In the recent decision of Re SB; Ex Parte AC [2020] QSC 139, the Supreme Court of Queensland confirmed that the decision to make a binding death benefit nomination (‘BDBN’) is a financial matter and can therefore be made for a person by their administrator.
This case reinforces the decision in Re Narumon [2019] 2 Qd R 247 (previously discussed here) where the Court found that the member’s attorney appointed under an enduring power of attorney could make a BDBN on behalf of a member who had lost capacity.
Background
The member in question was born in Myanmar in 1970 and she and her family immigrated to Australian in 2009. In July 2015 she was seriously injured in a motor vehicle accident leaving her almost totally paralysed and unable to speak. Evidence provided to the court was that the member could mouth words and make some noises. Non-family members were unable to communicate effectively with her, but some family members were able to communicate to a limited extent with her.
In these proceedings, the member’s litigation guardian sought orders that the court authorise the making of a will and that declarations be made allowing for the execution of a BDBN under the super fund deed. The main issue was whether the member was a ‘person without testamentary capacity’ within the meaning of s 21 of the Succession Act 1981 (Qld).
The member was awarded approximately $10 million in a damages claim arising from the motor vehicle accident, and approximately $6 million of this was invested in the Perpetual Private Person Wrap superannuation fund (PPPW). The trust deed for PPPW provided that where the trustee holds a non-lapsing nomination for a member, the member’s death benefits must be paid in accordance with the terms of that nomination. The member had not made a nomination, and in her circumstances, was unable to do so. The member’s litigation guardian sought a declaration that the member’s financial administrator could execute a BDBN on her behalf.
Decision
Based on the assessments and reports of a number of medical experts, the court accepted it had been demonstrated that the member did not have the necessary capacity to make a will, and leave was granted to the applicant to apply for an order authorising a will to be made on behalf of the member.
The court found that a non-lapsing BDBN was not a revocable disposition of property intended to take effect at death (as differentiated from a will.)
The court referred to a number of cases including Re Narumon where it was found that the making of a BDBN was a ‘financial matter’ and not testamentary. The Court confirmed that the making of a BDBN was an act pursuant to a contract between the super fund trustee and the member as the member. Accordingly, the court made the declaration that the member’s financial administrator could execute a BDBN on her behalf.
While this case (in addition to Re Narumon) confirms the position in Queensland in relation to the power of an administrator (or attorney) to make a BDBN on behalf of a member, the position is not yet settled in other states. This is due, in part, to the differing enduring power of attorney legislation across the different states and territories.
It also raises the issue of whether it is desired, or appropriate, for administrators and attorneys to make BDBNs on behalf of members. For example, if a member did not want their attorney to make or revoke a BDBN, the power of attorney should specifically exclude the granting of that power to the attorney. Conversely, if a member wanted the attorney to have such power, best practice is to specifically grant that power in the power of attorney. In addition, it would be best practice for the trust deed to specifically allow (or deny) attorneys to make BDBN’s on behalf of their donors.
To discuss further or for more information please contact:
Philippa Briglia
Senior Associate
T +61 3 9611 0173
E pbriglia@sladen.com.au
Phil Broderick
Principal
T +61 3 9611 0163 l M +61 419 512 801
E pbroderick@sladen.com.au
