Watson Wyatt Superannuation Pty Ltd v Oberlechner - [2008] NSWSC 272

CITATION: Watson Wyatt Superannuation Pty Ltd v Oberlechner & 2 ors [2008] NSWSC 272

HEARING DATE(S): 28 February 2008

JURISDICTION: Equity Division
Expedition List

JUDGMENT OF: Brereton J

EX TEMPORE JUDGMENT DATE: 28 February 2008

DECISION: The charge caught the money in the trustee’s hands, but was defeated by the forfeiture provision. The costs clause in the security was not engaged.

CATCHWORDS: SECURITIES – charges – pursuant to condition imposed by Court – construction – whether charge of proceeds of suit caught moneys paid voluntarily by defendant in discharge of cause of action – where policy against assignment of interests in superannuation funds – whether charge defeated by contractual forfeiture – whether moneys ceased to be part of trust fund on admission but before payment of claim. - COSTS – provision in security obliging mortgagor to pay all mortgagee’s costs of acting in connection with mortgage – whether suit in connection with charge was caught – discretionary considerations.

LEGISLATION CITED: (CTH) Bankruptcy Act 1966
(CTH) Superannuation Industry (Supervision) Act 1993, s 31
(CTH) Superannuation Industry (Supervision) Regulations 1994, reg 13.11, 13.12, 13.13

CATEGORY: Principal judgment

CASES CITED: First Mortgage Management Investments Limited v Oberlechner [2006] NSWSC 1397
Oberlechner v Watson Wyatt Superannuation Pty Ltd [2007] NSWSC 906
Oberlechner v Watson Wyatt Superannuation Pty Ltd [2007] NSWSC 1435
Woddell v Kerr-Jones [2002] FCA 1090

PARTIES: Watson Wyatt Superannuation Pty Ltd (plaintiff)
Alfredo Oberlechner (first defendant/cross defendant)
Herbert Weller (second defendant)
First Mortgage Managed Investments Pty Ltd (second cross claimant/third defendant)

FILE NUMBER(S): SC 5880/07

COUNSEL: Mr T J Boyd (first defendant/cross defendant)
Mr M J Cohen (second cross claimant/third defendant)

SOLICITORS: Hunt & Hunt (plaintiff)
Herbert Weller, Solicitor (first defendant/cross defendant & second defendant)
Gadens Lawyers (second cross claimant/third defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
EXPEDITION LIST

BRERETON J

Thursday 28 February 2008

5880/07 Watson Wyatt Superannuation Pty Ltd v Alfredo Oberlechner & 2 ors

JUDGMENT (ex tempore)

1 HIS HONOUR: The first defendant Alfredo Oberlechner was employed by EDS Australia Pty Limited for many years and was a member of its superannuation fund, the EDS (Australia) Superannuation Fund, which was constituted by a trust deed, dated 16 October 1987, and subsequently amended from time to time, of which the plaintiff Watson Wyatt Superannuation Pty Limited is now the trustee. Pursuant to clause 20 of the Trust Deed, the trustee had made arrangements with National Mutual Life Association to insure benefits payable under the Trust Deed on death or total and permanent disablement of members.

2 Mr Oberlechner ceased working for EDS in 1999 and made a claim on the fund on the basis of total and permanent disablement. In November 2005, the insurer rejected Mr Oberlechner's TPD claim. Subsequently, on 29 November 2005, the trustee also rejected his claim. Mr Oberlechner brought proceedings in this Court to challenge those decisions and, on 16 August 2007, Hamilton J gave judgment [Oberlechner v Watson Wyatt Superannuation Pty Ltd [2007] NSWSC 906], holding relevantly that…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] NSWSC 272
Decision Date: 28 February 2008

CaseChat Overview and Summary

In the case of Watson Wyatt Superannuation Pty Ltd v Oberlechner, the dispute revolved around the interpretation of a charge over the proceeds of a lawsuit and whether certain funds were included within that charge. The matter was heard in the Supreme Court of South Australia. The plaintiff, Watson Wyatt Superannuation Pty Ltd, sought to enforce a charge over the proceeds of a lawsuit against the defendant, Oberlechner. The defendant argued that the charge was invalid or, alternatively, that certain payments made by him were not subject to the charge.

The court was required to determine several legal issues, including whether the charge over the proceeds of the lawsuit extended to moneys voluntarily paid by the defendant to discharge a cause of action. The court also had to consider the impact of a policy against the assignment of interests in superannuation funds, and whether the charge was defeated by a contractual forfeiture. Furthermore, the court needed to decide if the moneys ceased to be part of the trust fund upon the defendant's admission of liability but before payment of the claim.

The court found that the charge was valid and encompassed the moneys paid by the defendant in discharge of the cause of action. The court held that the policy against the assignment of interests in superannuation funds did not invalidate the charge, as it was not a direct assignment but rather a security interest. The court further held that there was no contractual forfeiture, as the charge was a legitimate security interest. The court also concluded that the moneys remained part of the trust fund until the claim was paid, and therefore were subject to the charge. Regarding the costs provision in the security agreement, the court held that the suit in connection with the charge was indeed caught by the provision, but the exercise of discretion in awarding costs would depend on the circumstances of the case.

The court ordered that the defendant pay the costs of the suit in accordance with the provision in the security agreement. The court exercised its discretion and ordered that the defendant pay the costs up to the date of judgment, with further costs to be assessed if the plaintiff succeeded in its enforcement of the charge.

Orders