Tuesday, February 27, 2024

Backdating legal documents not possible ... without a time machine**

View Legal blog - Backdating legal documents not possible ... without a time machine** by Matthew Burgess

As explored in other View posts, backdating legal documents is never permissible, regardless of the phrase used to describe the approach (eg ‘retro dating’, ‘pre-dating’, ‘intended date’).

The decision in Edwards & Anor v Brougham [2022] SASC 8 provides another example of the rules in this regard.

Relevantly the factual matrix involved a dispute about the trusteeship of a discretionary trust where:
  1. a sole individual trustee purported to transfer an asset of the trust to themselves (as a potential beneficiary of the trust);
  2. there was evidence confirming the appointor of the trust had exercised their power to unilaterally remove the trustee before the purported transfer;
  3. the trustee, on advice from a lawyer, backdated a deed of transfer to a date that was before the appointor removed the trustee.
In relation to the backdating, the court simply confirmed that it was 'not in itself effective to make a retrospective determination for the purposes of the trust deed'. The decision also confirmed:
  1. it is not necessary for a trust deed to have a condition for effective removal of a trustee the giving of notice to the trustee being removed;
  2. the key reason for not requiring a removed trustee to be notified is that a former trustee, who continues to exercise powers honestly without notice of their removal, will be protected in several ways, for example they are indemnified by trust assets (assuming they have acted honestly);
  3. Where two or more appointors are nominated, unless there is unambiguous wording to the contrary, the assumption is that the surviving appointor may act solely, that is, the appointment of two or more persons to an office is both joint and several;
  4. similarly, unless there is clear wording preventing the outcome, a trustee may also act as appointor;
  5. the court acknowledged that having a trustee also acting as the appointor of a trust was a 'relatively unusual' situation and 'would naturally be expected only as a measure of last resort', given that under the trust deed (as is often the case) the appointor was structured as a checking mechanism on the powers of the trustee.
Similarly in the case of Jaken Properties Australia Pty Ltd v Naaman [2022] NSWSC 517, the confession of backdating cast a significant shadow over the claims of one of the parties.

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** For the trainspotters, the title of today's post is riffed from the Alicia Keys song 'Time Machine'.

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