Chase v Chase

Supreme Court of NSW|2020-09-18|Before: Rein J

minees Pty Ltd [2016] NSWSC 990 Re Thomson [2015] VSC 370 Smith v Matthews (1861) 3 De G F & J 139; 45 ER 831 Sutton v NRS(J) Pty Ltd [2020] NSWSC 826 Termijtelen v Van Arkel [1974] 1 NSWLR 525 Wallersteiner v Moir [1974] 3 All ER 217; [1974] 1 WLR 991 Texts Cited: Butt, Peter, Butt's Land Law (Thomson Reuters, 7th ed, 2017) Heydon, J. D. and M. J. Leeming, Jacobs' Law of Trusts in Australia (LexisNexis Butterworths, 8th ed, 2016) Ong, Denis, Trusts Law in Australia (The Federation Press, 4th ed, 2012) Category: Principal judgment Parties: Mr Stuart Chase (Plaintiff) Ms Margery Chase (First Defendant) Ms Karen Chase (Second Defendant) Mr Andrew Chase (Third Defendant) The Commonwealth of Australia (Fourth Defendant) Representation: Counsel: Mr R. W. Tregenza (Plaintiff)

Judgment

These proceedings concern a parcel of land known as 48 Cowans Lane, Oxley Island NSW, which is near Taree NSW. The land was owned by a now-deregistered company called Ileaco Pty Ltd ("Ileaco") that was first registered on 24 February 1981 and deregistered on 8 February 2018.
The Plaintiff, Mr Stuart Chase ("Stuart"), contends that Ileaco held the land on trust for himself and a number of other beneficiaries, the number and identity of which the Court will need to determine. He is seeking to be made trustee of the land (or have trustees for sale appointed) so that it can be sold and distributed to the beneficiaries.
Stuart is represented by Stacks Law Firm, Taree and Mr R. W. Tregenza of Counsel appeared for him at the hearing on 18 September 2020. I had the benefit of written submissions prior to the hearing. Following the hearing, I directed the Plaintiff to provide the Court with further written submissions, which I received on 30 September 2020 and to which I shall refer as the "PFWS".
There are four Defendants, three of whom are members of Stuart's family, namely: 1. Margery May Chase ("Margery"), the First Defendant and Stuart's mother. 2. Karen Serena Chase ("Karen"), the Second Defendant and Stuart's sister. 3. Andrew Chase ("Andrew"), the Third Defendant and Stuart's brother. For the sake of convenience, I shall refer to the parties by their first names.
At the time Ileaco was deregistered, Karen was the company's only shareholder and director. Other members of the family (including Stuart himself between 2007 and 2014) were directors and/or shareholders of the company at various times over the years: see paragraphs 11 and 14 of Stuart's Affidavit of 5 July 2019 at page 44 of the Court Book ("CB"). Indeed, Stuart contends that Karen unilaterally removed him as a director in 2014 without his knowledge or consent.
The Fourth Defendant is the Commonwealth of Australia, on behalf of whom the Australian Securities and Investments Commission ("ASIC") has corresponded with the Plaintiff.
The Commonwealth was joined because, pursuant to s 601AD of the Corporations Act 2001 (Cth) ("Corporations Act"), trust property of a deregistered company vests in the Commonwealth. So if Stuart is granted the order which he seeks, being that he (or a person he recommends) is appointed trustee of the land, then the land will be effectively transferred from the Commonwealth to the new trustee.
None of the Defendants have filed an appearance or Defence in the matter: see paragraph 2 of Joshua Crowther's Affidavit dated 27 July 2020. All have been served and, apart from Karen, all have communicated with Stuart to indicate that they do not oppose the relief that he seeks in his Statement of Claim ("STOCL"), which I set out as follows: "1. A Declaration that the former company known as Ileaco Pty Ltd and which bore Australian Company Number 002 083 810 (hereinafter referred to as "the Company") immediately prior to its deregistration and dissolution, held the land comprised in certificate of title folio identifier 832/609797 and situate at and known as 48 Cowans Lane, Oxley Island in the state of New South Wales ("the Land") on the trust or trusts as determined in these proceedings (hereinafter referred to as "the Trust"). 2. A Declaration that the Trust is a fixed trust on behalf of the beneficiaries: a. The estate of Peter Chase (now deceased), the first defendant, the plaintiff, the second defendant and the third defendant or, alternatively, b. the plaintiff and the second defendant and Andrew Chase or, alternatively, c. the plaintiff and the second defendant; or alternatively d. as determined by the Court. 3. A Declaration that the Land is now vested in the fourth defendant pursuant to section 601 AD of the Corporations Act 2001 subject to the Trust. 4. An order pursuant to section 66G of the Conveyancing Act 1919 that Graham Patrick Brown of GPB Partners and Marika Hollingsworth of GPB Partners be appointed as trustees for sale. 5. An order that the Land be vested in such trustees subject to any encumbrances affecting the entirety of the said land but free from encumbrances, if any, affecting any undivided share or shares therein to be held by the said trustees upon the statutory trusts for sale under Division 6 of Part IV of the Conveyancing Act 1919. 6. An Order pursuant to section 6 of the Trustee Act 1925 that the plaintiff be appointed as trustee of the Trust. 7. Alternatively, an order pursuant to section 6 of the Trustee Act 1925 that Graham Patrick Brown of GPB Partners and Marika Hollingsworth of GPB Partners be appointed as trustees. 8. A Declaration that, pursuant to subsection 6(8) of the Trustee Act 1925 the Land vests in the plaintiff subject to the Trust. 9. A Declaration that, pursuant to section 27 of the Trustee Act 1925 the trustee or trustees, upon appointment may sell the Land and deduct the costs in so doing from the proceeds of sale. 10. An Order dispensing with the joinder of a representative of the estate of Peter Chase, deceased. 11. Such further or other order as the Court thinks fit. 12. The costs of the plaintiff be paid out of the Trust on the indemnity basis."
In the case of the Commonwealth, the Affidavit of Joshua Crowther dated 27 July 2020 annexes correspondence between Stuart's solicitor and ASIC in which ASIC indicates the Commonwealth's position, namely that neither ASIC nor the Commonwealth intends to take any part in the proceedings and that neither of them opposes the orders being sought in the STOCL, provided the orders do not adversely affect ASIC or the Commonwealth.
Karen proved difficult to serve. She has been uncooperative and has not responded to enquiries or correspondence. Stuart's solicitor has been serving documents and correspondence on Karen at two of her known addresses in Kambah, ACT: see, for example, paragraph 5 of Joshua Crowther's Affidavit dated 27 July 2020, and the Affidavits of Craig Brooks dated 19 May 2020 (of which there are two) and 29 June 2020. Registrar Chang made an order for substituted service with respect to Karen on 12 June 2020 (see CB 224), and Stuart's solicitor subsequently served her in accordance with the order for substituted service: see the Affidavit of Joshua Crowther dated 18 June 2020 (starting at CB 227) and the Affidavit of Craig Brooks dated 29 June 2020 (starting at CB 243). I am therefore satisfied that Karen has been served and, as I noted earlier, none of the Defendants have filed an appearance or Defence. Hence, the proceedings are uncontested.
Stuart's primary case with respect to the beneficiaries of the trust is that, other than himself, the beneficiaries are Margery, Karen, Andrew and the Estate of Peter Chase. Peter Chase ("Peter"), a solicitor who died on 26 November 2014, was Margery's husband and the father of Stuart, Karen and Andrew: see the Affidavit of Margery dated 7 June 2019 at paragraph 1. Stuart pleads in the alternative that the beneficiaries of the trust were himself, Karen and Andrew; or himself and Karen; or as determined by the Court.
A representative of Peter's Estate has not been joined as a defendant because Peter apparently died intestate with no property (apart from any beneficial interest he might have had in the land the subject of these proceedings) and the Plaintiff submits that the only possible beneficiaries of the Estate are himself and the First, Second and Third Defendants. Stuart therefore seeks an order dispensing with the need for a representative of the Estate to be joined to the proceedings, as any proceeds owing to the Estate from the sale of the trust property can be distributed to the beneficiaries directly.
There were two earlier proceedings involving Stuart and Karen, being No. 2016/191027 ("the 2016 proceedings") and No. 2018/255781 ("the 2018 proceedings"). The 2018 proceedings concerned property held by a different company in the Chase family and Rees J published a judgment in those proceedings, namely In the matter of A.C.N. 063 346 708 (formerly known as South Passage Pty Ltd) [2018] NSWSC 1709.
In the 2016 proceedings, so far as it concerned 48 Cowans Lane, Stuart sought an order that Karen disclose any documents held by her or the company relating to the trust. Lindsay J granted this order on 6 February 2018 (the day of the hearing). Karen did not file an appearance and did not attend the hearing, although she purported to lodge a Defence on behalf of herself and Ileaco, which was unsupported by evidence and, in its form, liable to be struck out: see [15] of Rees J's judgment in South Passage. Lindsay J made further orders on 4 May 2018 granting, inter alia, substituted service on Karen. The Plaintiff asserts that Karen never produced any documents relating to the trust pursuant to Lindsay J's orders. Indeed, she caused Ileaco to be deregistered a mere two days after Lindsay J made the orders to which I referred on 6 February 2018: see CB 131.
On this last point, Mr Tregenza clarified at the hearing on 18 September 2020 that Karen initiated the process of deregistering Ileaco, as well as South Passage Pty Ltd (being the trustee company the subject of the 2018 proceedings), several months before Lindsay J's orders on 6 February 2018 but that deregistration was not completed until 8 February 2018, so Karen might not yet have been served with a copy of Lindsay J's orders prior to the deregistration. Even so, the 2016 proceedings were on foot, and it is hard to resist the conclusion that Karen deregistered the companies as a means of avoiding her obligations to Stuart and frustrating his plans.

The Estate's Interest in the Trust Property

The Plaintiff seeks an order dispensing with the need for a representative of Peter's Estate to be joined to the proceedings, because he contends that he and the First to Third Defendants are the only possible beneficiaries of the Estate and the Estate's share of the proceeds of 48 Cowans Lane can be distributed to the beneficiaries directly. The Plaintiff asserts this but does not, in his pleadings or in his written submissions, direct the Court to any authority in support of this proposition. I raised with Mr Tregenza at the hearing whether it is correct that these four people (or a number of them) stand to inherit the Estate's portion of the proceeds and in what shares, noting that Part 4.2 of the Succession Act 2006 (NSW) gives a deceased's surviving spouse (i.e. Margery) a significant measure of priority over other potential beneficiaries on intestacy. In particular, s 112 of the Act reads as follows: "112 Spouse's entitlement where issue are also issue of the spouse If an intestate leaves a spouse and issue and the issue are all also issue of the spouse, the spouse is entitled to the whole of the intestate estate." In response to this, Mr Tregenza confirmed that he was of the same understanding as the Court, being that Margery would inherit Peter's entire Estate on intestacy if Peter is found to have a beneficial interest in 48 Cowans Lane.

Appointment of new Trustee(s) and Mortgage Issue

The Plaintiff seeks an order that trustees be appointed for sale pursuant to s 66G of the Conveyancing Act 1919 (NSW) ("Conveyancing Act") or, alternatively, an order that a trustee be appointed pursuant to s 6 of the Trustee Act 1925 (NSW) ("Trustee Act"), either himself or persons he nominates (being Mr Graham Brown and Ms Marika Hollingsworth of GPB Partners, the same persons he is proposing as the trustees for sale). I am satisfied that Mr Brown and Ms Hollingsworth would be suitable persons to be appointed trustees for sale, having regard to the Affidavit of Joshua Crowther dated 14 September 2020 (starting at CB 442) and noting that both persons have given their consent to being appointed (CB 441).
Dealing first with the s 66G application, the Court must be satisfied that Stuart has standing to seek such an order. Mr Tregenza submits that Stuart, upon the Court declaring him a beneficiary of the trust, satisfies the statutory requirement of being a co-owner, as s 66F of the Conveyancing Act recognises equitable interests as falling within the definition of co-ownership.
If Stuart is found not to be a beneficiary under the trust because, for example, he is merely the object of a discretionary trust (as this would not amount to co-ownership) or if someone else, such as Margery, is found to be the only beneficiary of the trust, then he will not have standing to seek an order pursuant to s 66G of the Conveyancing Act. In such an event, Mr Tregenza indicated that the Plaintiff would seek to be made trustee pursuant to s 6 of the Trustee Act (or have Mr Graham Brown and Ms Marika Hollingsworth appointed in the same way) so that he (or they) could sell the property and distribute it to Margery or whoever the beneficiary is found to be.
I also asked Mr Tregenza about the mortgage that the property is supposedly encumbered with in favour of Karen's partner Mr Marshall. The Plaintiff's position is that the mortgage is baseless and was arranged by Karen for her nefarious purposes. In any event, Mr Tregenza submitted that the mortgage is not of concern because the company could not have given a mortgage over land that it held on trust and the Plaintiff does not believe any money was actually advanced by Mr Marshall: see T30.4-27.
If the property were sold I think attention would need to be given to whether notice would have to be given to Mr Marshall before any net proceeds could be distributed.

Whether the Land is Held on Trust

No declaration of trust or trust deed has been located. Stuart contends, however, that based on the material that is before the Court (i.e. the Court Book), the Court should be satisfied of the following matters: 1. That Ileaco held 48 Cowans Lane on trust for certain beneficiaries as part of a trust arrangement referred to in the company's records as "the Oxley Island Trust". 2. That the beneficiaries of the trust are himself, Peter's Estate, Andrew, Margery and Karen. Alternatively, Stuart pleads that the beneficiaries of the trust were himself, Karen and Andrew; or himself and Karen; or as determined by the Court. 3. That the trust was a fixed trust held in equal shares rather than a discretionary trust. Alternatively, the PFWS seek relief in circumstances where the Court finds that the trust is discretionary.
In further support of that submission, Mr Tregenza relies on three arguments, namely: 1. A submission based on the presumption of regularity. 2. A submission that the need for "clear and convincing" proof of the existence and contents of the trust deed is somehow not applicable, or is of lesser application, to proceedings where the existence and contents of the trust deed is not in contest. 3. A submission that it would be against "public policy" for the Court not to make a declaration that the land is held on trust, because the consequence of the Court not making such a declaration is that the land will vest in "the Commonwealth" (I assume Mr Tregenza means ASIC rather than the Commonwealth per se, as the land would go to ASIC if it is not held on trust, pursuant to s 601AD of the Corporations Act).
Because the claimed trust relates to a declaration of trust over real estate, regard must be had to the requirement of writing in s 23C(1)(b) of the Conveyancing Act, which reads as follows: "(1) Subject to the provisions of this Act with respect to the creation of interests in land by parol - […] (b) a declaration of trust respecting any land or any interest therein must be manifested and proved by some writing signed by some person who is able to declare such trust or by the person's will."
Mr Peter Butt in Butt's Land Law (Thomson Reuters, 7th ed, 2017) at [4.100] explains that: "In all cases, however, the instrument or combination of instruments must show not only that there is a trust, but also its terms and conditions. If the original document(s) cannot be found, secondary evidence is admissible of its (their) existence and contents." (Emphasis added) Butt cites Smith v Matthews (1861) 3 De G F & J 139; 45 ER 831 as authority for the first sentence in the quote above and Maks v Maks (1986) 6 NSWLR 34 at 36 per McLelland J as authority for the second sentence. In Maks itself, McLelland J says: "I am of opinion that where the original writing is not produced and secondary evidence is relied on, there must be clear and convincing proof not only of the existence, but also of the relevant contents, of the writing, of the same order as the proof required to establish an entitlement to the rectification of a written instrument… the two classes of case being to my mind in relevant respects analogous." (Emphasis added) McLelland J cites Pukallus v Cameron [1982] HCA 63; (1982) 180 CLR 447 per Wilson J for the proof required to establish an entitlement to rectification. Wilson J says in Pukallus at 452 that "convincing proof… in clear and precise terms" is necessary to make out such an entitlement. Similarly, in Carlow Castle Pty t/a Greenhill Capital Partners v Aztec Resources Ltd [2014] NSWCA 123 at [100], Bergin CJ in Eq (Barrett and Emmett JJA agreeing) says the standard is "clear and convincing proof". I therefore consider "clear and convincing proof" to be the evidentiary standard that the Plaintiff in these proceedings must be held to in persuading the Court of both the trust deed's existence and its terms.
Also relevant to the question of whether an express trust was created (whether of real estate or any other property) is what has been described as the requirement of the "three certainties", i.e. certainty of intention, subject and object: see Denis Ong, Trusts Law in Australia (The Federation Press, 4th ed, 2012) at 80-127 and J. D. Heydon and M. J. Leeming, Jacobs' Law of Trusts in Australia (LexisNexis Butterworths, 8th ed, 2016) at 49-63. The doctrine of the three certainties is relevant here particularly with respect to the property the subject of the trust, the nature of the trust (whether fixed or discretionary) and the identity of the beneficiaries.
It follows therefore that what the Plaintiff is required to establish in these proceedings is: 1. Clear and convincing proof of the existence and contents of the missing trust deed. 2. Certainty with respect to: 1. The identity of the beneficiaries. 2. The property the subject of the trust. 3. The nature of the trust (i.e. whether fixed or discretionary).
The following evidence lends support to the Plaintiff's case that the land was held on trust: 1. Stuart in his Affidavit of 5 July 2019 attests to having had conversations with his father Peter over the years in which Peter told Stuart that Ileaco held the land on trust for himself and the family: see, for example, paragraph 6 of Stuart's Affidavit of 5 July 2019 at CB 42-43. 2. Margery in her Affidavit of 7 June 2019 at paragraphs 16-17 (CB 14) attests to conversations she had with her husband Peter over the years in which Peter explained to her that he transferred the land to Ileaco as trustee in order to protect the family's wealth from law suits that he anticipated might arise as a result of his profession as a solicitor. 3. Ileaco in its returns for various years, such as its 1982 return, reported assets of only $2, despite being the registered proprietor of land worth considerably more than that, which suggests the land was held on trust rather than being beneficially owned by Ileaco: see CB Tab 16. 4. In the records of the company (see, for example, CB 34) there are references to the "Oxley Island Trust" and to Ileaco as being trustee of the Oxley Island Trust, with the assets of the trust being described as "Freehold Land at Oxley Island $135,000.00". There are also several references in the company's records to "beneficiaries", which suggests the land was held on trust: see, for example, CB 335, 348 and 395. 5. There is evidence that in August 2013 an adjoining property owned by Ileaco, being 50 Cowans Lane, was sold and Stuart asserts that the proceeds were distributed between himself and Karen: see paragraph 12 of Stuart's Affidavit of 5 July 2019 and the Transfer at CB 68. 6. Margery attests to having signed a document which Peter provided to her (presumably a trust deed) to establish the trust: see Margery's Affidavit of 7 June 2019 at paragraph 13. Margery's evidence on this point was unchallenged, as the proceedings are uncontested, although no copy of the document has been produced and she gave no evidence as to the terms of the document.
There is in evidence contradictory material as to who the beneficiaries of the trust are and as to whether the trust was fixed or discretionary: 1. The 2002 company return (at CB 395) lists Stuart, Peter, Margery, Karen and Andrew as the beneficiaries and states that none of them received a distribution that year. 2. In paragraph 12 of Stuart's Affidavit of 5 July 2019 he asserts that he and Karen shared the proceeds of sale of neighbouring land at 50 Cowans Lane (which Stuart asserts was subject to a similar trust arrangement as 48 Cowans Lane), which suggests that he and Karen might be the only two beneficiaries. 3. The 2002 company return (at CB 400) describes the trust as "discretionary", whereas Stuart's pleaded case is that the trust is a fixed trust held in equal shares. 4. A figure of "100%" appears alongside Margery's name in the list of beneficiaries in the 2002 company return, suggesting that Margery had some special status among the beneficiaries. Mr Tregenza could not offer any explanation of what was meant by the "100%" notation: T6.25-27. 5. Andrew prepared an application for Centrelink in which he listed Stuart, Karen, Margery, Peter and himself as the beneficiaries of the trust: see CB 315. He also states in the form that he intended to divest himself of his interest under the trust by 30 June 2001: see CB 323. At Item 18, CB 316 the Centrelink form also describes the Oxley Island Trust as not being a fixed trust (i.e. that it is a discretionary trust). Mr Tregenza contended that I should infer that the Centrelink application was prepared by Peter on behalf of Andrew because Peter is given as the contact person for more information about the trust and because Stuart deposes to having found the form in a box of documents which his parents gave him several years ago. The document (which lists only Andrew and Karen as shareholders of Ileaco and refers to the fact that Margery and Peter reside at the property) is not dated and bears no indication of lodgement. On its face, the document must have been prepared in the financial year ending 30 June 2001 and, if it was lodged with Centrelink, it must have been lodged before that date: see CB 311, 313 and 323. 6. Both Margery and Stuart in their Affidavits give evidence of remarks made by Peter which suggest that Andrew was not a beneficiary of the trust. The remarks attributed to Peter, which I discuss further below, suggest that the terms of the trust were that, upon Margery and Peter's death, Karen and Stuart would become beneficiaries in equal shares and they would be expected to "look after" Andrew because he suffers from schizophrenia. This is more in the nature of a request or a moral obligation, implying that Andrew is not a beneficiary in a legally binding sense. 7. In Andrew's Centrelink form at CB 314 and 318, it says the appointer of the trust is a man called Lindsay John Tooley. Mr Tregenza said that Mr Tooley is or was a next door neighbour of Peter and Margery Chase. Mr Tooley swore an affidavit in the 2016 proceedings which Mr Tregenza sought leave to read. In that affidavit, a portion of which Mr Tregenza read aloud in Court, Mr Tooley says he does not know anything about Ileaco, the Oxley Island Trust or that he had been made the appointer under it. 8. Margery gives conflicting evidence in her Affidavit about who the beneficiaries are. In paragraph 18 she relays Peter's words to her that the Oxley Island Trust is "for the kids". However, she also quotes Peter as saying in her presence to Karen and Stuart: "The Properties are held in trust by Ileaco for your benefit. When your mother and I are gone, it will pass to both of you but you need to look after Andrew because of his schizophrenia." The words "when your mother and I are gone" seem to imply that the parents are the current beneficiaries but that Karen and Stuart will become the beneficiaries after both the parents die. This would mean that Margery is now the only beneficiary and should get everything. However, Peter's speech also refers to land being held in trust for Stuart and Karen's benefit, which would imply that perhaps Peter, Margery, Karen and Stuart were the current beneficiaries and that Peter was saying that, after he and Margery die, Karen and Stuart (and not Andrew) will be the only remaining beneficiaries. 1. At paragraph 21 of her Affidavit, Margery recalls herself saying to Karen: "The Property here will pass to you and Stuart equally when we're gone. You will need to look after Andrew though." At paragraph 23 of her Affidavit, Margery recalls Peter saying to her on many occasions: "'I spoke to Karen and she knows the Property is held in trust for her and Stuart equally when we're gone,' and 'I spoke to Stuart today and he is well aware the Property is held in trust for him and Karen when we're gone.'" This evidence supports the theory that only Margery and Peter were beneficiaries but that their interests in the trust would pass to Stuart and Karen upon their deaths. Stuart relates similarly ambiguous language in his Affidavit of 5 July 2019, such as in paragraph 6, where Peter is reported to have said: "This place is held in trust by the company Ileaco. When you mother and I die it will pass to you and Karen but we want you to look after Andrew because he can't look after himself…"
On the issue of certainty as to the property the subject of the trust, the Plaintiff asks the Court to find that it is, relevantly, 48 Cowans Lane, but Stuart indicates in his Affidavit that the property sold to Ileaco in 1981 was subdivided into three parcels, which became 46, 48 and 50 Cowans Lane: see the plan of subdivision at CB 51-53. Without the missing trust deed there is some uncertainty as to precisely how many and which of these parcels of land constituted the trust property. The early records of Ileaco that are in evidence include a reference at CB 353 to the assets of the Oxley Island Trust as being "Freehold Land at Oxley Island - $135,000.00", but it is not clear whether this is a reference to all three parcels of land or to some lesser number of them, and, if the trust property is comprised of more than one parcel, it is also unclear whether different terms applied to each of them under the deed. Whilst I am inclined to think it is a distinct possibility that 48 Cowans Lane constituted the trust property, the requirement of writing means that there must be clear and convincing proof of the contents of the written document which manifests and proves the trust, and proper identification of the trust property is necessarily a part of the contents for which such proof is required.
Given the absence of a declaration of trust by Ileaco and the absence of any document establishing the terms of the trust (which might well have been the trust deed referred to by Margery in her Affidavit of 7 June 2019 at paragraph 13) and the lack of coherent evidence of what the contents of that document were, in my view there is a lack of clear and convincing proof of the contents of the trust deed and, hence, there is uncertainty as to the identity of the beneficiaries, the property the subject of the trust and whether or not the trust was fixed or discretionary.
I deal now with the matters advanced by Mr Tregenza in an endeavour to overcome these difficulties.

The Presumption of Regularity

Mr Tregenza submitted that the Court should infer that a trust deed existed and that the presumption of regularity can be relied on to establish that all that needed to be done was done to create the trust. In his opening submissions, Mr Tregenza drew attention to a number of authorities in relation to the presumption, namely Marine Investment Company v Haviside (1872) LR 5 HL 624, Braema Pastoral Company Ltd v Hutchinson [1993] NSWCA 33, Sutton v NRS(J) Pty Ltd [2020] NSWSC 826 and Re Thomson [2015] VSC 370.
The presumption of regularity has been described as establishing: "a prima facie position that 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." : see Knox County v Ninth National Bank [1893] USSC 8; 147 US 91 (1893), 1, per Brewer J, as quoted in McLean Bros & Rigg Ltd v Grice [1906] HCA 1; (1906) 4 CLR 835 at 850 per Griffith CJ. In other words, the presumption can only operate in relation to "some formal act" or "mere formality", such as establishing that a document was executed or that an officer was given authority to act: see Kingham v Sutton [2002] FCA 506; (2002) 114 IR 137 at [59] per Wilcox and Marshall JJ and Harris v Knight (1890) 15 PD 170, 179-180 per Lindley LJ. In Kingham, the majority pointed out at [59]: "As Wigmore, in Evidence in Trials at Common Law Vol 9, reveals at para 2534, the presumption of regularity is: '…more often mentioned than enforced; and its scope as a real presumption is indefinite and hardly capable of reduction to rules.' It may be said that most of the instances of its application are found attended by several conditions; first, that the matter is more or less in the past and incapable of easily procured evidence; second, that it involves a mere formality or detail of required procedure in the routine of a litigation or of a public officer's action; third, that it involves to some extent the security of apparently vested rights so that the presumption will serve to prevent an unwholesome uncertainty; and finally, that the circumstances of the particular case add some element of probability." (Emphasis added) Furthermore, in Burnside v Mulgrew; Re the Estate of Grabrovaz [2007] NSWSC 550, Brereton J (as his Honour then was), in considering the presumption of regularity, drew a distinction at [25] between cases where "what is in question is compliance with formal requirements" as opposed to those involving a "substantive issue", with the presumption potentially applying in cases of the former but not the latter. It follows that Stuart cannot rely on the presumption of regularity to make up for the lack of evidence as to the terms of the missing trust deed - this is a substantive issue and not a merely formal matter.
The factual situation in Re Thomson was fundamentally different to the present case. In Re Thomson, the plaintiff, who was the executor of a deceased's estate, sought to rely on the presumption of regularity in relation to an unsigned copy of a trust deed relating to the deceased's superannuation fund which the plaintiff contended had been executed in the year 2000 and which varied an earlier executed trust deed. The Court in that case held that, in the circumstances, the presumption of regularity could be relied on to establish that the 2000 trust deed had been executed and was therefore the operative trust deed for the superannuation fund. As can be seen, what was in question in Re Thomson was adherence to formal requirements.
The other three cases that Mr Tregenza has identified where the presumption of regularity was held to operate (to which I refer at [33] above) are, similarly, cases about adherence to formal requirements rather than about substantive issues of the present kind.

Clear and Convincing Proof in Uncontested Cases

Mr Tregenza submits that the need for "clear and convincing" proof of the existence and contents of the trust deed is either not applicable, or is of lesser application, to proceedings where the existence and contents of the trust deed are not in contest. He relies on Re Thomson, claiming that the test of clear and convincing proof was not expressly applied in that case because there was no contest between competing interest holders. Mr Tregenza draws attention to the passage in Maks at 36 per McLelland J where his Honour stipulates the need for clear and convincing proof, emphasising the introductory words of that sentence where his Honour has regard to the object of the various statutory requirements of writing based on the Statute of Frauds, being the "prevention of frauds and perjuries." By this emphasis, I understand Mr Tregenza to imply that the need for clear and convincing proof is a safeguard to prevent fraud which ought to be applied less stringently in uncontested cases. Mr Tregenza also contends that his submission is "consistent with" s 140 of the Evidence Act 1995 (NSW), although he does not explain precisely what he means by this. Section 140 of the Evidence Act is in the following terms: "140 Civil Proceedings: Standard of Proof (1) In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities. (2) Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account-- (a) the nature of the cause of action or defence, and (b) the nature of the subject-matter of the proceeding, and (c) the gravity of the matters alleged."
Whilst it is true that the proceedings are uncontested, Stuart nonetheless seeks a declaration from this Court that the land is held on trust for certain beneficiaries and I must be satisfied that this is so before making such a declaration, having regard to, inter alia, the requirement of writing and the three certainties: see, on the onus of proof, Wallersteiner v Moir [1974] 3 All ER 217; [1974] 1 WLR 991, Termijtelen v Van Arkel [1974] 1 NSWLR 525 at 533, Bokhari v Bokhari [2014] NSWSC 1474 at [7] and Massoud v NRMA Insurance Ltd (1995) 62 NSWLR 657 at 660. As I have explained above, Re Thomson is not an analogous case and it does not support the proposition Mr Tregenza contends for here.
The approach in Maks was followed by the Full Court of the Supreme Court of South Australia in City of Burnside v Attorney-General of South Australia (1993) 61 SASR 107; (1993) 81 LGERA 167 per Legoe, Perry and Duggan JJ. In City of Burnside, the City had sought declarations from the Court that it held certain sporting grounds on trust, having been unable to locate the missing trust deed which had been executed in 1888. The Court applied the approach in Maks and the City was able to satisfy the requirement of writing in s 29 of the Law of Property Act 1936 (SA) with respect to the declaration of trust through a combination of contemporary sources, including: an internal memorandum of the City which referred to the City having executed the trust deed on 28 November 1888; a caveat lodged on the title to the land entered on 12 January 1889; written instructions contained in a letter from the City to a law firm to prepare the trust deed; corroborating evidence from that law firm of having once had the declaration of trust in their possession; and contemporary newspaper reports. A memorandum of unknown authorship prepared some 20 years later, ostensibly on behalf of the City, was found not to be sufficient proof as to a particular term of the trust, namely a restriction on sale of the land. It was this particular proposed term of the trust that was in question in City of Burnside, rather than the more fundamental questions of certainty as to the nature, subject and objects of the trust that I have to determine in these proceedings. Although Legoe J at 124 briefly entertained the question whether McLelland J in Maks "might have stipulated too high a standard of proof", the Full Court nevertheless followed the approach in Maks with respect to proving the terms of the missing trust deed, with Duggan J at 146 making the following remarks about the need for "clear and convincing proof": "Wigmore expresses the view that 'clear and convincing proof' is commonly required when secondary evidence is called in aid to establish the existence and contents of a lost deed or will: Wigmore on Evidence, Vol IX, par 2498; Vol VII, par 2106. In the case of a deed, rights and duties are not to be found lightly (Vol VII, par 2105). Wigmore also refers to the dangers of allowing a witness who has not read the entire contents of a document to speak to its terms. In addition the learned author points out that a witness is not to express an opinion as to the legal effect of a document. I am of the view that in the present case there are a number of reasons why the secondary evidence as to the contents of the trust, as opposed to its existence, requires a cautious approach. More often than not secondary evidence is given by a witness who has perused the document. The witness can then be questioned as to his or her knowledge of the document and the basis upon which statements as to its effect have been made. In the present case, although the document comes from the official records of the Council, there is no evidence as to the identity or role of its author; it is not known whether the author of the memorandum sighted the Declaration of Trust or was simply told of its existence. It is not clear whether the witness was merely expressing an opinion as to its legal effect. If the author of the memorandum did read the document it cannot be said how much of it was read."
I note that many of the concerns about secondary evidence to which Duggan J refers apply to the present case. For example, it is not clear that Karen, in preparing the 2002 company return, had ever sighted the declaration of trust or that her statement as to the identity of the beneficiaries and the nature of the trust as discretionary is an accurate reflection of what was in the trust deed, as opposed to merely a belief or an understanding of what the deed said.
In the PFWS at paragraph 3, Mr Tregenza suggests that Young J (as his Honour then was) in Mack v Lenton (1993) 32 NSWLR 259 accepted American authority that the standard of proof required to prove the existence and terms of a missing document varies depending on the nature of the issue in the proceedings, and that this supports Mr Tregenza's argument that a lower standard of proof applies in uncontested proceedings. I do not read Young J as supporting such a proposition. Rather, Young J makes the point at 261 that the simpler the missing document the easier it is for the Court to be satisfied as to its terms, and his Honour cites, as an example, a certificate of conviction, suggesting that if a witness had sighted such a document then their evidence of what the certificate said would be more readily accepted than a person's evidence as to the terms of a more complex document. Such an observation as this goes to what is required to meet the standard in particular cases rather than to what the standard is.
In any event, even on some lesser evidentiary standard, the evidence before me is unclear and contradictory as to who the beneficiaries are, whether the trust is fixed or discretionary and as to its terms.
At paragraph 1 of the PFWS, Mr Tregenza lists a number of other cases in which Maks has been applied or referred to without disapproval, including Minassian v Minassian [2010] NSWSC 708, PM Sulcs v Daihatsu Australia Pty Ltd [2001] NSWSC 636, Ali v Ali [2011] NSWSC 261, Anglican Development Fund Diocese of Bathurst v Palmer [2015] NSWSC 1856; (2015) 336 ALR 372, Lincu v Krnjulac [2014] NSWSC 532 and Re Barp Nominees Pty Ltd [2016] NSWSC 990. Whilst this list includes cases where secondary evidence was successfully used to prove the existence of a missing document, the typical factual scenario in the successful cases is where the text of the missing document was able to be reproduced in full (e.g. Barp Nominees) or there was sufficient corroborating evidence to be sure of the terms of the missing document (e.g. Palmer at [567]-[584]), such that the need for clear and convincing proof of the terms of the document was met. For example, in Barp Nominees there was another trust established at the same time for a sibling and there was evidence from a witness who had seen the missing trust deed that its terms were identical to that of the other trust deed - in reaching his conclusion, Pembroke J said at [6] that it was: "far more than mere guesswork or an exercise of the imagination. The application is based upon the actual personal observation and remembrance of the contents of the lost document. The fact that there was a mirror trust deed for the other side of the family fortifies me in reaching [my] conclusion." These cases involve scenarios that are different to the factual circumstances here, and I am not persuaded that there is clear and convincing proof here of the contents of the trust deed.

Public Policy

In relation to the "public policy" submission, Mr Tregenza formulates the principle as follows: "In a case where: (a) it is clear that there was a trust and the identity of the beneficiaries is clear; (b) the entity otherwise entitled to the trust fund on default of proof of the terms of a trust instrument (in this case the Commonwealth) has appeared in the proceedings but is not an active party and does not object to the relief (subject to no adverse orders being made against it, which are not sought) such that there is no active contest between competing claimants; (c) that the now de-registered trustee was clearly intended as a mere vehicle for the trust; and (d) where the trustee does not appear to have been intended to retain a beneficial interest in the trust, then it is respectfully submitted that it is contrary to public policy to permit the trust property to, in effect, fall to an entity, in this case Ileaco Pty Ltd and, upon its deregistration, to the Commonwealth rather than to the persons who were intended to take the beneficial interest."
Even on Mr Tregenza's formulation, the Plaintiff fails to make out the elements. With respect to element (a), "the identity of the beneficiaries" is not clear and, indeed, it is also not clear that there was a valid trust due to the problems with the requirement of writing and the three certainties. Element (b) is also problematic for the same reasons I gave in relation to Mr Tregenza's submission about clear and convincing proof in uncontested cases.
Elements (c) and (d) require the Court to determine what some person "intended" with respect to the supposed trust. Mr Tregenza appears to be asking the Court to consider what Peter was supposedly trying to achieve with the purported trust scheme that he set up. To the extent that there is evidence available of what Peter was trying to achieve, it seems that his purpose was to defeat law suits brought by clients against him, or at least to minimise his risk in the event that he became the subject of law suits in the future: see paragraphs 16 and 17 of Margery's Affidavit at CB 14. Even if there was some scope for public policy considerations (as to which I am in doubt), I do not see there being any public policy reason here for the Court to ignore the requirements that the Maks line of cases lays down. I should also note that the only reason the Commonwealth will gain the property is because Ileaco has been deregistered. If an application to reinstate the company is granted, then Ileaco will regain the property as an asset, and the question of how the property is to be dealt with can be considered. Stuart was formerly a director of Ileaco and, on his evidence, both his removal as a director and Ileaco's deregistration occurred without his knowledge or consent.

Conclusion

For the reasons given above, I am unable to make a declaration that Ileaco held 48 Cowans Lane on trust for any of the proposed beneficiaries and, because I am not persuaded there was a validly established trust, I decline to make any of the other declarations or orders which the Plaintiff seeks in his Statement of Claim and I dismiss the proceedings. On the question of costs, whilst the Plaintiff has been unsuccessful, no other party has taken an active role in the proceedings. I therefore make no order as to costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 26 November 2020

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