Definition of the “governing rules” of a fund

In superannuation trusts, the words “governing rules” are used for the “terms of the trust“. The governing rules are not a single document but a set of documents that includes:

  • The founding Trust Deed that established the trust
  • Any subsequent  Deed of Variation that amended the terms of the trust
  • Any order or direction from the court in relation to the trust
  • Any Act of Parliament specific to the trust
  • The relevant State Trustee Act
  • Relevant Commonwealth legislation

A consolidation Deed of Variation does not render the founding Trust Deed obsolete. The founding Trust Deed and Deeds of Variation that have been consolidated must be retained by the trustee so that a court would be able to determine a “true construction” of the terms of the trust.

Butterworths Australian Legal Dictionary defines “governing rules” as follows:

“In relation to superannuation fund, approved deposit fund or a unit trust, any trust instrument, other document or legislation, or combination of these, governing the establishment and operation of the fund or unit trust.

Refer to Section 10 of the Superannuation Industry (Supervision) Act 1993 which defines “governing rules” as follows:

governing rules“, in relation to a fund, scheme or trust, means:

  • (a) any rules contained in a trust instrument, other document or legislation, or combination of these; or
  • (b) any unwritten rules;
  • governing the establishment and operation of the fund,scheme or trust”

    Allsop J in Retail Employees Superannuation Pty Ltd v Croker [2001] FCA 1330 stated at [23]:

    “The phrase “governing rules of the fund” means the terms governing the conduct of the superannuation fund, which was a regulated superannuation fund under the Superannuation Industry (Supervision) Act 1993 (Cth). It is not limited to the schedule to the trust deed which set out the “rules for the management” of the fund. It means the terms of the trust under which the fund is carried on, which includes the “rules for the management” of the fund: clause 1.2 of the annexure to the deed of amendment dated 13 December 1988″.

    A formal agreement or promise in a deed or under seal is referred to as covenant.

    Additional covenants are inserted into the terms of the trust of every regulated superannuation fund by way of Section 52 of the Superannuation Industry (Supervision) Act 1993. These additional covenants for part of the governing rules of each fund.

    APRA’s Definition

    APRA provides the following definition of “governing rules” in a document titled “8. Trust Deeds/Governing Rules” that is provided to trustees to assist them register their fund with APRA.

    FAQ8.1: What documents does APRA expect to see as part of the fund’s governing rules?

    To be able to register an RSE, APRA must be satisfied that nothing in the governing rules of the entity conflicts with the requirements of Part 6 of the Act. In this regard, the trustee must submit all governing rules that together demonstrate to APRA that they contain and are consistent with these requirements. The definition of ‘governing rules’ in section 10 of the SIS Act was not affected by the SSAA. The definition of ‘“governing rules” is defined as follows:

    1. “governing rules in relation to a fund, scheme or trust, means

    2. any rules contained in a trust instrument, other document or legislation, or combination of them;

    3. or any unwritten rules; governing the establishment or operation of the fund, scheme or trust”.

    Governing rules will always include the trust deed or other constituent instrument and any rules attached to the trust deed or other instrument together with any further rules which are made pursuant to such instrument.

    Interpretation of governing rules

    The court’s approach to the construction of documents relating to a superannuation fund is practical and purposive, rather than detached and literal1.

    In interpreting a superannuation fund document, the court will take into account that the beneficiaries of the fund are not volunteers; their rights have contractual and commercial origins and are derived from the contracts of employment of the members 2.

    Regards may also be had to the statutory requirements of the regulations of superannuation and common practices in the field of superannuation3. In the case of ambiguity the court will lean towards a construction which will operate fairly among the beneficiaries.4

    Notes

    (#1) Mettoy Pension Trustees Ltd v Evans [1991] 2 All ER 513 at 537; [1990] WLR 1587 per Warner J. Ch D. See also Re Courage Group’s Pension Schemes: Ryan V Imperial Brewing & Leisure Ltd [1987] 1 All ER 538 at 537; [1987] 1 WLR 495 per Millet J; British Airways Pensions Trustees Ltd v British Airways plc [2002] PLR 247 at [28] per Arden LJ; Ansett Australia Ground Staff Superannuation Plan Pty Ltd v Ansett Australia Ltd (2002) 174 FLR 1 at [216]; [2002] VSC 576 per Warren J.

    (#2) Mettoy Pension Trustees Ltd v Evans [1991] 2 All ER 513 at 537; [1990] WLR 1587 per Warner J. Ch D; Imperial Group Pensions Trust Ltd v Imperial Tobacco Ltd [1991] 2 All ER 597 at 605-6; [1991] 1 WLR 589 per Browne-Wilkinson VC Ch D; Lock v Westpac Banking Corp (1991) 25 NSWLR 593 at 6002 per Waddell CJ; Re UEB Industries Ltd Pension Plan [1992] 1 NZLR 294 at 297 per Cooke P at 306 per Richardson J; Local Government Superannuation Board v Thorne (2002) 76 ALD 596; [2002] FCA 848; at [34]-[35] per Mansfield J.

    (#3) Mettoy Pension Trustees Ltd v Evans [1991] 2 All ER 513 at 537; [1990] WLR 1587 per Warner J. Ch D; Ansett Australia Ground Staff Superannuation Plan Pty Ltd v Ansett Australia Ltd (2002) 174 FLR 1 at [216]; [2002] VSC 576 per Warren J.

    (#4) James Miller Holdings Ltd v Graham (1978) 3 ACLR 604 at 617; (1977-78) CLC 40-460 per Mcgarvie J, SC(Vic)


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    This tab updated on 3 August 2015