Conduct of Trustees

Drummond J stated in ASIC v QLS Superannuation Pty Ltd [2003] FCA 262 {Link}. in making reference to a corporate Trustee at [4]:

“Employer-contributors and Fund members as potential beneficiaries are thus especially dependent on the integrity and competence of their Fund’s trustee and those persons who control the activities of the trustee.”

The Court also made reference to the position of Directors of corporate Trustees of superannuation funds at [114]:

“In consequence, the content of the fiduciary duties on Parker as a director required of him a higher standard of care and diligence in performing his duties, including his duty to bring loan proposals suitable for consideration by the Board before it, than is the nature of the fiduciary duty on a director of an ordinary trading company”.

Young J stated in Maciejewski v Telstra Super Pty Ltd Matter No 4210/97 [1998] NSWSC 376 {Link}.

Although the Court will not interfere with the proper discretion of trustees, the Court will also not allow people who are using their power under a trust deed to deny the beneficiary rights by incompetence or inaction; see Dundee General Hospitals Board of Management v Walker [1952] 1 All ER 896, 905.

It also must be remembered that it costs thousands of dollars for a person to approach this Court for relief. That may not be very much in the eyes of the defendant, but it does mean that because it is so difficult and expensive for a worker who challenges decisions of this nature that those who are given the job of acting fairly under superannuation schemes must be scrupulously professional, careful and assisting. If they are not, then this Court will need to step in.

It is true that this Court does not usurp the position of the trustees. This Court does not reach the view that the trustees ought to have reached. The role of this Court is to ensure that trustees behave fairly and properly and treat the beneficiaries as human beings.

Young J also made reference to the limited powers of the Superannuation Complaints Tribunal which can only deal with complaints where Trustees have acted lawfully. Young J states:

Unfortunately in many ways the scheme that was set up by the Commonwealth Parliament to review these matters has fallen foul of the Australian Constitution, so that it is still necessary for this Court to superintend trusts because ultimately it is this Court that is responsible to see that trustees comply with their duties and that beneficiaries receive what is rightfully theirs, no more, no less.

The Law of the Place of Administration

The matter of the “Proper Law” of a trust was examined by Scott J the High Court of England and Wales in Chellaram v Chellaram [1985] 1 All ER (Ch d) 1043

Scott J ruled:

“All matters affecting the determination of the duties and rights of the trustees and the beneficiaries arising out of the settlement (including the right to remove and replace trustees is conferred by the trust instrument) are governed by the proper law of the trust and not by any so-called law of the place of administration of the trust; it is merely the enforcement of such rights and duties, once determined, that may take place under a different law (see p 1056j to p 1057c).”

The ruling in Chellaram v Chellaram was followed by the Full Court of the Supreme Court of South Australia in In the Estate of Webb(dec’d) (1992) 57 SASR 193 at 202-204.


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This tab updated on 29 July 2015