The issue of eligible recipients of an adult child’s superannuation death benefit was considered by the Federal Court of Australia (FCA) on 4 December 2018, in Williams v IS Industry Fund Pty Ltd [2018] FCAFC 219 (“Williams”) which concerned an appeal by a father claiming to be an eligible payee of his son’s superannuation death benefit on the basis of the existence of an interdependency relationship between the father and son.
Context – The Rules Concerning Eligible Payees
In Williams, the rules concerning eligible payees in the trust deed of the relevant superannuation fund, Intrust Super Fund, reflected those set out in the Superannuation Industry (Supervision) Act 1993 (Cth) (“SIS Act”). They required that a member’s death benefit may only be payable to:
- nominated beneficiaries (if any) – meaning one or more dependants, or the legal personal representative of a member, nominated by the member as a nominated beneficiary; or
- other dependants of the deceased member – meaning the spouse, child, person in an interdependency relationship, or any other person financially dependent on the deceased member; or
- the deceased member’s legal personal representative.
Since the specified categories of payees do not include parents, the appellant in Williams claimed to be a “person in an interdependency relationship”. The expression “interdependency relationship” is defined in s 10A of the SIS Act. Subsection (1) of s10A requires the following:
(1) Subject to subsection (3), for the purposes of this Act, 2 persons (whether or not related by family) have an interdependency relationship if:
(a) they have a close personal relationship; and
(b) they live together; and
(c) one or each of them provides the other with financial support; and
(d) one or each of them provides the other with domestic support and personal care.”
Importantly, due to the use of the word “and” following each of the criterion in (a) – (d) above, a person claiming to have an interdependency relationship with another person must show that each of those criteria is met. When Mr Williams’ case was heard at first instance by the Superannuation Complaints Tribunal (SCT), it was accepted that Mr Williams and his son had a close personal relationship however it was not accepted that he and his son had lived together.
The Arguments on Appeal
The appeal heard by the FCA on 4 December 2018 was Mr Williams’ third appeal to the FCA in relation to this matter. In this third appeal Mr Williams argued, amongst other things, that the FCA had previously erred in finding that the SCT
- had not misconstrued the phrase “live together” as requiring or meaning physical co-habitation in the one dwelling; and
- had taken into account relevant considerations about whether the living arrangements between him and his son were temporary
In support of his arguments, Mr Williams drew attention to subsection (3) of s10A of the SIS Act which notes that regulations may specify particular matters to be taken into account. Regulation 1.04AAAA of the Superannuation Industry (Supervision) Regulations 1994 (Cth) (“the SIS Regulations”) specifies a wide range of matters to be taken into account, where relevant, and notes the following with respect to the requirement of “living together”:
“ (3) For paragraph 10A(3)(b) of the Act, 2 persons have an interdependency relationship if:
(a) they have a close personal relationship; and
(b) they do not satisfy the other requirements set out in subsection 10A(1) of the Act; and
(c) the reason they do not satisfy the other requirements is that they are temporarily living apart.”
Example for paragraph (3)(c): One of the persons is temporarily working overseas or is in gaol.
Since Mr Williams’ adult son, Joseph, had died in hospital following a lengthy period of hospitalisation, Mr Williams argued that he and Joseph had been living together prior to Joseph’s hospitalisation such that the period of hospitalisation could be deemed a period of temporarily living apart after which Joseph would have returned to living with his father had he recovered.
The FCA’s Decision
In the circumstances, the FCA held that the “established pattern of Joseph’s working and living arrangements” leading up to his co-habitation with his father revealed that Joseph had only been holidaying with his father prior to hospitalisation and that Joseph’s future employment plans necessitated that he would have returned to living separately from his father had he recovered.
In addition, the evidence showed that in the weeks immediately before his death, Joseph had chosen to be transported to a hospital away from his father. Around that time, Joseph had also signed a Power of Attorney and a Will removing his father from any position that would allow him to make decisions on behalf of Joseph.
The FCA therefore approved the earlier findings of the SCT that:
“[Joseph] did not see himself as ‘living together’ with [Mr Williams] immediately before his death. Neither was there any evidence that, should he, hypothetically, have gone into remission and emerged from hospital that he necessarily would have recuperated, as in lived together, with [Mr Williams].”
Implications
Whilst, in Williams, the available evidence did not support the appellant’s claim that he and his son had an interdependency relationship, there is certainly scope within the law for a parent to be an eligible recipient of his or her child’s superannuation death benefit. In addition to specifying allowances for circumstances such as “temporarily living apart”, the regulations set out a wide range of other matters to be taken into account in determining whether 2 persons had an interdependency relationship immediately before the death of 1 of the persons.
If you would like clarification on this complex area of the law in relation to your specific circumstances, contact The Law Office of Conrad Curry to make an appointment to discuss how to ensure that you can provide for those closest to you into the future.
