Wan v BT Funds Management Limited

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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…

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Details
Case
[2022] FCA 302
Decision Date

CaseChat Overview and Summary

The matter in Wan v BT Funds Management Limited involved an appeal by the Applicant, who sought to challenge the decision of the Australian Financial Complaints Authority (AFCA) affirming the decision of the trustee of a superannuation fund. The Applicant claimed to be a dependant of the deceased member and sought to argue that AFCA erred in upholding the trustee's decision to distribute the death benefit to the deceased's estate rather than to her. The appeal was dismissed by the Federal Court of Australia. The central issue before the court was whether AFCA had erred in upholding the trustee's decision to distribute the deceased's superannuation death benefit to his estate rather than to the Applicant. The Applicant argued that AFCA failed to consider relevant evidence in relation to financial support and common residence. The court, however, found that AFCA had considered the evidence provided and concluded that there was no evidence to support the Applicant's claims of financial dependence or common residence with the deceased. As such, the court held that AFCA was entitled to conclude that it was fair and reasonable for the trustee to distribute the death benefit to the deceased's estate.

The court dismissed the appeal and ordered that the Applicant pay the costs of the Third Respondents' appeal. The costs of the First and Second Respondents were reserved for later determination, with a provision for referral to a Registrar of the Court if the parties could not reach an agreement within seven days.

Orders

Orders of the court

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.

Background

Background to the litigation

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.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for 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.

Ratio Decidendi

Legal Principle Established

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.