The decision of Burgess v Burgess is another case which considers conflicts of interest in the context of paying super death benefits. It follows a number of recent similar cases, including Re Narumon Pty Ltd, Brine v Carter and McIntosh v McIntosh. The strong consistent theme across all of these cases is that the Courts will strictly uphold fiduciary duties (even if they have “unfair” outcomes).

This case involved an application to the Court by a widow as to whether a conflict of interest arose from her position as administrator of her husband’s estate and her personal claims for his super death benefits. The parties were the wife and her minor children (represented by the Public Trustee).

The husband died intestate and was survived by his wife and their two minor children. Under the Western Australian intestacy laws the bulk of his estate was to be paid 1/3 to each of the wife and the two children. The husband, relevantly, had interests in 3 public offer super funds. The wife claimed, and was paid, the death benefits from the first super fund prior to her appointment as administrator. She claimed, and was paid, the death benefits from the second super fund after her appointment as administrator. At the time of the application she had not made a claim to the third super fund.

The Court found that:

The principles laid down by McIntosh v McIntosh should be followed – that is, an administrator of an estate is bound to claim death benefits for the estate and any claim made personally is a breach of prohibition against conflicts of interest.
In relation to the first super fund, because the wife was not an administrator when she claimed the death benefit there was no conflict of interest and that amount could be retained by the wife.
In relation to the second super fund, there was a conflict of interest as she was bound to claim the benefits on behalf of the estate. Therefore, the death benefits from the second super fund had to be paid to, or accounted for, the estate.
In relation to the third super fund, the wife was bound to claim the benefits on behalf of the estate (although the third super fund was not bound to pay it to the estate). Importantly, the Court distinguished merely informing the super fund of the existence of the estate as a potential beneficiary and actually making a claim on behalf of the estate (the latter was required, not just the former).

This is another important case in highlighting the importance of conflicts of interest in the context of super death benefit claims and payments. Options that may prevent such a result include: making a will, authorising conflicts, making binding death benefit nominations (BDBNs) and appointing independent persons as executors.

To discuss this further or for more information please contact:

Phil Broderick
Principal
Sladen Legal
T +61 3 9611 0163 l M +61 419 512 801
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
E: pbroderick@sladen.com.au

Ashleigh Eynaud
Associate
Sladen Legal
T +61 3 9611 0129
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
E: aeynaud@sladen.com.au