BETWEEN : LAUREN MCINNES (by her next friend GAYLE MCINNES)

Party under disability - Rules of the Supreme Court O 70 - Trustee wishing to divest itself of substantial part of trust monies by directing to a superannuation fund - Parens patriae jurisdiction

1 WISBEY DCJ: On 12 November 2010 his Honour Stavrianou DCJ made an order pursuant to O 70 r 10 of the Rules of the Supreme Court 1971 giving the plaintiff leave to compromise her claim for damages in the sum of $9,011,522. His Honour purported to enter judgment in that sum in accordance with the terms of the originating summons, and made orders inter alia that:

1. The balance of the judgment sum after payment of the sum of $275,000 in respect of past gratuitous services and the amount owing to Centrelink, be paid to ANZ Trustees Limited to be invested and administered by the Trustee on behalf of the plaintiff (par 4).
2. The Trustee be empowered at its discretion to apply, from time to time, the whole or any part of the income from the investment of the settlement sum with recourse, if considered necessary, to the capital thereof for the maintenance, welfare and advancement or otherwise of the plaintiff (par 5).

2 On 27 January 2011 the plaintiff filed a summons seeking pursuant to par 6 of his Honour's orders an order that the Trustee be authorised to invest up to $7,400,664 in a superannuation fund with 'Portfolio One Superannuation' which is administered by 'One Path', a wholly owned subsidiary of Australia and New Zealand Banking Group Limited.

3 Upon the transfer of the moneys to that entity, the Trustee would cease to be the legal owner and administrator of the funds, although it is said that it would continue to manage the investment of the funds in the superannuation account on the same basis as it manages investment of the balance of the trust fund.

4 The reason why the Trustee desires to transfer the moneys to the superannuation fund is that there will apparently be a taxation saving of the order of $180,000 per year.

5 His Honour ordered that the Trustee may invest the funds received by it as a consequence of the compromise. The Trustee's powers of investment are regulated by Pt III of the Trustees Act 1962, and pursuant to s 17 it may invest trust funds in any form of investment. What is proposed here, however, cannot be categorised as an investment, since the Trustee intends to divest itself of the legal estate in the money.

6 The trustee of the Portfolio One Superannuation Fund is not an entity in respect of which the court would have any control, and it seems that the superannuation trustee would be obliged to disgorge monies to the plaintiff on demand, subject to any statutory restriction.

7 What is fatal to the application is that upon the Trustee divesting itself of the funds, the court having no relationship with the superannuation trustee, would be deprived of any protective control, contrary to the parens patriae jurisdiction reflected by O 70, and particularly r 12(2) which provides:

The court may at any time, and from time to time, give directions for the application of the income or of the capital and income of the investment for the maintenance, welfare, advancement or otherwise of the benefit of the person under a disability.

8 In all the circumstances the application is refused.