Tuesday, June 27, 2023

Dig it up** - Lost trust deeds & another case to remember

Last week's post considered arguably the leading case in relation to lost trust deeds.

The case of Re Porlock Pty Ltd [2015] NSWSC 1243 provides further insight into the issues a court will consider where a trust deed has been lost.

In this case, the plaintiff was the trustee of the JBD Carr Trust No 2 which was established in 1957 and by the time of the court application had substantial assets. The trustee applied to court seeking advice pursuant to the powers under the relevant Trusts Act confirming how it held the property.

As part of the search for the deed, a letter was produced by the accountant of the trust which outlined how the income and capital of the trust was to be distributed. The trustee produced a supporting affidavit from the accountant indicating the letter was likely to be an accurate summary of the deed as he recalled quoting the trust deed itself when drafting the letter.

In making an order, the court concluded that the trustee would be justified acting in accordance with the letter as this was the ‘best evidence’ of the trust’s terms.

Importantly, the court confirmed that if the trust deed were to be found and a claim brought against the trustee by other parties who may be entitled under the deed, the trustee would not be personally liable for any breach of trust so long as they followed the advice of the court.

As usual, please contact me if you would like access to any of the content mentioned in this post.

** For the trainspotters, the title of today's post is riffed from the Hoodoo Gurus song 'Dig it up'.

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Tuesday, June 20, 2023

Lost (in infinity**) and lost trust deeds - the leading case

In the lead up to another 30 June, it is timely to consider one of the most important issues leading to potentially seeing trust distributions fail, that is the trustee having custody of the original trust deed.

Arguably the leading case in relation to when a court will allow a trustee to rely on secondary evidence where a trust deed has been lost is Maks v Maks (1986) 6 NSWLR 34.

In this case, both parties lived in a number of homes purchased by the defendant in his own name.

The plaintiff sought a declaration that the defendant in fact held a half share of the relevant property 'on trust'.

The plaintiff argued that a document had been signed by both parties which amounted to a declaration of trust. The alleged document was never produced at trial. On balance, the court considered a document did exist, however the judge was not prepared to make a finding as to the terms of the document.

It seems apparent from the decision, there was no argument put forward as to the nature of the terms of the missing document.

The court concluded that where secondary evidence is being relied upon to prove the existence of a trust, there must be clear and convincing evidence not only of the existence, but also the terms of the trust.

As usual, please contact me if you would like access to any of the content mentioned in this post.

** For the trainspotters, the title of today's post is riffed from the World Party song 'Lost in infinity'.

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Tuesday, June 13, 2023

When prenups** will fail – part II

View Legal blog – When prenups** will fail – part II by Matthew Burgess

Last week’s post considered a number of the situations that might lead to prenups (or binding financial agreements) being declared unenforceable. Seven further examples are set out below:
  1. Impracticality – for most agreements, they are unlikely to be determined entirely void for impractical reasons, although there may often be components of the agreement that are ignored, particularly in relation to specific assets that can no longer be dealt with in the manner originally anticipated by the agreement.
  2. Lack of disclosure – while potentially caught by one of the other items set out above, the failure to provide full and complete disclosure can of itself be grounds for avoiding an agreement.
  3. Just and equitable grounds – in many respects, this is reminiscent of the 'vibe' in the Australian movie ‘The Castle’ – i.e. the court interprets the overall circumstances to assess that the agreement should no longer be binding.
  4. Public policy – this ground is similar to just and equitable i.e. the court determines that it is not in the public’s interest to see a precedent set for the agreement to be binding in the particular circumstances of the case.
  5. Ending due to lapse of time – some financial agreements have a specific time or duration – if no other arrangements are made before the ending of the agreement, it will simply lapse.
  6. Termination by agreement – if both the parties voluntarily agree, then the agreement can be terminated absolutely, or alternatively, a replacement agreement can be entered into.
  7. Death – many binding financial agreements are specifically crafted to end on the death of either party, however this is often subject to certain provisions being made under the estate plan of the deceased. It is important to be aware that in some states it is possible to have a binding financial agreement whereby the parties also agree not to challenge the estate plan of the survivor, however these rules do not apply in every jurisdiction.
As usual, please contact me if you would like access to any of the content mentioned in this post.

** For the trainspotters, the title of today's post is riffed from the Kayne West song 'Gold Digger'.

View the (kid friendly) Glee version here:

Tuesday, June 6, 2023

When prenups** will fail – part I

View Legal blog – When prenups** will fail – part I by Matthew Burgess

A number of previous posts have highlighted court decisions where prenups (or binding financial agreements) have been held to be invalid.

While the range of situations that might lead to this type of arrangement being declared are not enforceable, six of the main examples are set out below (next week’s post will list another seven):
  1. The relevant legislative provisions are not followed – the laws in relation to binding financial agreements are very particular. If each aspect is not followed, then there is a real risk that the document will not be binding.
  2. Failure to get independent advice – one of the key characteristics of the provisions is that each spouse must obtain independent legal advice. A failure to do so (or failure to receive specialist advice) can mean the agreement will be void.
  3. Unconscionable conduct – this normally arises where it can be shown that one spouse has taken advantage of the other, in circumstances where that other spouse was in a weak position.
  4. Abandonment or revocation by conduct – over time, the parties may start to consider themselves not to be bound by the arrangement, and even enter into inconsistent arrangements. If this occurs, then the original agreement is likely to be ignored.
  5. Undue influence – this can arise in a range of circumstances and does not necessarily require that a spouse be completely overborne.
  6. Duress – if one spouse can demonstrate that they effectively felt that they had no alternative but to sign the document, then a case of duress can be substantiated.
As usual, please contact me if you would like access to any of the content mentioned in this post.

** For the trainspotters, the title of today's post is riffed from the Prince song 'Illusion, Coma, Pimp & Circumstance'.

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