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Sladen Snippet - NSW Supreme Court holds manager of protected estate cannot make BDBN on behalf of protected person

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As discussed here and here, the decisions in Re Narumon [2019] 2 Qd R 247 and Re SB; Ex Parte AC [2020] QSC 139 made it clear (at least in Queensland) that:

  • A decision to make a binding death benefit nomination (BDBN) is a financial matter and can therefore be made for a person by their administrator (Re SB);

  • A member’s attorney appointed under an enduring power of attorney can make a BDBN on behalf of a member who had lost capacity (Re Narumon).

A recent NSW Supreme Court decision of G v G (No. 2) [2020] NSWSC 818 (G v G) is somewhat inconsistent with the above cases, in holding that, in NSW, a protected estate manager’s authority does not extend to the making of a BDBN on behalf of the protected person.
In G v G, the Court found that the manager of a protected estate had power to invest part of the estate in a super fund, but did not have authority to make a BDBN on behalf of a protected person for the following reasons:

  • The manager of a protected estate derives the power and authority of their role from the NSW Trustee and Guardian Act (Act), and there is no power under that Act which extends to the making of a BDBN;

  • As a fiduciary called upon to exercise fiduciary powers, the act of communicating a BDBN may be a breach of fiduciary obligations owed to the protected person or their estate (eg, by exercising those powers to divert estate property away from the ownership of the protected person).

While acknowledging that the prevailing view in Australia is that the making of a BDBN is not a testamentary act, the Court in G v G appeared to either depart from this view or, at a minimum, found that if the manager of a protected person makes a BDBN, the nomination can only be in favour of the protected person’s estate . In particular, in the judgement, the Court:

  • adopted the NSW Trustee’s report, which stated that a BDBN to a superannuation trustee as to what to do with funds upon the death of the fund member is in effect a testamentary disposition. It is a direction post mortem which is not allowed by the Act.

  • noted that a BDBN that directs the trustee of a superannuation fund to pay a benefit otherwise than to the estate of the protected person cannot be taken, ordinarily, to satisfy the obligation to act for the benefit of the protected person.

  • found that a protected estate manager is charged with management of the protected person’s estate during the lifetime of the protected person, not beyond it.

Following the decision in G v G, we are left in the somewhat unsatisfactory position of seeming to have different positions in different states and for different types of legal personal representatives (eg, attorneys under an enduring power of attorney vs managers of a protected estate).

To discuss or for further information please contact:

Phil Broderick
Principal
M +61 419 512 801 | T +61 3 9611 0163  
E: pbroderick@sladen.com.au           

Philippa Briglia
Senior Associate
T +61 3 9611 0173
E pbriglia@sladen.com.au

Phil Broderick