Williams v Williams

[2023] QSC 90

SUPREME COURT OF QUEENSLAND

CITATION:

Williams v Williams & Anor [2023] QSC 90

PARTIES:

Gayle Dianne Williams

(Applicant)

v
Paul Francis Williams

(First Respondent)

And

Mark Anthony Williams

(Second Respondent)

FILE NO/S:

BS 14803 of 2022

DIVISION:

Trial Division

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Brisbane

DELIVERED ON:

5 May 2023

DELIVERED AT:

Brisbane

HEARING DATE:

5 April 2023

JUDGE:

Martin SJA

ORDER:

1.   The Binding Death Benefit Nomination dated 26 March 2018 is invalid.

2.   The parties are to provide submissions as to whether the requirements of the Superannuation Industry (Supervision) Act1993 (Cth) affect the removal and replacement of the current trustees.

3.   I will hear the parties as to costs.

CATCHWORDS:

SUPERANNUATION – BENEFITS – MATTERS AFFECTING ENTITLEMENT TO AND PAYMENT OF – OTHER MATTERS – where a binding death benefit nomination has been made – where the binding death benefit nomination was executed by a member of the fund who is also a trustee – where a second trustee has not been served with the binding death benefit nomination – whether a binding death benefit nomination is valid when it has only been served on one trustee

SUPERANNUATION – TRUSTEES – APPOINTMENT, REMOVAL, ETC – where a trustee has died – where a new trustee is attempted to be appointed – where there is no personal legal representative of the deceased – where trustees are also dependents to the fund and beneficiaries under a will – where trustee alleges a member has been dishonest – whether the trustees are conflicted – whether the trustees should be substituted with independent trustees  

Trusts Act1973 (Qld) s 80

Cantor Management Services Pty Ltd v Booth [2017] SASCFC 122, considered
Cummings v Austin (1902) 28 VLR 347, cited
Miller v Cameron (1936) 54 CLR 572, cited

COUNSEL:

A Fraser for the applicant.
A Muir (Solicitor) for the first and second respondents.

SOLICITORS:

Robbins Watson for the applicant.
Muir Legal for the first and second respondents.

1. Gayle Williams seeks two orders. First, she seeks a declaration as to the validity of a binding death benefit nomination (BDBN) made by her late husband in respect of the death benefit payable from a self-managed superannuation fund. Secondly, she seeks the removal of the current trustee or trustees of the superannuation fund and the appointment of independent professional trustees.

2. The issue for determination on the first order is whether or not notice of the BDBN was given to the trustees in accordance with the superannuation fund governing rules. As to the second order, the issue is whether or not the current trustees have behaved in a way which justifies their removal.

   The parties and their relationships

3. Anthony Vincent Williams died on 28 December 2021. He was survived by the applicant (whom he married in 2019) and his adult sons Paul Francis Williams and Mark Anthony Williams. In the will he executed in 2020, the deceased appointed Mark Williams as his executor. At the date of his death, the deceased had a superannuation interest in the self-managed superannuation fund known as the Boosey Doherty Superannuation Fund (the Fund). The trust deed for the Fund (the Deed) provided that the original trustees were the deceased and Margaret Williams (the deceased’s first wife). The initial members were the deceased and his late wife. Margaret Williams died in December 2014 and Paul Williams was appointed as a trustee in her place in 2016.

4. The deceased executed two BDBNs. The first on 1 February 2018 and the second on 26 March 2018. The latter, apart from declaring it to be his last binding death benefit nomination, directed the trustees to pay 50% of his death benefit to Gayle Williams and 50% to the deceased’s legal personal representative.

5. By letter of 24 February 2022, Mark Williams told Gayle Williams that the BDBN of 1 February 2018 was invalid.

6. By a purported deed of removal and appointment of trustee of 25 March 2022 (the 2022 deed of appointment), Mark Williams was appointed a trustee of the Fund.

   The binding death benefit nomination of 26 March 2018

7. On 26 March 2018, the deceased executed a BDBN (the second BDBN) by which he directed the trustees to make the payments referred to above. The BDBN is executed in accordance with the requirements of the Deed. It also contains a “trustee confirmation” in which the deceased recites that, in his capacity as trustee for the Fund, he confirms that he accepts the BDBN.

   Does the second BDBN bind the Fund?

8. The primary objection by the respondents to the BDBN (whether the nomination in February or the nomination in March 2018) is that the trustees were not given the required written notice of the nomination by the deceased.

9. The Deed provides for the making of binding nominations. The nomination is a non-lapsing death benefit nomination. As a result, clause 24.6A of the Deed applies. It provides:

   “If the Trustees are given a written notice by Member requesting that benefits be paid following the death of that Member to a person or persons or other permitted payees then the Trustees must:

   (a) by written resolution, accept the terms of the Member’s notice; or

   (b) give written notice to the Member of a proposed rule in respect of the death benefit specifying the terms thereof in accordance with the Member’s request. 

   AND on the date of that resolution referred to in (a) or the date of the written acceptance by the Member of the death benefit referred to in (b), the Trustees are bound by those terms unless and until that member and the Trustees otherwise in writing agree or until a later binding nomination in accordance with the SIS Act is given to the Trustees or a later non-lapsing nomination is given effect under (a) or (b).”

10. The respondents say, correctly, that the first respondent was not given written notice by the deceased of the BDBN. 

11. The applicant argues that the deceased, as trustee, had notice of the BDBN because he had executed the document. The applicant then argues that the term “Trustees” need not be interpreted as meaning all the trustees under the Deed because of the provisions of the interpretation clause in the Deed. 

12. Clause 2.1 of the Deed provides:

    “In this Deed unless the context otherwise requires words importing gender include any gender and words importing number include the singular number and the plural number. …” (emphasis added)

13. The word “Trustees” is defined to mean:

    “…the Trustees or the Trustee for the time being of the Fund and “Trustee” has the same meaning.”

14. The provision relating to construing the singular to include the plural and vice versa is a common provision in deeds generally. Such a provision is, in any event, included in deeds and other instruments by virtue of s 48(1) of the Property Law Act1974 (Qld).

15. The respondents argue that the “context otherwise requires” and that the word “trustees” should not be read as including one trustee. The context to be considered is more than just the provision (Clause 24.6A) in which the term “trustees” is used. Clause 24.6A requires the trustees, upon receiving the written notice, to take certain action, namely, creating a written resolution accepting the terms of the notice or giving written notice to the member of a proposed rule. Upon that happening, the trustees are bound by the terms of the written resolution or the proposed rule.

16. The argument by the applicant requires a conclusion that a trustee who has not been given notice will be bound if another trustee is served and creates the resolution or gives notice of a proposed rule. This could, on the applicant’s submission, mean that a trustee would be bound even if the trustee knows nothing of the BDBN or the actions of the other trustee.

17. The applicant relies upon a decision of the Full Court of the Supreme Court of South Australia in Cantor Management Services Pty Ltd v Booth.[1] In that case, the deceased was a single member of a self-managed superannuation fund. The appellant was the corporate trustee of the self-managed superannuation fund and the deceased’s brother was the sole director and shareholder of the corporate trustee. The trustee denied that it was served with a binding nomination executed by the deceased directing the trustee to pay his member benefits to his estate upon his death. My attention was directed to paragraph [41] in the reasons of Kourakis CJ (with whom Peek and Nicholson JJ agreed) where he said:

    “The purpose of communicating a DBBNF [death benefit beneficiary nomination form] is largely practical.  To give effect to a DBBNF the Trustee must know about it and, in the case of multiple nominations, must know which was current and which had been superseded.”

    [1][2017] SASCFC 122.

18. I accept what Kourakis CJ said, but it does not support the proposition advanced by the applicant.

19. The machinery provisions of the Deed envisage the giving of notice to all of the trustees. Notice to one of the trustees is not notice to all of them. The provision cannot be read in the way advanced by the applicant. It would be contrary to the intention of the Deed to allow one beneficiary (who happens to be a trustee) to make a binding nomination and for that, without anything further, to create a binding obligation upon the other trustees and the Fund itself. Nor could it be said that the knowledge of the deceased affects his co-trustee with knowledge of the transaction.[2]

    [2]Cummings v Austin (1902) 28 VLR 347, affirmed at (1903) 28 VLR 622.

20. The parties did not address the meaning of the word “Trustees” as defined in cl 2.1 of the Deed: “the Trustees or the Trustee for the time being of the Fund and “Trustee” has the same meaning.” I interpret that as meaning that where there is more than one trustee the word “trustees” should be taken to mean all the trustees. This particular definition means that the more general provision to the effect that the plural includes the singular does not apply to the word “trustees”.

21. It follows, then, that the BDBN was invalid. It did not have effect claimed by the applicant.

    Removal of the current trustee or trustees

22. The applicant seeks an order removing Paul Williams and, if necessary, Mark Williams as trustees of the Fund.

23. The Deed provides, in cl 9.8, that the office of a trustee becomes vacant upon, among other things, the death of that trustee.

24. Clause 9.8(b) provides:

    “Pending any appointment of a Trustee where a Member has died the deceased Member’s legal personal representative may with the consent of any other Members, act as Trustee in place of the deceased Member/Trustee … in any period commencing on the Member’s death and ending on the date the Member’s benefits become payable.”

25. The parties did not address the apparent inconsistency between the general provisions of cl 9.8 and the words of cl 9.8(b) which concerns the death of a member. It may be that the word “Member” where it first appears in cl 9.8(b) should be construed as “Trustee” but that was not the subject of argument and I will not pursue that point.

26. On 25 March 2022 a document was executed by Paul Williams and Mark Williams. The document is entitled “Deed of Removal and Appointment of Trustee”. The parties are said to be Anthony Williams, Paul Williams and Mark Williams. As is noted above, Anthony Williams died on 28 December 2021. Notwithstanding that, and the provisions of clause 9.8 of the Deed rendering his position as “Trustee” vacant, this Deed purports to remove him and to replace him with Mark Williams.

27. When Anthony Williams died, Paul Williams became the sole trustee. The parties did not deal with the requirements of the Superannuation Industry (Supervision) Act1993 (Cth) (the SIS Act). The Boosey Doherty Superannuation Fund is subject to the provisions of that statute. The SIS Act requires, among other things, that (in the absence of a corporate trustee) there be at least two trustees and that each trustee must be a member of the fund. There are refinements and other issues which can arise but, for the purposes of this discussion, it would appear that there was only one trustee of the Fund after the death of Anthony Williams.

28. The Deed allows, in cl 9.9, for a vacancy in Trustees to be filled by resolution of a two-thirds majority of members. The “Deed of Removal” does not appear to satisfy that condition. The removal purports to be a resolution of the deceased and  Paul Williams. Mark Williams and Paul Williams purport to accept appointment. In any event, the only member was the deceased. If it were possible to remove the trustees when the only member is dead, then it might have to be by an act of an executor after probate had been granted.

29. In the “Rules” which are contained in a schedule to the Deed, r 2.5(a) provides that a person ceases to be a member on the member’s death but, subject to the SIS Act, the deceased member’s legal personal representative is deemed to be a member on that death.

30. A “legal personal representative” is defined in cl 2.1 as meaning:

    “… in relation to a Member a person who satisfies the Trustees that such person is entitled to represent the Member and to give valid receipts and discharges on the Member’s behalf and in relation to a deceased Member the person who has been granted probate of the will or letters of administration of an estate of that Member.”

31. Probate of the will has not been obtained. It follows that there is no person who comes within the definition of “legal personal representative”.

32. This confusing state of affairs is complicated further by the conduct of Paul Williams. He would not, until required by a court order, provide relevant trust documentation when requested to do so and, even then, only reluctantly. In addition, each of the respondents is a “dependent” for the purpose of the exercise of a discretion as to any death benefit payment. Further, each is a residuary beneficiary under the will of the deceased. Mark Williams is the named executor in the deceased’s will of 2020 and, so, has an interest in seeking to have the death benefit paid to the estate.

33. Paul Williams, in his affidavit filed by leave, says that he has resolved that the deceased had, as a member of the Fund, been dishonest within the meaning of cl 27.1 of the Deed and that the deceased is not entitled to his benefit. The benefit is, Paul Williams says, at the trustees’ discretion. He goes on to say that, in the absence of a satisfactory explanation from the applicant of the conduct of the deceased in not giving any purported nomination to him as trustee, he would exercise his powers under cl 27.1 of the Deed to resolve that the applicant and the deceased were not entitled to any benefit from the fund.

34. Clause 27.1 provides that, if a beneficiary in the trustee’s opinion commits any fraud or is guilty of dishonesty or defalcation then: “the Member ceases to be presently or presumptively entitled to his or her benefit or such part of that benefit as the Trustees in their absolute discretion determine …”.

35. The behaviour of Paul Williams is, at least, concerning. It is difficult to understand precisely what has occurred. His decision to exercise his powers as a trustee against the applicant and the deceased, because the applicant has not given a satisfactory explanation for the conduct of the deceased is, at first sight, not a decision that one might expect to be made by a trustee acting rationally. He does not say how or why he expects that the applicant could explain the conduct of her late husband.

36. The power to remove a trustee is available under s 80 of the Trusts Act1973 (Qld). Section 80(1) provides:

    “The court may, whenever it is expedient to appoint a new trustee or new trustees, and it is found inexpedient, difficult or impracticable to do so without the assistance of the court, make an order appointing a new trustee or new trustees either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee.”

37. The principles relevant to an application of this nature, dealing in particular with the removal of a trustee, are not controversial. As Dixon J said in Miller v Cameron:[3]

    “The jurisdiction to remove a trustee is exercised with a view to the interests of the beneficiaries, to the security of the trust property and to an efficient and satisfactory execution of the trusts and a faithful and sound exercise of the powers conferred upon the trustee. In deciding to remove a trustee the Court forms a judgment based upon considerations, possibly large in number and varied in character, which combine to show that the welfare of the beneficiaries is opposed to his continued occupation of the office. Such a judgment must be largely discretionary. A trustee is not to be removed unless circumstances exist which afford ground upon which the jurisdiction may be exercised.”

    [3](1936) 54 CLR 572 at 580-581.

38. The actions of Paul Williams, referred to above, and the conflicts which appear to exist for both him and Mark Williams lead me to the view that that this is a case in which it is appropriate to remove the trustees and replace them with independent trustees. The persons nominated by the applicant are independent and knowledgeable in this area. A matter which was not explored in submissions is whether the SIS Act’s requirement that trustees be members of the fund affects the ability to appoint new trustees. I will hear further submissions on that point.