Background

Back in late 2018 the Queensland Supreme Court[1] had decided that:

  • Provided the trust deed does not preclude it, an attorney under an enduring power of attorney is able to affirm an existing binding death benefit nomination (BDBN) made by a fund member.
  • However, the ability for an attorney to sign a new BDBN is likely to require a conflict transaction authorisation provision in the EPOA to be effective.

In saying this, the Court held that there was nothing in the superannuation legislation which precluded an attorney from signing a BDBN on behalf of a member and went on to say that a BDBN was not a testamentary act.

However, the position in Queensland has been blurred by an inconsistent decision in Western Australia where the West Australian Estate Administrative Tribunal held that an attorney was unable to make a BDBN. That decision though is not binding on Queensland Courts.

Rhetorically though, what does that mean for anyone appointed as administrator by QCAT under the Guardianship and Administration Act (GAA) in respect of someone who has lost capacity from the point of view of superannuation generally and, more particularly, the ability to sign a BDBN?

G V G (No.2)[2]

The New South Wales Supreme Court had to deal with the situation of the manager of a protected estate (as referred to in specific New South Wales legislation) but akin to an administrator appointed by QCAT under the GAA) who sought Court approval for investing moneys of the protected estate in a retail superannuation fund and execution of a BDBN.

The Court noted that there were some West Australian authorities that had held that the payment by a trustee (likely to extend to the manager of a protected estate) into a superannuation fund was not an investment of trust property and so would require the sanction of the Court relying on its inherent jurisdiction (referred to as its parens patriae jurisdiction).

The Court noted that the role of someone in the position as manager of a protected estate was carrying out a fiduciary power meaning that the manager/administrator has to exercise powers solely in the interests and for the benefit of the person in need of protection – not as a trustee but rather as the holder of a unique office enabled by legislation. The Court said that a decision to invest in a superannuation fund is likely to meet this fiduciary test more readily than a decision to make a BDBN (paragraph 56).

The Court then held (paragraph 62):

“(a)      A decision-maker has to be satisfied that any investment in a superannuation fund can be withdrawn (in whole or part), on reasonable terms, in the event (at least) that it is required for the maintenance, education or advancement in life of the protected person during his or her lifetime. 

(b)        Upon an assessment of any security risk attaching to the investment, a decision-maker must also be satisfied that, upon the death of the protected person, there is no practical possibility (by means of a purported “death benefit nomination”, an exercise of a discretion by the trustee of the superannuation fund or otherwise) that the estate of the protected person will, in whole or part, be paid otherwise than to the legal personal representative of the decision person.”

The decision

The Court went on to hold that it was in order for the manager to invest the protected person’s estate in a retail super fund but it was not permitted for the manager to sign a BDBN – mainly because of the potential for someone other than the protected person’s estate to benefit from the execution of the BDBN.

Implications

As a consequence of the case it seems that so far as managers appointed under the GAA are concerned, it will be permissible, subject to the terms of the super fund trust deed, to invest in a retail superannuation fund but not to execute a BDBN.

It should also be noted that the G -V- G case referred specifically to a retail superannuation fund and not to an SMSF where the Court noted it was unlikely that the overriding fiduciary power would be met by such an investment.

The powers of an attorney under an EPOA or administrator appointed under the GAA are developing. We are likely to see more decisions around these issues in the near future.

[1] Re Narumon [2018] QSC 185

[2] [2020] NSWSC 818