Tuesday, July 4, 2023

Lost trust deed? – how ‘bout pluggin’ in** a photocopy?

Posts over recent weeks have considered leading cases in relation to lost trust deeds.

Another useful decision in this space is the case of Sutton v NRS(J) Pty Ltd [2020] NSWSC 826.

In this case, the trustee provided the court with what appeared to be a full photocopy of a trust deed, dated on establishment in 1972.

At all times all relevant parties had acted on the assumption that the photocopy was indeed a true and full copy of the original deed (which had been misplaced).

A financier for the trust operating under the 'know your customer' policy mandated production of the original trust instrument for sighting, to ensure the trust’s constituent documents were in order.

Given the trustee was unable to produce the original deed, the application to court was made, with part of the evidence also including a further photocopy of the deed that was located with the law firm who originally drafted the trust deed.

The court confirmed:
  1. generally, in the absence of evidence to the contrary, it can be presumed from the taking of the action that the formalities have been complied with – that is, a presumption of regularity may apply to the effect that where an act is done which can be done legally only after the performance of some prior act, proof of the later act carries with it a presumption of the due performance of the prior act (see for example Harris v Knight (1890) 15 PD 170, and the case of Re Thomson [2015] VSC 370 where an unsigned SMSF trust deed was assumed to have been properly adopted, even though the relevant trustee had subsequently died).
  2. In this case however, there was no need to prove by inference that any formality had been complied with - the photocopy of the deed was signed and the evidence established directly that the parties concerned had always acted on the basis that it set out the terms of the trust.
  3. In this type of situation it was held that the Court should assist those responsible for the administration of the trust by ensuring that they can continue to administer it as if the photocopied deed was the trust’s constituting document.
  4. The way this was achieved here was for the Court to formally order that the trustees of the trust were justified in administering the trust on the basis that the photocopy of the deed that was annexed to the Court order was a true copy of the original trust deed.
A similar outcome, based on a similar factual matrix, was also reached in the decision of The application of M & L Richardson Pty Limited [2021] NSWSC 105.

Similarly in Re Cleeve Group Pty Ltd [2022] VSC 342, it was confirmed that where there is a fully copy of the deed (even if unexecuted), there is either no need to prove the terms through ‘clear and convincing’ evidence, or, if there is, the terms of the draft documents provide that ‘clear and convincing’ evidence.

D R McKendry Nominees Pty Ltd [2015] VSC 560 provides another example of where a lost trust deed was accepted as being in the form of a solicitor’s usual pro forma deed. In contrast however, in Mantovani v Vanta Pty Ltd (No 2) [2021] VSC 771 (another case featured in View posts) in the absence of any evidence as to the terms of the deed, the schedule alone was held to be insufficient.

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

** for the trainspotters, the title is riffed from a key line in the Basement Jaxx song ‘Plug it in’.

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