The Elders IXL Fund Case

There are important similarities with the history of The Provident Fund (renamed the Elders IXL Superannuation Fund) and that of the Colonial Fund in The Commonwealth Bank Case.

The Trust Estates of both funds were purportedly transferred to another fund with valuable provisions not included in the Regulations or Rules of the Transferee Fund.

A specific Deed of Variation can be identified in both cases as the source of the problem. In the case of the Colonial Fund it is a Deed of Variation executed on the 30 December 1996 {Top line on the following illustration} and in the case of the Elders IXL Superannuation Fund it is a purported Deed of Variation executed on the 26 August 1986 (The “Jarret Deed” – a document bearing the signature of Ken Jarrett, the former Finance Director of Elders IXL Limited.

Fund Histories

The Provident Fund has a much longer history than the Colonial Fund and over a period of seven decades the value of retirement and retrenchment entitlements was progressively increased, the the pension formula being amended in 1958 to provide improved pension benefits in the event of retrenchment. The Member contribution rate was also increased as the value of the benefit increased.

Manual #1

In the case involving the Colonial Fund a provision was added by a Deed of Variation in 1985 that provided a power to the trustees of the fund to provide a pension benefit instead of a lump sum benefit to an employee who was retrenched before attaining the age of 55 and who had been a long serving employee {Clause 22.B}. This provision was renumber in a Deed of Variation in July 1995 to Clause A11.3.

However this provision was deleted by a Deed of Variation in December 1995 after faulty legal advice was received and without obtaining an opinion from the fund actuary.

The situation is more complicated in the case of The Provident Fund {Elders IXL Superannuation Fund} since there was a fund for male staff members and a separate fund for female staff members as confirmed by the Elder Smith & Co Limited Provident Funds Act 1963 (SA).

The first fund established for female staff was a non-contributory fund and this fund was superseded by a contributory fund in 1963.

The pension benefit for male employees was provided by Regulation 8 in the original Trust Deed that established the fund on 23 December 1913.

Regulation 8 was renumbered to Regulation 10 by a Deed of Variation in October 1948. The pension formula was then amended by a consolidation Deed of Variation dated 6 May 1958 to improve the retrenchment benefits for male staff who were retrenched before the early retirement age of 60.The new pension formula was provided by Regulation 29

In the case of the Colonial Fund, Clause A11.3 was repealed by a Deed of Variation in December 1995, however in the case of the provisions that provide pension benefits in The Provident Fund and the Elders-GM Women’s Provident Fund, these provisions were simply ignored by a purported Trustee that had not been appointed to office in accordance with the terms of the trust {Regulations of the Fund) and the purported Trustee remained out of South Australia for more than 12 months in contravention of the provisions of the Trustee Act 1936 (SA).

Provisions ignored

Once a provision has been properly added to the terms of a trust {Regulations of the Fund} it remains in effect until the provision has been properly repealed by a subsequent amending instrument (or the Scheme as a whole has been terminated and the associated Trust Estate wound up).

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A trustee cannot simply decide to ignore a particular provision or act under the dictation of the sponsoring Employer to ignore the provision.The trustee commits a Breach of Trust by doing so.

If a trustee has any doubt about a provision that does not appear in subsequent “consolidation” instrument the trustee should seek advice and directions from the Court as to whether the provision no longer has legal effect, as recommended by the High Court of Australia.

The Consolidation Deed of Variation

The consolidation Deed of Variation repealed Regulation 10 and the original pension formula was replaced with an amended formula by by Regulation 29.

The consolidation Deed of Variation made clear that it was in fact a consolidation Deed of Variation that repealed previous Regulations and replaced them with new Regulations providing improved benefits.This Deed states in the body of the Deed:

“Subject to the proviso herein after contained the whole of the Regulations numbered 1 to 63 (both inclusive) under and governing the Provident Fund and the schedules to such Regulations are hereby repealed and the Regulations set forth in the Schedule hereunder written are substituted therefore and from the date hereinafter mentions shall be the Regulations governing the said Fund PROVIDED that nothing herein after contained shall apply in the case of or affect an officer who died or retired from the service of the company prior to the first day of July One thousand nine hundred and fifty six and the pensions and other benefits to which any such officer or his widow or dependants are or may be or become entitled shall be regulated in accordance with the Regulations governing the Fund which were in force at the date of his death or retirement.”

The “Jarrett Deed”

Now does the document described on its face as a “Deed” and not a “consolidation Deed of Variation” and dated 26 August 1986 include a similar provision?

The following is stated at Recital E:

The Fund is governed and administered in accordance with rules or regulations which were originally adopted by the said Deed made the 23rd day of December 1913.

No mention is made that the “Regulations are hereby repealed”. Instead it is confirmed that the Fund is governed and administered in accordance with the regulations.

Therefore assuming the “Deed” dated 26 August 1986 is correctly executed by the correct parties, then any “Rules” added by the “Deed” are additional “Rules” and not replacement “Rules” for the existing Regulations.

Nw Rules additive

This conclusion would be supported by the fact that deductions for member contributions were increased from 5% to around 15% of a Member’s salary.

However the “Jarrett Deed” has been executed by the wrong parties and is therefore void and ineffective. The “Jarrett Deed has been executed by the following parties.

Jarrett Deed Parties

The “Jarrett Deed” has been executed by the company, Elders IXL Limited, and by a corporate Trustee, Elders Superannuation Ltd, which is resident in the State of Victoria and not South Australia.

To validly amend the Regulations of the occupational pension scheme established on the 23 December 1913 in the State of South Australia, the amending instrument must comply with the following requirements.

Power of Amendment

The fetters imposed by the provisions of the Power of Amendment cannot be released by the exercise of that power. If this were possible there would have been no need for the Elder Smith & Co Limited Provident Funds Act 1963 (SA).

A company is a different legal person than are the natural person Directors of that company {Salomon v Salomon & Co Ltd [1896] UKHL 1}.

In 1986 there were 17 natural person Directors of Elders IXL Limited.

Since the “Jarrett Deed” was not executed by a majority of the Directors this purported Deed of Variation is void and ineffective.

Furthermore this document should also have been executed by a majority of the natural person trustees resident in South Australia and not by an out of jurisdiction corporate trustee resident in Victoria. So there is a second reason why this document is void and ineffective.

Regulations Ignored

The Regulations of the fund, which have never been repealed, have simply been ignored by three out of jurisdiction purported corporate Trustees who were never lawfully appointed to the office of trustee.The first was purported appointed on 20 December 1982, the second on 3 April 2006 and the third gained control of the Trust Estate on 20 January 2014.

Regulatons ignored

These purported trustees are in fact Trustees de son tort who have simply failed to obey the terms of the trust and have failed to follow the general advice of the High Court of Australia to seek advice and directions from the Court to confirm the “true construction” of the terms of the trust {Regulations of the Fund}.


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This tab updated on 30 December 2015