Donovan v Donovan

LYNDA JANE DONOVAN (AS EXECUTOR OF THE ESTATE OF RONALD JOSEPH DONOVAN)

HELGA DONOVAN (AS EXECUTOR OF THE ESTATE OF RONALD JOSEPH DONOVAN)

HIS HONOUR: The parties are the executors of the Will of

Ronald Joseph Donovan, whom I shall call Ronald, who died on

18 June 2007. His death left the respondent, Helga, his widow

after some 29 years of marriage. The applicant, Lynda, is his

daughter by his first marriage. Mr Donovan established a

superannuation fund in 1991 called the Helron Superannuation

Fund. The trustee was Villaricci Pty Ltd and Ronald was a

member at all material times. In November 2000 Villaricci

amended the trust deed so that the rules took the form in

issue in these proceedings. Ronald and Helga were director

and secretary of Villaricci at that time. I infer that the

deed was amended by reason of and to comply with changes made

Clause 11.4 of the deed provides that in respect of payment of

(a) A Member may designate a Dependant or legal personal representative of the Member as the person entitled to payment of the Death Benefit in writing to the Trustee in such form as the Trustee may from time to time approve;

(b) A Member may make a binding death benefit nomination in the form required to satisfy the Statutory Requirements;

(c) A Member may revoke a nomination by completing a new form in the case of a non-binding nomination or in the method set out in the Statutory Requirements in the case of a binding death benefit nomination.

11.5 Where a Member has made a valid binding death benefit nomination in accordance with Rule 11.4 the Trustee must pay the Death Benefit to the nominated legal personal representative or Dependant of the Member.

11.6 Where a Member does not have a binding death benefit nomination in force, any Death Benefit shall be paid as the Trustee in its absolute discretion decides to such one or more of the nominated beneficiaries (if any) or other Dependants or legal personal representative of the Member.

The ultimate question in the present litigation is whether the

trustee must dispose of the death benefit which by a chain of

definitions means the net amount standing to Ronald's account,

plus the value at the time of his death of any insurance

policy in respect of him, in accordance with clause 11.5 or

By letter dated 10 April 2006 Ronald wrote to the directors of

"46 Martingale Circuit, Clear Island Waters, Qld, 4226

(All correspondence to P O Box 569 Robina DC, QLD 4226)

I hereby advise that it is my wish that the balance of any amounts standing in my name in the above named superannuation fund, on my demise, be paid to my Legal Personal Representative for inclusion in my estate assets.

On 20 November last year a Judge ordered that the following

questions be heard and determined in advance of all other

"(a) Section 59(1A) of the Superannuation Industry (Supervision) Act 1993 (Cth) and Reg 6.17A of the Superannuation Industry (Supervision) Regulations 1993 apply to self managed superannuation funds;

(b) Section 59(1A) of the Superannuation Industry (Supervision) Act (1993) (Cth) and Reg 6.17A of the

Superannuation Industry (Supervision) Regulations 1993 apply to the Helron Superannuation Fund by force of statute and further or alternatively because such statutory requirements are incorporated in the rules of the Helron Superannuation Fund;

(c) The letter of 10 April 2006 from Ronald Joseph Donovan (deceased) to Villaricci Pty Ltd as trustee of the Helron Superannuation Fund is a binding or non-binding death benefit nomination."

It is convenient to deal with the third question first. In

doing so I point out that the parties have approached the case

on the basis that it is to be resolved simply on the

documents. The only evidence before me is the letter of 10

April 2006, the trust deed and rules, a draft determination of

the Commissioner of Taxation dated 10 September 2008, and a

Lynda relies on clause 11.4 as the source of Ronald's right to

make a binding nomination of the person entitled to the death

benefit. She does not contend that any right to make such a

nomination existed under the general law. She submits that on

its face the letter was sufficient to designate a legal

personal representative under clause 11.4(a), and to constitute a binding death benefit nomination within the meaning of those words in clause 11.4(b). I will leave aside for the moment the question of form in relation to the statutory requirements. Alternatively, she submits that clause 11.4(b) may be read alone as having the result for which she contends.

Helga did not challenge the idea that the letter was adequate

as a designation of the legal personal representative. In the

course of the argument, I raised with counsel whether there

was any evidence that the letter was in a form which the

trustee had approved, and if not what was the consequence of

this. Neither side seemed interested in pursuing this

question. If the question fell for decision I would infer

that at the time the letter was written no such approval had

been given. I shall proceed on the assumption that the

trustee may still give such an approval retrospectively and

that no issue of non-compliance with this part of clause

Helga submitted that the language of the letter was

insufficient to convey the notion that Ronald was nominating

his legal personal representative in a binding way. She

submitted that the word "wish" can sometimes in context be a

command, but more often was merely a request or indication of

desire, and that one would have expected clear words such as

"I direct" or "I require". I would not accept the last part

of that submission, but it is not necessary to do so in order

to find, as I do, that the letter did not manifest an

intention to make a binding death benefit nomination.

Whatever effect is given to that part of sub-clause (b)

specifying that the nomination be in the form required to

satisfy the statutory requirements, the letter simply does not

indicate whether it is to be binding or non-binding. It was

written to the trustee, and so may be assumed to have been

referable to the trust deed, but that document envisages both

sorts of nomination. The letter makes no attempt to follow

any particular form. Even if Lynda is correct in submitting

that it is not obliged to follow any particular form, it could

hardly be expected that Ronald would have known that. There

is in my judgment nothing in rule 11.10 which detracts from

Were I of a different opinion it might have been necessary to consider whether the letter could validly operate as a Will to dispose of property after death. Contrast McFadden v Public Trustee for Victoria [1981] 1 NSWLR 15. If it could be revoked at any time (sub-clause (c)), it is unlikely to be construed as making a present disposition of an interest in property.

Strictly speaking, that is sufficient to resolve the dispute between the parties and it is unnecessary to answer the other questions. I shall, however, deal in part at least with the second question as it relates to the question of form in a way which reinforces the interpretation of the letter. The rules required a binding nomination to be in the form required to satisfy the statutory requirements. "Statutory requirements" was defined to mean:

"Statutory Requirements" means the requirements imposed under any law or by any Statutory Authority which must be satisfied by a superannuation fund in order to qualify for income tax concessions provided that where the Member's Application indicates that the pension is taken out to comply with the requirements of the Social Security Act 1991 of the Veteran's Entitlements Act 1986, the term shall include those acts."

The only requirements arguably capable of satisfying that

Superannuation Industry (Supervision) Regulations 1994. So

"(2) For subsection 59 (1A) of the Act, the governing rules of a fund may permit a member of the fund to require the trustee to provide any benefits in respect of the member, on or after the death of the member, to the legal personal representative or a dependant of the member if the trustee gives to the member information under subregulation (3).

(3) The trustee must give to the member information that the trustee reasonably believes the member reasonably needs for the purpose of understanding the right of that member to require the trustee to provide the benefits.

(5) A member who gives notice under subregulation (4) may:

(a) confirm the notice by giving to the trustee a written notice, signed, and dated, by the member, to that effect; or

(b) amend, or revoke, the notice by giving to the trustee notice, in accordance with subregulation (6), of the amendment or revocation.

(b) must be signed, and dated, by the member in the presence of 2 witnesses, being persons:

(ii) neither of whom is a person mentioned in the notice; and

(c) must contain a declaration signed, and dated, by the witnesses stating that the notice was signed by the member in their presence.

(7) Unless sooner revoked by the member, a notice under subregulation (4) ceases to have effect:

(a) at the end of the period of 3 years after the day it was first signed, or last confirmed or amended, by the member; or

(b) if the governing rules of the fund fix a shorter period - at the end of that period."

Lynda accepts that the nomination was not in the form required

to satisfy that provision. Helga submits that the regulation

requires the use of such a form by reason of its operation in

conjunction with section 59(1A) of the Superannuation Industry

(Supervision) Act 1993, or alternatively because its

requirements have been incorporated into the rules by

Lynda submits that by reason of the words "which must be

satisfied by a superannuation fund in order to qualify for

income tax concessions" in the definition, no particular form

need be used because there is no legislative requirement which

applies to this particular fund. That raises the first

question of those reserved for consideration. However, let it

be assumed for the moment that there was no statutory

obligation for Ronald to use a particular form to make a

binding death benefit nomination, nor, perhaps more relevantly, for the nomination to be in a particular form so as to permit or require a payment under clause 11.5.

Lynda's submission is in my judgment inconsistent with the

words of the definition of "statutory requirements" in the

deed. Those words do not refer to requirements which must be

satisfied by this particular superannuation fund in order to

qualify for income tax concessions, though they easily could

have done so. They are of general import. In my judgment it

is quite plain that the intent of the deed is to require the

nomination to be in the form described in regulation 6.17A(6).

There are two reasons for this conclusion. First, were it

otherwise, the requirements of clause 11.4(b) as to form would

be meaningless. Second, such an interpretation makes sense in

the context of a superannuation deed. The legislation

governing superannuation in Australia is notoriously

convoluted and is reminiscent of the legendary oomidoodle bird. It is very easy for trustees and members to make a mistake about the requirements applicable in their particular case. It is very understandable that a deed should specify a

requirement in effect to comply with the form described in

regulation 6.17A(6) out of an abundance of caution. The

alternative would be to require the trustees or the member to

take legal advice about the answer to the first question posed

to me, and to run the risk that their advice might turn out to

be incorrect. Such an approach is uncommercial and unlikely.

Interestingly, requiring conformity with that regulation also

eliminates any argument about whether the disposition is a

testamentary disposition which fails to meet the requirements

For these reasons I answer the questions in the order made on

20 November 2008: (a), unnecessary to answer; (b), the

requirements of regulation 6.17A(6) of the Superannuation

Industry Supervision Regulations, 1994, apply to rule 11.4(b) of the rules of the Helron Superannuation Fund; (c), the letter of 10 April 2006 sent from Ronald Joseph Donovan to Villaricci Pty Ltd as trustee of the Helron Superannuation Fund, is a non-binding death benefit nomination.

HIS HONOUR: I order that the costs of both parties be

assessed on the indemnity basis and paid out of the estate of