Trusts are very common business and investment structures. The powers, rights, and obligations of the parties to a trust (especially the trustee) are set out in the trust deed; the trust deed is effectively the manual for what the trustee of a trust can and cannot do. If a trust deed is lost or otherwise misplaced, it can be incredibly inconvenient for trustees and it becomes almost impossible for trustees to properly administer the trust. Lately, banks and financial institutions are increasingly pushing to sight the original wet-signature trust deed before opening a trust bank account, and dealings with Landgate will require the original or a certified copy of the original.
For most other documents, a copy (electronic, certified or physical) of the original document is sufficient; it is not the case with a trust deed. If luck strikes and a copy can be located, it still may not be sufficient to open a bank account or obtain finance.
If a copy cannot be found at all, it’s not sufficient to execute a new deed to replace the old deed and this approach would likely have significant tax and duty implications. If the trustee cannot find even a copy proving the essential terms, the trust could fail due to uncertainty and the trustee would be unable to operate the trust.
So what options are available to trustees who have misplaced the trust deed?
Recent Case Law
This is quite topical as there has been three 2023 Supreme Court decisions that have dealt with this issue.
The recent Victorian case of Vanta Pty Ltd v Mantovani involved a matter where the trustee could not locate the trust deed, except for the schedule. The court accepted that the trust deed was lost and the initial judge found that the trust failed for uncertainty. Upon appeal, the court relied upon the schedule, financial reports and tax returns of the trust as appropriate secondary evidence for determining that a trust existed. However, the secondary evidence was insufficient for determining the powers of the trustee and so the court said that the trustee could operate the trust on the basis that the trustee must seek further guidance from the Supreme Court regarding how it could manage the trust, which is subject to further fees.
The recent Western Australian case of Willmington Investments Pty Ltd v Sarich has shown how complex it can be, even if a copy of the trust deed can be located. In this case, the trustees had a scanned copy of the trust deed but had encountered a number of occasions recently where authorities had not accepted the scanned copy and insisted that the trustees produce the original deed. The only option then was for the trustee to apply to the Supreme Court for a declaration under section 92 of the Trustees Act 1962 (WA) that the trustee is justified in using a copy of the deed.
In another 2023 decision of the Supreme Court of Victoria, Application by Ellasil Pty Ltd, the original 1979 trust deed could not be found. There was, however, several items of secondary evidence including a 1989 amendment deed, a 2015 document purporting to be a deed of trust, minutes of meetings, financial statements and a deed appointing a new trustee from 1996. Based on the 1989 amended deed and the 1996 deed, it was accepted by the court that in 1979 a deed established the trust and, despite some questionable aspects of the adoption of the new 2015 deed, it could be relied upon as the new trust deed.
Key takeaway
First and foremost, the most important takeaway is to safeguard the original trust deed and possess an electronic and physical copy of the trust deed in full. For trustees to properly administer the trust, it is almost inevitable that various authorities will want to sight the original trust deed.
Secondly, keeping all the secondary records and scans of originals is also a good secondary protection.
If the trustee is unable to locate the original trust deed, we can assist with any application to the Supreme Court to either prove the existence of the trust, and how the trustee and then manage the trust, or a declaration that the trustee is justified in using a copy of the deed.
About the Authors: This article was co-authored by Kristy-Lee Smith and Steven Brown. Kristy-Lee was admitted as lawyer in 2017 after graduating with Bachelor of Laws (Honours). Kristy-Lee joined the commercial law team at Lynn and Brown in June 2022 after practicing in tax law for almost 6 years at some of Perth’s top tier accounting and law firms, and in-house at Monadelphous. Steven is a Perth lawyer and director, and has over 20 years’ experience in legal practice and practices in commercial law, dispute resolution and estate planning.
