Interesting issues from the Cantor Case

A number of interesting issues arise from this case.

The first is that the Court agreed with the decision of Munro v Munro – which held that SIS regulation 6.17A does not apply to SMSFs (unless the trust deed of the SMSF explicitly or implicitly incorporates the regulation).  

The second is that the Court opined that the accountants had a duty to keep the BDBN safe and also had a duty to bring to the attention of the trustee of the SMSF that they held the BDBN.  This finding raises the issue of whether accountants holding an otherwise valid BDBN which is not brought to the attention of the trustees of a self managed superannuation fund would be liable to the disappointed beneficiaries under the nomination if the trustees allocated the death benefit on the basis that there was no valid nomination.

The third is that the Court approved the view taken by Master Sanderson in Ioppolo & Hesford v Conti Case that a legal personal representative does not become a trustee (or director of the corporate trustee) merely by virtue of being the legal personal representative.  However, if the legal personal representative becomes a trustee (or director of the corporate trustee) by being appointed as a trustee or director, then the superannuation fund does not cease to satisfy the definition of “self managed superannuation fund” while the death benefit remains to be paid.

One issue the Court did not have to address was the status of the superannuation fund since the member died.  The sole director ceased to be the enduring attorney on the death of the member and as the sole director was not the executor or administrator of the estate of the deceased member, the superannuation fund did not satisfy the definition of “self managed superannuation fund”.  The Court did not have to address this issue or the consequences of the superannuation fund not satisfying the definition and, accordingly, the Court did not make any comment on this issue.

The decision of the Court of Appeal is reported as Cantor Management Services Pty Ltd  v Booth  [2017] SASCFC 122.