Key News Summary: The Full Federal Court found that a father was not in an ‘interdepency relationship’ prior to his son’s death, applying the relevant SIS Act definition, and the superannuation death benefits were appropriately payable to the son’s legal personal representative, under the Fund’s rules.


 

The Full Federal Court has upheld a decision by a super fund trustee to pay a death benefit to a deceased member’s legal personal representative (LPR) after ruling that the deceased was not in an “interdependency relationship” with his father.

The appellant’s son died of malignant neurofibromatosis, in 2011, at age 31. Despite being American, he was a member of an Australian superannuation Fund: Intrust Super Fund, due to his employment with Club Med in the Whitsunday Islands, Queensland.

The son had lived with his parents until they divorced, and then lived variously with his mother and father including in holidays from College. The son had taken 2 weeks leave and returned to the United States, where he stayed with his father. At the conclusion of his leave, he was scheduled to commence work with Club Med in the British West Indies, he was diagnosed with the malignancy that led to his hospitalisation and death. [paras 5 – 9]

In essence, this was fight between the father and the son’s legal personal representative (the LPR), under the will he made on 4 October 2011. And this fight turned on whether the appellant father, and his son, were in an  “interdependency relationship”. This arose out of the terms of the Rules of the Fund.

  • Rule 14 allowed death benefits to be paid either to the LPR or certain ‘dependants’.
  • ‘Dependant’ was defined as: ‘spouse, child, person in an interdependency relationship, or any other person financially dependent on the deceased member’.
  • Whilst a ‘child’ is a ‘dependant’ of their father, this father’s only option, for being a ‘dependant’ was to establish an ‘interdependency relationship’.
  • ‘Interdependency relationship” was defined as having the same meaning as is contained in the SIS Act and the SIS Regulations prescribed under that Act.

The expression “interdependency relationship” is defined in s 10A of the SIS Act as follows:

10A  Interdependency relationship

(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.

(3) The regulations may specify:

(a) matters that are, or are not, to be taken into account in determining under subsection (1) or (2) whether 2 persons have an interdependency relationship; and

(b) circumstances in which 2 persons have, or do not have, an interdependency relationship.

And a long list of factors are set out, in SIS Reg 1.04AAAA.

The father was appealing the 2nd decision of the of the Superannuation Complaints Tribunal (after he successfully appealed the first). Both times it found that there was no ‘interdependency relationship’. The father failed in his second appeal to the Federal Court  [2018] FCA 529. This case was his appeal, from that decision, to the Full Court.

The Full Court held there was no error of law in finding that the father and son were not in an “interdependency relationship” as they were not “living together” immediately before the son’s death.

  • The Full Court rejected the appellant’s argument that the SCT had erred by failing to take into account all of the relevant considerations listed in reg 1.04AAAA(1) of the SIS Regs.
  • The Full Court also dismissed the appellant’s claim that the SCT had misconstrued the phrase “live together” as requiring physical co-habitation in the one dwelling, and failed to consider whether they were “temporarily living apart”.
  • Rather, the finding that the father and son were not living together was based on the established pattern of the son’s working and living arrangements, and his intention to continue that pattern, once the brief holiday with his father had come to an end.

(Williams v IS Industry Fund Pty Ltd [2018] FCAFC 219, Full Federal Court, Allsop CJ, Reeves and Derrington JJ, 4 December 2018.)

[LTN 236, 6/12/18; Tax Month – December 2018]

11.1.19

CPD (compensation) questions

  1. Was this a fight between the father of the deceased member, and his son’s LPR, over who was entitled to his son’s death benefits?
  2. Why did the matter turn on whether the father and the son were in an ‘interdependency relationship’?
  3. Was the definition of ‘interdependency relationship’ in s10 of the SIS Act relevant?
  4. Why?
  5. Was ‘living together’ a key aspect of ‘interdependency relationship’?
  6. Did the court find that the father and son ‘lived together’?
  7. Why?

 

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