Sladen Snippet – Court confirms judicial advice not always needed for SMSFs

The Supreme Court of New South Wales, in the decision of Bideena Pty Ltd as trustee for the Bideena Pty Ltd Superannuation Fund, has confirmed that the trustee of a self managed superannuation fund (SMSF) does not always require judicial advice as to whether the trustee will have a right to indemnify itself out of the SMSF assets for legal costs in pursuing litigation.

Some uncertainty has arisen around this issue as a result of the High Court decision of Macedonian Orthodox Community Church St Petka Inc. The Supreme Court found that this was an “exceptional case” that did not require judicial advice as:

  • the directors of the corporate trustee of the SMSF were also the beneficiaries of the SMSF (as required under the super laws) and they supported the litigation;
  • a barrister’s opinion was obtained;
  • the trust deed of the SMSF empowered the trustee to institute and conduct litigation and provided for an indemnity to the SMSF trustee;
  • the Superannuation Industry (Supervision) Act 1993 provides that a provision that purports to limit an SMSF trustee's right of indemnity would be void.

Given that these criteria would be present for most SMSFs, this is good news for SMSF trustees that wish to commence or defend proceedings as they will not necessarily have to go through the time and expense of seeking judicial advice. 

Phil Broderick
Principal
T: 03 9611 0163
M: 0419 512 801
E: pbroderick@sladen.com.au

Melissa Brazzale
Associate
T: 03 9611 0161
E: mbrazzale@sladen.com.au

Phil Broderick