Court upholds AFCA decision on death benefit payment

The deceased, in this case, held his superannuation benefits in an Asgard account managed by BT Funds Management Limited. Each of his annual member statements recorded a nomination by the deceased of his estate as the sole beneficiary of his death benefit.

The final will made by the deceased in May 2017, provided that his residuary estate be distributed in equal shares to the applicant, his former partner and the son of his former partner, the third respondent in the case.

While the deceased had made a nomination for his estate to be the sole beneficiary of his death benefit, he had not made a binding death benefit nomination.

In June 2018, the trustee resolved to pay all of the deceased’s superannuation death benefit to the applicant on the basis that she was his de facto spouse at the date of his death.

In July 2018, the third respondent objected to the trustee’s first decision. After considering the objection, the trustee instead resolved to pay all of the death benefit to the deceased’s estate on 21 August 2018.

After the applicant objected to the trustee’s second decision, the trustee resolved to uphold its second decision in November 2018.

The trustee determined that it was appropriate to distribute 100 per cent of the death benefit to the deceased’s estate because it did not accept the applicant was a dependent of the deceased as she was not a de facto spouse or in an interdependency relationship with the deceased.

It also noted that on 30 June 2016, the deceased had reconfirmed his discretionary non-binding nomination for 100 per cent of the death benefit to be paid to his estate.

It also outlined that the deceased’s final will expressed a testamentary intention that his estate be divided equally between the applicant, Ms Betts and the third respondent.

The applicant made a complaint to the Australian Financial Complaints Authority (AFCA) on 28 May 2019. AFCA concluded that the trustee’s decision was fair and reasonable because the applicant was not a dependent of the deceased at the time of the deceased’s death.

AFCA noted that there was conflicting evidence about the nature and status of the relationship between the deceased and the applicant.

On the one hand, AFCA noted that the applicant had given evidence that she was in a de facto relationship with the deceased at the date of his death and that she had lived, and commenced a relationship, with the deceased from around mid-2014.

She had also claimed that she was financially dependent on the deceased and that despite maintaining her own residence, they were living together at his house in North Fitzroy.

On the other hand, AFCA recorded that the third respondent did not accept that the applicant and deceased had been in any kind of serious or intimate relationship. In fact, the third respondent contended that the applicant was only a carer to the deceased as his health declined and that fair and adequate provision had already been made for her under the deceased’s final will.

While AFCA noted that the applicant had an increasing presence in the deceased’s life and involvement in his care from 2015, it also took into account that the applicant had maintained her own residence from 2014.

AFCA concluded that there was no evidence before it to suggest that the deceased’s residence was a common residence, despite accepting that the applicant had stayed at the deceased’s home on occasion, had left clothes at the deceased’s residence and stayed overnight with increasing frequency as his health declined.

AFCA also had regard to the fact that the deceased referred to the applicant as a “friend” in his final will.

It considered it significant that the deceased was reluctant to label the relationship and seemed to go to some length to clarify to some of his closest friends that the applicant was merely a “friend” and also to deny that she was his “girlfriend” or “partner”.

AFCA added that the factors relevant to determining whether there is an interdependency relationship are very similar to the factors relevant to assessing whether there is a de facto relationship, with the addition of whether the relationship was intended to be permanent and whether the relationship was one of mere convenience.

The applicant submitted that AFCA misconstrued the definition of dependant by adopting a narrow interpretation of that status or relationship, limited to whether the applicant was a de facto spouse of the deceased, in an interdependency relationship with the deceased or otherwise financially dependent on the deceased.

It was also submitted that AFCA should have construed “dependant” broadly, taking into account the personal and emotional dependency of the applicant, particularly in circumstances where dependant was not defined in the trust deed.

Justice Anastassiou said it was clear from its reasons that AFCA did not confine itself to the narrower categories of dependants in the SIS Act.

“To the contrary, AFCA expressly took into account matters such as whether the applicant was financially dependent upon the deceased before concluding that the applicant was not a dependant of the deceased. That approach is consistent with a broader definition of dependant urged upon the court by the applicant,” stated Justice Anastassiou.

He also stated that there are difficulties with the applicant’s contention that dependant should include emotional dependency.

“It is an unorthodox construction of dependant and there is nothing in the trust deed that would support such a novel and extended meaning of dependant,” he explained.

“The concept of emotional dependency, while no doubt real and meaningful psychologically, is undoubtedly a spectrum so broad and intangible that it would be vague, meaningless and uncertain if imported into the meaning of dependant under the trust deed, at least without a separate definition of emotional dependency.

“The forensic, analytical and practical issues that a trustee would confront if required to determine whether a person was emotionally dependent are so legion that in the absence of an express inclusion of emotional dependency, it may be strongly inferred that is not the kind of dependence to which the trust deed refers.”

Justice Anastassiou was satisfied that AFCA had considered relevant evidence in relation to financial support provided to or by the deceased or evidence that the deceased’s residence was a common residence.

AFCA acknowledged that the deceased paid for all the household groceries and utilities, the expenses on the car that he allowed the applicant to use and also that he had paid for the applicant’s one-off dental expenses.

However, AFCA expressed a number of concerns, including the fact that at the time of the deceased member’s death, she was on Centrelink new-start allowance and that there was no evidence provided of joint expenses or transfers to or from the complainant or deceased member’s bank accounts.

“In my view, these are instances in which AFCA carefully and rationally engaged with the relevant material in concluding the trustee’s decision was fair and reasonable,” he stated.

Justice Anastassiou dismissed the appeal, concluding that AFCA had made no legal error in its finding that the trustee’s decision was within power and fair and reasonable in its effect, having regard to the interests of the applicant as well as to those interests of other parties joined to the complaint.