Almost 12 months ago, I re-blogged Dominique Hogan-Doran’s post about the mechanics of proving the contents of a lost trust deed (here).
Much has happened in the past year. Ms Hogan-Doran SC acquired post nominals (congratulations). Also over that time, my instructing solicitors Goldman Legal and I successfully navigated the lengthy process of establishing the contents of a lost family trust deed. The steps undertaken are set out in Digby J’s judgment in Re: D.R. McKendry Nominees Pty Ltd.
In order to declare the contents of a missing trust deed, the Court requires cogent evidence on two matters:
- establishing that all reasonable efforts had been made to locate the deed
- identifying precisely the terms (or effect) of the deed
The deed was lost
The Court had evidence that all of the following had been contacted and did not know the whereabouts of the deed:
- surviving descendants and potential beneficiaries
- the solicitor who was the author of the deed
- that solicitor’s subsequent firms
- all bankers, lawyers, tax agents and financial advisors who had acted for the person on whose instructions the trust was established (who was by this time deceased)
- the settlor of the trust
- the State Revenue Office and the Commissioner of Taxation
The Court was satisfied that the deed was lost and that no other person might know its whereabouts.
The terms of the deed
Consistently with s. 48(4) of the Evidence Act and common law authorities, the Court required ‘clear and convincing’ proof before it could be satisfied of the terms of the lost trust deed. Thankfully, two compelling sources of evidence were available:
- the solicitor who had drafted the deed was able to produce a precedent deed from the relevant time and give evidence of his practice as to identifying the beneficiaries and specifying the settled sum and other items in the schedule to the deed
- subsequent documents, including a will, assumed the efficacy of the trust deed. The plaintiff was able to rely upon the presumption of regularity: as explained in McLean Bros v Rice (1906) 4 CLR 835 at 850. The presumption of regularity is a useful evidentiary presumption: ‘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.’
In addition to a will which referred to the trust deed, years of trust distributions and tax returns that agreed with the contents of the propounded trust deed provided strong support.
Had less compelling evidence been available, an alternative, lesser remedy may have been available. In Re Porlock Pty Ltd, Young AJA gave judicial advice that the plaintiff was justified in managing and administering the trust pursuant to certain terms set out in an accountant’s letter, which were by no means all of the terms of the trust. An order of that kind provides some lesser level of comfort to a trustee. As Young AJA said: ‘if at some time in the future the deed happens to turn up and the people see that they may have a claim against the trustees they can then mount that claim but this advice will give some protection to the trustees.’
The exercise for my client was time consuming but ultimately worthwhile. The trustee now has the comfort of an order allowing it to continue to deal with the trust assets under the terms of the trust deed without fear of adverse consequences.