McIntosh v McIntosh [2014] QSC 99

This recent decision of the Supreme Court of Queensland deals with an area of the law which has growing practical importance in view of the growth of personal superannuation. The amount invested in superannuation and receivable by way of a death benefit can often be well in excess of the amount of funds in the estate itself.

In this case, the court was asked to determine how the legal personal representative of her deceased son should deal with the entitlement to payment of his superannuation upon his death.

Facts

The applicant and the respondent were respectively the estranged parents of their deceased single son who died without children or a Will. The deceased lived with his mother at the date of death.

In September 2013, the applicant mother was granted Letters of Administration of her son’s estate and deposed in an affidavit to a high level of conflict between herself and her former husband. Consequently, she did not believe that a joint grant to them of Letters of Administration was workable. She also deposed that if she were appointed Administrator of the estate, she acknowledged that she was required to collect her son’s assets, pay his liabilities as soon as possible and distribute his residuary estate by dividing it equally between herself and the respondent. She said, “I propose faithfully to do this”.

After obtaining a grant of Letters of Administration the applicant made three separate applications to superannuation funds of which her deceased son was a member claiming to be in an interdependent relationship with him for the purposes of the Superannuation Industry (Supervision) Act 1993 & Regulations and was therefore his financial dependant for those purposes. The superannuation benefits totalling $453,748.69 were then paid to the applicant personally. In comparison, the net assets of the estate appeared to amount to $80,000.00.

The respondent objected to the applicant’s conduct and payment of the superannuation to her as he would otherwise only receive half of the net estate assets. 

In March 2014, the applicant filed an application for advice and direction pursuant to the Succession Act 1981 (QLD) and section 96 of the Trusts Act 1973 (QLD) whether as the Administrator she was required to pay to the estate the superannuation benefits which she had received. In essence, the applicant argued that she should be entitled to retain the benefit of all of the superannuation paid to her while the respondent submitted that the applicant should be required to account to the estate for those monies which would then be divided under the Intestacy Rules, equally between the applicant and the respondent.

Whilst the applicant conceded that once she was appointed as Administrator she was in a fiduciary relationship with the beneficiaries of the intestate estate, she argued that she did not breach any such  duty in the circumstances of this case. She submitted that the duty expressed in section 51(1)(a) of the Succession Act 1981 to collect and get in the real and personal estate of the deceased did not  include the right to compel the trustee of the superannuation fund to exercise its discretion according to the Superannuation Deed, in favour of the estate. Neither the superannuation benefits nor the right  were assets of the estate to which the duty in section 52 of the Succession Act 1981 would attach.

The applicant also submitted that as the potential conflict between her duty as Administrator and her interest in receiving the superannuation benefits personally was known before she was appointed  Administrator, an application for payment of the superannuation benefits to the estate did not form part of the Administrator’s duties.

The respondent submitted that the applicant, as the legal personal representative, had a positive duty under section 52 of the Succession Act 1981 to get in the assets of the estate. She also had a fiduciary duty not to allow a conflict of personal interest in duty to occur. Seeking a payment of the superannuation death benefit to herself personally, without also doing so on behalf of the estate or, otherwise, not informing the respondent so that he could do so, breached both of those duties.

Outcome and principles

The court considered the following relevant principles:

  • The applicant was not the executor of a Will whom a Willmaker may have known had a known conflict of  interest and would be taken to have accepted that a conflict could arise.
  • The appointment of an Administrator was made by the court for the due and proper administration of the estate and the interest of the parties beneficially entitled.
  • In this case, the applicant did not disclose to the court that she intended to apply to the superannuation funds for the death benefits to be paid to her personally.
  • There was not sufficient disclosure by the applicant for the court to infer that she would be placed in a position of conflict nor for the respondent to give his informed consent to that position of conflict.
  • The applicant made application to the superannuation funds on 30 September 2013 which was after the order made on 24 September 2013 that Letters of Administration be granted to her.
  • After that order, the applicant acquired the fiduciary duties which are reposed in the office of an Administrator.
  • In this case, there was a clear conflict of duty and interest contrary to her fiduciary duties as Administrator which she resolved in favour of her own interests.
  • When the applicant made application to each of the superannuation funds for money to be paid to her personally, rather than to the estate, she was preferring her own interest to her duty as legal personal  representative.
  • As such, she acted in breach of her fiduciary duty as Administrator of the estate and in breach of the duty expressed in section 52 (1)(a) of the Succession Act 1981.
  • An Administrator of an intestate estate has a duty to apply for payment of superannuation funds to the estate and has no proprietary right to the funds.
  • The exercise of a discretion is different to the duties falling upon a trustee of a superannuation fund where a binding nomination has been executed in which case the trustee is required to pay the benefits so nominated.
  • There was no binding nomination in this case so the trustees of the superannuation funds were obliged to comply with Regulation 6.22 of the Superannuation Industry (Supervision) Regulations and pay the benefits to the legal personal representative, the  member’s dependant or dependants.
  • The failure of the applicant to apply for payment to herself as legal personal representative was in breach of her fiduciary duty to act in the best interests of the estate, for which she may be held liable by the court.

Having regard to those considerations, the applicant was required to account to the estate for the benefit which she gained for herself in breach of her duty which in this case meant transferring the payments received from the three superannuation funds from herself to the estate of her son.

Comment: This case is a reminder of the fiduciary obligations of legal personal representatives. It is likely that this case could been avoided if the deceased son had prepared a binding death benefit nomination with the superannuation funds directing the death benefit be paid to his mother and importantly, had prepared a Will nominating his mother as the executor of his estate. The circumstances once again demonstrate the importance of estate planning for all individuals irrespective of their personal circumstances and size of their estate.