KCA Super Pty Limited as Trustee of the Superannuation Fund Known as 'KCA Super' [2011] NSWSC 1204

Supreme Court New South Wales

Medium Neutral Citation: KCA Super Pty Limited as Trustee of the Superannuation Fund Known as 'KCA Super' [2011] NSWSC 1204 Hearing dates: Monday, 26 September 2011 Decision date: 26 September 2011 Jurisdiction: Equity Division - Duty List Before: Brereton J Decision: By order, pursuant to (NSW) Trustee Act (1923), s 63, I advise that the plaintiff would be justified in communicating with members of the Defined Benefit Division of KCA Super to following effect: (a) The Trustee has been advised by the Fund Actuary that it is unable to express an opinion upon the offer contained in the Offer Documents, including amounts proposed to be credited to the Accumulation Account of a Defined Benefit Member transferring to the Accumulation Division, until the Fund Actuary receives the actuarial model used by the Company to calculate the transfer values. The Fund Actuary, on behalf of the Trustee, has requested this actuarial model but, at this time, the Trustee has not received this model. Accordingly, the Trustee is not presently in a position to form an opinion as to whether it will, or is likely to, give consent to any determination that may be made by the Company. (b) You should be aware that matters discussed between the Company and Trustee prior to 16 September 2011 concerned, among other things, the amount to be credited to the Accumulation Account of a Defined Benefit Member reclassified as an Accumulation Division member. The Trustee considered that the amounts proposed by the Company during those discussions were inadequate. Such discussions are referred to at page 21 of the Offer Document ('Changes to your super') wherein reference is made to 'extensive discussions with the Trustee... concerning the closure of the Defined Benefit Division' and that '[w]hilst those discussions were held in good faith, terms could not be agreed. (c) You should be aware that: (i) The Trustee understands that the uplift is supposed to compensate you for the investment risk, expenses, costs and potential personal tax liability that a member will incur by transferring from the Defined Benefits Division to the Accumulation Division; and (ii) On reaching the age 55, a Defined Benefit Member accrues superannuation at the rate of 17.5% multiplied by years of membership of KCA Super multiplied by their Final Average Earnings compared to a member of the Accumulation Division for whom the Company will make superannuation contributions of 10% of their Accumulation Super Earnings. (d) You should be aware that there is considerable doubt as to the validity of that term of the offer that provides for you to be deemed to have consented to a variation of your employment contract resulting in a salary freeze if you do not accept the offer. The trustee is seeking further advice and considering further action in this and other respects. (e) While you must bear in mind that at present the offer expires on 14 October 2011, you may wish to consider deferring your decision whether or not to accept it until these matters have been clarified or until you have heard further from us in the meantime. Catchwords: TRUSTS - Trustees - Application for judicial advice - trustee of superannuation fund seeks judicial advice as to whether it can communicate with members of fund, whether it should accept an offer from company employing employees who are members of fund and whether it should commence proceedings against company - trustee justified in communicating with members as to proposed transaction - trustee should also communicate that proposed unilateral variation of contracts of employment of dubious validity. Legislation Cited: (NSW) Trustee Act 1923, s 63 Category: Principal judgment Parties: KCA Super Pty Limited as Trustee of the Superannuation Fund Known as 'KCA Super' (applicant) Kimberley-Clark Australia Pty Ltd (interested party) Representation: Counsel: Mr Fernon SC (applicant) Mr Gleeson SC w Mr Izzo (interested party) Solicitors: Freehills (applicant) Herbert Geer (interested party) File Number(s): 2011/305970