23 February 2015 Sent by Registered Mail: Article id: 5159 0420 2011 12 Highland Way Highton, 3216 Peggy O Neal Legal Director PFS Nominees Pty Ltd (L0002912) {Subsidiary Company of National Australia Bank} GPO Box 63A Melbourne 3001 Dear Ms O Neal Re: Fairfax Media Investigation in to NAB Wealth I refer to the front page of The Age on 21 February 2015 which details the commencement of an investigation into NAB Wealth by Fairfax Media reporters Adele Ferguson and Ruth Williams. Adele has asked people with information in relation to misconduct by staff at NAB Wealth to provide her with further information. To assist Adele and Ruth with their investigations I have provided them with copies of evidence that has until recently been criminally concealed from the widows and beneficiaries of one of Australia s oldest superannuation trusts, that was once known as the Elders IXL Superannuation Fund. The evidence that I have provided to date is listed in Fairfax Media NAB Wealth Investigation Schedule A which I have attached for your benefit. PFS Nominees Pty Ltd became a successor trustee of the superannuation fund that was once known as the Elders IXL Superannuation Fund on 20 January 2014. Survivorship Pensions for Widows The original Trust Deed did not provide for a survivorship pension for widows, however a Deed of Variation executed on 18 January 1955 added Regulation 10A to the Regulations of the fund, which came into effect on 16 March 1954. This provision was repealed and then added back as Regulation 30 in the consolidation Deed of Variation executed on the 6 May 1958. Regulation 30 required a male office to trade some of his pension entitlement for a survivorship pension for his wife. Page 1
A Deed of Variation executed on the 20 November 1974 made the survivorship pension automatic with the addition of Regulation 30A which applied where the male officer had died after 29 June 1974. These provisions remain in force until such time as they are repealed by a subsequent Deed of Variation. I refer you to New South Wales Court of Appeal case Re Dion Investments Pty Ltd [2014] NSWCA 367 {Appendix A} as confirmation of this principle and how there is a chain of deeds so that the varied terms are in that way traceable to the settlor s intention as communicated to the original trustee. The last Deed of Variation executed in accordance with the provisions of the Power of Amendment {Regulation 50} is a Deed of Variation executed on 15 February 1977. Regulation 50 is shown in Exhibit B. Regulation 50 is reference in the Elder Smith & Co Limited Provident Funds Act 1963 (SA). A copy of this enactment can be downloaded at: http://www5.austlii.edu.au/au/legis/sa/num_act/esclpfa58o1963424/ The Next Purported Amending Instrument The next purported instrument to vary the terms of the trust established on the 23 December 1913 is dated 20 December 1982 [Exhibit C]. This purported instrument is not a Deed as required by Regulation 50 and is not duty stamped as either a Deed or an Agreement. The document describes itself on its face as a Resolution and it bears the signature of John Dorman Elliott. Page 2
Recital B that appears in the purported Resolution dated 20 December 1982 states: Recital B says that the Regulations as amended are now referred to as the Rules {Note: the terms of a superannuation trust are commonly referred to as the governing rules so it may have been decided to rename the existing Regulations to avoid confusion}. Recital B does not state something along the lines of: The Regulations of the Fund were repealed in their entirety and replaced by a set of Rules in a Deed of Variation executed in accordance with the provisions of Regulation 50 and dated x-x-19xx. Therefore any purported new Rules must be considered to be supplementary to the existing Regulations of the fund which have become Rules themselves. Recital E in the purported Deed of Variation dated 26 August 1986 supports such a construction since the words rules or regulations are used. There is no Recital in the purported Deed of Variation dated 26 August 1986 along the lines of: The Regulations of the Fund were repealed in their entirety and replaced by a set of Rules in a Deed of Variation executed in accordance with the provisions of Regulation 50 and dated x-x-19xx. I refer to the Recitals in the Deed of Variation dated 20 November 1974 [Exhibit B]. Where a consolidation Deed of Variation has replaced the provisions of the original Trust Deed in their entirety, the consolidation Deed of Variation should be recited along with the original Trust Deed as occurs in the Deed of Variation dated 20 November 1974. Page 3
The Recitals make a clear statement:...and the Regulations governing the Fund were consolidated and amended and the Regulations then governing the Fund were repealed and new Regulations were prescribed and such new Regulations (hereinafter referred to as The Regulations )... If there is a subsequent second consolidation Deed of Variation, then both consolidation Deeds of Variation should be recited along with the original Trust Deed in any subsequent Deeds of Variation. This confirms that certain provisions have been repealed and replaced with new provisions and not just additional provisions. If the Regulations have been repealed there needs to be clear evidence of this intention by the parties to the trust. Refer to Re Wells, 42 Ch. D 646 in Farwell on Powers at p. 214. An instrument which exercises a power of revocation and new appointment must show, not merely the intention to appoint but an intention to revoke the subsisting appointment. That is, if an existing provision in a Deed is to be replaced by a new provision, it must be clearly stated in a Deed of Variation that the older provision is repealed (or revoked) and the date on which the new provision comes into effect also clearly stated. A Document for Adele Ferguson To assist Adele Ferguson with her ongoing investigation into NAB Wealth can you please provide Adele with a copy of the Deed of Variation that repeals Regulations 30 and 30A? Refer to Exhibit A for the outline of such a Deed of Variation. The Deed of Variation will need to be executed in accordance with the provisions of the Power of Amendment {Regulation 50} and prescribe a date when the repeal becomes effective. Alternatively can you provide Adele with a copy of a Deed of Variation that repeals all the Regulations which has also been executed in accordance with the provisions of the Power of Amendment {Regulation 50}? It is trite law that a trustee must obey the original Trust deed as lawfully amended in accordance with the Power of Amendment. Sloppy drafting cannot be used as an excuse by a Trustee who has a duty to act in the best interests of the beneficiaries of the trust. If a Trustee is unsure as to how to interpret the provisions in a set of Deeds, then the Trustee should seek the advice and directions of a court of competent jurisdiction. Page 4
This action will protect the Trustee from a personal liability for a Breach of Trust even if entirely innocent. I have prepared a pro-forma letter for you to send to Adele Ferguson attached. Summary Provisions were added to the terms of an occupational pension trust established on the 23 December 1913 in the State of South Australia to provide survivorship pensions for widows. These provisions were provided by Regulation 30 and 30A and remain in force until such time as these Regulations are repealed. PFS Nominees Pty Ltd will now need to produce a Deed of Variation that clearly states that these provisions have been repealed. If not then PFS Nominees Pty Ltd should pay the pensions in accordance with the provisions of Regulation 30 and 30A. It is trite law that a Trustee must obey the terms of the trust as properly construed. Yours Sincerely Phillip Sweeney {A person with a beneficial interest in the occupational pension trust established on the 23 December 1913 in the State of South Australia}. Cc Head of NAB Wealth Andrew Hagger Attachment: Pro-forma letter of reply to Adele Ferguson Fairfax Media NAB Wealth Investigation Schedule A - Deed of Variation dated 18 January 1955 - Consolidation Deed of Variation dated 6 May 1958 - Deed of Variation dated 20 November 1974 Page 5
Exhibit A Page 6
Exhibit B Regulation 50 - Extract from the consolidation Deed of Variation dated 6 May 1958 Page 7
Exhibit C Decade of Interest Elders IXL Superannuation Fund Signatories Purported Resolution dated 15 December 1989 Signed by Ken Biggins (#1) Purported Deed of Variation dated 26 August 1986 Signed by Ken Jarrett (#1)(#2) Purported Resolution dated 20 December 1982 Signed by John Dorman Elliott (#1) Deed of Variation dated 15 February 1977 Notes: (#1) Subject to investigation by National Crime Authority (#2) Imprisoned for Dishonest Conduct Page 8
Appendix A The New South Wales Court of Appeal reviewed key concepts related to a trust in Re Dion Investments Pty Ltd [2014] NSWCA 367. The Court stated at [41-45]: Where an express trust is established in that way by a deed made between a settlor and the initial trustee to which the settled property is transferred, rights of the beneficiaries arise immediately the deed takes effect. The beneficiaries are not parties to the deed and, to the extent that it embodies covenants given by its parties to one another, the beneficiaries are strangers to those covenants and cannot sue at law for breach of them. The beneficiaries rights are equitable rights arising from the circumstance that the trustee has accepted the office of trustee and, therefore, the duties and obligations with respect to the trust property (and otherwise) that that office carries with it. Any subsequent action of the settlor and the original trustee to vary the provisions of the deed made by them will not be effective to affect either the rights and interests of the beneficiaries or the duties, obligations and powers of the trustee. Those two parties have no ability to deprive the beneficiaries of those rights and interests or to vary either the terms of the trust that the trustee is bound to execute and uphold or the powers that are available to the trustee in order to do so. The terms of the trust have, in the eyes of equity, an existence that is independent of the provisions of the deed that define them. Let it be assumed that on Monday the settlor and the trustee execute and deliver the trust deed (at which point the settled sum changes hands) and that on Tuesday they execute a deed revoking the original deed and stating that their rights and obligations are as if it had never existed. Unless some power of revocation of the trusts has been reserved, the subsequent action does not change the fact that the trustee holds the settled sum for the benefit of beneficiaries named in the original deed and upon the trusts stated in that deed. The covenants of a deed may be discharged or varied by another deed between the same parties (West v Blakeway [1841] EngR 591; (1841) 2 Man & G 751; 133 ER 940) but the equitable rights and interests of a beneficiary cannot be taken away or varied by anyone unless the terms of the trust itself (or statute) so allow. It is, of course, commonplace to speak of the variation of a trust instrument as such when referring to what is, in truth, variation of the terms upon which trust property is held under the trusts created or evidenced by the instrument. A provision of a trust instrument that lays down procedures by which it may be varied is, of its nature, concerned with variation of the terms of the trust, not variation of the content of the instrument, although the fact that it is the instrument that sets out the terms of the trust Page 9
does, in an imprecise way, make it sensible to speak of amendment of the instrument when the reference is in truth to amendment of the terms of the trust. Where the trust instrument contains a provision allowing variation by a particular process, the situation is one in which the settlor, in declaring the trust and defining its terms, has specified that those terms are not immutable and that the original terms will be superseded by varied terms if the specified process of variation (entailing, in concept, a power of appointment or a power of revocation or both) is undertaken. The varied terms are in that way traceable to the settlor s intention as communicated to the original trustee. It should be noted that Section 52 of the Superannuation Industry (Supervision) Act 1993 accords with the principles enunciated the NSW Court of Appeal since Section 52 add covenants to the terms of each regulated superannuation trust (fund) without altering the trust instruments themselves. Section 52 (1) If the governing rules of a registrable superannuation entity do not contain covenants to the effect of the covenants set out in this section, those governing rules are taken to contain covenants to that effect. General covenants (2) The covenants referred to in subsection (1) include the following covenants by each trustee of the entity: (a) to act honestly in all matters concerning the entity; (b) to exercise, in relation to all matters affecting the entity, the same degree of care, skill and diligence as a prudent superannuation trustee would exercise in relation to an entity of which it is trustee and on behalf of the beneficiaries of which it makes investments; (c) to perform the trustee's duties and exercise the trustee's powers in the best interests of the beneficiaries;... (j) to allow a beneficiary of the entity access to any prescribed information or any prescribed documents. Where "beneficiary", in relation to a fund, scheme or trust, means a person (whether described in the governing rules as a member, a depositor or otherwise) who has a beneficial interest in the fund, scheme or trust and includes, in relation to a superannuation fund, a member of the fund despite the express references in this Act to members of such funds. Page 10