Case note: limits on the scope of a power of attorney

It is always difficult in banking, trusts and estates administration to determine whether an attorney has the power to act for the principal in all the ways that the attorney would wish. The scope of a power of attorney depends on its precise wording as well as the type of matter or document that is in question.

In Re Narumon Pty Ltd [2018] QSC 185 the Supreme Court of Queensland decided that an attorney under an Enduring Power of Attorney had the power to sign an extension of a Binding Death Benefit Nomination for the member of a self-managed superannuation fund, but not a new Binding Death Benefit Nomination.

In 2016 the attorneys for Mr. Giles, after he became incapacitated, signed a document entitled “extension of binding death benefit nomination”, by which the binding death benefit nomination made by Mr. Giles on 5 June 2013 was confirmed and extended for a further three year period.

At the same time, the attorneys for Mr. Giles also signed a (new) binding death benefit nomination, which nominated his second wife and the child of his second marriage to each receive 50% of the benefit payable on Mr. Giles’ death.  He died in 2017.

The validity of the binding death benefit nominations was important: Mr. Giles had four children from his first marriage who claimed on his estate. But while his estate was worth only $200,000 he had self-managed superannuation fund benefits of $4 million.

Whether the attorneys had the power to confirm the 2013 nomination or make a new one, depended upon the consideration of the terms of the Fund deed, the statutory provisions governing an enduring power of attorney under the Powers of Attorney Act 1998 (Qld), and the relevant Commonwealth superannuation legislation.

Justice Bowskill decided:
1. There was nothing in the Fund deed itself which would prohibit an attorney signing a nomination for the member. On the contrary, the 2014 deed expressly contemplated that any power or right given to a member may, if the person is under a legal disability, be exercised by a person who holds an enduring power of attorney from the person, in accordance with the terms of the appointment.
2. There was no restriction in the Superannuation Industry (Supervision) Act or Regulations which would prevent an attorney, under an enduring power of attorney, from executing such a nomination on behalf of a member.
3. The Queensland Powers of Attorney Act permitted the execution of the 2016 extension.

However, she decided that:
“There is a distinction between that, and the making of the 2016 BDBN, because it does represent an, albeit small, change to what Mr. Giles had proposed. Where an attorney purports to make a binding death benefit nomination for a principal/member, who has lost capacity, for the first time (that is, where the principal/member had not previously done so personally); or purports to amend or vary a binding death benefit nomination previously made personally by the member, different considerations, in particular in terms of actual or potential conflicts of interest, may arise. In that context, questions as to the scope of the authority of the attorney would arise, in terms of whether the principal had authorised them to enter into a conflict transaction of that type, or generally; and in any event, whether the act was nevertheless one “on behalf of” and in the interests of the principal.

Adopting what I regard as an appropriately conservative approach to this issue, I am not persuaded it is appropriate to make the declaration sought … giving effect to the 2016 BDBN, as it could be said, in light of the change, that it is a conflict transaction for which there was no authorisation from the principal. However, I do consider it appropriate to grant the relief sought, giving effect to the 2016 extension, for the reasons already articulated. “

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