the deceased had never been married and did not have any children. He had, however, previously been in two long term de-facto relationships. One of those relationships was with Mrs Beatrice Derody (from approximately 1981 to 1991). The Third Respondent was born in 1979 and his biological mother is Mrs Derody. He is not the biological child of the deceased but viewed the deceased as his “father”. Moreover, prior to the deceased’s death, the Third Respondent was the deceased’s medical and financial power of attorney. The other relationship was with a beneficiary under his will, Ms Alison Betts (from approximately 1991 to 2012).
The Applicant says that she has known the deceased since late 2007. In or around 2012, after the Applicant ended a relationship with her ex-partner, she visited the deceased often and called each day if she could not visit. In mid-2014, the Applicant became increasingly concerned about the deceased’s health after he had a fall. At or around that time, the Applicant says that she started living with the deceased at his house in North Fitzroy. Further, she says that by the time of his death, she was a “dependant” within the meaning of the relevant superannuation law.
The deceased’s superannuation arrangements and residuary estate
On or around February 2015, the deceased transferred his superannuation benefits into an Asgard account managed by the Trustee. Each of the deceased’s 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. For example, the Trustee’s annual statement to the deceased dated 30 June 2017 recorded: “You’ve nominated the following beneficiaries to receive this benefit in the event of your death: Estate 100%” [Emphasis added].
On 17 May 2017, the deceased made his final will. That will provided for his residuary estate to be distributed in equal shares to each of:
(1)the Applicant;
(2)the deceased’s former partner, Ms Betts; and
(3)the son of the deceased’s other former partner, the Third Respondent.
As at 30 June 2017, the deceased had a balance in his superannuation account payable in the event of his death of $881,111. Though the deceased had made a nomination for his estate to be the sole beneficiary of his death benefit, it is common ground that he had not made a binding death benefit nomination. This became apparent during the course of the hearing as a result of the following events.
On 24 March 2021, shortly before the first day of hearing, the Third Respondent filed and served a Notice to Produce on the Trustee for the production of all documentation, correspondence or records relating to whether the deceased had made a binding death benefit nomination. That issue was highly relevant to the resolution of the appeal. If there were such a nomination, the entirety of the deceased’s death benefit would have been distributed to the deceased’s nominated beneficiary.
On 26 March 2021, the Applicant filed an interlocutory application for the purpose of setting aside the Notice to Produce, supported by an affidavit of Yue Huang, a solicitor engaged by the Applicant. In support of her interlocutory application, the Applicant also filed written submissions on 29 March 2021, contending that the Notice to Produce should be set aside for the following reasons.
First, the Applicant said the subject matter of the Court’s jurisdiction on appeal from AFCA is confined to questions of law. It therefore followed, according to the Applicant, that the ambit of the appeal was restricted to the errors identified by the Applicant in her Amended Notice of Appeal. Given that no concerns were raised regarding the status of the nomination made by the deceased, the Applicant contended that the documents sought by the Third Respondent in the Notice to Produce were not sufficiently relevant to the appeal to justify their production: Haritos v Commissioner of Taxation [2015] FCAFC 92; 233 FCR 315 at [62] (Allsop CJ, Kenny, Besanko, Robertson and Mortimer JJ).
Second, the Applicant submitted that there was no explanation for the delay in filing the Notice to Produce until shortly before the hearing. Further, she said that the delay imposed a considerable obligation, and thus disruption, on parties and practitioners already immersed in the preparation for and conduct of the appeal. Accordingly, the Applicant submitted that it was unreasonable for the Trustee to be expected to comply with the Notice to Produce in those circumstances: Tony Azzi Automobiles Pty Ltd v Volvo [2006] NSWSC 283 at [8] (Brereton J); Construction Forestry, Mining and Energy Union v BHP Coal Pty Ltd (No 3) [2012] FCA 61 at [7] (Collier J).
Third, the Applicant said that absent any information to suggest that the Trustee had misconstrued the nomination, the Notice to Produce amounted to nothing more than a “fishing” exercise.
On the first day of the hearing, I allowed the Notice to Produce for the reason that if a binding nomination had in fact been made, but not considered by the Trustee or AFCA, the prejudice to the Third Respondent’s interests would be potentially incurable. I temporarily adjourned the hearing and asked the parties to inspect the documents during the course of the adjournment. When the hearing resumed, the parties confirmed that there was no binding nomination in the documents produced.
Absent a binding death benefit nomination, it is therefore necessary to have regard to the Trust Deed for the Asgard Independence Plan. In this instance, cl 6.3(e)(v) of Schedule 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, though of course is not bound by such a nomination. Both of these aspects of the Trust Deed are consonant with the requirements in the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act): see, especially, reg 6.22(2) of the Superannuation Industry (Supervision) Regulations 1994 (Cth) (SIS Regulations).
The Trustee’s decisions
Having regard to the above background matters, I turn to consider the four decisions made by the Trustee in the present case concerning the distribution of the deceased’s superannuation death benefit.
On 22 June 2018, the Trustee resolved to pay all of the deceased’s superannuation death benefit to the Applicant on the basis that she was his de-facto spouse at the date of his death (the Trustee’s First Decision).
On 25 July 2018, the Third Respondent objected to the Trustee’s First Decision. Having considered the objection, the Trustee instead resolved to pay all of the death benefit to the deceased’s estate on 21 August 2018 (the Trustee’s Second Decision).
On 11 September 2018, the Applicant objected to the Trustee’s Second Decision. Having considered the objection, the Trustee resolved to uphold its Second Decision on 27 November 2018 (the Trustee’s Third Decision).
On 14 January 2019, the Applicant lodged a further objection. However, on 26 April 2019, the Trustee determined it was appropriate to distribute 100% of the superannuation death benefit to the deceased’s estate because:
(1)it did not accept the Applicant was a dependant of the deceased as she was not a de facto spouse or in an interdependency relationship with the deceased within the meaning of ss 10 and 10A of the SIS Act and reg 1.04AAAA of the SIS Regulations;
(2)on 30 June 2016, the deceased had re-confirmed his discretionary non-binding nomination for 100% of the death benefit to be paid to his estate; and
(3)the deceased’s final will expressed a testamentary intention that his estate be divided equally between the Applicant, Ms Betts and the Third Respondent (the Trustee’s Fourth Decision).
In summary, the Trustee’s First Decision resolved to pay the deceased’s death benefit to the Applicant as the de-facto spouse of the deceased member, while the following three decisions resolved to distribute the deceased’s superannuation death benefit to his estate. As I have said, the practical effect of the Trustee’s Second, Third and Fourth Decisions is that the Applicant will receive approximately 33% of the death benefit derivatively, under and pursuant to the deceased’s will. By comparison, the practical effect of the Trustee’s First Decision would have been to distribute 100% of the death benefit to the Applicant. In any event, it is the Trustee’s Fourth Decision that was the subject of review by AFCA, and it is AFCA’s decision to uphold that decision which is the subject of this appeal.
I shall say more below about the scope of the Trustee’s discretion, including in relation to the critical question of whether it could abide by, reject or vary the member’s non-binding nomination, and what legal principles and statutory provisions delineate that discussion. However, at this stage, I simply note that in my view it was both permissible and necessary for the Trustee to take into account that the deceased had made a non-binding nomination that involved distributing his superannuation death benefit to his estate. As I have said, if the deceased had made a binding nomination, the Trustee would not have had a relevant discretion in relation to the distribution of the deceased’s death benefit.
I also conclude that the Trustee was permitted to take into account as relevant the fact that the Applicant was already a beneficiary under the will as to one-third of the deceased’s estate. In this regard, it is important to bear in mind that the decision made by the Trustee, and upheld by AFCA, has the effect that one-third of the deceased’s death benefit will ultimately be paid to the Applicant under and in accordance with the terms of his final will.
In any event, putting to one side the Trustee’s discretion, AFCA’s role under the relevant legislative scheme is to consider whether the Trustee’s decision was fair and reasonable in all the circumstances having regard to the interests of not only the Applicant, but also any other person joined as a party to the complaint: ss 1055(3) and 1056A of Corporations Act. For the reasons I shall explain, AFCA was therefore entitled to conclude that it was fair and reasonable for the Trustee in exercising its discretion to consider not only the interests of the Applicant but also other parties potentially entitled to a distribution under the will if the deceased’s non-binding direction was followed.
Before turning to AFCA’s determination, I set out the legislative provisions in the Corporations Act, SIS Act and SIS Regulations relevant to this appeal as well as their interaction with the Trust Deed.
The legislative scheme
Corporations Act
It is of assistance, and instructive, to commence with what the Full Court of this Court said in QSuper Board v Australian Financial Complaints Authority Ltd [2020] FCAFC 55; 276 FCR 97 at [13]-[16] (Moshinsky, Bromwich and Derrington JJ):
By the Treasury Laws Amendment (Putting Consumers First – Establishment of the Australian Financial Complaints Authority) Act 2018 (Cth), amendments were made to the CA [Corporations Act], the Supervision Act and to the Superannuation (Resolution of Complaints) Act 1993 (Cth) (Complaints Act) for the stated purpose of rationalising the external dispute resolution processes for superannuation funds. In broad terms, the object of the amendments was to replace the SCT and other external dispute resolution schemes with the AFCA scheme. The implementation of the new system was mostly effected by the introduction of Part 7.10A into the CA which came into force on 6 March 2018. By it, the Minister administering the CA was authorised to establish an external dispute resolution scheme for superannuation complaints (CA s 1050(1)). The Minister exercised that power and the AFCA scheme was established. At the same time the Supervision Act was amended to require each trustee of certain regulated superannuation funds to be members of the AFCA scheme (s 101 of the Supervision Act). However, the Supervision Act requirements which applied to trustees of regulated superannuation funds, including the requirement to be a member of AFCA, did not apply in certain cases and, relevantly, in relation to trustees of superannuation funds which held an AFSL: s 101(1A) of the Supervision Act.
By the same suite of amendments which took effect on 6 March 2018, CA ss 912A(1)(g) and 912A(2) were also amended to the effect that in order for a person who provides financial services to retail clients to comply with the requirement to hold an AFSL, they must have membership of the AFCA scheme…
AFCA’s constitution provided that an entity may apply to become a member of the AFCA scheme by delivering to it a completed signed application form (cl 3.2(b) and (c)). The applying entity became a member once it was accepted by AFCA’s directors and its name was registered in the register of members (cl 1.1).
By cl 3.2(g) of the AFCA constitution and its rules, a member agreed to be bound by all the rules applicable to a member in respect of a complaint from time to time. Additionally, by cl 12.1(d) of AFCA’s constitution, the provisions of AFCA’s constitution and the rules ‘form a binding contract between’ the member and AFCA.
The effect of these amendments is that where an entity is a regulated superannuation fund, and the holder of an Australian Financial Services Licence (AFSL), AFCA determines complaints in respect of certain decisions made by the entity pursuant to the Corporations Act and AFCA’s Complaint Resolution Scheme Rules: QSuper at [17].
The nature of the powers accorded to AFCA are provided for by Division 3 of Part 7.10A of the Corporations Act. In particular, s 1055 of the Corporations Act provides as follows:
Making a determination
(1)In making a determination of a superannuation complaint, AFCA has, subject to this section, all the powers, obligations and discretions that are conferred on the trustee, insurer, RSA provider or other person who:
(a)made a decision to which the complaint relates; or
(b)engaged in conduct (including any act, omission or representation) to which the complaint relates.
Affirming decisions or conduct
(2)AFCA must affirm a decision or conduct (except a decision relating to the payment of a death benefit) if AFCA is satisfied that:
(a)the decision, in its operation in relation to the complainant; or
(b)the conduct;
was fair and reasonable in all the circumstances.
(3)AFCA must affirm a decision relating to the payment of a death benefit if AFCA is satisfied that the decision, in its operation in relation to:
(a)the complainant; and
(b)any other person joined under subsection 1056A(3) as a party to the complaint;
was fair and reasonable in all the circumstances.
Varying etc. decisions or conduct
(4) If AFCA is satisfied that:
(a)a decision (except a decision relating to the payment of a death benefit), in its operation in relation to the complainant; or
(b)conduct;
is unfair or unreasonable, or both, AFCA may take any one or more of the actions mentioned in subsection (6), but only for the purpose of placing the complainant, as nearly as practicable, in such a position that the unfairness, unreasonableness, or both, no longer exists.
(5)If AFCA is satisfied that a decision relating to the payment of a death benefit, in its operation in relation to:
(a) the complainant; and
(b) any other person joined under subsection 1056A(3) as a party to the complaint;
is unfair or unreasonable, or both, AFCA may take any one or more of the actions mentioned in subsection (6), but only for the purpose of placing the complainant (and any other person so joined as a party), as nearly as practicable, in such a position that the unfairness, unreasonableness, or both, no longer exists.
(6) AFCA may, under subsection (4) or (5), do any of the following:
(a)vary the decision;
(b)set aside the decision and:
(i)substitute a decision for the decision so set aside; or
(ii)remit the decision to the person who made it for reconsideration in accordance with any directions or recommendations of AFCA;
(c)if the complainant was unfairly or unreasonably admitted into a life policy fund:
(i)require a party to the complaint to repay all money, or particular money, received under the life policy to which the complaint relates; or
(ii)set aside the whole or part of the terms or conditions of the life policy in their application to the complainant; or
(iii)vary the governing rules of the life policy fund in their application to the complainant; or
(iv)cancel the complainant’s membership of the life policy fund or of any sub‑plan of the fund;
(d)if the complainant was unfairly or unreasonably sold an annuity policy, contract of insurance or RSA:
(i)require a party to the complaint to repay all money, or particular money, received under the annuity policy, contract or RSA; or
(ii)set aside the whole or part of the terms or conditions of the annuity policy, contract or RSA in their application to the complainant; or
(iii)vary the terms or conditions of the annuity policy, contract or RSA in their application to the complainant.
Limitations on determinations
(7)AFCA must not make a determination of a superannuation complaint that would be contrary to:
(a)law; or
(b)subject to paragraph (6)(c), the governing rules of a regulated superannuation fund or an approved deposit fund to which the complaint relates; or
(c)subject to paragraph (6)(d), the terms and conditions of an annuity policy, contract of insurance or RSA to which the complaint relates.
In QSuper, the Full Court conveniently summarised the nature of the powers conferred by s 1055 of the Corporations Act at [64]-[65]:
The powers conferred by CA s 1055 permit AFCA to set aside or vary a decision made by a trustee in relation to a fund member even where the decision was authorised by the trust deed and any regulating statute. The determining factor is not the lawfulness of the decision, but its fairness or reasonableness “in its operation in relation to the complainant”. Such a power is more aptly applied in relation to discretionary powers which, by their nature, confer wide decisional freedom on the repository such that a broad range of decisions might legitimately be made from a single set of facts. In any event, under the scheme where a complainant is aggrieved by a trustee’s decision, AFCA can consider the relevant circumstances and exercise the power or discretion of the trustee afresh so as to correct any perceived unfairness or unreasonableness arising from the original decision’s operation.
Despite the width of AFCA’s remedial powers, subsection (7) requires that it exercise the powers of the trustee or other authorised person within legal confines. It is not entitled to make a decision which is contrary to the terms of the trust or beyond the limits of any relevant statutory regulation. For instance, AFCA could not, standing in the shoes of a trustee, exercise a power in a manner which breached the trustee duty to observe the terms of the trust.
[Emphasis added]
AFCA is required to give written reasons in relation to its determination of a superannuation complaint: see s 1055A of the Corporations Act. If a party to a superannuation complaint is dissatisfied with a decision made by AFCA, s 1057(1) of the Corporation Act allows for an appeal to the Federal Court, on a question of law, from AFCA’s determination of the complaint. That appeal is to be instituted within 28 days and in accordance with the rules in the Federal Court of Australia Act 1976 (Cth): s 1057(2) of the Corporations Act.
The Federal Court has power to hear and determine the appeal and may make such order as it thinks appropriate: s 1057(3) of the Corporations Act. Without limiting subsection (3), the orders that may be made by the Federal Court on appeal include:
(1)an order affirming or setting aside the determination of AFCA: s 1057(4)(a) of the Corporations Act; and
(2)an order remitting the matter to be determined again by AFCA in accordance with directions from the Court: s 1057(4)(b) of the Corporations Act.
For completeness, I note that s 1057(5) of the Corporations Act provides that the Federal Court must not make an order awarding costs against a complainant if the complainant does not defend an appeal instituted by another party to the complaint. That is not the case here.
The parties did not refer to any authorities that have specifically considered the powers of the Court on hearing and determining an appeal from AFCA pursuant to s 1057 of the Corporations Act. However, it is instructive that these powers are very similar, or substantially the same as those applicable to the hearing and determination of an appeal from the Administrative Appeals Tribunal (AAT): see ss 44(3) and (4) of the Administrative Appeals Tribunal Act 1975 (Cth). It is also relevant that Division 33.2 of the Federal Court Rules 2011 (Cth), which deals with appeals from the AAT, applies to an appeal under s 1057 of the Corporations Act.
The numerous cases that have considered the powers of the Court on hearing an appeal from the AAT are therefore apposite in this context. For instance, in Minister for Immigration and Ethnic Affairs v Gungor (1982) 4 ALD 575, Sheppard J said at 585-586:
Dealing with the powers of this court on this appeal, it is not correct to see our powers as unlimited. The powers as stated are subject to restrictions, which restrictions are readily apparent if compared with the powers on review of the Tribunal, admittedly acting administratively, and the powers of this court in other jurisdictions, both original and appellate.
…
It is, in my opinion, not correct to say that this court is by [s 44 of the Administrative Appeals Tribunal Act 1975 (Cth)] given wide powers to make such order as it thinks fit. Implicit in its powers are a number of restrictions. The appeal is expressly limited to error of law, which alleged error is the sole matter before this court and is the only subject matter of any order made consequent on the appeal. The order which this court can make after hearing the appeal is also similarly restricted to an order which is appropriate by reason of its decision. It follows that the only order which can be properly made is one the propriety of which is circumscribed by and necessary to reflect this court's view on the alleged or found error of law. To go further I would see as amounting to exceeding the jurisdiction of this court under this section. A power to make "such order as it thinks appropriate by reason of its decision" is much more restrictive than a power "to make such order as it sees fit" or a power "to make a decision in substitution for the decision" the subject of the appeal. Section 44(5) confirms, though it states that it does not purport to limit, this as an appropriate reading of the power in s 44(4) when it limits its statement of the express power of the court when setting aside a decision to the making of an order remitting the case to be heard again. Having set aside a decision, it has no express power to substitute what it sees as the correct decision unless such is the appropriate order by reason of its decision on the point of law in the context of the particular proceedings.
The powers of this court on appeal under s 44 of the AA T Act are limited to consideration of alleged errors of law by the Tribunal and go no further. There is certainly no power to supervise the Tribunal in any other way and, in particular, to deal with the merits of the review. The error of law alleged has to be isolated out, a decision made on this question of law, and such order made and directions given as are appropriate only to the decision of this question of law, and not to the decision under review by the Tribunal.
[Emphasis added]
It follows that the only occasion the Court may substitute its decision is when the facts as found by the Tribunal admit, upon the application of the law as laid down by the Court, of only one result. That is, the Court may only substitute a decision of its own if it is of the view that there was only one decision which the Tribunal, properly instructed, could have arrived at: Minister for Immigration and Multicultural Affairs v Thiyagarajah [2000] HCA 9; 199 CLR 343 at [59] (Gaudron J). This constraint as expressed by Gaudron J in Thiyagarajah is materially the same as that described by Shepherd J in Gungor that the Court “has no express power to substitute what it sees as the correct decision unless such is the appropriate order by reason of its decision on the point of law in the context of the particular proceedings.”
In this instance, the Applicant accepted that if the appeal was allowed by the Court, it may be for AFCA, not the Court, to consider the relevant circumstances and exercise the power or discretion of the Trustee afresh so as to correct any perceived unfairness or unreasonableness arising from the original decision. As to this issue, the Third Respondent submitted that should the Court find that AFCA erred in any of the ways contended for by the Applicant, the most appropriate approach would be for the Court to remit the matter to AFCA to re-consider the Trustee’s determination, particularly given that the Applicant seeks an order that she be paid the entirety of the deceased’s death benefit.
I agree that the appropriate course, if the appeal were allowed, would be to remit for re-determination by AFCA as to whether the Trustee’s Fourth Decision satisfied the criteria in s 1055(3) of the Corporations Act. Neither the Trustee’s First Decision, nor the Trustee’s Second or Third Decisions, or relevantly for present purposes the Trustee’s Fourth Decision, are so self-evidently wrong as to permit only one outcome. Put another way, the Trustee’s First Decision is not so self-evidently reasonable compared to the Trustee’s Fourth Decision, such that this Court should, if the appeal were allowed, substitute the Trustee’s First Decision for the Trustee’s Fourth Decision.
SIS Act and SIS Regulations
In addition to the aforementioned parts of the Corporations Act, there are provisions in the SIS Act and SIS Regulations specifically relevant to this appeal. In particular, s 34 of the SIS Act requires trustees of superannuation entities to ensure compliance with “prescribed standards”. Section 55A(1) of the SIS Act provides that the governing rules of a regulated superannuation fund must not permit a member’s benefit to be cashed after their death other than in accordance with standards prescribed for the purposes of s 31 of the SIS Act. The standard contained in the SIS Regulations which is principally relevant to the payment of a member’s death benefit is reg 6.22, which provides:
The conditions of this subregulation are satisfied if the benefits are cashed in favour of either or both of the following:
(a) the member's legal personal representative;
(b) one or more of the member's dependants.
Section 10 of the SIS Act is also highly relevant. That section defines a “dependant” as including “the spouse of the person, any child of the person and any person with whom the person has an interdependency relationship”. It follows that to satisfy the definition of “dependant” under the SIS Act, the Applicant needs to have been a spouse or in an interdependency relationship with the deceased.
Section 10 of the SIS Act defines spouse as follows:
Spouse of a person includes:
(a)another person (whether of the same sex or a different sex) with whom the person is in a relationship that is registered under a law of a State or Territory prescribed for the purposes of section 2E of the Acts Interpretation Act 1901 as a kind of relationship prescribed for the purposes of that section; and
(b)another person who, although not legally married to the person, lives with the person on a genuine domestic basis as a couple.
[Emphasis added]
Section 10A of the SIS Act defines interdependency relationship as follows:
10A Interdependency relationship
(1)Subject to subsection (3), for the purposes of this Act, 2 persons (whether or not related by family) have an interdependency relationship if:
(a)they have a close personal relationship; and
(b)they live together; and
(c)one or each of them provides the other with financial support; and
(d)once or each of them provides the other with domestic support and personal care.
(2) Subject to subsection (3), for the purposes of this ACT, if:
(a)2 persons (whether or not related by family) satisfy the requirement of paragraph (1)(a); and
(b)they do not satisfy the other requirements of an interdependency relationship under subsection (1); and
(c)the reason they do not satisfy the other requirements is that either or both of them suffer from a physical, intellectual or psychiatric disability;
they have an interdependency relationship –
(3) The regulations may specify:
(a)Matters that are, or are not, to be taken into account in determining under subsection (1) or (2) whether 2 persons have an interdependency relationship; and
(b)Circumstances in which 2 persons have, or do not have, an interdependency relationship.
The SIS Regulations provide further guidance on whether two people have an interdependency relationship in reg 1.04AAAA:
(1)For paragraph 10A(3)(a) of the Act, the following matters are to be taken into account in determining whether 2 persons have an interdependency relationship, or had an interdependency relationship immediately before the death of 1 of the persons:
(a)all of the circumstances of the relationship between the persons, including (where relevant):
(i)the duration of the relationship; and
(ii)whether or not a sexual relationship exists; and
(iii)the ownership, use and acquisition of property; and
(iv)the degree of mutual commitment to a shared life; and
(v)the care and support of children; and
(vi)the reputation and public aspects of the relationship; and
(vii)the degree of emotional support; and
(viii)the extent to which the relationship is one of mere convenience; and
(ix)any evidence suggesting that the parties intend the relationship to be permanent;
(b)the existence of a statutory declaration signed by one of the persons to the effect that the person is, or (in the case of a statutory declaration made after the end of the relationship) was, in an interdependency relationship with the other person.
(2)For paragraph 10A(3)(b) of the Act, 2 persons have an interdependency relationship if:
(a)they satisfy the requirements of paragraphs 10A(1)(a) to (c) of the Act; and
(b)one or each of them provides the other with support and care of a type and quality normally provided in a close personal relationship, rather than by a mere friend or flatmate.
Examples of care normally provided in a close personal relationship rather than by a friend or flatmate:
(i)Significant care provided for the other person when he or she is unwell.
(ii)Significant care provided for the other person when he or she is suffering emotionally.
(3)For paragraph 10A(3)(b) of the Act, 2 persons have an interdependency relationship if:
(a)they have a close personal relationship; and
(b)they do not satisfy the other requirements set out in subsection 10A(1) of the Act; and
(c)the reason they do not satisfy the other requirements is that they are temporarily living apart.
Example for paragraph (3)(c): One of the persons is temporarily working overseas or is in gaol.
(4)For paragraph 10A(3)(b) of the Act, 2 persons have an interdependency relationship if:
(a)they have a close personal relationship; and
(b)they do not satisfy the other requirements set out in subsection 10A(1) of the Act; and
(c)the reason they do not satisfy the other requirements is that either or both of them suffer from a disability.
(5)For paragraph 10A(3)(b) of the Act, 2 persons do not have an interdependency relationship if 1 of them provides domestic support and personal care to the other:
(a)under an employment contract or a contract for services; or
(b)on behalf of another person or organisation such as a government agency, a body corporate or a benevolent or charitable organisation.
The Trust Deed
As I have explained above, the Trustee was required to pay the deceased’s superannuation death benefit according to any relevant superannuation law and by reference to the terms of the Trust Deed. Accordingly, there are specific clauses in the Trust Deed which are also relevant to whether there was any legal error on the part of AFCA in resolving to uphold the Trustee’s Fourth Decision.
Most relevantly, r 6.3 of Schedule 2 of the Trust Deed stipulates the requirements pertaining to the payment of benefits under the Trust Deed when the benefit becomes payable. In particular, r 6.3(e)(v) of Schedule 2 of the Trust Deed applies where there is no binding death nomination at the time of the participating member’s death, as is the case here. In those circumstances, the Trust Deed says that the death benefit is to be paid by the Trustee to dependants of the deceased, the deceased’s legal personal representative or such other person as permitted by “Superannuation Law”, or to any one or more of them to the exclusion of the other or others, as the Trustee determines in its absolute discretion.
The Trust Deed did not include a definition of “dependant”. However, cl 1.2 of the Trust Deed includes the composite rule that where a word or phrase:
(1)begins in uppercase;
(2)is not defined in cl 1.1 of the Trust Deed; and
(3)has a particular meaning under “Superannuation Law”,
the word or phrase shall have the same meaning in the Trust Deed as under the “Superannuation Law”.
In addition, r 6.5 of Schedule 2 states that "it is an overriding condition of Rules 6.2, 6.3 and 6.4 that any benefit determined in accordance with rule 6.2 ... shall be dealt with in the manner required by Superannuation Law". This Rule is consistent with other parts of the Trust Deed, such as:
(1)clause 1.7.2, which provides that any provision of Superannuation Law that is required from time to time shall be taken to be included in the Trust Deed;
(2)clause 1.7.4, which provides that Superannuation Law covenants are taken to be included in the Trust Deed; and
(3)clause 1.7.5, which provides, in effect, that in the event of any inconsistency between Superannuation Law incorporated into the Trust Deed and any other terms of the Trust Deed, Superannuation Law shall prevail.
For completeness, I note that “Superannuation Law” is defined broadly in cl 1.1 of the Trust Deed to include any of the following:
(1)the SIS Act;
(2)the Superannuation Entities (Taxation) Act 1993;
(3)the Tax Act;
(4)the Superannuation Guarantee Charge Acts;
(5)the Corporations Act;
(6)the Family Law Act;
(7)any other present or future law which the Trustee determines to be a Superannuation Law for the purposes of this Deed; and/or
(8)regulations, statutory instruments, prudential standards, binding determinations, declarations, notifications, orders, class orders, determinations, rulings and any other instruments made or issued under any Act specified in paragraphs (a) to (g) (inclusive) with which the Trustee must or may comply with.
The inter-relationship between the Trust Deed and Superannuation Law is significant to the resolution of the first ground of appeal, which raises for consideration the proper construction of the phrase “dependant” in the Trust Deed, which was not capitalised in r 6.3(e)(v) of the Trust Deed. However, before considering the various grounds of appeal, I return to AFCA’s determination.
AFCA’s determination
The Applicant made a complaint to AFCA on 28 May 2019. On 13 August 2020, AFCA affirmed the Trustee’s Fourth Decision, concluding that the Trustee’s decision was fair and reasonable because the Applicant was not a dependant of the deceased at the time of the deceased’s death.
As the Trust Deed did not provide for a definition of “dependant”, AFCA referred to various aspects of Superannuation Law, including the SIS Act, and determined that in order to meet the definition of ‘dependant’, the Applicant had to be either: the deceased’s ‘spouse’; in an ‘interdependency relationship’ with the deceased; or ‘financially dependent’ on the deceased at the date of his death.
Having regard to these matters, AFCA determined that:
(1)the weight of the “objective evidence” did not support a finding that the Applicant and the deceased were living together on a genuine domestic basis as a couple at the date of the deceased’s death; and
(2)there was insufficient information to demonstrate that the Applicant was in an interdependency relationship with the deceased or that she was financially dependent upon him.
In its determination, AFCA noted that the Applicant and deceased had been in “some type of relationship”. In particular, AFCA concluded that the material provided to it showed:
•The complainant and the deceased member had known one another since late 2007;
•The complainant and the deceased member kept in touch but were not in a permanent relationship from that time;
•In mid-2014 the complainant became increasingly concerned about the deceased member after he had a fall;
•The deceased member was experiencing declining health, particularly from 2015, and the level of care and assistance he required increased from early 2017 until the deceased member was taken to hospital in June 2017;
•The deceased member’s doctor had noted reference to the complainant providing him with assistance from 2015;
•The complainant’s presence at his home had been noticed by a number of the deceased’s close friends from early 2017; and
•The deceased member had indicated that he was appreciative of the assistance provided and had included the complainant in his will to thank her for the care provided.
AFCA noted the conflicting evidence about the nature and status of the relationship between the deceased and the Applicant.
One the one hand, AFCA noted that the Applicant had given evidence that she was in a de-facto relationship with the deceased at the date of his death and that she had lived, and commenced a relationship, with the deceased from around mid-2014. The Applicant had also claimed that she was financially dependent on the deceased and that despite maintaining her own residence, they were living together at his house in North Fitzroy.
On the other hand, AFCA recorded that the Third Respondent did not accept that the Applicant and deceased had been in any kind of serious or intimate relationship. In fact, the Third Respondent contended that the Applicant was only a carer to the deceased as his health declined, and that fair and adequate provision had already been made for her under the deceased’s final will.
AFCA then went on to consider whether the Applicant was a spouse of the deceased or, alternatively, whether the Applicant was in an interdependency relationship with the deceased.
Was the Applicant a de-facto spouse of the deceased?
In determining whether the Applicant was a de-facto spouse of the deceased, AFCA began by observing as follows:
Under superannuation law, a ‘spouse’ is defined to include someone who, although not legally married to a person, lives with the person on a genuine domestic basis in a relationship as a couple.
If the [Applicant] was the deceased member’s ‘spouse’, she was also a dependant under superannuation law and the trust deed.
The following common law factors are indicative of when two people are living together on a genuine domestic basis in a relationship as a couple:
•the duration of the relationship
•nature and extent of a common residence
•whether or not a sexual relationship exists
•degree of financial dependence or interdependence
•ownership, use and acquisition of property
•the degree of mutual commitment to a shared life
•the care and support of children
•the reputation and public aspects of the relationship.
AFCA proceeded to consider the evidence by reference to the above criteria. In relation to the duration of their relationship, AFCA noted that the deceased and the Applicant had known each other from late 2007, and that from 2015 the Applicant had an increasing presence in the deceased’s life and involvement in his care. AFCA acknowledged that by early 2017, the Applicant was spending an increasing amount of time at the deceased’s home, including staying overnight. Notwithstanding, AFCA ultimately concluded that the nature of the relationship was “uncertain”.
AFCA took into account that the Applicant had maintained her own residence from 2014, being a house provided to her through social housing arrangements, throughout her relationship with the deceased and up until he died. Indeed, AFCA recorded that the Applicant gave evidence that she had discussions with the deceased towards the end of 2016 as to whether she should continue to maintain her own residence. According to the Applicant, the deceased said he would “think about it”. However, due to his declining health it was not brought up again. AFCA concluded that there was no evidence before it to suggest that the deceased’s residence was a common residence, despite accepting that the Applicant had stayed at the deceased’s home on occasion, had left clothes at the deceased’s residence and stayed overnight with increasing frequency as his health declined.
AFCA was unable to determine whether or not the Applicant and the deceased had a sexual relationship. AFCA noted that the Applicant said she shared a bed with the deceased but that the deceased was advised to refrain from sexual activity after 2016 due to his deteriorating health. AFCA therefore concluded that even if there was some form of sexual relationship at some time, it was just one of a number of elements relevant to whether the Applicant was the deceased’s de-facto spouse.
Further, AFCA was not satisfied, on the evidence provided, that the deceased was financially dependent on the Applicant or vice versa. The Applicant received an income, which was a Centrelink benefit, and otherwise appeared to purchase basic living items for her and the deceased from his funds. AFCA concluded that there was otherwise no evidence of joint expenses or transfers to or from the Applicant or the deceased’s bank accounts. Further, AFCA noted that a one-off transaction of $6,000 for dental expenses referred to by the Applicant as supporting evidence was explicable as a one-off gift and did not meet the threshold of financial dependence or interdependence.
AFCA also noted that there was conflicting information as to whether the Applicant and the deceased had a mutual commitment to a shared life. While the Applicant expressed that she was the deceased’s de-facto spouse, AFCA was not convinced that the deceased viewed her in the same way. In this respect, AFCA had regard to the fact that the deceased referred to the Applicant as a “friend” in his final will. AFCA considered it significant that the deceased was reluctant to label the relationship and seemed to go to some length to clarify to some of his closest friends that the Applicant was merely a “friend” and also to deny that she was his “girlfriend” or “partner”.
As to the reputation and public aspects of their relationship, AFCA noted that there was conflicting evidence concerning whether the deceased and Applicant were a publicly recognised couple. The Applicant provided evidence in support of her characterisation of being the de-facto spouse of the deceased, including a statutory declaration from a neighbour who had seen both the Applicant and the deceased together in the deceased’s home and at the supermarket. However, AFCA was not satisfied that the weight of the evidence demonstrated that the Applicant and the deceased were in a de-facto relationship. Further, AFCA acknowledged that the Applicant was providing assistance to the deceased in his final years, but was not satisfied that they were in a de-facto relationship given also that the deceased often referred to the Applicant as a “helper” and “friend” when speaking to others who were close to him.
AFCA noted, presumably for the sake of completeness, that the Applicant and deceased did not have children and did not own any joint property. AFCA also noted other potentially relevant factors, for example that there was evidence the Applicant may have driven the deceased’s car, and that the deceased ultimately left his car to the Applicant in his final will. None of these factors were given significant weight in AFCA’s reasons.
Having regard to these matters, AFCA concluded:
Considering the weight of the objective evidence as it relates to the complainant’s claim that she was the deceased member’s de-facto spouse, I am not satisfied that at the date of death they were living together in a genuine domestic relationship as a couple.
Was the Applicant in an interdependency relationship with the deceased at the date of his death?
AFCA then went on to consider whether the Applicant was in an interdependency relationship with the deceased at the date of his death, by reference to the definition of “interdependency relationship” in that SIS Act and SIS Regulations.
AFCA commenced by observing as follows:
Under superannuation law the definition of dependant includes ‘any other person with whom the member has an interdependency relationship’.
For two persons to have been in an interdependency relationship, certain criteria have to be met immediately before the date of death which are:
•they have a close personal relationship; and
•they live together; and
•one or each provides financial support; and
•one or each provides domestic support and personal care.
AFCA added that the factors relevant to determining whether there is an interdependency relationship are very similar to the factors relevant to assessing whether there is a de-facto relationship, with the addition of whether the relationship was intended to be permanent and whether the relationship was one of mere convenience.
Weighing these matters in the balance, AFCA reached the following conclusion:
While I accept there was some form of relationship between the deceased member and the complainant, I am not satisfied that the complainant was in an interdependency relationship such that it would satisfy the criteria necessary as outlined in the regulations. The requirements are similar to those of spouse and as I have outlined above, I am not satisfied that the complainant was the deceased member’s de-facto spouse.
Even if I was satisfied that a close personal relationship existed, I am not satisfied the complainant lived permanently at the deceased member’s home as she maintained her own residence. There has also not been any evidence of financial support provided by or to the deceased member. I have noted my concerns in relation to this requirement above. This means I am also not satisfied that she was a financial dependent.
On the information provided, I am also not satisfied that the complainant and deceased member were in an interdependency relationship, such that would make her a dependant.
Was the decision of the trustee fair and reasonable?
Having regard to the above, AFCA concluded that the decision to pay the deceased’s death benefit to his estate was fair and reasonable in all the circumstances. Relevantly, in reaching this view, AFCA noted that the Trustee adequately took into account: (1) whether the Applicant was a dependant of the deceased; (2) that the deceased had made a non-binding nomination for the entirety of his death benefit to be distributed to his estate; and (3) the deceased’s final will provided for an equal distribution of the deceased’s estate to the Applicant, the deceased’s former partner and the Third Respondent.
AFCA accepted that there “may have been a relationship” between the deceased and the Applicant at some point, and the Applicant provided significant care to the deceased as his health deteriorated. However, AFCA determined that, based on the competing evidence provided, the Applicant was not the deceased’s de-facto spouse; was not in an interdependency relationship with the deceased; and did not have a relationship of financial dependence.
CONSTRAINTS ON THE TRUSTEE’S DISCRETION AND SCOPE OF AFCA’S REMIT
Before turning to consider the grounds of appeal and contending submissions, it is important to understand the scope of the Trustee’s discretion to determine how to distribute the deceased’s superannuation death benefit, including whether it should abide, reject or vary the member’s non-binding nomination and what legal principles and statutory provisions delineate that discussion. Inherent in this question is the allied question of the extent, if any, to which the Trustee was permitted, or required, to have regard to the fact that the Applicant is a residuary beneficiary of the deceased’s estate as to a one-third share. These are matters which I raised with counsel during the hearing and in relation to which I requested written submissions. I turn now to consider what falls from those submissions.
At a high level of generality, the discretion conferred on a trustee is one that involves matters of judgment and degree. However, as is so often observed, it is a discretion which must be exercised having regard to the subject matter, scope and purpose for which it was given: Wotton v Queensland [2012] HCA 2; 246 CLR 1 at [9]-[10] (French CJ, Gummow, Hayne, Crennan and Bell JJ).
There are numerous authorities which demonstrate the breadth of a trustee’s discretion and the limited extent to which that discretion is examinable by a Court. Seminal among those authorities is Karger v Paul [1984] VR 161, in which McGarvie J held at 164:
[I]t is open to the Court to examine the evidence to decide whether there has been a failure by the trustees to exercise the discretion in good faith, upon real and genuine consideration and in accordance with the purposes for which the discretion was conferred. As part of the process of, and solely for the purpose of, ascertaining whether there has been any such failure, it is relevant to look at evidence of the inquiries which were made by the trustees, the information they had and the reasons for, and manner of, their exercising their discretion. However, it is not open to the court to look at those things for the independent purpose of impugning the exercise of discretion on the grounds that their inquiries, information or reasons or the manner of exercise of the discretion, fell short of what was appropriate and sufficient. Nor is it open to the Court to look at the factual situation established by the evidence, for the independent purpose of impugning the exercise of the discretion on the grounds that the trustees were wrong in their appreciation of the facts or made an unwise or unjustified exercise of discretion in the circumstances. The issues which are examinable by the Court are limited to whether there has been a failure to exercise the discretion in good faith, upon real and genuine consideration and in accordance with the purposes for which the discretion was conferred. In short, the court examines whether the discretion was exercised, but does not examine how it was exercised…
[Emphasis added]
The principles in Karger v Paul were conveniently summarised by the Victorian Court of Appeal in Telstra Super Pty Ltd v Flegeltaub [2000] VSCA 180; 2 VR 276, in which Callaway JA said (at [27]):
The duties implicitly identified in Karger v. Paul are, therefore, first, to act in good faith; secondly, to give real and genuine consideration to the right question; and, thirdly, to act for a proper (as opposed to an extraneous) purpose.
It has also been said specifically in the context of trustees of a superannuation fund that where the trustee is under a duty to form an opinion, the court may only infer a breach of duty if the decision is one that no reasonable trustee could make on the material before it: see, eg, Telstra Super Pty Ltd v Flegeltaub [2000] VSCA 180; 2 VR 276 at [26] (Callaway JA), Ormiston JA agreeing at [7] and Batt JA agreeing at [34]; Maciejewski v Telstra Super Pty. Limited [1999] NCWSC 341 at [13].
Importantly, however, in Finch v Telstra Super Pty Ltd [2010] HCA 26; 242 CLR 254, the High Court (French CJ, Gummow, Heydon, Crennan and Bell JJ) cautioned against applying the principles in Karger v Paul to decisions of superannuation fund trustees that are not in fact “discretionary decisions”. In particular, their Honours explained (at [28]-[29]) that Karger v Paul involved the exercise a trustee’s discretion under a will where the a testatrix left all her property to her husband for life and conferred a power on the trustees “in their absolute and unfettered discretion” to pay or transfer the whole or part of the capital of her estate to her husband. The High Court contrasted that kind of power with the situation in Finch, being one in which the trustee was bound to consider whether to reach opinions in relation to matters which in turn determined the eligibility of potential beneficiaries to be paid from the trust. The High Court said that while that consideration no doubt involved factors “difficult to weigh, impressions to be formed, and judgments to be made”, the trustee was not exercising a discretion in the true sense. More specifically, their Honours said (at [30]) that forming the required opinion “was not a matter of discretionary power to think one thing or the other; it was an ingredient in the performance of a trust duty.”
AFCA correctly set out the definition of interdependency relationship in its reasons. It referred to s 10A of the SIS Act, which sets out the cumulative factors that must be satisfied, and reg 1.04AAAA of the SIS Regulations, which provides additional matters to be taken into account. Regulation 1.04AAAA(3)(c) sets out the circumstances where two people who have a close personal relationship, but do not otherwise satisfy the requirements in s 10A(1), can still be considered to be in an interdependency relationship. The exception specified in the regulation is where the two people are temporarily living apart. On the evidence available to AFCA, there was no suggestion that the living arrangement between the Applicant and deceased was capable of being so described.
Further, AFCA noted in its determination that the SIS Regulations specify various factors to be taken into account in determining whether there is an interdependency relationship. AFCA noted that these factors are very similar to those indicative of whether a person is a de-facto spouse, with the addition of whether the relationship was intended to be permanent and whether the relationship was one of mere convenience. AFCA had already considered those factors in detail earlier in its determination in relation to whether the Applicant was in a spousal relationship with the deceased and it was not required to engage in what would have been a repetitious recitation of the relevant criteria. Indeed, the mere fact that AFCA did not expressly refer to these requirements in detail does not mean that it did not critically engage with and consider these factors in reaching a conclusion that the Applicant was not in an interdependency relationship with the deceased.
GROUNDS 6 AND 7
Applicant’s submissions
As to grounds 6 and 7, the Applicant submitted that it was unreasonable for AFCA to conclude that there was “no evidence" of financial support provided to or by the deceased or evidence that the deceased’s residence was a common residence.
The Applicant contended that AFCA’s conclusion in relation to the absence of financial support was unreasonable having regard to evidence that:
(1)the deceased gave the Applicant access to his money to enable her to pay for household expenses;
(2)the deceased paid for the Applicant’s dental expenses and all her clothes, utilities, repairs, alterations to the home and personal care expenses; and
(3)the Applicant was named a beneficiary in the deceased’s will, indicating that the deceased intended to cater for her financial needs.
The Applicant further contended that AFCA’s finding that there was no common residence was unreasonable having regard to evidence that:
(1)the Applicant had lived with the deceased from around mid-2014;
(2)a witness observed the Applicant and deceased “regularly” entering and leaving the house;
(3)a witness had been told by the deceased that “his girlfriend had moved in with him so that if he fell someone would be around”;
(4)the Applicant and the deceased slept in the same bed;
(5)the Applicant kept her clothes at the deceased’s house; and
(6)the Applicant continued staying at the house after the deceased’s passed away.
Third Respondent’s submissions
In response, the Third Respondent submitted that AFCA’s references in the Determination to there being “no evidence” to support the financial support or common residence were clearly references to “no documentary evidence”, “no independent evidence” or no “corroborative evidence”. Contrary to the Applicant’s contention, the Third Respondent submitted that AFCA’s determination refers at length to all the material it considered – including matters relevant to the questions of “financial dependence” and a “common residence” – and AFCA considered that evidence in a deliberative way. Thus, the Third Respondent submitted that AFCA’s determination was not unreasonable. Rather, AFCA proceeded rationally and logically from the absence of evidence to conclude that the Applicant was not a “dependant” of the deceased.
Consideration of grounds 6 and 7
I am not satisfied that AFCA failed to consider relevant evidence in relation to financial support provided to or by the deceased or evidence that the deceased’s residence was a common residence.
In relation to the question of financial dependence, AFCA acknowledged that the deceased paid for all the household groceries and utilities, the expenses on the car which he allowed the Applicant use and also that he had paid for the Applicant’s one-off dental expenses. Notwithstanding, AFCA expressed a number of concerns about the evidence, noting as follows:
The complainant has indicated that at the time of the deceased member’s death she was on Centrelink new-start allowance and was receiving $280.00 per week. She also says the deceased member covered their living expenses and provided $300 a week to run the house. She says she had his key card and would withdraw these funds.
There has been no evidence provided to establish this. However, even if this arrangement was in place, this would be consistent with someone who, because of his health, was unable to get to the bank or shop for the items required to run a household. It appears likely the deceased member gave the complainant access to his money to enable her to meet his own needs and as a form of payment for his care.
The complainant has provided a photograph of a cheque that was provided to her in November 2016 for $6,000. This was for her to have her teeth fixed. This is explicable as a one-off gift.
There has been no evidence provided of joint expenses or transfers to or from the complainant or deceased member’s bank accounts.
Having regard to those matters, AFCA concluded that there was no evidence of financial support provided by or to the deceased member and, accordingly, it could not be satisfied that the Applicant was financially dependent on the deceased.
In relation to the question of a common residence, it is similarly apparent that AFCA took into account evidence that the Applicant had stayed at the deceased’s home on occasion, had left clothes at the deceased’s residence and stayed overnight with increasing frequency as his health declined. Despite that evidence, AFCA regarded it as significant that the Applicant maintained her own residence throughout her relationship with the deceased and there were only scant, cursory discussions about cohabiting at the North Fitzroy property on a permanent basis. Accordingly, AFCA determined that there was no evidence before it to suggest that the deceased’s residence was a common residence.
This is a cognate consideration to that referred to above in relation to the question of whether the Applicant and the deceased “lived with” each other. The question of financial dependency in appropriate circumstances is a factor relevant to that question, though it arises under a different taxonomy. Here, the fact that the Applicant had an income from Centrelink and maintained her own residence, are each factors which are clearly germane also to the question of whether the Applicant was in a relationship of financial dependence and/or lived with the deceased in a common residence.
In my view, these are instances in which AFCA carefully and rationally engaged with the relevant material in concluding the Trustee’s decision was fair and reasonable. In circumstances where AFCA clearly made reference to the objective evidence relevant to the question of financial dependency and/or a common residence, it is clear that “no evidence” should be taken as meaning there was no independent or corroborative evidence to substantiate these claims. The Applicant’s construction seeks to read “no evidence” in a literal way that is entirely divorced from context. It follows that AFCA did not fall into any error and, for those reasons, I reject grounds 6 and 7.
DISPOSITION
In my view, AFCA made no legal error in finding that the Trustee’s Fourth Decision was within power and fair and reasonable in its effect, having regard to the interests of the Applicant as well as to those interests of other parties joined to the complaint. AFCA carefully considered and weighed the objective evidence against the representations made by the Applicant in support of her complaint, and made its determination on that basis. There is nothing in AFCA’s reasons that reveals any misconception on its part as to its statutory task and there is no omission in the consideration of the material before it that would indicate it failed to take account of matters raised by the Applicant in support of her complaint. I have therefore concluded that there is no demonstrable error that could support a conclusion that AFCA committed a legal error in upholding the Trustee’s Fourth Decision.
Accordingly, the appeal is dismissed with costs.
I certify that the preceding one hundred and ninety-nine (199) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Anastassiou. Associate:
Dated: 30 March 2022
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