D.R. McKendry Nominees Pty Ltd [2015] VSC 560 (22 September 2015)

2 On the plaintiff's case Donald Robert McKendry in May 1980 caused a trust to be created by a deed settled by one Zelma Beryl Baldwin pursuant to which D.R. McKendry Nominees Pty Ltd was appointed trustee.

3 The plaintiff's application is supported by various affidavits, namely: two affidavits of Ian Fraser McKendry sworn 7 September 2015 and 18 September 2015; an affidavit of Peter Julian Connor sworn 14 August 2015 and two affidavits of Bruce Akiva Goldman sworn 10 September 2015 and 21 September 2015 and their exhibits.[1]

4 Having made all reasonable efforts in that regard, the plaintiff, D.R. McKendry Nominees Pty Ltd, the Trustee of the McKendry Family Trust (the Trust), is unable to locate a copy of the Trust Deed establishing the Trust of which the sole director of D.R. McKendry Nominees Pty Ltd believes it is the Trustee.

5 The application relies on evidence from the author of the missing Trust Deed in 1980, one Peter Julian Connor, Solicitor, who acted for Donald Robert McKendry, including in 1980 and thereafter for some time, and also relies on evidence from Bruce Akiva Goldman, Australian Legal Practitioner, who acts for the Trustee.

6 In respect of the relief sought, the Rules relevantly provide:

54.01 Definitions

In this Order -

administration proceeding means a proceeding for the administration of an estate or the execution of a trust under the direction of the Court;

estate means the estate of a deceased person.

54.02 Relief without general administration

(1) A proceeding may be brought for any relief which could be granted in an administration proceeding and a claim need not be made for the administration or execution under the direction of the Court of the estate or trust in respect of which the relief is sought.

(2) Without limiting paragraph (1), a proceeding may be brought for -

(a) the determination of any question which could be determined in an administration proceeding, including any question -

(i) arising in the administration of an estate or in the execution of a trust;

(ii) as to the composition of any class of persons having a claim against an estate or a beneficial interest in an estate or in property subject to a trust; or

(iii) as to the rights or interests of a person claiming to be a creditor of an estate or to be entitled under the will or on the intestacy of a deceased person or to be beneficially entitled under a trust;

(b) an order directing an executor, administrator or trustee to -

(i) furnish and, if necessary, verify accounts;

(ii) pay funds of the estate or trust into court; or

(iii) do or abstain from doing any act;

(c) an order -

(i) approving any sale, purchase, compromise or other transaction by an executor, administrator or trustee; or

(ii) directing any act to be done in the administration of an estate or in the execution of a trust which the Court could order to be done if the estate or trust were being administered or executed under the direction of the Court.

54.03 Parties

In an administration proceeding or a proceeding within Rule 54.02 -

(a) all the executors of the will of the deceased or administrators of the estate or trustees of the trust, as the case may be, shall be parties;

(b) where the proceeding is brought by executors, administrators or trustees, any of them who does not consent to being joined as a plaintiff shall be made a defendant;

(c) notwithstanding anything in Rule 9.03(1), and without limiting the powers of the Court under Order 9, all persons having a beneficial interest in or claim against the estate or having a beneficial interest under the trust, as the case may be, need not be parties, and the plaintiff may make such of those persons parties as the plaintiff thinks fit;

(d) where in the taking of an account of debts or liabilities under a judgment or order in the proceeding, a person not a party makes a claim -

(i) a party other than the executors or administrators or trustees shall not be entitled to attend before the Court in relation to that claim except by leave of the Court; and

(ii) the Court may direct or allow any party to attend before the Court either in addition to or in substitution for the executors, administrators or trustees.

7 The principles governing such an application are reflected in cases including Maks v Maks[2] in which McLelland J in the Equity Division of the Supreme Court of New South Wales held that where an original document constituting a trust has been lost or destroyed, proof of the contents of the document may be given by secondary evidence. However there must be clear and convincing proof, not only of the existence of the document but of its contents. The approach taken by McLelland J in Maks is, I observe, consistent with the current provisions of s 48(4) of the Evidence Act 2008 (Vic).

8 The plaintiff submits, and I accept, that in considering the probative value of evidence about the contents of a missing trust deed the court would usually give greater weight to evidence from a lawyer, who was the author hereof, than evidence from a lay person were such evidence to be called. In Sugden v Lord St. Leonards,[3] the Court explained, in that case in relation to a lost will:

"... if the evidence of the contents of a long and complicated will were given by a professional man who had himself drawn the instrument or upon one or repeated occasions had had the opportunity of reading it, that would, under ordinary circumstances, be more satisfactory that the evidence of a non-professional person..."

9 The trustee further seeks to support its evidentiary case by relying upon the presumption of regularity which establishes 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.[4]

10 The Statute of Frauds does not preclude a court receiving secondary evidence that a deed existed.[5]

11 The equitable jurisdiction of the court to uphold an asserted claim under, or pursuant to, a missing document so as to establish estates or interests created by such an instrument, is recognised as one which may be exercised in contested or uncontested circumstances. A court hearing such an application does not necessarily require a contradictor as a precondition of the exercise of its power under s 36 of the Supreme Court Act 1986, and complimentary provisions of the Rules in relation to the grant of declaratory relief, although generally the participation of a contradictor is regarded as desirable.

12 The court's power under Order 54 of the Rules is broad enough to determine the questions posed by the plaintiff trustee in this application. In substance, the questions on this application arise in relation to the execution and terms of the relevant trust deed and as to the composition of any class of persons having a beneficial interest in the property the subject of the trust.[6]

13 The applicant submits that in summary the evidence establishes two procedural and four substantive matters to be addressed. The first of the procedural matters is whether all parties with an interest in the ascertainment of the terms of the trust deed consent to the relief sought by the trustee, and secondly, that no contradictor can be found despite the Trustee's best, diligent and satisfactory efforts.

14 The substantive matters are that it is established that the trustee has made exhaustive searches for the trust deed without success; that the trust was settled; the terms upon which it was settled; and that here, the parties have acted on the assumption that the McKendry Family Trust was established in 1980.

15 Mr Ian Fraser McKendry's affidavits, and exhibits, include a Family Tree setting out the persons he deposes comprise all the potential beneficiaries of the subject trust. Each living adult person listed in that Family Tree has, on the evidence before me, been contacted by the trustee's representative and has consented to relief being granted in the terms sought. No beneficiary, on the evidence before me, seeks to take an active role in the proceedings. The beneficiaries contacted, I note, include Kylie McKendry and Lewis McKendry, the only two children of Bruce McKendry, the brother of Ian Fraser McKendry. Bruce McKendry having died on 5 May 2015. The late Donald Robert McKendry had only two children, Ian Fraser McKendry and Bruce McKendry.

16 The materials also establish that the Commissioner of Taxation has been contacted, but does not wish, it would appear, to participate in these proceedings as a contradictor.

17 The extensive inquiries which are established in the affidavit material filed in this proceeding have been undertaken by the trustee's current solicitor, Mr Goldman, in an endeavour to locate a copy of the missing trust deed. These inquiries detailed in Mr Goldman's affidavit of 10 September 2015 have, in my view, been sufficiently well directed, thorough and exhaustive.

18 Paragraph [5] of Mr Goldman's affidavit of 10 September 2015 explains the avenues pursued, and efforts made, to enquire of all known advisers, family members and authorities who might be likely to have retained a copy of the Trust Deed.

19 Further, Mr McKendry deposes in his affidavit of 7 September, at paragraph [13], that he is not aware of any other banker, legal or accounting adviser or other person or entity who might be expected to have a copy of the missing Trust Deed.

20 The evidence also establishes that the trustee's former solicitor, Peter Julian Connor, has made enquiries of the former legal practices in which he worked, and their successors. Mr Connor has also caused a paralegal of his firm to contact the Australian Taxation Office to make relevant enquiries in relation to the Trust.

21 Mr Graeme Hope, formerly the accountant of Donald McKendry, has also been contacted by Mr Goldman as has JBWere Limited (current manager of most of the funds of the Trust), Westpac Bank, Adelaide Equity Finance Pty Ltd and the State Revenue Office. None of those inquiries has succeeded in locating the Trust Deed.

22 The evidence to which I have referred, in my view, provides me with a comfortable basis upon which to conclude that the subject Trust Deed is lost and cannot be recovered or has been destroyed.

23 Cogent evidence has also been filed as to the settling of the Trust and the terms of the deed. Mr Connor, an Australian Lawyer, states that he recalls being given instructions by Donald McKendry to establish a discretionary trust with a corporate trustee, naming Donald McKendry's two sons, Ian Fraser McKendry and Bruce McKendry, as beneficiaries.

24 Mr Connor also states that he prepared a Trust Deed, in accordance with Donald McKendry's instructions, and procured registration of the trustee company D.R. McKendry Nominees Pty Ltd for this trust.

25 Mr Connor states that in 1980 his practice was to utilise a certain pro forma set of trust deed documentation and that the draft trust deeds he employed were not varied in any material way at any time. Mr Connor also states that the terms of the sample trust deed he invariably utilised are, in all material respects, the same as the Trust Deed which he prepared for Donald Robert McKendry. Mr Connor's evidence is that, as was his practice, he prepared a schedule for the discretionary Trust Deed from which he was able to identify the information which was to be included in the final Schedule to form part of the McKendry Family Trust Deed. Mr Connor states that he did so at the time that he drafted the subject Deed in about May 1980. Mr Connor stated that it was also his universal practice to have $50 settled on such Trust Deeds. Mr Connor states that to the best of his recollection, the McKendry Family Trust Deed was prepared, executed, stamped and returned to Mr Donald McKendry.

26 In my view, the evidence to which I have referred, provides a more than sufficient basis to conclude that the McKendry Family Trust Deed executed in 1980 was in the form of the Exhibit "PJC-6" to Mr Connor's affidavit of 14 August 2015.

27 Further, I consider that there is significant supporting evidence for the existence and due execution of the Trust Deed. That further evidence, in my view, establishes that since the Trust was settled, certain persons, including the Trustee, the beneficiaries and advisers to the Trust have acted in a way consistent with the due establishment of the Trust. Furthermore, I consider that such evidence is sufficient for me to presume the due performance and regularity of the execution of the McKendry Family Trust Deed in May 1980. I do not consider that it is necessary for me to deal with all the details of that evidence. Sufficient examples are that Mr Connor prepared a will for Donald McKendry in 1988 which refers to the Trust Deed and identifies the Trust Deed's date and the Settlor. Furthermore, Mr Connor, who also acted as the tax agent, prepared tax returns for the McKendry Family Trust for the year ending 30 June 1988, as addressed in Mr Connor's affidavit sworn 14 August 2015, at paragraph [16], and summarised in the applicant's Submissions in paragraph [22]. Mr Goldman also deposes in his affidavit of 10 September 2015, paragraph [12], to the tax returns produced by Mr Graham Hope, Accountant, for the McKendry Family Trust.

28 I am satisfied that there is sufficient detailed consistent conduct subsequent to May 1980 for there to be a proper basis for me to presume the prior due execution and the regularity of the Trust Deed in the form of Exhibit "PJC-6".

29 The plaintiff's submissions raise the possible issue of delay in the plaintiff bringing this application. I am, however, satisfied that the explanation given by Ian Fraser McKendry in his affidavit of 7 September 2015 is sufficient to justify the time it has taken to bring this application. Those circumstances have essentially to do with the long period of depression suffered by Mr McKendry. I am satisfied that there is no disentitling conduct or issue arising by reason of delay in this application being brought to Court.

30 In these circumstances where, in my view, there is persuasive evidence as to the terms and execution of the missing Trust Deed bolstered, in this case, by evidence sufficient to infer the regularity of the prior acts necessary to create and effectuate the subject trust, I consider that I should make the declarations sought as to the existence, terms and operation of the McKendry Family Trust, identified in Exhibit "PJC-6".

31 It is also, in my view, in the interests of the Trustee, the beneficiaries, and the interests of the proper administration of the trust, that I make the declarations sought. In this regard I am also mindful of the concern deposed to by Mr Ian Fraser McKendry in his affidavit of 7 September 2015, paragraph [21], to ensure that he is acting appropriately and by reference to clear and defined trust terms so as to meet his obligations, including under the tax laws. I also recognise Mr McKendry's further concern that, in the absence of a Trust Deed or a declaration from this Court confirming the terms of the trust, it may be asserted that the trustee is acting otherwise than in accordance with his obligations.

1. Within 7 days of this order, Mr Goldman, solicitor for the plaintiff, file a further affidavit dealing with the communication to Mr Picone of the materials in relation to this application which are specified in Exhibit "BAG-20" and any response from Mr Picone in addition to the materials that are already exhibited in Exhibit "BAG-21" and detailing also, on the basis of his information and belief, with the establishment of the date or approximate date and fact of the death of Myfanwy Agnes McKendry.

Subject to satisfaction of order 1 above, it is further ordered and declared that:

1. A deed in the form of the deed of settlement marked 'PJC-6' and exhibited to the affidavit of Peter Julian Connor made 14 August 2015 in this proceeding ("the Trust Deed") was duly executed on 10 May 1980 and stamped for duty.
2. The sum of $50 was settled on the plaintiff by Zelma Beryl Baldwin on 10 May 1980 pursuant to the terms of the Trust Deed.
3. The assets described in the affidavits of Ian McKendry of 7 September 2015 and 18 September 2015 filed in this proceeding, and held in the name of D.R. McKendry Nominees Pty Ltd, are and have at all times been held upon the terms of the McKendry Family Trust for its beneficiaries.
4. The plaintiff be indemnified for its costs of the proceeding on an indemnity basis from the assets of the McKendry Family Trust.

[1] The plaintiff filed a further affidavit of Bruce Akiva Goldman sworn 24 September 2015 pursuant to orders of 22 September 2015.

[2] (1986) 6 NSWLR 34.

[3] (1876) LR 1 PD 154 at 177.

[4] McLean Bros. & Rigg Ltd v James Grice [1906] HCA 1; (1906) 4 CLR 835 at 850; Re Thomson [2015] VSC 370.

[5] Porlock Pty Ltd [2015] NSWSC 1243. In the secondary evidence there was a summary of the terms of the deed set out in a letter by an accountant. Young AJA recorded that the court had no power to recreate the deed. However, he declared that the trustee was justified in managing and administering the trust pursuant to the terms contained or reflected in the accountant's letter.