NESS SUPER PTY LTD ACN 003 156 812 AS TRUSTEE FOR NESS SUPER v BEVAN WILLEM DE VRIES [2025] SASC 188

Applicant: NESS SUPER PTY LTD ACN 003 156 812 AS TRUSTEE FOR NESS SUPER Counsel: MR H INSALL SC WITH MR T CLEARY - Solicitor: HENRY WILLIAM LAWYERS Respondent: BEVAN WILLEM DE VRIES Counsel: MS G WALKER SC WITH DR V GILLILAND - Solicitor: MADSEN O’DEA AGNEW Hearing Date/s: 15/08/2025 File No/s: CIV-24-010814 B SUPREME COURT OF SOUTH AUSTRALIA (Civil: Application) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court in which it was generated. NESS SUPER PTY LTD v DE VRIES [2025] SASC 188 Judgment of the Honourable Justice B Doyle 17 November 2025 SUPERANNUATION - PRIVATE SECTOR FUNDS - AMENDMENT OF TRUST DEED The applicant, Ness Super Pty Ltd (‘the Trustee’), seeks an order pursuant to s 59C of the Trustee Act 1936 (SA) (‘Trustee Act’) varying the terms of the trust deed (‘Trust Deed’) governing a superannuation fund known as NESS Super (the ‘Fund’). The Fund is a regulated superannuation fund and a registrable superannuation entity within the meaning of the Superannuation Industry (Supervision) Act 1993 (Cth) (‘the SIS Act’). The purpose of the proposed variation is to authorise the payment to the Trustee of a fee in an amount equal to 0.25% of the net assets of the Fund up to an initial total of $3 million, to enable the Trustee to address the risk of the Trustee becoming insolvent should it be liable to a penalty in respect of which it has no right of indemnity against the assets of the Fund. Held, granting the application for orders varying the Trust Deed: 1. the Court has jurisdiction to entertain the application to vary the Trust Deed; 2. the pre-requisites for the making of an order pursuant to s 59C of the Trustee Act are established; 3. there is no reason why the Court should withhold relief on a discretionary basis. Superannuation Industry (Supervision) Act 1993 (Cth) ss 52, 52A, 56, 57, 134; Superannuation Industry (Supervision) Regulations 1994 (Cth), referred to. AustralianSuper Pty Ltd v McMillan [2021] SASC 147; Retail Employees Superannuation Pty Ltd v Pain [2016] SASC 121, applied. Application by LGSS Pty Ltd atf Local Government Super [2021] NSWSC 1613; Application by Maritime Super Pty Ltd atf Maritime Super [2021] NSWSC 1614; Application by Motor Trades Association of Australia Superannuation Fund Pty Ltd atf Spirit Super [2021] NSWSC 1672; Application by NGS Super Pty Ltd atf NGS Super [2021] NSWSC 1694; Application by SCS Super Pty Ltd atf Australian Catholic Superannuation and Retirement Fund [2022] NSWSC 686; -- 1 of 18 -- Australian Securities and Investments Commission v AustralianSuper Pty Ltd (2025) 172 ACSR 615; Australian Securities and Investments Commission v LGSS Pty Ltd (No. 3) [2025] FCA 205; Australian Securities and Investments Commission v Mercer Superannuation (Australia) Ltd [2024] FCA 850; Application by United Super Pty Ltd atf Construction and Building Superannuation Fund [2021] NSWSC 1679; Clarke v Ebdon [2020] SASC 67; Host-Plus Pty Ltd v Blackwell [2022] SASC 59; Re Care Super Pty Ltd [2021] VSC 805; Re Care Super Pty Ltd (No 2) [2021] VSC 854; Re Hest Australia Ltd [2021] VSC 809; Re QSuper Board [2021] QSC 276; Salkeld v Salkeld (No 2) [2000] SASC 296; Togethr Trustees Pty Ltd v Safai [2023] SASC 90, discussed. -- 2 of 18 -- NESS SUPER PTY LTD v DE VRIES [2025] SASC 188 Civil 1 B DOYLE J: The applicant, Ness Super Pty Ltd (‘the Trustee’), seeks an order pursuant to s 59C of the Trustee Act 1936 (SA) (‘Trustee Act’) varying the terms of the trust deed (‘Trust Deed’) governing a superannuation fund known as NESS Super (‘the Fund’). The Fund is a regulated superannuation fund and a registrable superannuation entity within the meaning of the Superannuation Industry (Supervision) Act 1993 (Cth) (‘the SIS Act’). 2 The purpose of the proposed variation is to authorise the payment to the Trustee of a fee in an amount equal to 0.25% of the net assets of the Fund up to an initial total of $3 million, to enable the Trustee to address the risk of the Trustee becoming insolvent should it be liable to a penalty in respect of which it has no right of indemnity against the assets of the Fund. Because the prospect and actuality of the insolvency of the Trustee would likely be to the significant disadvantage of members, and because there are no practicable alternative measures that would substantially mitigate the risk available, the variation is submitted to be in the interests of the members of the Fund. 3 The application is similar in concept to a number of applications that have been granted by this Court in exercise of the power in s 59C.1 The legal and regulatory environment that has prompted the applications has also been addressed in a number of authorities in other States.2 Those authorities have, consistently with the South Australian authorities, endorsed the initially counter-intuitive proposition that building up a pool of personal capital by the trustee levying a fee upon members can, so long as the right balance is struck and the process is equitable as between members, be seen to be in the best financial interests of all members of the Fund. They have also accepted that a provision of a trust deed which permits a trustee to raise capital for the purpose of being in a position to fund future exposures is not necessarily rendered void by s 56(2) or s 57(2) of the SIS Act as a provision which would or would have the effect of exempting from, or indemnifying against, relevant liabilities.3 The reasoning in those decisions has not been challenged and should be followed. 1 AustralianSuper Pty Ltd v McMillan [2021] SASC 147 (‘AustralianSuper’), Host-Plus Pty Ltd v Blackwell [2022] SASC 59 (‘Host-Plus’), Togethr Trustees Pty Ltd v Safai [2023] SASC 90 (‘Togethr’). 2 Re QSuper Board [2021] QSC 276 (‘QSuper’), Application by NGS Super Pty Ltd atf NGS Super [2021] NSWSC 1694, Application by Maritime Super Pty Ltd atf Maritime Super [2021] NSWSC 1614 (‘Maritime Super’), Application by LGSS Pty Ltd atf Local Government Super [2021] NSWSC 1613 (‘LGSS’), Application by Motor Trades Association of Australia Superannuation Fund Pty Ltd atf Spirit Super [2021] NSWSC 1672 (‘Spirit Super’), Re United Super Pty Ltd atf Construction and Building Unions Superannuation Fund [2021] NSWSC 1679 (‘United Super’), Re Hest Australia Ltd [2021] VSC 809 (‘HESTA’), Re Care Super Pty Ltd (No 2) [2021] VSC 854, Application by SCS Super Pty Ltd atf Australian Catholic Superannuation and Retirement Fund [2022] NSWSC 686. 3 QSuper at [32] (Kelly J), Re Care Super Pty Ltd [2021] VSC 805 at [173]-[175], [179] (Lyons J), HESTA at [81]-[85], [91]-[92] (Button J), LGSS at [105]-[108] (Ward CJ in Eq), Maritime Super at [194] (Ward -- 3 of 18 -- [2025] SASC 188 B Doyle J 2 4 That this is now well-traversed territory does not lessen the degree of scrutiny required by this Court in any particular application. However, having been satisfied that this is an appropriate case to grant relief in the terms ultimately sought, I can express my reasons briefly. The Fund and the Trustee 5 The Fund was established by a deed poll dated 8 October 1987. The original deed and relevant rules have been amended a number of times. The most recent amendments were made to the deed on 23 April 2014. A consolidated version of the deed was tendered in evidence, and attention can largely be confined to the terms of that consolidated deed. 6 As at 30 June 2024, there were over 12,800 members across Australia and the net assets were a little under $1.2 billion. Prior to 2014, membership was limited essentially to electrical contractors and their families. But since that time it has been a public offer superannuation fund. It is an industry superannuation fund operated on a ‘profit for members’ basis. That is to say, the Trustee has not charged a fee for acting in its capacity as trustee, but the directors and employees of the Trustee receive remuneration. 7 The Fund offers a number of accumulation fund products.4 It does not offer a defined benefit pension. Under each option, a member’s account balance is made up of contributions, rollovers, and transfers into the Fund, plus or minus any investment returns, less any fees, taxes or charges that apply. The value of an account is expressed in number of units and the unit value of each investment option. Each investment option has its own unit price. Unit prices are normally calculated by dividing the value of the assets held in the investment option (after allowing for certain fees and expenses and taxes) by the total number of units on issue for that investment option. 8 The money contributed by or on behalf of a member is applied to purchase units in the investment option(s) chosen by the member. The number of units purchased depends on the value of the units (unit price) at the date of purchase. The value of a member’s account will fluctuate depending on variations to the unit price of the investment option(s) and the amount of any taxes, fees and insurance costs applied to the account. Unit prices are calculated daily and are available via the website maintained for the Fund. 9 The Trustee is a limited liability proprietary company, the current shareholders of which are Electrical Contractors Association and Electrical Trades Union of Australia New South Wales Branch, each of whom hold two fully paid shares in their respective class, with each share having a paid-up value of $1.00. The Trustee is subject to the equal representation provisions of the SIS Act. These CJ in Eq), Spirit Super at [73], [75], [76] (Henry J), United Super at [87]-[88] (Henry J), AustralianSuper at [85]-[144] (Blue J), Host-Plus at [122]-[130] (Blue J), Together at [71] (Stein J). 4 The products offered are the MySuper Product, the Choice Investment Options product and Account Based Pensions. -- 4 of 18 -- [2025] SASC 188 B Doyle J 3 require that the Trustee have an equal number of employer and member representative directors. 10 The Trustee’s only business activity is as a trustee of the Fund and the Trustee does not conduct any activities that could be considered profit-making activities. 11 The Trustee’s constitution is silent with respect to the payment of dividends. On a winding up, cl 25 provides: 25. Winding up 25.1 If the Company is wound up, the liquidator may, with the sanction of a special resolution, vest the whole or any part of any property of the Company in trustees on such trusts as are consistent with a wind up of the Fund under the Governing Rules. No property of the Company shall be divided amongst shareholders except to the extent a shareholder may be a beneficiary under a trust referred to above. 12 In anticipation of the Court granting the relief sought, the Trustee is proposing to provide additional comfort that any personal capital raised will be preserved for the purpose of avoiding the risk of insolvency by seeking an amendment to its constitution to include a provision in these terms: Noting the undertaking given to the Supreme Court of South Australia on 15 August 2025 in proceedings CIV-24-010814, no shares (other than those beneficially owned by the Fund) shall have a right to a dividend and, subject to clause 25, no payment of property on winding up of the Trustee shall be made to shareholders other than for services rendered by a shareholder or goods supplied in the usual course of business. 13 The trust deed provides that all of the Fund Expenses, being all expenses (except tax) relating to the Fund including expenses relating to the Trustee must be paid from the Fund except to the extent that they are paid directly by an Employer. However, whilst there is a provision in the consolidated trust deed that entitles the Trustee to charge for services on request by non-member spouses of members in compliance with Family Law orders or agreements, there is no general fee-charging power for the purpose of remunerating the Trustee. Under the original terms of the trust deed, whilst there was a clause titled ‘Remuneration’, its substance did not contemplate recovery of anything other than expenses. 14 Rather, the fees that are levied are used to meet expenses and maintain reserves for the benefit of members. By way of overview, the fees comprise: (1) administration fees and costs, which on the MySuper Product comprise a charge of $1.40 per week plus 0.1275% per annum up to $650 per year; (2) investment fees and costs, varying from nil to 0.52% per annum of the member’s balance held within any particular investment option, with a further performance related fee of 0.01% per annum, deducted from before tax investment returns before the unit price is declared; -- 5 of 18 -- [2025] SASC 188 B Doyle J 4 (3) transaction costs payable by members, varying between nil and 0.05% of a member’s balance held within a particular investment option, deducted from before tax investment returns before the unit price is declared. 15 The Reserve Account maintained under the trust deed is comprised of a number of sub-reserves. As at 30 June 2024, the balance stood at just under $4 million. Fund expenses are debited from these reserves. 16 Consistently with the Australian Prudential Regulation Authority’s (‘APRA’) Prudential Standard SPS114, the Trustee also maintains an Operating Risk Financial Reserve, with a balance as at 30 June 2024 of approximately $2.6 million, representing approximately 0.22% of net assets available for member benefits. 17 The trust deed does provide for a right of indemnity from the Fund in respect of the Trustee’s costs in respect of any liability in connection with the Fund save where it was incurred from a failure to act honestly, from intentionally and recklessly failing to exercise due care and diligence, or to the extent prohibited by the ‘Relevant Law’. However, the last exception just mentioned is very significant, given the amendments to the SIS Act to which I now turn. Legislative and regulatory developments that have prompted the application 18 The legislative and regulatory developments that have prompted this and similar applications by trustees of ‘profit for members’ superannuation funds have been described in a number of decisions to which reference has been made above. 19 At its simplest, the problem is that the level of regulation and risk of penalty that superannuation trustees and their directors face has steadily increased and, by reason of amendments to the SIS Act that came into effect on 1 January 2022, the provisions in ss 56(2) and 57(2) the SIS Act precluding trustees and their directors from being indemnified in respect of certain liabilities have been broadened so that trustees and directors are no longer able to be indemnified from trust assets in respect of any criminal, civil or administrative penalties payable under any Commonwealth law. 20 In Application by NGS Super Pty Ltd atf NGS Super,5 Henry J said:6 Currently, ss 56(2) and 57(2) of the SIS Act render void provisions of a superannuation entity’s constituent documents that, amongst other things, would have the effect of exempting a trustee from, or indemnifying a trustee or director against, liability for breach of trust in failing to act honestly in a matter concerning the Fund or intentionally or recklessly failing to exercise the degree of care and diligence required to be exercised in relation to a matter affecting the Fund. 5 [2021] NSWSC 1694. 6 [2021] NSWSC 1694 at [36]. -- 6 of 18 -- [2025] SASC 188 B Doyle J 5 The amendments to ss 56(2) and 57(2) of the SIS Act which take effect on 1 January 2022 (SIS Act Amendments) will impose additional restrictions on indemnification that render the Trustee and its directors personally liable for a range of obligations imposed by Commonwealth law, including obligations of strict liability. In summary, the SIS Act Amendments extend the existing prohibitions on indemnification and exemption to prevent trustees and their directors from using trust assets to pay any criminal, civil or administrative penalty incurred in relation to a contravention of any Commonwealth law, where that liability is imposed on or after 1 January 2022. This will extend to circumstances where the trustees or their directors have not engaged in criminal conduct, acted dishonestly or been guilty of gross negligence. The SIS Act Amendments and relevant parts of the Explanatory Memorandum to the Bill that introduced them are detailed in QSuper at [27]–[28] and in HESTA at [19]–[20]. The SIS Act Amendments will take effect in a regulatory environment that has heightened the exposure of trustees to penalties and seen an intensification of enforcement actions by ASIC and APRA concerning the conduct of superannuation trustees and officers. 21 The complexity of the regulatory regime to which superannuation funds are subject is well summarised in the Australian Law Reform Commission’s Background Paper FSL11, ‘Superannuation and the Legislative Framework for Financial Services May 2023’.7 22 Recent illustrations of the nature and quantum of penalties to which superannuation funds may be exposed include Australian Securities and Investments Commission v Mercer Superannuation (Australia) Ltd,8 which resulted in an aggregate pecuniary penalty in the sum of $11.3 million, Australian Securities and Investments Commission v LGSS Pty Ltd (No. 3),9 which resulted in an aggregate pecuniary penalty in the sum of $10.5 million, and Australian Securities and Investments Commission v AustralianSuper Pty Ltd,10 in which an agreed aggregate pecuniary penalty in the amount of $27 million was imposed. 23 Prompted by these developments, the essential basis upon which the Trustee contends that it would be in the best financial interests of members for the Court to authorise it to levy a trustee fee is summarised in the following terms by its Chief Executive Officer, Mr Paul Cahill:11 (1) it is beneficial for Fund members for the Trustee to charge a fee to build up personal capital for potential liabilities imposed on the Trustee or its directors because, if it did not do so and a liability was imposed where insurance did not respond or an upfront excess was payable, the Trustee would face the risk of becoming insolvent, in which case there would be significant member detriments, including significant direct costs to be borne out of the Fund, as 7 Paragraphs [26]-[31]. 8 [2024] FCA 850. 9 [2025] FCA 205. 10 (2025) 172 ACSR 615; [2025] FCA 102. 11 Exhibit A1, Tab 4, Affidavit of Paul Cahill made on 7 November 2024, [63]. -- 7 of 18 -- [2025] SASC 188 B Doyle J 6 well as various indirect costs such as risks of member outflows from a loss of confidence in the Fund; (2) without adequate personal capital to protect against a range of potential unexpected liabilities, the impacts of the Trustee operating with a real risk of insolvency may mean that the Trustee may be unable to perform its role without undue concern about its personal liability. In turn, this may lead to less favourable decision-making for the members, for example, on the basis that the Trustee may be more conservative than a properly protected trustee ought reasonably be; (3) the proposed quantum of the fee is consistent with the level of fees charged in relation to similar funds; (4) without adequate funding or protections or safeguards in place, it could become more difficult to ensure that appropriately skilled individuals are willing to serve as directors of the Trustee where such individuals may otherwise be disincentivised by the risk of additional personal liability, assuming that directors’ remuneration is not increased to cover such additional risk arising from the amendments; and (5) if the Trustee determined that it could no longer act as trustee of the Fund without appropriate measures in place to address its personal financial risks, the Trustee would be required to transfer its members to another fund (at significant cost to the members) where in all likelihood a fee would be paid to the new trustee in one form or another. The precise terms of the relief sought 24 The final form of the relief sought by the Trustee is that, upon the Trustee giving an undertaking to the Court,12 the Court make an order varying the Trust Deed to insert the following terms. Clause 1.1.1 shall have the following new definitions inserted: • “Constitution” means the constitution of NESS Super which was exhibited to the affidavit of Paul Cahill dated 7 November 2024 in proceedings CIV-24-010814 in the Supreme Court of South Australia and marked “PC-8”. • "Reference Period" has the meaning given to it in Clause 1.8A. • "Review Period" has the meaning given to it in Clause 1.8A. 12 The undertaking proposed is that NESS Super Pty Ltd undertakes that: (a) no amount paid to it in respect of the Trustee Fee as defined in clause 1.8A of the Trust Deed; and (b) no part of any fund reserve or account into which the Trustee Fee is paid, shall be used to make a payment to a shareholder of the Trustee whether by dividend or return of capital or otherwise except in the case of services rendered by any shareholder or goods supplied by it to the Trustee in the usual course of business. -- 8 of 18 -- [2025] SASC 188 B Doyle J 7 • "Trustee Capital" has the meaning given to it in Clause 1.8A. • "Trustee Fee" has the meaning given to it in Clause 1.8A. The following new Clause 1.8A shall be added immediately after Clause 1.8: 1.8A Trustee Fee (a) For each Reference Period, a Trustee Fee is payable to the Trustee for acting as trustee in an amount equal to 0.25% of the net assets of the Scheme (calculated as at the end of the day immediately prior to the commencement date of the Reference Period). (b) The Trustee Fee is to be paid in periodic instalments and in such manner as determined by the Trustee from time to time. (c) Despite anything in this Clause 1.8A: (i) no proportion of the Trustee Fee may be paid when the Trustee determines that, in the event of such proportion being paid, the Trustee Capital would exceed the greater of (A) $3 million as at the payment date; and (B) such maximum amount of Trustee Capital as at the payment date as the Relevant Law permits, recommends, requests or directs the Trustee to hold; (ii) The Trustee may determine in its absolute discretion to reduce, waive, suspend or postpone the payment of the Trustee Fee (or any part of it) and subject to Clause 1.8A(c)(i), to cease such reduction, waiver, suspension or postponement; and (iii) Noting the undertaking given to the Supreme Court of South Australia on 20 August 2025 by NESS Super Pty Ltd in proceedings CIV-24-010814, no amount received by the Trustee in payment of the Trustee Fee (including an amount in any fund or reserve maintained by the Trustee and derived from payment of the Trustee Fee) may be used by the Trustee to make any payment to a shareholder of the Trustee, whether by way of dividend or return of capital or otherwise, except in the case of services rendered by any shareholder or goods supplied by it to the Trustee in the usual course of business; (iv) The constitution of the Trustee must not contain any clause providing any shareholder with a right to receive any dividend and must not (except for cl 25 of the Constitution) include any clause providing any shareholder with any right to receive any part of the property of the Trustee on a winding up; (d) The Trustee must as soon as practicable after the Review Period (and in any event not later than 6 months after the end of any Review Period): (i) consider whether the Trustee Fee payable under Clause 1.8A(a) and/or by reason of the operation of Clause 1.8A(c)(i)(A) remains fair and reasonable; and -- 9 of 18 -- [2025] SASC 188 B Doyle J 8 (ii) in the event that the Trustee considers, pursuant to Clause 1.8A(d)(i) that the Trustee Fee payable under Clause 1.8A(a) and/or by reason of the operation Clause 1.8A(c)(i)(A) is no longer fair and reasonable: (A) determine what amount would, in its opinion, be fair and reasonable (whether that amount is higher or lower than the existing Trustee Fee payable under Clause 1.8A(a) and/or by reason of the operation of Clause 1.8A(c)(i)(A)); and (B) amend this Deed by adjusting the figures in Clause 1.8A(a) and/or Clause 1.8A(c)(i)(A) to accord with the determination in Clause 1.8A(d)(ii)(A). (e) For the purposes of the Trustee's determination in Clause 1.8A(d), the Trustee: (i) must have regard to the advice of an appropriately qualified independent consultant; and (ii) may (without limitation) have regard to the amount which the Trustee reasonably considers necessary to appropriately compensate the Trustee for acting as trustee of the Scheme and/or the amount which the Trustee reasonably considers to appropriately compensate it for the personal financial risk it might incur in connection with its role as trustee of the Scheme. (f) For the avoidance of doubt, in forming the views and otherwise taking action as described in paragraphs (d) and (e) above, the Trustee is obliged to act in the best financial interests of the beneficiaries. (g) For the purposes of this Clause 1.8A, a reference to: (i) "Reference Period" is to each successive period of four financial years with the first Reference Period being the period of 4 years commencing on 1 July 2025; (ii) "Review Period" is to each successive period of four financial years with the first Review Period of four financial years commencing on 1 July 2025; (iii) "Trustee Fee" is the fee payable under Clause 1.8A; (iv) "Trustee Capital" is to the total value of net tangible assets of the Trustee in its personal capacity as calculated in accordance with Australian accounting standards." Section 59C of the Trustee Act 25 The provision provides: 59C—Power of Court to authorise variations of trust (1) The Supreme Court may, on the application of a trustee, or of any person who has a vested, future, or contingent interest in property held on trust— (a) vary or revoke all or any of the trusts; or (b) where trusts are revoked— -- 10 of 18 -- [2025] SASC 188 B Doyle J 9 (i) distribute the trust property in such manner as the Court considers just; or (ii) resettle the trust property upon such trusts as the Court thinks fit; or (c) enlarge or otherwise vary the powers of the trustees to manage or administer the trust property. (2) In any proceedings under this section the interests of all actual and potential beneficiaries of the trust must be represented, and the Court may appoint counsel to represent the interests of any class of beneficiaries who are at the date of the proceedings unborn or unascertained. (3) Before the Court exercises its powers under this section, the Court must be satisfied— (a) that the application to the court is not substantially motivated by a desire to avoid, or reduce the incidence of tax; and (b) that the proposed exercise of powers would be in the interests of beneficiaries of the trust and would not result in one class of beneficiaries being unfairly advantaged to the prejudice of some other class; and (c) that the proposed exercise of powers would not disturb the trusts beyond what is necessary to give effect to the reasons justifying the exercise of the powers; and (d) that the proposed exercise of powers accords as far as reasonably practicable with the spirit of the trust. (4) An order made by the Supreme Court in the exercise of powers conferred by this section is binding upon all present and future trustees and beneficiaries of the trust. (5) This section does not apply to— (a) a trust affecting property settled by an Act; or (b) a charitable trust. (6) This section does not derogate from any other power of the Supreme Court to vary or revoke a trust, or to enlarge or otherwise vary the powers of trustees. 26 Blue J summarised the prerequisites to the Court’s jurisdiction to entertain an application to vary a trust and the Court’s power to vary a trust as follows (citations omitted):13 This Court’s jurisdiction to entertain an application to vary a trust is conditioned on satisfaction of three prerequisites: • the existence of a trust; 13 AustralianSuper at [51]-[52] (Blue J). -- 11 of 18 -- [2025] SASC 188 B Doyle J 10 • an application by a trustee of the trust or person with an interest in property held on trust; and • the interests of all actual and potential beneficiaries being represented in the proceeding. This Court’s power to vary a trust is conditioned on satisfaction of six prerequisites: • there is good reason to make the variation; • the variation is in the interests of beneficiaries; • the variation will not result in one class of beneficiaries being unfairly advantaged to the prejudice of another class; • the variation accords as far as reasonably practicable with the spirit of the trust; • the variation will not disturb the trust beyond what is necessary to give effect to the reasons for the variation; and • the application is not substantially motivated by a desire to avoid or reduce the incidence of tax. 27 The meaning of the pre-requisites had been earlier considered by his Honour in Retail Employees Superannuation Pty Ltd v Pain (‘Pain’).14 The effect of his analysis was recently summarised in these terms by Stein J (citations omitted):15 Justice Blue said that whether there is good reason to make the proposed variation is to be determined by considering the purpose and effect of the proposed amendment in the context of the purpose and effect of the trust deed and relevant surrounding circumstances. In relation to the interests of beneficiaries, Blue J noted that the first limb of s 59C(3)(b) focuses on the interests of beneficiaries as a whole and involves a holistic assessment, weighing together financial and non-financial interests. Justice Blue considered that the second limb of s 59C(3)(b), which requires the Court to be satisfied the proposed variation would not result in one class of beneficiaries being unfairly advantaged to the prejudice of another, focuses on the interests of separate classes of beneficiaries as between themselves. In addressing beneficiaries’ interests, consideration should be given to both financial and non-financial interests of different classes of beneficiaries. The mere fact one class is advantaged to the prejudice of another does not preclude the power to vary the trust deed. The assessment of advantage and unfairness is a holistic one. Justice Blue considered that determining whether or not an amendment accords with the spirit of the trust involves considering the fundamental nature, structure, object, purpose and effect of the trust, to be identified at a relatively high level without descending into minutia. Justice Blue noted the mere fact a proposed variation does not accord with the trust’s spirit does not preclude the power to vary the trust deed. It is, however, necessary that the departure not extend beyond what is reasonably practicable to make the variation and a holistic assessment is required. In relation to minimising disturbance of the trust, Blue J considered this involves a holistic assessment requiring identification of the extent to which the proposed variation would disturb the trust, the reasons for that disturbance and the necessary extent of the disturbance. 14 [2016] SASC 121 at [160]-[180]. 15 Togethr at [74]. -- 12 of 18 -- [2025] SASC 188 B Doyle J 11 Jurisdictional requirements 28 Plainly the application is made by a trustee of a relevant trust. By reason of the order I made on 19 December 2024, all actual and potential beneficiaries of the trust were represented by Mr Bevan Willem De Vries, a NESS Super member. 29 As Blue J observed in Pain, the Court has jurisdiction in respect of an application if there is a real connection between the trust and South Australia, and it may have jurisdiction even in the absence of such a connection. In cases where the link is too tenuous, the Court might decline as a matter of discretion to entertain an application or grant relief.16 It is not essential that the trust be governed by the law of South Australia;17 indeed, the provision has been used to effect a change to the proper law of a trust to make South Australian law applicable.18 30 In a case in which there is a possibility that the interests of members might differ based on their State of residence, it might be appropriate to withhold relief, or decline to exercise the Court’s discretion to entertain the application, if a very or disproportionately small number of the members were resident in this State. In such a case, the connection might be too tenuous to warrant the Court’s exercise of discretion. There is no such suggestion here. The proposed variations will not operate differentially having regard to a member’s residence. Although the Trust has a stronger connection with some larger States, there is a real connection with South Australia. Some 68 members reside in this State, and 35 employers under the Fund are registered in South Australia.19 Should the order be made? 31 There can be no suggestion that the application is motivated by a desire to avoid or reduce the incidence of tax and it will not have that effect. 32 Before considering the other pre-requisites to the making of an order, I briefly summarise some aspects of the evidence relied upon, as well as the procedural history of the application. The procedural history shows that the application has been considered both by APRA and by Mr Devries, and is ultimately not opposed by either, and the evidence shows that the Trustee has given the need for, form and quantum of, a trustee fee, careful consideration, consistent with its obligations under the SIS Act. Whilst ultimately the Court must make its own assessment of the criteria contained in s 59C, it does not do so in a vacuum. It has been assisted by the consideration that has been given to those issues by the parties, and the material marshalled by them. 16 Pain at [182], Clarke v Ebdon [2020] SASC 67 at [115] (Blue J). 17 Salkeld v Salkeld (No 2) [2000] SASC 296 at [26] (Perry J). 18 Clarke v Ebdon [2020] SASC 67 at [87]-[91] (Blue J) 19 Exhibit A1, Tab 3, Affidavit of Paul Cahill made on 7 November 2024, [16]. -- 13 of 18 -- [2025] SASC 188 B Doyle J 12 Evidence relied upon 33 In addition to the background matters already recited, the evidence of the Trustee’s CEO, Mr Cahill, was to the effect that: • Mr Cahill’s experience as a Chief Executive Officer of various superannuation funds over a period of approximately 30 years accorded with the proposition accepted in many of the recent authorities that there is an increased level of complexity in superannuation management, and that the regulatory environment has become considerably expanded, more detailed and more stringent, with greater scrutiny of the conduct of superannuation trustees. This has resulted in a dramatically changed environment that has increased both the difficulty of acting as a trustee of a superannuation fund, and an increased risk of exposure to statutory penalty; • in the absence of an amendment to the Trust Deed to enable the Trustee to build up personal capital, the imposition of a statutory penalty would result in the Fund becoming insolvent and would likely see APRA move to appoint a new trustee under s 134 of the SIS Act. A new trustee would be very unlikely to accept such an appointment unless the deed were amended as proposed because the same problem would arise for it. In any event, there would be significant costs associated with the appointment, which costs would have to be borne by members; • there would be other negative impacts for members if the Trustee were to become insolvent; • even if the risk of insolvency does not manifest the impact upon the members of the Fund could be negative and significant in that the risk may lead to unduly conservative management of the fund and because the Trustee may find it difficult to attract and retain suitably qualified directors; • the Trustee has considered but determined that a merger of the Fund with another superannuation fund would not be feasible at this time, including having regard to the requirements of the Superannuation Industry (Supervision) Regulations 1994 (Cth). Some aspects of the Trustee’s consideration of this issue are commercially confidential and need not be traversed; • the Trustee has ascertained, including by discussions with its insurance broker, that insurance would not cover the exposure which arises from the amendments to ss 56 and 57 of the SIS Act. The detail of this engagement is commercially sensitive and need not be traversed; • the Trustee maintains a risk management strategy to ensure it meets requirements relating to risk management as set out in legislation and APRA standards. Whilst the policy and associated policies are believed to represent ‘robust’ controls and policies, there nonetheless remains a risk that the -- 14 of 18 -- [2025] SASC 188 B Doyle J 13 Trustee will incur a penalty. Plans, policies and other strategy documents were tendered on a confidential basis. It is not necessary to traverse their content. There is no reason, on a review of those documents, to doubt that the Trustee is a reasonably prudent and competent trustee that has been conscientious in developing appropriate risk management policies considered by it to be appropriate to the Fund’s circumstances;20 • the Trustee has sought out and considers appropriate to give effect to the advice of Mr Tim Jenkins of Mercer Consulting (Australia) Pty Ltd (‘Mercer’) with respect to the quantum of personal capital that should be raised and the time period over which it should be established; • the Trustee does not believe that the proposed amendments to the Trust Deed are in conflict with the interests of beneficiaries but considers that because that may be the appearance, it ought to seek the Court’s approval; • the Board of the Trustee has passed a resolution to the effect that the Board considers it to be in the best financial interests of members for the Trust Deed to be amended as proposed; and • the proposed amendments would not result in one class of beneficiaries being unfairly disadvantaged to the prejudice of another class because any fee would be an expense paid out prior to the calculation of any returns to all classes of beneficiaries. 34 The Trustee also tendered, on a confidential basis, the expert report of Mr Tim Jenkins of Mercer.21 That report is supportive of the proposed approach to raising a level of trustee capital. It enables the conclusion to be made that, by comparison with other profit-for-member superannuation funds, a proposed fee of 0.08% per annum falls within a relevant range and will likely be competitive. The relevance of that figure is that it represents the approximate annual percentage fee that would see the proposed fund built up over three years. 35 Subsequent to the hearing, the Trustee filed an affidavit confirming what might have otherwise been inferred, namely, that the two shareholders of the trustee are not willing to provide the funds required to guard against the risk of insolvency arising from the imposition of penalties.22 The affidavit also confirmed the Trustee’s instructions to give the undertaking proposed and to pursue the amendment to the Trustee’s constitution contemplated by it. 20 Various of these materials are also canvassed in the evidence of the Trustee’s Head of Risk and Compliance, part of which was received on a confidential basis: Affidavit of Felix Warner Feist dated 3 June 2025, which comprises Exhibit A1, Tab 9 and Confidential Exhibit A4. 21 Confidential Exhibit A5. 22 Affidavit of Paul Alan Lahiff made on 19 August 2025. -- 15 of 18 -- [2025] SASC 188 B Doyle J 14 Procedural history 36 The Trustee gave notice to APRA of the nature of its proposed amendments and has exchanged correspondence with the regulator about aspects of the proposal. Ultimately, APRA has expressed no concern or submission that the Trustee’s proposed amendments would be contrary to the best financial interests of members. 37 Initially, the Trustee made an application for judicial advice in the New South Wales Supreme Court. It sought advice to the effect that it would be justified in using the existing amendment power to effect the proposed amendments. The Trustee elected not to proceed with that action, but to pursue a variation to the Trust Deed in this Court pursuant to s 59C of the Trustee Act. 38 Whilst notice of these proceedings has not been provided to the Fund’s members personally, a representative has been appointed to represent their interests. As well, the Trustee’s Board includes directors nominated by organisations representing the interests of members. I am satisfied that in these circumstances there would have been limited utility, which utility would be outweighed by the cost and disruption, associated with giving individual notice. 39 Mr De Vries’ legal representatives have engaged in a substantial volume of correspondence with the Trustee’s legal representatives, in the course of which questions have been asked and answered, matters clarified, further evidence furnished and some aspects of the final form of the relief sought refined. There is no need to traverse the to and from of this correspondence, save to observe that it appears to have been undertaken consistently with the rationale for the appointment of a representative beneficiary. Written and oral submissions 40 The Trustee filed detailed written submissions summarising the evidence and addressing the matters required to be considered in an application pursuant to s 59C of the Trustee Act. Mr De Vries filed written submissions which indicated that, having regard to the totality of the evidence before the Court, he supported the application, but considered that, should the Court be minded to make the variations proposed, the Trustee should first be required to amend its constitution to expressly prohibit the distribution of the capital fund to shareholders on any winding up. Ultimately, as the hearing progressed, and having regard to the form of the undertaking proposed, and the Trustee’s stated intention to amend its constitution, Mr De Vries did not press that submission. 41 A further aspect of the Trustee’s proposed approach was refined during and then immediately following the oral hearing. The original form of the proposed clause 1.8A contemplated, as does the current proposal, that in future years the Trustee might, after having had regard to the advice of an appropriately qualified independent consultant, consider whether the $3 million ‘cap’ remains ‘fair and reasonable’ and, if it does not, amend the Deed accordingly, so as to reflect the -- 16 of 18 -- [2025] SASC 188 B Doyle J 15 amount that is considered to be ‘fair and reasonable’. I expressed the concern that, whilst it may not be intended by the Trustee, that clause might be capable of being construed as entitling the Trustee to vary the amount of the fee in the future by reference to a fair and reasonable return for the risk that it may be taking, or its expertise or effort, as if the Fund were not a profit-for-members fund. 42 The final and revised form of the proposed amendment addresses that concern. Proposed cl 1.8A(f) now provides that ‘[f]or the avoidance of doubt, in forming the views and otherwise taking the action as described in paragraphs (d) and (e) above, the Trustee is obliged to act in the best financial interests of beneficiaries’. 43 That reflects a characteristic obligation of a superannuation trustee under s 52(2)(c) of the SIS Act. Whilst it might be argued that s 52(2)(c) would apply of its own force to, and would therefore control, the exercise of any power of revision conferred by cl 1.8A, it is, in my view, appropriate that the terms of the Trust Deed explicitly reflect that obligation. That will ensure that any revision to the proposed fee in the future does not become untethered from the grounds upon which the Court’s relief has been sought. Good reason and best interests of beneficiaries 44 Like Stein J in Togethr, I consider these two pre-requisites can be dealt with together. As her Honour observed, and as Blue J had earlier observed, the two pre- requisites overlap with the statutory covenants imposed on superannuation trustees pursuant to s 52(2) and 52A(2) of the SIS Act.23 The Trustee has comfortably satisfied me that the proposed amendments are in the best financial interests of beneficiaries and that, consequently, there is good reason to make the amendments. The good reason partly arises from the doubt that exists as to the efficacy or propriety of the Trustee itself making the variation by a purported exercise of the amendment power. 45 In reaching this view I have accepted the factual propositions made in the Trustee’s evidence as summarised earlier. That is to say, the current lack of protection against insolvency is contrary to the interests of members. I am satisfied that the Trustee has made appropriate inquiries about insurance and alternative sources of funding and that it has reasonably concluded that a fee is the only reasonably available means of mitigating the risk of insolvency. The proposed capital to be raised is not vast, either in absolute or relative terms. It is not likely to lead the Trustee to be less diligent in discharging its many duties. I am satisfied that despite reasonable and appropriate risk mitigation policies and strategies, the complexity attending the administration and management of a superannuation fund inevitably exposes a trustee to a material risk of penalty or penalties. 23 Togethr at [77] (Stein J), AustralianSuper at [146] (Blue J). -- 17 of 18 -- [2025] SASC 188 B Doyle J 16 Fairness between beneficiaries 46 This pre-requisite substantially mirrors the covenants imposed by ss 52(2)(e) and (f) of the SIS Act. The material relied upon by the Trustee does not disclose that there is anything about the structure of the Fund or the classes of product offered that would render the proposed amendments unfair as between those classes. Mr De Vries did not suggest there was anything in the material that should give the Court any concern on this score. I am satisfied that the variation will not result in one class of beneficiaries being unfairly advantaged to the prejudice of another class. Preserving spirit and minimising disturbance 47 These two matters can be dealt with together. Whilst it was originally envisaged by the Trust Deed that the Trustee would act gratuitously, and the proposed amendments will involve a departure from that position, the departure is limited, proportionate and measured, and not motivated by profit-making. For essentially the same reasons that have been given in previous decisions in this context,24 I accept that these pre-requisites are satisfied. Discretion 48 The pre-requisites having been satisfied, there is no reason why the Court should withhold relief on a discretionary basis. Disposition 49 I will make an order pursuant to s 59C of the Trustee Act that, noting the undertaking given in the terms set out in Annexure A of the draft minutes of order provided on 20 August 2025, the Trust Deed is varied to insert new provisions in Annexure B to those draft minutes. I will order that the Trustee’s and Mr De Vries’ costs of the application are to be paid or reimbursed out of the Fund. 24 AustralianSuper at [199], [232]-[235] (Blue J), Togethr at [84]-[87] (Stein J). -- 18 of 18 --