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Federal Court upholds AFCA ruling on death benefit

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By Keeli Cambourne
July 09 2025
4 minute read
terence wong sladen legal smsfa mazd10
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An AFCA decision regarding death benefit wishes made via phone to a superannuation fund has been upheld by the Federal Court.

Terence Wong, director of T Legal, said the decision in Steele v HostPlus affirmed AFCA’s determination that the super trustee’s decision to distribute 100 per cent of the deceased estate to the member’s current spouse was correct.

Wong explained the notice of appeal by the applicants, the deceased’s son and daughter from a previous marriage, referred to AFCA’s superannuation death benefits approach document, which appears to place emphasis in section 2.3 on the provisions of the current trust deed, the member’s wishes and dependants’ expectations of financial support rather than financial hardship itself.

 
 

He said the facts of the case stated that the deceased made her current spouse the sole beneficiary of her will on 10 May 2005 and phoned HostPlus on 31 May 2005 to nominate him as her preferred superannuation beneficiary, which was recorded on annual statements sent to the deceased every year until her passing.

The deceased’s son claimed in his submissions to the court that his mother’s current spouse had “fleeced us of absolutely everything, is now also highly suspected of double dipping from his former wife, and the law seemingly recognises that disproportionalism and unfairness and supports it”.

He also claimed that the current spouse had “cleaned out” his father due to the legal battle and his father “has no house because it has been stolen from him courtesy of the [...] bank enabling and facilitating that act, does not even have enough money to buy a cabin in a caravan park, is almost 80yrs old”.

“If the spouse has since altered and changed his will post our mother’s death to exclude my sister and I from receiving any of our mother’s property, does that act and omission render the word ‘wishes’ null and void, and upon which AFCA and Hostplus have placed a great deal of emphasis and weight to form their final determination?” the court heard.

Wong said AFCA considered legal proceedings involving the children’s biological father, due to events that occurred after the deceased’s death, as the main cause of their financial hardship, which was included by the applicant in arguing that important factors were not considered by AFCA in its decision.

“AFCA found that neither [of the children] were financially dependent on the deceased on the date of her death and considered that even if these events could have been foreseen by her, there was no evidence to indicate that she would have contributed to the legal fees of her former spouse,” he said.

“AFCA was also satisfied that the HostPlus trustee decision was consistent with the wishes of the deceased due to her phone call to HostPlus in 2005 and that her current spouse was the sole beneficiary of her will.”

He continued that in its decision, the court had to be satisfied that the applicant had raised a question of law on appeal, for example, the use of an incorrect legal test by AFCA or an unreasonable decision that failed to take into account a relevant matter or had regard to an irrelevant matter.

“The court found that the son’s notice of appeal was directed at challenging factual findings that were made or are alleged should have been made by AFCA and did not raise any seriously arguable question of law,” Wong said.

“The court noted: ‘It may even be appropriate in some cases for the court to formulate the question in appropriate terms when it is apparent from either the notice of appeal or the applicant’s submissions that a question of law does arise (see Onassys at [21] citing Secretary, Department of Education, Employment and Workplace Relations v Ergin (2010) 119 ALD 155; [2010] FCA 1438 at [11] (Tracey J) and Rana v Repatriation Commission (2011) 126 ALD 1; [2011] FCAFC 124 at [14] (Kenny, Stone and Logan JJ)’.”

Wong said the court had to consider two broad potential grounds for the son’s reframed appeal claim to succeed in hypothetically re-applying to the court, being biased and failure to consider relevant matters.

“The potential ground of bias was considered by the court to likely fail. It could not express how AFCA having board members from the banking industry or with shares in the banking industry could provide any basis for a concern that its determination in this case (to be made by an allocated AFCA adjudicator or panel) was affected by apprehended or actual bias.”

“The potential ground of not considering financial hardship was noted by the court as having already been considered by AFCA, and it concluded that AFCA acknowledged that the children appeared to be facing financial hardships, however, AFCA was not persuaded that this meant that the decision of HostPlus as superannuation trustee was unfair or unreasonable.”

He added that it appears the deceased and her current spouse had entered into reciprocal wills naming each other as their primary beneficiaries.

“This is also seen often in BDBNs, and leaves open the invalidity of one BDBN of the last surviving spouse as the spouse recipient has passed away prior,” he said.

“The next step of beneficiaries of the last surviving spouse is often not considered in these simple arrangements, which in the absence of any BDBN leaves the default beneficiaries clause in the trust deed and any trustee discretion mechanism within that clause to determine the death benefits distribution.”

Furthermore, Wong noted that it is not clear from the judgment how many years after 2005 the deceased passed away, any period of estrangement from her children, or any age differential between the deceased and her spouse.

“If the spouse had passed away first, then the deceased could have had an opportunity to reconsider naming him as primary beneficiary of her will and as her primary superannuation beneficiary. If she had made a BDBN, it would have to be revoked and remade separately.”

“AFCA’s decision factors under section 1055 of the Corporations Act 2001 were also considered in more depth in the Federal Court and Full Federal Court judgments in the case of Tratter v Aware Super (Tratter), where leave to appeal to the High Court was refused for having no prospects of success.”

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