In a recent Queensland case, the topic of attorney’s handling a principal’s superannuation matters was, again, front and center.

In Re Rentis Pty Ltd [2023] QSC 252, the Court was asked to determine whether a nomination by a duly appointed attorney of an incapacitated principal was valid.

You may recall my earlier post on the matter of Re Narumon that initially determined that an attorney was empowered to make/renew a binding death benefit nomination (BDBN) in relation to the principal’s superannuation.

In Re Rentis, the Court upheld the authority that Re Naurmon had settled but had a further point to consider: the interpretation of the word ‘renew‘ set out in the drafting the Enduring Power of Attorney (EPA) document.

By way of background, the applicant in the matter was the corporate trustee for the Robert Stannett Superannuation Fund. Sadly, the principal, Robert Stannett, had lost capacity as a result of a brain injury in late 2020. Robert was the sole member of his self-managed superannuation fund and, prior to his injury, had executed an Enduring Power of Attorney in favour of his wife and his brother Peter (who was later the sole director of the corporate trustee of the superannuation fund). Robert’s wife subsequently passed away in early 2021, leaving his brother Peter to manage Robert’s affairs pursuant to the EPA.

There were multiple BDBNs before the Court; two made by Robert himself and then a later two made by Peter, as Robert’s attorney. The history of the BDBNs can be summarised as follows:

• On 13 June 2019, Robert nominated his wife as sole beneficiary, then if she did not survive, then $200,000 to each of Robert’s children and his wife’s children, and then the balance to Robert’s estate;
• On 23 October 2020, Robert nominated his wife to receive 50% and his children to receive 25% each;
• On 9 May 2022, Peter (as Robert’s attorney), nominated 40% each to Robert’s children, and 10%e ach to Robert’s step-children (his late wife’s children);
• On 17 May 2022, Peter (again, as Robert’s attorney), nominated 25% each to Robert’s children and the 50% balance to Robert’s estate.

The BDBNs were properly executed and the only question left remaining was the interpretation of the word “renew” in the EPA and whether that was sufficient to empower Peter to have had made the BDBNs on behalf of Robert.

The power in the EPA was expressed as “I authorise my attorney/s to renew any binding death nomination made by me for any superannuation benefits or entitlement”.

The Court said:

A more sensible and preferable interpretation of the word renew is a dictionary definition, “restore to freshness” or, in other words, to make new in the sense of making a new BDBN that was fresh and addressed fresh circumstances that had arisen since the last BDBN.  It would seem inconvenient, to say the least, if the attorney could not address changed circumstances.  To deal with purely hypothetical circumstances, changed circumstances could include the death of someone who is the subject of a previous nomination, a divorce, a family fracture, a dependant ceasing to be financially dependant when they came into wealth, or as it were, won the lottery, or a particular dependant falling on hard times through disease, illness or some other reason.

In a succinct judgement, Applegarth J held that the concluded interpretation should not be one that would result “consequences which appear to be capricious, unreasonable, inconvenient or unjust” (See, Spina v Permanant Custodians Ltd [2008] NSWSC 561, at [107]).

Giving consideration to this principle of construction, the Court said:

I turn to apply the principles that I have just discussed to that term.  A narrow construction would produce capricious, unreasonable and certainly inconvenient results for a principal who became incapacitated and whose circumstances had changed or where other circumstances had changed.  One would think that it is precisely the existence of changed circumstances that gave rise to the authority given to the attorney to renew any binding death benefit in the sense of making a fresh BDBN, that is, to make a new BDBN to address those circumstances or to renew the BDBN. 

The Court concluded that the BDBN made by Peter, as Robert’s attorney, was within Peter’s power and declared it valid.

For the estate planners that are reading this post, I must say this is a great example of the importance of drafting for EPAs and just generally encouraging a conversation with clients who are giving instructions to set up an EPA. I feel this is a fortunate case to have as a precedent to lean on, however it is, like Re Narumon, highly dependent on the circumstances. I cannot help but wonder if the outcome would be different or perhaps would garner a more complex, highly contentious and robust discussion if the attorney had a personal stake in the BDBN (hello, conflict of interest!) and/or the BDBN was dissimilar from the previous BDBNs made by the principal. Food for thought!

You can read the full case here.