On 23 March 2022, in BT Funds Management Limited (ACN 002 916 458) as trustee for the Retirement Wrap Superannuation Fund the Court made orders giving its consent to certain conduct engaged in or proposed to be engaged in by the plaintiff, BT Funds Management Limited (ACN 002 916 458) (BTFM/Trustee) as trustee for the Retirement Wrap Superannuation Fund (the Fund), which, absent consent, may have amounted to a breach of s 249E of the Crimes Act 1900 (NSW).
The conduct consented to by the Court included:
BTFM is a wholly owned subsidiary of Westpac Banking Corporation (Westpac). As of 31 January 2022, the Fund had approximately 580,000 members which a combined value of $37.6 billion.
Following its review, Australian Prudential Regulation Authority (APRA) concluded that two of the products offered by the Fund did not meet the minimum requirements of the annual performance test conducted pursuant to Part 6A of the Superannuation Industry (Supervision) Act 1993 (Cth).
As a result, BTFM investigated potential strategies which may result in improved returns for members, including consideration of the potential transfer of the Fund and all its members to another fund.
Typically, there are two types of costs associated with any such transfer if it proceeds. First, the transaction costs incurred by BTFM. Generally, BTFM would be entitled to be indemnified against such costs out of the Fund. Second, are the costs and losses individuals may suffer on transfer of the Fund. As part of the negotiations for the transfer of the Fund and its members to another trustee, BTFM sought to pursue negotiations with potential transferees and Westpac regarding the possibility of either party: (a) paying all or part of BTFM’s transactions costs; (b) compensating members for any losses they suffer as a consequence of the transfer; and (c) indemnifying BTFM for claims against it in respect of those which it would otherwise be entitled to be indemnified out of the assets of the Fund. In each case, the intention was that those benefits would be passed on to members of the Plan.
S 249E of the Crimes Act 1900 (NSW) (equivalents – Criminal Code Act 1899 (Qld) s 442F, Crimes Act 1958 (Vic) s 180, Criminal Code Act Compilation Act 1913 (WA) s 535) (the Provision) makes it a crime for a trustee to receive or solicit a benefit from a person as an inducement or reward for the appointment of any other person to be entrusted with the property without the consent of each person beneficially entitled or of the Supreme Court. The Trustee, concerned that the Provision would apply to the solicitation from or payment by a potential transferee or Westpac of the costs, losses or indemnities aforementioned, sought the consent of the Court to the same.
In granting consent, the Court noted that:
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Liam Hennessy, Partner
Yvonne O’Byrne, Special Counsel
Dale Copley, Law Clerk