Royal Commission into the banks - Advice to Trustee

Phillip Sweeney made this Freedom of Information request to Australian Prudential Regulation Authority

Australian Prudential Regulation Authority did not have the information requested.

From: Phillip Sweeney

Delivered

Dear Australian Prudential Regulation Authority,

The first duty of any trustee is to obey the terms of the trust. If the trustee is a corporate trustee, then it is a duty of every director to acquaint themselves with the terms of the trust and to ensure the corporate trustee executes the trust.

If the corporate trustee administers more than one trust, then the directors must acquaint themselves with the terms of each trust.

This is a duty that cannot be delegated.

If a trustee or a director of a corporate trustee is unsure of how to interpret the terms of a trust (Regulations of the Fund) , then judicial advice should be obtained to resolve any uncertainty.

In the last decade the High Court of Australia has made some important rulings that every director of a superannuation fund trustee should be aware of.

The High Court in Finch v Telstra Super Pty Ltd [2010] HCA 36; (2010) 242 CLR 254 stated at [35]:
“The government considers that the taxation advantages of superannuation should not be enjoyed unless superannuation funds are operating efficiently and lawfully.”

The lawful operation of a superannuation fund requires a trustee to seek judicial advice if there is any uncertainty as to the terms of the trust (Regulations of the Fund}.

Seeking such advice allows the Court to relieve a trustee of a personal liability for a breach of trust action.

This has been confirmed by the High Court in Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand[2008] HCA 42; (2008) 237 CLR 66.

If a member or a beneficiary of a superannuation fund in a compulsory superannuation system raises a concern about the interpretation of the terms of a superannuation trust or what class of persons has a beneficial interest in the trust, then the High Court and lower courts have ruled that the onus of proof does not lie with the fund member or beneficiary to substantiate their claim for a benefit, the onus of proof lies with the trustee to repudiate the claim if the trustee honestly believes that the member or beneficiary is misconceived as to their entitlement.

A trustee and a director of a trustee has a statutory duty to act in the best interests of a member or beneficiary of the superannuation trust and seeking judicial advice in cases of doubt is part of this statutory duty.

The cost of obtaining judicial advice can be taken from the fund itself and not out of the trustee’s own pocket.

Therefore any adversarial litigation between a trustee of a regulated superannuation fund must be a last resort and not a first resort.

These ruling by the High Court of Australia are clearly significant for both trustees and fund members.

The document I seek is a copy of an information bulletin or similar letter or document that APRA has circulated to Trustees with a RSE licence advising them of the need not to participate in adversarial litigation with members or beneficiaries without first having sought advice and directions from a court of competent jurisdiction.

This information bulletin may or may not make specific reference to the High Court cases mentioned above.

This FOI request and response may be tendered as evidence to a Royal Commission into the banks.

Yours faithfully,

Phillip Sweeney

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From: Freedom of Information
Australian Prudential Regulation Authority

Dear Mr Sweeney

I acknowledge your FOI request as set out below. We are processing your request and will respond to you soon.

Kind regards

Ben Carruthers
FOI Officer

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From: Freedom of Information
Australian Prudential Regulation Authority

Dear Mr Sweeney

 

Could you please clarify whether you seek:

1.       a bulletin or letter that may have been circulated by APRA to all
trustees at the same time (i.e. an industry bulletin); or

2.       a bulletin or letter that may have been sent by APRA to
individual trustees at various times.

 

Kind regards

 

Ben Carruthers

FOI Officer

 

 

 

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From: Phillip Sweeney

Delivered

Dear Freedom of Information,

This is an example of a Bulletin or brochure published by APRA.

file:///D:/AAAAAAA%20Communication%20Pack/AAAA-%20Royal%20Commission/APRA/APRA%20Publications/APRA_Brochure.pdf

In this document it is stated that APRA promotes safety and
soundness in business behaviour and risk management.

Advising trustees of regulated superannuation funds on the need for
trustee Directors to acquaint themselves with the terms of the
superannuation trusts under their stewardship would be an important
aspect of such promotion. This is a fundamental aspect of the role
of a trustee Director.

The "Insight" documents are bulletins which provides information on
APRA’s main policy initiatives and on key developments in the
financial industries that APRA supervises.

APRA also publishes "Information Papers". For Example

http://www.apra.gov.au/Super/Documents/I...

APRA publishes Standards such as SPS 520 which requires that
Directors have "competence".

An item on any "competence" list would be the need of a
Director to understand the duty of a Trustee to seek judicial advice if there is any doubt as to how to interpret the trust instrument or to how to administer the trust. If a trustee seeks judicial advice then the the Court is able to protect the trustee from a liability for breach of trust.

Therefore the document(s) I seek would be a document published by
APRA such as those listed above as general advice which would apply
to all trustees and not a document that may have only been sent to
one particular trustee or a few trustees at different times

Yours sincerely,

Phillip Sweeney

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From: Freedom of Information
Australian Prudential Regulation Authority


Attachment 20160603 Notice of Decision FOI 54.pdf
1.6M Download View as HTML


Dear Mr Sweeney

 

Please see attached, APRA's Notice of Decision dated 3 June 2016.

 

Kind regards

 

FOI Officer

 

[1]http://www.apra.gov.au/PublishingImages/...

 

 

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