Another BDBN Case: Was the nomination given to the right trustee?

A court has upheld an informal removal and appointment of SMSF trustees. The background is about the control of a death benefit of a father.  It seems that as the father did not have a binding death benefit nomination, the allocation of the death benefit was to be determined by the trustee of the self managed superannuation fund exercising a power of selection.  The two interested parties each wanted to control the trustee and therefore to control the selection decision.  This contest translated into the legal issue as to whether the daughter had been validly removed as a trustee and as to whether the father’s de facto had been validly appointed as trustee.

The Court held that the daughter had been validly removed and that the de facto had been validly appointed.  

The trust deed required that any removal/appointment of trustee must be in writing and the fact of the removal/appointment must be immediately advised to the continuing trustees.  The Court held that this requirement was satisfied by a minute of a trustees meeting stating that “decided to remove trustee” and “decided to appoint trustee”.  The “minute” satisfied the trust deed requirement as it was signed by all relevant parties – so it was “in writing” and by signing the “minute” the continuing trustee had notice of the removal/appointment.

This is an interesting case – “decided to remove/appoint” is equated with “removed/appointed”.  Also, it treats a trustee minute as being in “writing” as all relevant parties signed the minute.  There may be much discussion as to the reasoning of the case and whether third parties will be satisfied with such informality of trustee changes.  If the removal and appointment had been formally prepared then possibly considerable legal and court costs and time could have avoided.

Case reference: Perry v Nicholson [2017] QSC 163