List member Katrina Kluss appeared for an interested party in the recent matter of Re Narumon Pty Ltd  QSC 185, in which the Court considered whether an enduring power of attorney is able to make or confirm a binding death benefit nomination (BDBN) on behalf of their principal and if so, in what circumstances.
The applicant, Narumon Pty Ltd, was the trustee of the John Giles Superannuation Fund, a self-managed superannuation fund established in 1992 (the Fund), of which the initial sole member was Mr John Giles. Mr Giles passed away on 14 June 2017, aged 80. He was survived by his wife, Mrs Narumon Giles (Mrs Giles), to whom he had been married for almost 19 years; their son Nicholas, who was 16 at the date of the application (Nicholas); four adult children from his previous marriage; and his sister, Mrs Roslyn Keenan (Ms Keenan).
As at the date of the application, Mrs Giles was the sole director of the applicant, Narumon Pty Ltd. The applicant applied to the Court for certain declarations and orders in relation to the administration of the Fund.
Mrs Giles and Mrs Keenan were appointed by Mr Giles as attorneys pursuant to an enduring power of attorney made on 25 January 2013 and then again on 5 June 2013. Their appointment was in respect of financial and personal/health matters, with the power in relation to financial matters to commence when Mr Giles was assessed by a medical professional with at least 10 years’ experience as incapable of making his own decisions. In November 2013, Mr Giles was assessed as having lost capacity, and Mrs Giles and Ms Keenan commenced acting on Mr Giles’ behalf as his attorneys. Mrs Giles and Ms Keenan were also both members of the Fund.
Between 2010 and 2013, Mr Giles made five BDBNs, the last of which was dated 5 June 2013 and directed that on Mr Giles’ death, the trustee of the Fund was to pay benefits in the order of 47.5% to Mrs Giles, 47.5% to Nicholas, and 5% to Ms Keenan (the 2013 BDBN). The 2013 BDBN was to cease to have effect three years after the date it was signed, namely 5 June 2016.
On 16 March 2016, Mrs Giles and Ms Keenan, as Mr Giles’ attorneys, signed a document to confirm and extend the 2013 BDBN (the 2016 Extension), given it was shortly to expire. At the same time, Mrs Giles and Ms Keenan also signed a new BDBN on behalf of Mr Giles which nominated Mrs Giles and Nicholas to each receive 50% of the benefits payable on Mr Giles’ death (the 2016 BDBN). The 2016 BDBN was made because Ms Keenan was not a dependent of Mr Giles as contemplated by either the Fund deed or s 10 of the Superannuation Industry (Supervision) Act 1993 (the Act) and was therefore not eligible to receive a benefit on Mr Giles’ death. In any event, Ms Keenan expressly disclaimed her interest and right to the 5% benefit under the 2013 BDBN and the 2016 Extension on 25 June 2018.
In considering the issues regarding the various BDBNs, the Court was required to consider, inter alia:
- Whether the 2013 BDBN valid, given it contained an invalid nomination to Ms Keenan;
- Whether the 2016 Extension was valid, given it was confirmed by Mr Giles’ attorneys rather than by him personally;
- Whether the 2016 BDBN was valid, given it was made by Mr Giles’ attorneys rather than by him personally;
As to the first issue, the Court held that the 2013 BDBN was valid notwithstanding the fact the nomination of Ms Keenan was not valid: see  to .
As to the second issue, the Court held that the 2016 Extension was valid because the act of the attorneys signing that document confirmed and continued Mr Giles’ intentions, as expressed by him personally prior to his loss of capacity: see  to .
As to the third issue, the Court held that the 2016 BDBN was not valid because it could be said that that document was a conflict transaction for which Mr Giles did not provide authorisation, given it created new nominations, rather than simply confirming nominations made by Mr Giles. Specifically, the 2016 BDBN comprised an, albeit small, change to what Mr Giles had proposed because it removed the nomination of Ms Keenan: see  to .
The Court therefore ordered the applicant to pay the relevant benefits in the order of 47.5% to Mrs Giles and 47.5% to Nicholas, with the remaining 5% to be dealt with by the trustee in accordance with the Fund’s deed.
This case provides some much needed clarification in an area previously referred to by the Australian Law Reform Commission as being uncertain in Report 131 Elder Abuse – A National Legal Response (see pages 244 to 250), and will be an important decision for practitioners in the areas of estate planning and superannuation.