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.

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

Listen here: