I want you back!** Finding lost trust deeds

Recent posts have considered various issues in relation to lost trust deeds.

Due to the difficulties that arise when a trust deed is lost, the preferred solution is to locate the original deed.

The types of searches most likely to be successful in relation to locating a lost trust instrument include:

1. Former and or present banks, as trust deeds are often required to be produced to open accounts or enter into finance arrangements;
2. Past and present lawyers, including the lawyer who prepared the deed as they will often keep an original or copy of the trust deed for their own records;
3. Accountants, past and present for similar reasons as lawyers, they may have access to at least a copy of an original trust deed;
4. In some states, if the trust has ever owned real property it can be useful to contact the Land Titles Office, in that jurisdiction. It may be that the department will have retained a full copy of the trust instrument on the initial acquisition of the property;
5. This particular alternative is however not available in all jurisdictions. For example, New South Wales prohibits the disclosure of the existence of a trust relationship on title, so there will never be trust instruments with that department. The approach is also dependent on the exact practices from time to time of the relevant department;
6. Where none of the above pathways prove successful, there can be benefits in contacting the original settlor of the trust, particularly if they were not directly associated with the law firm that established the trust. Alternatively, other parties that have had any dealings with the trust from time to time should also be contacted. For example:
1. a beneficiary that is known to have historically received a distribution (or close relatives of deceased beneficiaries who are known to have received a distribution);
2. former trustees; and
3. parties who have held a position of authority with the trust, for example, appointors, principals, guardians or nominators.

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 'I want you back'.

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Something less than infinity** - what evidence is needed to 'recreate' a trust deed

Recent posts have considered leading cases in relation to lost trust deeds.

These cases highlight the critical role ancillary documentation plays in supporting the existence of the trust.

While ancillary materials will not necessarily prove the existence of a trust, their absence when producing a purported trust deed is likely to be fatal to any court application.

In particular, to varying degrees, each of the cases profiled confirm:

1. Supporting documentation, while not of itself enough to establish the existence of a trust, will be critical to the prospects of success in any court application;
2. In many respects, the more relevant ancillary documentation available, the more likely that a court application will be successful;
3. If the supporting documentation indicates at least how the capital and income of the trust are dealt with, the court may advise the trustee to administer the trust according to those documents; and
4. Similarly, the more evidence that a trustee can bring demonstrating that it has discharged all duties in relation to a trust, other than ensuring security of the trust deed, the more likely that the court application will be successful.

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 Guru Josh song 'Infinity'.

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Lost trust deeds and the presumption of regularity: A (Boogie) Wonderland**

Recent posts have considered various issues in relation to lost trust deeds.

The decision in Chase v Chase [2020] NSWSC 1689 provides another useful summary of the key issues in this area.

In a situation where there was only secondary evidence about the possible existence of a trust, the court reiterated anyone wanting to have the court confirm the existence of a trust relationship is required to establish:

1. Clear and convincing proof of the existence and contents of the missing trust deed (as confirmed in the decision of Maks v Maks (1986) 6 NSWLR 34, as set out in an earlier post).
2. The '3 certainties of a trust', that is:
1. The identity of the beneficiaries.
2. The property the subject of the trust.
3. The nature of the trust (i.e. whether fixed or discretionary).

The court found the above tests had not been satisfied.

In particular, there was an absence of a declaration of trust, an absence of any document establishing the terms of the trust and a lack of coherent evidence of what the contents of any such documents were. Thus there was uncertainty as to the identity of the beneficiaries, the property the subject of the trust and whether or not the trust was fixed or discretionary.

The court also made comments about the potential application of the 'presumption of regularity', another concept featured in previous View posts.

This presumption states that where 'an act is done which can only be legally done after the performance of some prior act, the proof of the latter carries with it a presumption of due performance of the prior act'.

The court confirmed:

1. There are 4 key conditions that must be satisfied, before the resumption of regularity will be applied.
2. First, the matter must be more or less in the past and incapable of easily procured evidence.
3. Second, it must involve a mere formality or detail of required procedure in the routine of a litigation or of a public officer’s action.
4. Third, it must involve, to some extent, the security of apparently vested rights so that the presumption will serve to prevent an unwholesome uncertainty.
5. Fourth, the circumstances of the particular case add some element of probability.

Cross referencing the case of Burnside v Mulgrew; Re the Estate of Doris Grabrovaz [2007] NSWSC 550, it was confirmed that when considering the presumption of regularity, courts will draw a distinction between cases where “what is in question is compliance with formal requirements” as opposed to those involving a “substantive issue”, with the presumption potentially applying in cases of the former but not the later.

Thus here, unlike the cases mentioned in last week's post, where there was very little to support the existence of the trust, the presumption of regularity offered no assistance.

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 Earth, Wind and Fire song 'Boogie Wonderland’.

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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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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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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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When prenups** will fail – part II

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: