Constraints on the Trustee's Discretion and Scope of AFCA's Remit
76 Before turning to consider the grounds of appeal and contending submissions, it is important to understand the scope of the Trustee's discretion to determine how to distribute the deceased's superannuation death benefit, including whether it should abide, reject or vary the member's non-binding nomination and what legal principles and statutory provisions delineate that discussion. Inherent in this question is the allied question of the extent, if any, to which the Trustee was permitted, or required, to have regard to the fact that the Applicant is a residuary beneficiary of the deceased's estate as to a one-third share. These are matters which I raised with counsel during the hearing and in relation to which I requested written submissions. I turn now to consider what falls from those submissions.
77 At a high level of generality, the discretion conferred on a trustee is one that involves matters of judgment and degree. However, as is so often observed, it is a discretion which must be exercised having regard to the subject matter, scope and purpose for which it was given: Wotton v Queensland [2012] HCA 2; 246 CLR 1 at [9]-[10] (French CJ, Gummow, Hayne, Crennan and Bell JJ).
78 There are numerous authorities which demonstrate the breadth of a trustee's discretion and the limited extent to which that discretion is examinable by a Court. Seminal among those authorities is Karger v Paul [1984] VR 161, in which McGarvie J held at 164:
[I]t is open to the Court to examine the evidence to decide whether there has been a failure by the trustees to exercise the discretion in good faith, upon real and genuine consideration and in accordance with the purposes for which the discretion was conferred. As part of the process of, and solely for the purpose of, ascertaining whether there has been any such failure, it is relevant to look at evidence of the inquiries which were made by the trustees, the information they had and the reasons for, and manner of, their exercising their discretion. However, it is not open to the court to look at those things for the independent purpose of impugning the exercise of discretion on the grounds that their inquiries, information or reasons or the manner of exercise of the discretion, fell short of what was appropriate and sufficient. Nor is it open to the Court to look at the factual situation established by the evidence, for the independent purpose of impugning the exercise of the discretion on the grounds that the trustees were wrong in their appreciation of the facts or made an unwise or unjustified exercise of discretion in the circumstances. The issues which are examinable by the Court are limited to whether there has been a failure to exercise the discretion in good faith, upon real and genuine consideration and in accordance with the purposes for which the discretion was conferred. In short, the court examines whether the discretion was exercised, but does not examine how it was exercised…
[Emphasis added]
79 The principles in Karger v Paul were conveniently summarised by the Victorian Court of Appeal in Telstra Super Pty Ltd v Flegeltaub [2000] VSCA 180; 2 VR 276, in which Callaway JA said (at [27]):
The duties implicitly identified in Karger v. Paul are, therefore, first, to act in good faith; secondly, to give real and genuine consideration to the right question; and, thirdly, to act for a proper (as opposed to an extraneous) purpose.
80 It has also been said specifically in the context of trustees of a superannuation fund that where the trustee is under a duty to form an opinion, the court may only infer a breach of duty if the decision is one that no reasonable trustee could make on the material before it: see, eg, Telstra Super Pty Ltd v Flegeltaub [2000] VSCA 180; 2 VR 276 at [26] (Callaway JA), Ormiston JA agreeing at [7] and Batt JA agreeing at [34]; Maciejewski v Telstra Super Pty. Limited [1999] NCWSC 341 at [13].
81 Importantly, however, in Finch v Telstra Super Pty Ltd [2010] HCA 26; 242 CLR 254, the High Court (French CJ, Gummow, Heydon, Crennan and Bell JJ) cautioned against applying the principles in Karger v Paul to decisions of superannuation fund trustees that are not in fact "discretionary decisions". In particular, their Honours explained (at [28]-[29]) that Karger v Paul involved the exercise a trustee's discretion under a will where the a testatrix left all her property to her husband for life and conferred a power on the trustees "in their absolute and unfettered discretion" to pay or transfer the whole or part of the capital of her estate to her husband. The High Court contrasted that kind of power with the situation in Finch, being one in which the trustee was bound to consider whether to reach opinions in relation to matters which in turn determined the eligibility of potential beneficiaries to be paid from the trust. The High Court said that while that consideration no doubt involved factors "difficult to weigh, impressions to be formed, and judgments to be made", the trustee was not exercising a discretion in the true sense. More specifically, their Honours said (at [30]) that forming the required opinion "was not a matter of discretionary power to think one thing or the other; it was an ingredient in the performance of a trust duty."
82 Their Honours went on to explain (at [33]) that different criteria might be thought to apply to the operation of a superannuation fund from those which apply to discretionary decisions made by a trustee holding a power of appointment under a non-superannuation trust. Their Honours referred to the public significance of superannuation (at [34]) and added that because of the potentially lengthy time periods over which superannuation savings are accumulated, it was natural, and it is now in many instances mandatory, for a trust mechanism to be employed in this context (at [35]). At [36]-[37], their Honours added:
Thus the public significance of superannuation and the close attention paid to it through statutory regulation support the conclusion that the decisions of superannuation trustees are not likely to be largely immunised from judicial control without clear contrary language in the relevant trust document. Decisions like those which the Trustee made in this case are not discretionary decisions in the sense used in Karger v Paul.
Those reasons also suggest, though the contrary was apparently not put to it, that the Court of Appeal was wrong to approach the present controversy as if the principles stated in Karger v Paul, developed in and appropriate to other fields, were applicable in the present field without any qualification. But the question how far those principles should be qualified may be postponed for a time.
[Footnotes omitted; emphasis added].
83 Their Honours returned to that issue at [57] and said:
Earlier the question how far the principles in Karger v Paul should be qualified was postponed. It was a question of some controversy between the parties.
[Footnotes omitted]
84 Their Honours ultimately concluded at [65] that it was unnecessary to "evaluate the merits of the competing contentions about how far Karger v Paul principles were applicable and whether other principles should be adopted" in the context of superannuation fund trustees because the primary judge had properly concluded that the trustee ought to have made further inquiry into various matters. Their Honours said at [65]) that:
To offer answers to wider questions which might arise in disputes different from the present where it is not necessary to do so would have an unsettling effect on the law which may not be beneficial.
85 Notwithstanding the above, the "one respect" in which the High Court thought it prudent to express a view in relation to the relevance of Karger v Paul was to observe that superannuation fund trustees making a discretionary determination are subject to a higher duty to inform themselves than other trustees. More specifically, the High Court said (at [66]):
There is no doubt that under Karger v Paul principles, particularly as they have been applied to superannuation funds, the decision of a trustee may be reviewable for want of "properly informed consideration". If the consideration is not properly informed, it is not genuine. The duty of trustees properly to inform themselves is more intense in superannuation trusts in the form of the Deed than in trusts of the Karger v Paul type. It is extremely important to the beneficiaries of superannuation trusts that where they are entitled to benefits, those benefits be paid.
[Emphasis added]
86 The High Court thus left open the question of the application of the principles in Karger v Paul to trustees of superannuation funds: see, eg, Mercer Superannuation (Australia) Limited v Billinghurst [2016] FCA 1274 at [78] (Moshinsky J); Commonwealth Bank Officers Superannuation Corporation Pty Ltd v Beck & Anor [2016] NSWCA 218 at [137]-[140] (Bathurst CJ). I was not referred to any authority which resolves that controversy, though Nettle JA's reasons in Alcoa of Australia Retirement Plan Pty Ltd v Frost [2012] VSCA 238; 36 VR 618 at [59] (Redlich JA and Davies AJA agreeing) neatly encapsulates the importance of a superannuation fund trustee giving properly informed consideration in this context:
As the decision in Finch has enabled us better to understand, trustees of superannuation funds are no longer to be conceived of in the same way as custodians of charitable or family settlements through the exercise of whose absolute discretion settlors have chosen to channel their beneficence. The economic, industrial and ultimately social imperatives which inform the advent of the superannuation industry, not to mention that beneficiaries of the kind with which we are concerned in one way or the other invariably purchase their entitlements, are productive of legitimate expectations which the law will enforce. Superannuation fund trustees are bound to give properly informed consideration to applications for entitlements and, if that necessitates further inquiries, then they must make them.
87 In my view, it is unnecessary to reach a view about whether and, if so, to what extent, the principles in Karger v Paul should be qualified in light of the High Court's observations in Finch, save to say that it is clear that the duty of trustees to properly to inform themselves is higher in the context of superannuation trusts for the reasons cogently explained by their Honours. In any event, it is apt to recall that this is an appeal on a question of law from AFCA's determination of the Applicant's complaint, rather than judicial review of a Trustee's decision. Accordingly, the Court's function is limited to determining whether AFCA erred in law, rather than to resolve in any definitive way the duties of a trustee of a superannuation fund. In that context, were it to be necessary, the Trustee may seek judicial advice about such matters, including their duties in light of the discretions and powers conferred by a trust deed and the relevant legislative scheme: see, eg, r 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic); s 63 of the Trustee Act 1925 (NSW); Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; 237 CLR 66 at [36], [54]-[75] (Gummow ACJ, Kirby, Hayne and Heydon JJ) and [196] (Kiefel J).
88 Returning to the parties' submissions, at the level of general principle, the Applicant submitted that when determining how to distribute a member's death benefit, a trustee must act in the best interests of the beneficiaries, act honestly and in good faith, give real and genuine consideration to the interests of the beneficiaries, avoid conflicts of interests and act impartially between different classes of beneficiaries: s 52(2) of the SIS Act; see also Wooster v Morris [2013] VSC 5994.
89 As to the significance of the Applicant being a beneficiary under the deceased's will, the Applicant submitted that the provision made under a will does not override the discretionary power of a superannuation fund trustee to determine how to distribute a deceased member's superannuation benefits in accordance with a trust deed. This is consistent with the approach taken by the former Superannuation Complaints Tribunal (SCT) , which repeatedly observed that it is not the purpose of superannuation death benefits to rectify any perceived deficiencies in a member's will: see, eg, D13-14\183 [2014] SCTA 79 at [41].
90 The Applicant listed the following principles that she said should be considered when distributing a death benefit, which were frequently cited in the SCT (see, eg, D14-15\187 [2015] SCTA 42 at [52]).
(1) Superannuation death benefits are usually paid to dependants as opposed to the deceased's legal personal representative.
(2) Superannuation is not an asset of the estate and a trustee is not bound to follow the directions of a will.
(3) A trustee must determine the appropriate distribution of a death benefit unless there is in force a binding death benefit nomination.
(4) A trustee will generally only pay a benefit to the legal personal representative of a deceased member if there are no dependants or if there was such a direction in a binding death benefit nomination.
(5) The purpose of superannuation is to provide income in retirement to a member and his or her dependants.
(6) When multiple dependants have been identified it is appropriate to also consider the financial circumstances of the dependants when apportioning the benefit.
(7) The wishes of a deceased as expressed in his or her will, though not binding on the trustee, may be taken into account when determining the distribution of the death benefit.
91 The Applicant submitted that the Trustee erred by failing to give preference to the interests of the Applicant as a dependant, and by failing to acknowledge that preference in its reasons. It was a necessary premise of the Applicant's contention that, at a minimum, the existence of a dependant would have amounted to a likely preference and a serious matter to be considered in the exercise of the Trustee's discretion. Further, it followed, according to the Applicant, that a finding by AFCA that the Applicant was a dependant would likely have led to all or at least a significant proportion of the benefit being paid to the Applicant.
92 Having regard to these considerations, the Applicant submitted that the matter should be remitted to AFCA with a direction that the Applicant was a "dependant" as she was both the spouse of the deceased and in an interdependency relationship with the deceased. As I have said, I agree that the appropriate course, if the appeal were allowed, would be to remit the matter for re-determination by AFCA, and allow AFCA to receive or hear further evidence in relation to the nature of the Applicant's relationship with the deceased, to determine whether the Trustee's Fourth Decision satisfied the criteria in s 1055(3) of the Corporations Act.
93 In response, the Third Respondent submitted that even if the Applicant was a dependant of the deceased, or in an interdependency relationship with the deceased, that is only one matter for the Trustee to consider in making its determination. The Trust Deed does not provide that the Trustee must pay the death benefit to a dependant, nor does the legislation. The Trustee may, inter alia, take into consideration the duration and nature of the relationship between the deceased and the Applicant and, equally, the duration and nature of the relationships between the deceased and each of the beneficiaries of his will.
94 The Third Respondent contended that the Trustee has an absolute discretion under the Trust Deed to allocate funds between any dependants or the legal personal representative as it sees fit. That discretion is broad, though not unfettered. Relevantly, the Third Respondent referred to Attorney-General of the Commonwealth v Breckler [1999] HCA 28; 197 CLR 83 at [7], in which the High Court endorsed the following passage from Wilkinson v Clerical Administrative and Related Employees Superannuation Pty Ltd [1998] FCA 51; 79 FCR 469:
Where a trustee exercises a discretion, it may be impugned on a number of different bases such as that it was exercised in bad faith, arbitrarily, capriciously, wantonly, irresponsibly, mischievously or irrelevantly to any sensible expectation of the settlor, or without giving a real or genuine consideration to the exercise of the discretion. The exercise of a discretion by trustees cannot of course be impugned upon the basis that their decision was unfair or unreasonable or unwise. Where a discretion is expressed to be absolute it may be that bad faith needs to be shown. The soundness of the exercise of a discretion can be examined where reasons have been given, but the test is not fairness or reasonableness.
[Footnotes omitted; emphasis added]
95 It was thus the Third Respondent's contention that AFCA's scope to impugn the Trustee's discretion is relatively circumscribed and limited. As such, it is necessary to say something more about the nature and scope of AFCA's remit before considering the contending submissions. In Edwards v PostSuper Pty Ltd [2007] FCAFC 83, the Full Court of this Court (Tamberlin, Emmett and Middleton JJ) said at [15]:
The role of the [SCT, being the precursor to AFCA] … is not to decide for itself the correct or preferable decision: it must affirm a decision if it is satisfied that the operation of the decision the subject of review was fair and reasonable in the circumstances. The Tribunal may have to make its own findings of fact for the purposes of determining that. However, such findings of fact are necessary, and are only for that purpose. The tribunal does not simply stand in the shoes of the primary decision-maker. Its task is not to engage in ascertaining generally the rights of the parties. Further, it is not required to engage in a form of judicial review of the decision of the primary decision-maker. Rather, it is to form a view, from the perspective of the primary decision-maker, as to whether the decision was unfair or unreasonable.
96 The observations in Edwards v PostSuper must be read in the context of what the Full Court said in QSuper at [64]-[65], which I set out again for convenience:
The powers conferred by CA s 1055 permit AFCA to set aside or vary a decision made by a trustee in relation to a fund member even where the decision was authorised by the trust deed and any regulating statute. The determining factor is not the lawfulness of the decision, but its fairness or reasonableness "in its operation in relation to the complainant". Such a power is more aptly applied in relation to discretionary powers which, by their nature, confer wide decisional freedom on the repository such that a broad range of decisions might legitimately be made from a single set of facts. In any event, under the scheme where a complainant is aggrieved by a trustee's decision, AFCA can consider the relevant circumstances and exercise the power or discretion of the trustee afresh so as to correct any perceived unfairness or unreasonableness arising from the original decision's operation.
Despite the width of AFCA's remedial powers, subsection (7) requires that it exercise the powers of the trustee or other authorised person within legal confines. It is not entitled to make a decision which is contrary to the terms of the trust or beyond the limits of any relevant statutory regulation. For instance, AFCA could not, standing in the shoes of a trustee, exercise a power in a manner which breached the trustee duty to observe the terms of the trust.
97 In Rushton v Commonwealth Superannuation Corporation (No 3) [2021] FCA 358 at [50], Rares J said, to the same effect, in relation to AFCA's powers:
The hearing by the Authority is de novo: Mercer Superannuation (Australia) Ltd v Billinghurst (2017) 255 FCR 144 at 155 [32] per Flick, Kerr and Pagone JJ. The determining factor for the exercise of the Authority's powers under s 1055(3) is not the lawfulness of the trustee's decision, but its fairness and reasonableness in its operation in relation to the complainant and any joined person: QSuper Board v Australian Financial Complaints Authority (2020) 276 FCR 97 at 113 [64] per Moshinsky, Bromwich and Derrington JJ.
98 I respectfully adopt the concise description of AFCA's power in the above quoted passage from Rares J in Rushton. AFCA is given that singular remit; namely, to determine whether a trustee's decision is fair and reasonable in its operation in relation to the complainant and any joined person. That power should not be confused, or conflated, with the Trustee's discretionary powers conferred under the Trust Deed, understood within the confines of the established equitable principles in Karger v Paul, as qualified by the High Court in Finch.
99 For reasons I shall discuss further below, in my opinion, the Trust Deed does not constrain the exercise of the Trustee's discretion such that the deceased's superannuation death benefits should be prima facie paid to dependants as opposed to the deceased's legal personal representative. Further, there is no allegation in this proceeding that the Trustee acted beyond power, or otherwise not for a bona fide purpose, nor that the Trustee exercised its discretion for a purpose inconsistent with the power conferred by the Trust Deed. In the absence of any such allegation in connection with the Trustee's Fourth Decision, the question of whether the Trustee's decision was fair and reasonable only arises in the present case because the Applicant made a complaint and thereby engaged AFCA's power to determine whether the decision made by the Trustee was fair and reasonable in all the circumstances, having regard to the interests of the Applicant and the complaints made by her.
100 There is an asymmetry between the confined grounds upon which a trustee's discretion may be impugned on judicial review, in accordance with established equitable principles, and the power to be exercised by AFCA once its jurisdiction is engaged. The Trustee is not required to give reasons for the exercise of its discretionary power. Thus, in the absence of any reasons, consideration of whether the trustee's decision was fair and reasonable must necessarily depend upon a consideration of the effect of the decision having regard to the interests of the complainant (including any representations made by the complainant in relation to the complaint) and any other party joined to the complaint.
101 As the Court explained in QSuper at [64], AFCA carries out its function by considering the relevant circumstances and exercising the discretion of the trustee afresh so as to correct any perceived unfairness or unreasonableness arising from the original decision's operation. Moreover, AFCA is entitled to make its own findings of fact as may be required for the purposes of determining that question. AFCA does not, however, appear to have a process for interrogating evidence before arriving at a decision, either through objections or cross-examination. Rather, it receives statements, statutory declarations and other such documents. In all of this, AFCA's role is to assess retrospectively whether the decision of the Trustee was fair and reasonable. If it is so satisfied, it must affirm the decision: s 1055(3) of the Corporations Act.
102 A further asymmetry arises because AFCA's power is engaged only after a complaint has been made about the trustee's decision. The trustee may or may not have been aware before making his or her decision of the nature of the relationships between interested parties and other relevant matters subsequently relied upon by the complainant when invoking AFCA's jurisdiction. Thus, AFCA's power involves a retrospective review of the effect of the trustee's decision having regard to facts relevant to the complaint, which may or may not have been known to the trustee at the time the decision was made.
103 If the facts known to a trustee at the time of the decision objectively support a conclusion on the part of AFCA that the decision was fair and reasonable, having regard also to the interests of the complainant and to such representations concerning the effect of the trustee's decision upon the complainant's interests as may be made, that may be a sufficient basis for AFCA to discharge its statutory function. In that event, as I have said, the trustee's decision must be affirmed.
104 In other circumstances, as here, there may also be a dispute between the complainant and other interested persons affected by the trustee's decision concerning facts relevant to AFCA's ex post facto assessment of the fairness and reasonableness of the trustee's decision. When this arises, AFCA may need to make its own findings concerning such disputed facts. This is the approach which AFCA took in the present case. For reasons I shall explain below, in my view AFCA properly and genuinely considered the factual issues relevant to the exercise of its statutory power and had a proper basis for the conclusions it reached concerning those factual matters, as well as for its ultimate conclusion that the Trustee's Fourth Decision was fair and reasonable.
105 In the present case, the principal matter of objective relevance to AFCA's power to assess the reasonableness of the Trustee's decision is the fact that the deceased made provision for the Applicant through dual streams; namely, in his final will and, indirectly, by nominating his estate as the beneficiary of the superannuation death benefit. In my view, it was reasonable and necessary for AFCA to take into account the Applicant's entitlements under the deceased's will - and consequently through the non-binding nomination of his estate - when considering whether the Trustee's Fourth Decision was fair and reasonable.
106 At the time of his death, the deceased owned assets which would form part of his estate, including real estate. The deceased's entitlement to the death benefit did not form part of his estate at the time of his death but would do so only upon the Trustee affirming the deceased's non-binding nomination of his estate as the beneficiary of the death benefit. I see no reason why AFCA should not have considered the provision made by the deceased for the Applicant holistically when considering whether the Trustee's decision to affirm the death benefit nomination was fair and reasonable. In my view, it would be artificial and inconsistent with the statutory scheme for AFCA to ignore the fact that, in addition to the Applicant's indirect benefit derived from the nomination of the estate as the beneficiary of the death benefit, the Applicant is also entitled to one-third of the assets forming part of the deceased's estate. When the Applicant's entitlement to one-third of the deceased's residuary estate is taken into account, the answer to the question for AFCA of whether the Trustee's decision is fair and reasonable is surely affected by the further provision made for the Applicant under the terms of the deceased's final will.
107 In my view, the Applicant did not address the correct question when it submitted that the deceased's testamentary wishes, as manifest by his will, do not override the Trustee's discretion. The question is not, as posited by the Applicant, whether the Trustee is bound by the deceased's testamentary wishes as expressed in the non-binding nomination of his estate as the beneficiary of the death benefit (or, equivalently, as expressed in his final will). Rather, the question to be considered by AFCA, ex post facto, is whether the Trustee's Fourth Decision was fair and reasonable in all the circumstances in its operation in relation to the complainant and any other person joined as a party to the complaint.
108 The relevance of the additional provision made for the Applicant as a residual beneficiary under the will may be tested by considering the question to be answered by AFCA on the hypothetical assumption that the deceased had not made any provision for her in his final will. In that event, it would be relevant for AFCA to consider the absence of any other provision made for the Applicant when deciding whether the Trustee's decision was fair and reasonable having regard to the complainant and any other person joined as a party. If the Applicant was not to benefit indirectly from the nomination of the estate as the beneficiary of the death benefit, that fact would be of significance to any complaint the Applicant may have made to AFCA founded upon the grounds presently relied upon by her; namely, that she was owed obligations of support by reason of the nature of her relationship with the deceased and/or her dependency on him. In other words, the relevance of any additional provision made for a complainant, or not made, as the case may be, cuts both ways, so to speak.
109 I do not accept the Applicant's submissions concerning the principles said to be universally applicable to a trustee when exercising its powers to decide upon the distribution of a superannuation death benefit. The Applicant submitted that I should accept superannuation death benefits are usually paid to dependants as opposed to the deceased's legal personal representative. The Applicant said this principle may be discerned from decisions made by AFCA's predecessor, the SCT. Whether or not certain practices or principles have been developed by the SCT, as the Applicant submits, the exercise of a trustee's discretion in this context is subject to only limited constraints or qualifications. Those constraints or qualifications undoubtedly require the Trustee to give real and genuine consideration to the exercise of its discretion, including by properly informing itself of relevant matters. However, those obligations do not necessarily impose an obligation upon a trustee to consider the effect of its decision upon potential complainants, or whether having regard to the interests of the complainant, the decision, in this case to affirm the deceased's non-binding death benefit nomination, was fair and reasonable. As I have said, those are questions for AFCA to determine, which arise only when its jurisdiction is engaged by the making of a complaint.
110 Though it is unnecessary for me to decide, I respectfully disagree with the blanket adoption of the asserted guiding principles from the former SCT in relation to the exercise of a trustee's discretion in this context. I do not accept that when AFCA comes to assess whether a trustee's decision to affirm a non-binding nomination is fair and reasonable, it should give preference to the interests of a complainant who was a dependant of the deceased, or had been in an interdependency relationship with the deceased. In the present case, there is no support for such an approach to be found in the terms of the Trust Deed. In this respect, I note that cl 6.3(e)(v) of the Trust Deed expressly provides that when exercising its discretion in the context of a non-binding nomination, the Trustee is to pay the death benefit to one or more of the member's dependants, legal personal representative or such other persons permitted by superannuation law, in whatever proportions it decides. The specification of these classes of potential beneficiaries does not create an ex ante preference for one class of beneficiaries over others.
111 If I were wrong to conclude that there was no presumptive preference for the payment of dependants, it would be of no consequence. This is because AFCA proceeded on the assumption that the purpose of a superannuation death benefit is to provide for a deceased member's dependants who were receiving financial support and might reasonably have expected to continue to receive financial support from the deceased member, had they not died. In effect, therefore, AFCA followed the same approach as the former SCT, rendering my observations only indirectly relevant to the appeal. In any event, as I go on to explain, I do not accept that AFCA erred in finding that the Applicant was not a dependant, that being one of the central contentions raised on appeal.
112 Needless to say, each decision must be considered having regard to the particular facts and circumstances of the complaint in question. However, it is not sound as a matter of principle or analysis to distil from the outcome of particular complaints a principle to the effect that some form of preference should be given to a complainant who establishes that he or she was in dependency relationship, including where the complainant establishes that he or she was the spouse or de-facto spouse of the deceased. Such a principle would fight against the broad scope of a trustee's discretion and the grounds upon which its exercise may be impugned, even appreciating that superannuation fund trustees making a discretionary determination are subject to a higher duty to inform themselves than other trustees.
113 Further, and more relevantly, the Applicant did not refer to any authority from a superior court that supports an approach to the exercise of that power on the basis that some preference is to be accorded to the interests of a complainant who establishes that he or she was a dependant of the deceased. That is, of course, not to say that the nature of the relationship between the deceased member and the complainant is by any means irrelevant or unimportant. Clearly, the nature of the relationship is of central relevance to AFCA's assessment of whether the trustee's decision was fair and reasonable. But that factor must be considered together with other relevant factors, including the provision, if any, made by the deceased for the complainant under the terms of his or her will in circumstances where, as in the present case, the deceased held assets at the time of his death that formed part of his estate and others, such as the superannuation death benefit, which did not.
114 In brief, AFCA's task was thus to determine whether the Trustee's decision was fair and reasonable in all the circumstances in its operation in relation to the complainant and other parties joined to the complaint: s 1055(3) of the Corporations Act. That review function is directed to whether the actual decision, rather than the process that led to it, was fair and reasonable: Board of Trustees of the State Public Sector Superannuation Scheme v Edington [2011] FCAFC 8; 119 ALD 472 at [46]; Cummins v Petterd [2021] FCA 646 at [12] (Flick J). In other words, AFCA's power is directed to the effect of the trustee's decision on the interests of the complainant. For the reasons I have given above, it was entirely appropriate for AFCA to consider the effect of the Trustee's Fourth Decision to affirm the deceased's non-binding nomination, having regard to the combined effect of his testamentary wishes as manifest by his final will and by his nomination of the estate as the beneficiary of his death benefit.
115 AFCA did not fall into error by considering the effect of the Trustee's Fourth Decision on the Applicant's interests in the critically important context that she had already been provided for financially by the deceased via two streams of disposition I have described. That provision must be considered in aggregate insofar as the Applicant complains that her financial interests have been adversely affected by AFCA's decision.
116 For the avoidance of doubt, I stress that the provision to the Applicant via the two streams of disposition was not relevant for the reason that the Trustee was bound by the testamentary wishes of the deceased expressed in his will. Nor was it relevant because either the Trustee or later, AFCA, were each required to give particular weight to that factor in discharging their respective tasks to the observance of the manifest testamentary wishes of the deceased expressed in his will, or analogously by his nomination of the estate as beneficiary of the death benefit. Rather, that issue was a relevant as an objective factor for AFCA to assess in determining whether the Trustee's Fourth Decision was fair and reasonable in all the circumstances.
117 Indeed, the aggregate provision made for the Applicant was also objectively significant to the Trustee if it was to give real and genuine consideration in the exercise of its discretion to the interests of beneficiaries. In the present case, the objective relevance of the Applicant having been provided for via the two streams is that without taking into account the aggregate provision made for the Applicant, the Trustee would not have a proper basis for making a cogent assessment of whether to follow the deceased's non-binding nomination insofar as it affects the interests of beneficiaries. The Trustee had a discretion to affirm the nomination, or reject it and substitute one or more of the classes of potential beneficiaries referred to in cl 6.3 of the Trust Deed, in such proportions as it determined. Having regard to the manifest purpose of that express discretionary power; namely, that the Trustee may decide to nominate various persons from within the defined classes under the Trust Deed, objectively it could not give proper and genuine consideration to the exercise of that power without first ascertaining the state of affairs so far as the financial interests of beneficiaries are concerned.
118 Accordingly, I conclude that without taking the aggregate provision made for the Applicant into account, the Trustee would not have a proper understanding of the financial, or economic, effect of the deceased's nomination, in respect of which it had the discretionary power to affirm, reject or vary as it saw fit. Though the content of AFCA's power and the nature of its role is different to the powers and role of the Trustee, the objective significance of the aggregate provision made for the Applicant is surely relevant to any analysis by AFCA of whether the Trustee's Fourth Decision was fair and reasonable in all the circumstances.
119 I have discussed the significance of the dual streams of provision made for the Applicant at some length, perhaps even repetitiously, because for the Applicant to succeed I would need to be satisfied that AFCA had fallen into legal error in concluding in the above circumstances that the decision of the Trustee was fair and reasonable. I should not be taken as suggesting that the substantial aggregate provision made by the deceased for the Applicant was alone sufficient for AFCA to be satisfied the decision was fair and reasonable. However, in my view, the aggregate provision made by the deceased for the Applicant from the whole of his assets, within and outside his estate at the time of his death, objectively bespeaks an intention on his part to make substantial provision for the Applicant (albeit not exclusively so). That is a compelling factor which supports AFCA's conclusion that the Trustee's decision was fair and reasonable having regard to the Applicant. It is for the same reason also an objectively compelling factor which supports upholding AFCA's decision.
120 I turn now to consider the specific grounds of appeal raised. I do so from the lens of considering whether AFCA erred in law in the process of reviewing the Trustee's determination: s 1057 of the Corporations Act. Importantly, I approach that question on a fair reading of AFCA's reasons, and not one astute to detecting error: Williams v IS Industry Fund Pty Ltd [2018] FCAFC 219; 266 FCR 370 at [43] (Allsop CJ, Reeves and Derrington JJ). For the reasons I explain, I am not satisfied that AFCA erred in finding that the Trustee's decision was fair and reasonable.