What should a trustee do if the trust deed governing the trust cannot be found? On what terms does the trustee hold the property? This short article considers these questions in the Victorian context.
A trustee finding itself in this position might consider bringing a proceeding seeking relief in the Supreme Court of Victoria (‘Court’) pursuant to r 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’), including for the determination of questions arising in the execution of a trust or as to the composition of any class of persons having a beneficial interest in property subject to a trust. Rule 54.02 is important, as it is the only statutory basis in Victoria for a trustee to seek the advice and directions of the Court in these circumstances.
The trustee in D.R. McKendry Nominees Pty Ltd  VSC 560 (‘D.R. McKendry’) did just that. The trustee in D.R. McKendry could not locate the trust deed. Digby J held that the principles governing such applications were reflected in cases including Maks v Maks (1986) 6 NSWLR 34 (‘Maks’). In Maks, McLelland J held (at 36) that there is a need in such cases for the trustee to demonstrate ‘clear and convincing proof, not only of the existence, but also of the relevant contents’ of the missing trust deed. Digby J in D.R. McKendry observed (at ) that this approach was consistent with s 48(4) of the Evidence Act 2008 (Vic). The trustee put evidence before the Court that reasonable efforts had been made to locate the deed. This evidence included contacting surviving descendants and potential beneficiaries, the solicitor who drafted the deed, others who advised the person (since deceased) on whose instructions the deed was drafted, the settlor of the trust and revenue authorities. This allowed Digby J to conclude that the trust deed was lost and could not be recovered or was destroyed (at ). There was also evidence from the solicitor who drafted the missing trust deed establishing the form of the trust deed, and that the deed was executed in that form (at -). Digby J held (at ) that persuasive evidence as to the terms and execution of the missing deed, bolstered by evidence sufficient to infer the regularity of the prior acts necessary to create and effectuate the subject trust, allowed the Court to make the declarations sought as to the existence, terms and operation of the trust.
The statutory basis for approaching the court in other jurisdictions is different from that in Victoria. By way of contrast, trustees recently approached the Supreme Court of New South Wales in the lost trust deed cases of Re Porlock Pty Ltd  NSWSC 1243 (‘Porlock’) and Barp Nominees Pty Ltd  NSWSC 990 (‘Barp Nominees’). In Porlock, the trustee sought judicial advice pursuant to s 63 of the Trustee Act 1925 (NSW) on whether it was justified in dealing with the trust property in the way in which it proposed. In Barp Nominees, the trustee approached the court for judicial advice, also pursuant to s 63, that it was justified in managing and administering the trust estate substantially in accordance with the terms of another trust that was said to ‘mirror’ the missing trust deed. The only difference between the other trust and the missing trust deed was said to be the identity of the trustee and the beneficiaries. Applying the standard set out in Maks, in both Porlock and Barp there was secondary evidence of the terms of the respective trusts. This enabled the court in both cases to give the advice sought by the trustee.
A trustee who cannot locate the trust deed might be concerned about its personal liability and the welfare of the beneficiaries of the trust. In such a situation, a trustee might consider approaching the Court, relying on the Rules or equitable principle, in order to provide protection against adverse personal consequences. Although the process of gathering the evidence necessary to establish the terms of the trust might be time consuming, trustees seeking to avoid personal liability should consider adopting such a course. Trustees should always seek advice before taking any steps to avoid the creation of a new trust or to avoid unintended tax consequences.