The litigation relating to the Boosey Doherty SMSF concerned the validity of a binding death benefit nomination (BDBN). The circumstances involved two visits to the court, years of legal action and contained three valuable lessons discussed below.

Factual background
The Boosey Doherty Superannuation Fund was an SMSF established with two individual trustee members, being Anthony Williams and his wife, Margaret Williams. Margaret died and Paul Williams, the couple’s eldest son, was appointed as the replacement trustee. He was not a fund member.

Anthony had four children from his marriage to Margaret. After her death, he married Gayle Williams in 2019. There were no children resulting from this union.
Anthony executed a will in 2020 and died in late December 2021. One of his other sons, Mark, was the named as the executor of the estate and also appointed as the second SMSF trustee in March 2022.

Anthony made two BDBNs, the first dated 1 February 2018 and the second 26 March 2018. The effect of the second nomination was to revoke the first and allocate 50 per cent of his death benefit to Gayle and 50 per cent to his executor.

Peter Williams, the third son, was significantly disabled and not a party to the litigation. However, the actions of Paul were motivated by his view that greater provision should have been made for Peter, given his disability.

The value of the death benefit in December 2021 was around $550,000, before trustee expenses and litigation costs.

Litigation
The first round of the litigation was initiated by Gayle when she sought a declaration from the Queensland Supreme Court that the second BDBN was valid and therefore binding on the trustees and an order that the current trustees of the SMSF, Paul and Mark, be removed and other individuals be appointed in their place. The citation is Williams v Williams [2023] QSC 90.

The court held the second BDBN was invalid and granted the order removing Paul and Mark as trustees’ and appointing as replacement trustees the two individuals Gayle proposed.

The second round of litigation was commenced by Paul and Mark applying to the Queensland Supreme Court for a review of the replacement trustees’ decision as to the allocation of the death benefit. The court dismissed the application on the basis there was no defect in the trustees’ allocation decision and consequently no proper grounds for review. The citation is Williams v James Robba [2025] QSC 203.

First lesson – the invalidity of the second nomination
The court held the second nomination was invalid as it did not satisfy the formalities specified by the trust deed for a nomination to be binding.

While not explicitly stated in the court’s reasons, the Boosey Doherty SMSF was not bound by Superannuation Industry (Supervision) (SIS) Regulation 6.17A, on the authority of Hill v Zuda [2022] HC 21, and the trust deed of the fund did not incorporate, whether expressly or by implication, the requirements of the regulation as per Donovan v Donovan [2009] QSC 26.

The SMSF trust deed required a nomination to be given to the trustees. The second nomination did not satisfy this requirement as it was not given to the second trustee. As such, a precondition explicitly specified by the trust deed for the second nomination to be binding on the trustees was not satisfied.

To overcome this deficiency, Gayle submitted that, given the trust deed contained the usual interpretative boilerplate provision that “the singular includes the plural and vice versa”, giving the nomination to one trustee was sufficient compliance. The court rejected this argument on the basis that as the trust deed required the trustees to undertake certain actions on the receipt of a nomination, the relevant provision could not be read in the singular form.

The second argument submitted to save the second nomination was based upon paragraph 41 in the reasons of Cantor’s Case [2017] SASCFC 122, which stated the purpose in requiring a nomination to be submitted to the trustees is largely practical so the trustees know which nomination is most recent. This paragraph did not reflect the reason for the nomination being valid in Cantor’s Case. In that situation, the nomination was deemed to be valid, even though it was not provided to each trustee, as the nomination was provided to the agent of the trustees and as such each trustee was deemed to have constructive notice of the nomination.

As the BDBN made by Anthony Williams was held to be invalid, what did this mean for the first nomination? The court did not consider this issue. Possibly the parties to the litigation accepted the original BDBN suffered with the same defect as the second and consequently both nominations stood or fell together.

Second lesson – closed-minded trustees may be removed
Courts have both statutory and inherent power to remove a trustee from a trust, including a superannuation fund, if the removal is necessary for the proper administration and execution of it. This power is not lightly exercised. Mere delay or minor maladministration by the trustee is not sufficient cause. The court is more concerned whether, assuming that the trustee is correctly advised, the trustee would, going forward, intentionally frustrate the proper administration or execution of the trust or simply refuse to correctly administer the trust. The principles governing the court’s power to remove a trustee are set out in Miller v Cameron (1936) 54 CLR 572, particularly the reasons of Justice Dixon at page 580-581).

This portion of the reasoning is surprisingly short given the momentous nature of the power. In the Williams case, the power was exercised primarily because the appointment of Mark as the replacement trustee for the deceased member was defective and that Paul had developed a prejudice against Gayle that would cause him to exclude her from any allocation decision.
The trust deed of the SMSF provided that the death of a member terminates their membership of the fund and that a trustee ceased to be a trustee on death. Accordingly, when Anthony died, he ceased to be both a member and a trustee of the SMSF. Post his death the SMSF had one trustee, Paul, and no members and a superannuation interest that was subject to an allocation power conferred on the trustee.

The defective appointment of Mark arose because he was not a legal personal representative as defined in the trust deed. Here the definition was a “person who has been granted probate of the will or letters of administration of an estate of that member”. While Mark was named in the will as executor, probate had not at the relevant time been granted.
The end position being Paul was a duly appointed trustee and Mark, though not duly appointed, was a trustee by his conduct – trustee de son tort; neither of whom are members.
Very significantly, Paul had in an affidavit evidence advised that he believed the deceased member had engaged in dishonest conduct in relation to the fund, though not specified, and Gayle had not given any satisfactory explanation as to why the second BDBN had not been given to him. Consequently, he would exercise the beneficiary disentitlement powers under clause 27.1 of the trust deed.

This disentitlement power could be invoked if the trustee formed the opinion that if a member commits any fraud or is guilty of any dishonesty or defalcation, then the member is disentitled to their benefit. While the power under clause 27.1 may not apply to beneficiaries of a death benefit, it seems Paul would exclude Gayle from any consideration as a beneficiary if she did not provide an adequate explanation as to why his father did not provide the nomination to him.

The court held Paul had developed a closed mind as to Gayle and would not consider her in any death benefit allocation decision. It also held Mark’s appointment as invalid.

Consequently, the power of removal was exercised and both Paul and Mark were removed as SMSF trustees and two independent and qualified trustees proposed by Gayle were appointed, being James Robba and Morgan Lane.

Third lesson – Kargar v Paul still good law
The decision of the replacement trustees was to allocate 50 per cent of the net death benefit to Gayle and Peter, subject to a minor adjustment in his favour. Peter was materially disabled and entirely reliant on the National Disability Insurance Scheme and family support. Paul and Mark commenced proceedings seeking to overturn the allocation decision, arguing Peter should receive at least 95 per cent of the residual death benefit given his greater needs.

Unlike other jurisdictions, Queensland has a statutory right of review of trustee decisions under section 8(1) of the Trusts Act 1973. The former trustees applied for review of the trustees’ allocation decision under both section 8(1) and general law principles on the basis the trustees failed to exercise real and genuine consideration in making their allocation determination in that they failed to consider the greater needs of Peter compared to Gayle’s needs.

A review under section 8(1) or under general legal principles is not a merits review, that is, whether the decision of the trustee was the best or fairest decision. Rather, the review is to determine if the allocation decision is legally sound. This is an area of law where there are many descriptions as to what constitutes ‘a legally sound decision’, such as a decision which no reasonable trustee could reach, an arbitrary decision, a capricious decision and so on.

In this case, the court held there was no legal error affecting the trustees’ allocation decision.

The decision deemed statutory power of review under section 8(1) of the Trusts Act was not materially different to the Karger v Paul ([1984] VR 161) review test and that the allocation decision could only be reviewed if one or more of the following grounds were established:

• the decision was not exercised in good faith,
• the decision was not exercised upon real and genuine consideration,
• the decision was not exercised for a proper purpose,

if the trustees chose to state the reasons for the decision, then those reasons could be reviewed.

Paul and Mark argued the allocation decision was defective on the basis that the trustees did not give real and genuine consideration to the exercise of the allocation power.

An initial issue was whether the review under section 8(1) was a less demanding review than one under Karger v Paul principles. The court rejected that there was any material difference.

As to whether the trustees failed to give real and genuine consideration, the conclusion was made the court’s function “is limited to reviewing whether the trustee gave real and proper consideration to the exercise of the discretion based on the information possessed” (paragraph 66).

The reasoning from the second case suggests an allocation decision will be legally sound where the trustees:

• identify each potential beneficiary (given the usually small number of potential beneficiaries),
• contact each potential beneficiary as to whether they wish to be considered and, if so, to provide relevant information to the trustees. Typically the relevant information is obtained by a questionnaire as to the beneficiaries’ current financial position, future financial needs, financial support previously provided by the deceased member or provided or likely to be provided by
• the estate of the deceased member, and the nature of their relationship to the deceased and whether they provided support to the deceased and the nature and monetary value of that support, and
• a request for each potential beneficiary to provide such further information they think is relevant to the trustees for the purpose of making the allocation decision.

However, while the process is necessary, it is a means to an end and not the end itself. Additionally, there are practical limitations to the extent and detail of the process: the size and extent of the process is limited by the finite resources of the trustees, that much information may be nothing more than unsupported assertions or unproven allegations, that the death benefit should not be consumed in the costs and expenses of making an allocation decision, that the trustees have no legal power to compel potential beneficiaries to provide information or to test or to resolve conflicting information/allegations.

If the trustees have a reasonable process that identifies all potential beneficiaries, and the trustees undertake that process and the allocation decision is based upon the information obtained from the process, the trustees will have to make a sound allocation decision. The decision may not be the best decision, may not be the decision other persons would have made and the trustees may have not resolved conflicts within the information. However, the decision should stand legal challenge on the basis of ‘no real and genuine consideration’.

The court distinguished the Finch v Telstra Case [2010] HCA 36 on the basis the High Court was considering a member’s entitlement to a superannuation benefit where that entitlement depended on the trustee forming an opinion as to a factual matter, such as whether the member, in the opinion of the trustee, was sufficiently disabled so as never being able to engage in permanent employment again. The discretion in the current case was a ‘truly discretionary’ decision.

The court noted the decision in the Owies Case [2022] VSCA 142, a case where the trustee decision as to income distributions from a discretionary trust was to be defective, turned on the absence of any information seeking process by the trustees. The exercise of the trust distributions power was defective as the trustee did not have any relevant information and so the power was not exercised upon any real and genuine consideration.