Lost Trust Deeds

A lost trust deed - be it for a fixed trust, a discretionary trust or a SMSF or any of the links in the chain of deeds is no easy thing to cure – it is not simply a case of taking a copy of an old or new precedent and adopting it to cover the gaps.

Doing so may expose the trustee with a claim of breach of trust or acting beyond power. Worse payments could be made to persons not entitled and the trustee may be liable to make good.

The proper step for the trustee to take where a trust deed or a deed in the chain of deeds has been lost is for the trustee to approach the Supreme Court under Order 54 of the Supreme Court Rules seeking advice and direction on what to do. This may include seeking a declaration that the trustee can act in a particular way such as relying on an incomplete chain of documents.

There are a number of recent court decisions which may assist a trustee in circumstances where the chain of documents has been lost or destroyed.

For instance, until recently, in Victoria at least, the Courts had required clear and convincing proof of the existence and contents of missing deed so that any replacement deed could be said to accord with the terms of the lost deed. However, the Victorian Court of Appeal has now confirmed that the appropriate standard is on the balance of probabilities as to existence and content of the old deed in order to measure that the replacement deed reflects the lost deed.

The Court will not only provide advice on the chain of documents but will also give advice on how trustees should act in any given set of circumstances -assuming of course that the matter is sufficiently uncertain or complex to justify the opinion of the court being obtained.

 Tip: As the Courts are showing a willingness to assist trustees it can no longer be an excuse that such court applications are “too hard or expensive” and ought not be made. The time and expense involved must be measured against a trustee unlawfully paying trust assets to persons that are not properly entitled and the trustees subsequently being asked to make good without any right to indemnity from the trust’s assets and where insurance is unlikely to be available to indemnify the trustee.