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(August-2003) Third party payment ruling overturned
The Full Federal Court has overturned a decision by the Federal Court which effectively prevented super funds from paying member entitlements to third parties.
In an earlier decision, Asgard, as the trustee of a fund in which Barry Richard Maher had invested, had been ordered to pay Maher $245,000 after it was misappropriated by his financial adviser when Maher signed a withdrawal form instructing Asgard to pay the planner his benefit.
The previous decision, which found such payments to be in breach of the Superannuation Industry (Supervision) (SIS) Act 1993, put a halt to many third party payments including payments to joint accounts and third party cheques, so it became “massively inconvenient to trustees and members”, notes Blake Dawson Waldron partner Michael Vrisakis.
The successful appeal has now confirmed that such payments are valid.
“The importance of the case is that it reinstates the status quo prior to the decision, and it has given very clear interpretation to one of the key parts of the legislation, but it also shows that when members are entitled to a benefit, they can do with it what they want, and trustees won’t be liable if they follow the direction,” Vrisakis says.
“It is an indication that trustees have their normal duties, but that duty shouldn’t extend to second guessing where members direct their benefits. It’s a right of the member to direct where their money is to be paid, and it is the right of the trustee to be protected if they discharge the benefits.”
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