The recent Queensland Supreme Court decision of Re Narumon  QSC 185, confirmed that, at least in that jurisdiction, an attorney (appointed under an enduring power of attorney) has the power to make, renew or extend a Binding Death Benefit Nomination (BDBN) on behalf of a member.
This case has wide implications on BDBNs, estate planning, the appointment of attorneys and restrictions on an attorney's powers. In particular, attorneys will need to take care when making, renewing or extending a BDBN.Melissa Ramov, Maddocks Lawyers
Mrs Giles and Mrs Keenan (together, Attorneys) were appointed as the attorney for Mr Giles pursuant to an enduring power of attorney entered into in 2013 which appointed the Attorneys to make decisions on behalf of Mr Giles with respect to personal/health and financial matters should Mr Giles become 'incapable of making [his] own decisions'.
Mr Giles passed away on 14 June 2017. The final BDBN executed by Mr Giles expired on 5 June 2016, three years after it was signed and directed the trustee of the fund, after Mr Giles' death, to distribute his benefits (which included $1million in an accumulation account and a $3million lifetime pension) as follows:
Given that the BDBN had expired by the time Mr Giles had lost capacity, the Attorneys had to decide whether to extend Mr Giles' BDBN by confirming it in accordance with superannuation law.
Further, the BDBN directed that 5% of Mr Giles' benefits be paid to Mrs Keenan, who was not a dependant of Mr Giles as was required by the terms of the fund's deed. Accordingly, this meant that the BDBN, to the extent it distributed benefits to Mrs Keenan, was of no effect.
To solve these issues, the Attorneys:
It is not entirely clear on the facts why the Attorneys signed both an Extended BDBN and a New BDBN.
The court was required to consider whether the Attorneys had the power to make a new BDBN on behalf of the member.
Whether the Attorneys had the power to confirm or extend an existing BDBN or make a new one on behalf of a member depends on consideration of:
The court, being the first court to decide on the question, held that it was within the scope of an attorney to execute a new BDBN or extend an existing BDBN on behalf a member.
The court considered that:
Section 32 of the Qld Act permits an attorney acting under an enduring power of attorney, to do
'…anything in relation to 1 or more financial matters or personal matters for the principal that the principal could lawfully do by an attorney…'.
Things which an attorney cannot do include matters which may require personal performance as set out in section 3 of Schedule 2 of the Qld Act. This section does not list entry or renewal of a BDBN as requiring personal performance.
The court found that entry into the enduring power of attorney was:
An attorney is permitted to enter into a '…conflict transaction only if the principal authorises the transaction, conflict transactions of that type or conflict transactions generally…'. A conflict transaction is one which includes, amongst other things, a conflict between a duty of an attorney towards the principal and the interests of the attorney.
Mr Giles did not authorise any conflict transactions in his enduring power of attorney. The court found that the transactions entered into by the Attorneys in the Extended BDBN did not amount to 'conflict transactions'. This was because the Extended BDBN was entered into for the purpose of ensuring the continuity of Mr Giles' estate planning and to ensure his wishes were effected to the maximum extent possible. The fact that Mr Giles' enduring power of attorney did not permit a conflict did not matter.
The court made orders giving effect to the Extended BDBN but did not make orders with respect to the New BDBN. This case illustrates that individuals need to be careful when appointing attorneys and when deciding whether or not to permit an attorney to enter into a conflict transaction. Attorneys should also ensure that they take care when making, renewing or extending a BDBN.
For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of the Commercial team.
 Section 73 of the Qld Act.
Paul is a Special Counsel in the Maddocks Commercial team with particular expertise in commercial agreements for the supply of goods and/or services, the Personal Property Securities Act 2009, the National Consumer Credit Protection Act 2009 and the National Credit Code and the Australian Consumer Law.
Paul's key areas of practice include:
Before joining Maddocks, Paul was employed for 13 years with the Victorian Department of Justice, principally as a Deputy Registrar in the Victorian Magistrate's Court, but also as a legislation, policy and project officer for the Department.
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For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of their team.