What if the Founding Deed has been Lost?

Many superannuation funds have been in operation for decades with at least one fund founded as early as 1913.

With the passage of time the original founding Deed may have been lost and even copies of the original may have been lost.

In the absence of a signed and stamped copy of the founding trust deed, a Trustee should not attempt to create a replacement trust deed as this will likely constitute the creation of a new trust or resettlement of the trust with potential Capital Gains Tax and other tax  implications.

There is no implied or inherent trust law or statutory power vested in the trustee to amend the trust deed in the absence of an expressed power in the trust deed {R Meagher & W Gummow, Jacobs’Law of Trusts in Australia (6th ed 1997)[1704]}.

An invalid amendment {Re Cavill Hotels Pty Ltd [1998] 1 Qd R 396}, appointment of a trustee {H Ford & W Lee, Principles of the law of Trusts  at [9050]} or appointment of a beneficiary {Ramsden v FCT [2005] FCAFC 39; BRK (Bris) Pty Ltd v FCT 2001 ATC 4111} is void ab initio (from its start). Without a copy of the founding trust deed that recites the exact wording of the variation power, any attempt at reconstructing the trust deed that legally binds the trustee and the beneficiaries is likely to be ineffective.

In Re Cavill Hotels Pty Ltd [1998] 1 Qd R 396, the Queensland Supreme Court was asked to rule upon the proper construction of an original deed of trust and to rule in consequence of that construction whether a clause of a subsequent deed of variation was ultra vires the original deed of trust. The court ensured that all persons affected by the determination were represented before the Court.

Williams J that the trusts could not be varied “in any manner whatsoever” and the power of amendment was expressly limited by particular clauses of the original Deed of Trust. Williams J found that the Trustee’s power to vary the original Deed of Trust had not been validly exercised, and the purported exercise of it in consequence a nullity and the court can set it aside. {Turner v Turner [1984] Ch 100 considered}.

Even where an unsigned execution copy or precedent copy of the trust deed is obtained from the trust provider, execution or adoption of that deed by the trustee is likely to constitute a new declaration of trust with possible tax implications with the Australian Taxation Office. {Refer to the broad construction of a declaration of trust in CSR(Vic) v Lam & Kym Pty Ltd [2004] VSCA 204; (2004) 58 ATR 60}.

Where an unsigned execution copy of the trust deed is located or is reconstructed from the trust deed provider’s file, the court can order that the unexecuted or reconstructed copy of the trust deed stand as the terms of the trust in place of the terms of any deed or other document expressed to contain those terms.

In Victoria, the Trustee as plaintiff initiates the originating motion under Order 54.02 of the Supreme Court (Civil Procedure Rules) 2005. The settler (ie the Principal Employer) and a representative of the Members and Beneficiaries of the Trust (Fund) should also be joined as Plaintiffs.

It is the practice of the Court to award costs for any such direction out of the Trust Asset’s on a solicitor-client basis, so the Trustee does not have to pay for any directions or court order out of the Trustee’s own pocket {Section 63.26 of the Supreme Court (General Civil Procedure Rules) 2005}.

The Trustee Acts in other states provide for similar provisions.

Section 91 of the Trustee Act 1936 (SA) provides for advice and directions of court and commission in accordance with Section 69 and Section 70 of the Administration and Probate Act 1919 (SA).

Affidavit material by current and former directors of the corporate trustee and the beneficiaries is prepared and file in support of the originating motion.

A successful court order will reinstate the terms of the trust in a form that provides certainty for the administration of the trust.

In Entrust Pension Ltd v Prospect Hospice Ltd [2012] EWHC 3640 (Ch) the High Court consider the matter of lost documents at [38]:

I now turn to consider whether any assistance can be gained from the presumption of regularity, which is sometimes expressed in the Latin maxim “Omnia praesumuntur rite esse acta“. The principal circumstances in which the presumption has been applied appear to be cases where certain formal requirements have to be satisfied, or where due to the lapse of time it would be unreasonable to expect primary evidence to be adduced in order to establish the lawful origin of a proprietary right: see Halsbury’s Laws of England, 5th edition, volume 20, paragraph 1103 where several examples are given. The presumption is, at least normally, a presumption of fact, not law, and as such it is rebuttable by evidence to the contrary. So viewed, the term “presumption of fact” is in my judgment something of a misnomer, because such a presumption does not shift the persuasive or evidential burden of proof on the relevant issue, but merely “describes the readiness of the court to draw certain repeated inferences as a result of common human experience“: see Phipson on Evidence, 17th edition (2010), paragraph 6-17, and also paragraph 1-17 where it is said that “Not only are [presumptions of fact] always rebuttable, but the trier of fact may refuse to make the usual or natural inference, notwithstanding that there is no rebutting evidence”.

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