In the matter of Gainer Associates Pty Limited [2024] NSWSC 1138

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Gainer Associates Pty Limited [2024] NSWSC 1138 Hearing dates: 22 August 2024 Date of orders: 6 September 2024 Decision date: 06 September 2024 Jurisdiction: Equity - Expedition List Before: Rees J Decision: Judicial advice given. Catchwords: JUDICIAL ADVICE – s 63 Trustee Act 1925 (NSW) – principles at [72]-[78] – importance of trustees seeking advice – controversy or breach of trust does not preclude advice being given – trustee in breach of rules for self-managed superannuation fund (SMSF) – rules require deceased member's legal personal representative to be appointed as trustee or director of corporate trustee – deceased's legal personal representative is NSW Trustee and Guardian (NSWTG) – NSWTG appointed accountant as director of corporate trustee instead – as a consequence, SMSF becomes non-compliant with Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act) – trustee and NSWTG disclose non-compliance to Commissioner of Taxation (ATO) and obtain indemnity – whether advice should be given – the fact that the trustee is in breach is a reason to seek advice – in interests of trust estate to provide direction so that trust property may be administered. DEATH BENEFITS – whether trustee justified in proposed distribution of death benefit from SMSF – exercise of a trustee's discretion, principles at [92]-[96]. DEFENDING PROCEEDINGS – whether trustee justified in defending proceedings for its removal as trustee – justified where trustee's actions sought to be impugned. REMUNERATION – director appointed by NSWTG cannot be remunerated without making SMSF non-compliant – s 17A(2)(d), SIS Act – whether director can be paid by the deceased member's estate instead – meaning of "any person" – broad language – includes payment by estate – given disclosure to ATO of proposed payment of director and indemnity given, justified in paying director from the fund to the extent that his fees do not come within exemption in s 17B(2) – Re Application of Ellasil [2023] VSC 69 considered. Legislation Cited: Corporations Act 2001 (Cth), ss 201F(2), 249B(1) Income Tax Assessment Act 1997 (Cth), ss 295-325, 302-10, 302-60, 302-195 Income Tax Rates Act 1986 (Cth), s 26 NSW Trustee and Guardian Act 2009 (NSW), ss 5, 13(1), 201B Superannuation Industry (Supervision) Regulations 1994 (Cth), reg 6.21 Superannuation Industry Supervision Act 1993 (Cth), ss 17A, 17B, 40, 41, 42, 42A Trustee Act 1925 (NSW), ss 59(4), 63, 85(2) Cases Cited: AMP Capital Investors Ltd as Responsible Entity the KSC Trust [2010] NSWSC 1259 Application of Macedonian Orthodox Community Church St Petka Inc [2023] NSWSC 918 Crnjanin v Ioos [2010] NSWSC 750 Finch v Telstra Super Pty Ltd (2010) 242 CLR 254; [2010] HCA 36 Ievers v Superannuation Complaints Tribunal [2016] FCA 936 New South Wales Institution for the Deaf, Dumb & the Blind (NSW) v Shelly (1917) 23 CLR 351 Karger v Paul [1984] VR 161 Ludwig v Jeffrey (No 2) [2020] NSWSC 1677 Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42 Maciejewski v Telstra Super Pty Ltd (1998) 44 NSWLR 601 Maciejewski v Telstra Super Pty Ltd (No 2) [1999] NSWSC 341 Marley v Mutual Security Merchant Bank & Trust Co Ltd [1991] 3 All ER 198 Owies v JJE Nominees Pty Ltd [2022] VSCA 142 Partridge v Equity Trustees Executors and Agency Co Ltd (1947) 75 CLR 149 Re Perpetual Investment Management Ltd (as Responsible Entity for 10 Schemes listed in the Summons) [2014] NSWSC 784 Re Application by Perpetual Trust Services Ltd (as responsible entity of Momentum AllWeather (A$) Absolute Return Fund) [2012] NSWSC 758 Re Perrot Mill Pty Ltd (No 2) [2013] VSC 428 Re Rosewood Research Pty Ltd [2014] NSWSC 449 Re Stone; Read v Dubua (1936) 36 SR (NSW) 508 Re Application of Uncle's Joint Pty Ltd [2014] NSWSC 321 Re Application by NGS Super Pty Ltd (as trustee of NGS Super) [2021] NSWSC 1694 Wan v BT Funds Management Ltd [2022] FCA 302 Wareham v Marsella (2020) 61 VR 262 Category: Principal judgment Parties: Gainer Associates Pty Limited (Plaintiff) New South Wales Trustee and Guardian (Beneficiary) Steven Bone (Beneficiary) Representation: Counsel: R Bianchi (Plaintiff) C Winnett (New South Wales Trustee and Guardian) DL Williams SC / A d'Arville (Steven Bone)