EVIDENCE - Where trust deed lost - Where plaintiff seeks declaration for reconstruction of trust deed and orders for trustee to enter and approve past transactions of trustee - Whether all reasonable efforts to locate trust deed were made - Insufficient evidence of contents of trust deed - Application dismissed - Supreme Court (General Civil Procedure) Rules 2015, r 54.02 _ - D. R. McKendry Nominees Pty Ltd [2015] VSC 560 - Maks v Maks

2 In its final submissions, the plaintiff sought other declarations to those sought in the originating motion, namely, declarations as to the content and execution of the trust deed, including the date of execution, trustee, settlement sum, settlor of the trust and stamping of the trust deed for duty. The plaintiff also sought a declaration that the assets of the trust are held by the plaintiff upon the terms of the deed for the beneficiaries of the trust. No orders were sought in respect of approval of the relevant transactions or powers to enter into the proposed transactions and the plaintiff also did not pursue the relief sought pursuant to s 63 of the Trustee Act 1958.

3 The 'relevant transactions' are described by the plaintiff as the running of 'the business' on the basis of the operative parts of the trust deed for approximately 35 years, including paying distributions to the principal and secondary beneficiaries of the trust, paying rates in respect of properties it owns and selling property, including the sale of a property in Hamilton Avenue, Surfers Paradise, Queensland. The relevant business is a retail delicatessen business at the South Melbourne market.

4 The plaintiff named the Attorney-General for the State of Victoria as a defendant to the proceeding. On 22 February 2018, orders were made removing the Attorney-General as a party in the proceeding and the Court appointed a contradictor to assist the Court.

5 Where an original document has been lost, the Court may hear secondary evidence as to proof of the lost document. Where secondary evidence is relied upon, there must be clear and convincing proof not only of the existence of the lost document, but also evidence of its contents.[1] The evidence must be sufficient to satisfy the Court that the deed is lost or destroyed and cannot be recovered.[2]

6 Sometimes, a presumption of regularity may apply to the effect that where an act is done which can be done legally only after the performance of some prior act, proof of the later act carries with it a presumption of the due performance of the prior act.[3] This presumption was not raised in submissions but may be relevant where the evidence raises an argument with respect to the presumption.

7 Affidavits were filed by Theodorous Totos ('Mr Totos'), the sole director of the plaintiff, his former solicitor, Mr Darren Moses, and his present solicitor, Mr Joseph Carneli.

8 The plaintiff deposes that sometime around June 1984, Mr Totos and his father established the trust by a deed of settlement prepared by Mr Moses. The trustee of the trust was a shelf company called Woodlow Pty Ltd ('Woodlow'). The evidence concerning the incorporation of Woodlow includes a memorandum of association dated 3 April 1984 and an Australian Securities and Investments Commission ('ASIC') search showing the company was registered as of 5 April 1984. At the time of incorporation and until 11 April 1984, Woodlow's directors were John Wilder and Cheryl Zurzolo. On 11 April 1984, Mr Totos and his father became directors of Woodlow although the ASIC search lists Mr Theodore Totos as ceasing as a director on 11 April 1984. It is presumed that Mr Theodore Totos is the father of Mr Totos. Mr Totos deposes that the purpose of the trust was 'to protect our assets as my father and I ran a retail food business specialising in delicatessen and fresh food products'. At this point in time, Mr Totos was 23 years old, had no children and was not married and his involvement in the business was under his father's guidance.

9 Mr Totos deposes that in or around June 1984, he and his father attended the offices of Mr Moses, of the firm John Wilder Darren Moses ('JWDM'), to provide instructions for the creation of a family trust.

10 Mr Moses confirms that he recalls the meeting taking place, but is unable to say whether or not Mr Totos' father was also present. Mr Moses recalls arranging for Woodlow to be appointed as trustee of the trust.

11 Mr Moses exhibited to his first affidavit a precedent trust deed used by his firm at the relevant time and dated 12 August 1981 that sets out the terms of the trust ('the precedent trust deed'). Mr Moses does not recall amending this precedent between that date and the establishment of the trust in 1984. His view is that the operative parts of the deed establishing the trust would have been similar, if not identical, to those of the precedent trust deed although he does not state any basis for holding this view. The schedule to the precedent trust deed lists specific details relevant to the particular trust, such as the trustee of the trust, the settlor, the settled sum, the guardian and appointor, the specified and general beneficiaries, the name of the trust and the date of the deed.

12 The only indication given as to the name of the settlor of the trust is Mr Moses' belief that the settlor would have been his secretary at the time, Ms Maureen Roberts. Her last name is entered on the schedule and on the first page of the precedent trust deed under 'Settlor'. Despite internet, telephone directory and social media searches being undertaken by Mr Carneli, it appears that Ms Roberts cannot be located. Mr Totos deposes that his solicitors were informed by Mr Moses that, when Mr Moses sold his law practice seven to eight years ago, Ms Roberts returned to New South Wales and that he was not aware of anyone who would have maintained contact with Ms Roberts. Mr Moses also informed Mr Totos' solicitors that even if Ms Roberts were located, she would be unlikely to recall being the settlor of the trust due to the long period of time and that she was 'named as the settlor of a great many [t]rusts at the relevant time'.

13 Mr Moses has no specific recollection, but deposes that his usual practice was to nominate a settlement sum of $25 for trusts, however, that the amount was ultimately up to the client. The settled sum in the precedent trust deed was in the amount of $10. The financial statements for the trust for the period 2011 to 2017 record the settled sum as being the sum of $25.

14 Mr Totos recalls that there was no appointor for the trust and that his father was nominated as the guardian. Mr Moses had no practice as to the selection of a guardian, leaving it to the client's discretion.

15 Mr Moses had no practice as to the selection of the principal beneficiaries of the trust. Mr Totos recalls that he and his father were the principal beneficiaries of the trust and that his mother was not included as a principal beneficiary as she was not involved in the business.

16 Mr Moses agreed with an advice from counsel dated 22 June 2011, which was provided to the plaintiff, that the 'secondary beneficiaries' in the precedent trust deed are what are usually described in other trust deeds as 'primary beneficiaries' or 'principal beneficiaries' and that the 'principal beneficiaries' as listed in the precedent trust deed are what are usually described in other trust deeds as the 'general beneficiaries'. In that advice, counsel noted the definition of those terms in clause 1 of the precedent trust deed supported this position. Clause 1(d) of the precedent trust deed defines 'secondary beneficiaries' as being the persons named as such in the schedule as well as the descendants of the principal beneficiaries and any spouse, widow or widower of the principal beneficiaries or their descendants. The schedule, however, describes the principal beneficiaries as '[t]he grandparents, their brothers and sisters, and the parents, children, brothers, sisters, uncles, aunts, cousins, nieces and nephews of [secondary beneficiaries]'. Mr Moses agreed that 'the persons described as the principal beneficiaries and those described as the secondary beneficiaries in the schedule should be reversed' and that the deed 'would make more sense if the two instigators had been described as the principal beneficiaries'.

17 Mr Moses has no recollection of how the deed was dealt with following its execution. He deposes that his usual practice was to prepare four deeds for execution, retain one original deed in his deed safe, give an original deed to the client's accountant and give the remaining two originals to the client or one of these to an interested party, if required. His usual practice was also to record the deed being held by the firm on the firm's deed register and he would also submit the deed for the payment of stamp duty. Mr Totos does not have any recollection of receiving a copy of the deed and his opinion is that his father would have taken possession of it.

18 On 17 February 1986, Woodlow purchased the delicatessen business at the South Melbourne market. The agreement for the purchase of the business is the only documentary evidence of the existence of the trust during this period. In the agreement, the purchaser is described as 'Woodlow Pty Ltd (as Trustee of the Theo Totos Family Trust)'.

19 On 18 February 1986, Woodlow changed its name to South Melbourne Continental Pty Ltd ('South Melbourne Continental'), as evidenced by a historical ASIC search using the company's ACN 006 258 573.

20 The plaintiff provided a memorandum of association for the trustee. The plaintiff was requested to provide the articles of association for the trustee but instead provided another copy of the memorandum of association.

Awareness that trust deed was missing and efforts to locate it

21 Sometime in May 2011, Mr Totos became aware that the original trust deed for the trust had been misplaced. Despite making some enquiries at this time, the deed was not located. Mr Totos also sought legal advice as to the appropriate course for the continued operation of the trust and was advised that a new deed was not necessary as a statutory declaration would be sufficient for that purpose.

22 In 2011, Mr Totos generally made enquiries with banks, his then current solicitors and accountants and Mr Moses. Specifically, he instructed his accountants and solicitors to search their respective deed registers and deed boxes, and to make enquiries of Westpac Banking Group and any relevant government bodies. His solicitors at this time were Scanlon Carroll. Mr Totos has retained the same accountants since 1984, although with various mergers the name of the practice has changed over time. No evidence has been provided as to the results of these searches. Mr Totos deposes that he has been told by his accountant and by Scanlon Carroll that neither firm possess any documents relating to these enquiries.

23 Mr Totos deposes that, more recently, he also made enquiries with banks, his current and former accountants and Mr Moses in an attempt to locate the deed. Mr Moses confirmed he does not have a copy of the deed. Sometime around 1987, Mr Moses left JWDM when the practice was sold and it is now known as WMB Lawyers. Mr Moses' understanding is that upon the sale of the practice to WMB Lawyers, all deeds and the deed register kept in the former practice were transferred to WMB Lawyers.

24 Mr Totos instructed his current solicitor, Mr Carneli, to contact WMB Lawyers. On 17 April 2018, Mr Carneli spoke with a representative of the firm responsible for managing that firm's deed register. Despite acknowledging that all deeds were transferred to WMB Lawyers in 1987, the person advised Mr Carneli that the firm did not hold a copy of the deed and could not provide any further information. There is no confirmation whether WMB Lawyers continue to possess the deed register dating back to 1984 or whether the trust deed was entered into the deed register in 1984.

25 Mr Carneli also contacted the State Revenue Office, the result of which was confirmation that it does not, as a matter of practice, retain copies of trust deeds. Mr Totos obtained confirmation from his current accountant, Mr Tony Jolley, that it would not at any time have been necessary to provide a copy of the deed to the Australian Tax Office or ASIC.

26 Mr Totos deposes that the trust has been administered for 35 years and used primarily in the operation of the business.

27 The copy of the agreement for the purchase of the business by the plaintiff on 17 February 1986 records that, as consideration for the purchase, the plaintiff transferred the units held by it in the Cheese Plus Unit Trust to the trustees of the Stan Totos Family Trust and Jim Totos Family Trust as tenants in common in equal shares. No other evidence of this transaction was provided so that it can be understood in the context of the purchase but, on its face, it appears to be a major transaction entered into by the trust.

28 The plaintiff provided a number of bank statements from the National Bank of Australia in the name of Woodlow as trustee of the trust for the period 1991 to 1994 and one statement for November 2017 in the name of South Melbourne Continental as trustee of the trust. These statements include the ACN of the trustee company.

29 As noted by counsel acting as contradictor, the bank statements for the period 1991 to 1994 do not appear to be for accounts used in the operation of the business. Despite statements for the business being requested, the plaintiff did not provide any other bank statements or any recent statements within, for example, the last ten years or so, save for the November 2017 statement, which appears to be in respect of the business.

30 There is no evidence that the plaintiff arranged for or made enquiries of the National Australia Bank for the relevant statements or any relevant documentation. Mr Totos simply confirmed that, to his knowledge, no other bank records are in existence that record the transactions of the business.

31 The plaintiff also provided the financial statements for the trust to the period 2010 to 2017. The evidence does not disclose how the plaintiff's accountants undertook the task of preparing financial statements for the family trust up until the year 2017 without having in their possession a copy of the deed. Nor does the evidence disclose any basis for Mr Totos deposing that the trust has been administered according to the terms of the precedent trust deed since discovering that the trust deed had been lost in 2011.

32 Over time, the trust had purchased properties in Surfers Paradise, Queensland, Essendon, Victoria and Apollo Bay, Victoria.

33 The property in Apollo Bay was purchased in October 1998 and the Essendon property was purchased in July 2004. In December 2005, the trust purchased two units off the plan in Surfers Paradise. One of the units in Surfers Paradise and the Essendon property were sold in May and August 2008 respectively.

34 The plaintiff provided historical title searches for the remaining Surfers Paradise property, the Essendon property and the Apollo Bay property. These searches show that the trustee purchased these properties and, where relevant, sold them. The financial statements for the period record that the trust paid rates and expenses relating to these properties.

35 A State Revenue Office notification of lands held on trust form dated 22 March 2006 lists the Essendon and Apollo Bay properties as properties held by the trust. The Apollo Bay and Surfers Paradise properties are listed as trust assets in the financial statements in evidence. No other documents were provided to establish that the trustee dealt with these properties in its capacity as trustee of the trust.

36 On 13 May 2016, in a Family Court proceeding involving the separation of Mr Totos from his former wife, orders were made by consent of the parties dealing with the assets of the trust ('the Family Court orders'). On 21 November 2016, the Apollo Bay property was transferred to Mr Totos' former wife, pursuant to the Family Court orders.

37 In addition to dealing with the real property of the trust, the Family Court orders made provision, in relation to the trust, for Mr Totos' former wife to transfer her interest, relinquish her rights and be released from any liability. The orders required her to transfer her shares in the plaintiff to Mr Totos, leaving him the sole shareholder. The evidence relied upon in the Family Court proceeding was not produced in this proceeding and it is unknown how the Family Court determined that the trustee of the trust should be joined to the proceeding and there is no evidence of any orders that relate to the trust. At the time of the Family Court proceeding, it had long been recognised that the trust deed was lost or misplaced and it cannot be assumed that the Family Court was provided with a copy of the deed. This is despite the fact that on the face of the orders made in 2016, changes were made to the shareholding of the trustee and trust property was transferred to Mr Totos' former wife. The latter transfer suggests that his wife was also a beneficiary of the trust up until the implementation of the Family Court orders.

38 The current assets of the trust are moneys at the bank and the remaining unit located at Surfers Paradise. The title search for the unit in Surfers Paradise shows that the property was mortgaged to the National Australia Bank in 2009. An historical title search for the Essendon property records that the property was also mortgaged to National Australia Bank. The plaintiff has not provided any statements or other relevant documents relating to these mortgages with the National Australia Bank.

39 The financial statements of the trust in evidence also refer to a property in Greenvale as being a trust asset. Mr Totos deposes that he and his wife in fact only ever held this property in their personal capacities. The historical title search of that property confirms that Mr Totos and his former wife were the registered joint proprietors of the Greenvale property in their personal capacities from 10 May 2001 until 24 November 2016.

40 The financial statements in evidence also reflect Mr Totos' evidence that the trustee has made distributions and loans to him, his father, his former wife and his daughter as beneficiaries of the trust and the trustee company as a related entity of Mr Totos. Unpaid present entitlements are also on occasion recorded in the financial statements.

41 The evidence provided by the plaintiff in support of the relief sought highlights the substantial gaps in the relevant information and facts required to enable the deed to be reconstructed. The plaintiff has not provided clear and convincing proof as to the contents of the lost trust deed. There is no means of verifying Mr Totos' recollection as to the information required for the completion of the schedule to the precedent trust deed, such as the guardian, the appointor, the principal or other beneficiaries, the settlor or the date of the trust. Notably, Mr Totos was very young at the time that the deed was settled in 1984 and under the guidance of his father. In such circumstances, only so much weight can be given to his evidence without corroboration. It is notable that Mr Totos' mother and the extended Totos family are not mentioned as beneficiaries, as would be usual in the type of family trust that has been described by Mr Totos and Mr Moses, and where distributions were made to his mother.

42 The limited number of financial statements provide some secondary evidence of the trust but the usual secondary evidence that might assist the Court, such as the complete sets of the accounts for the trust, completed tax returns and various transactions for the trust over the years, are not in evidence. Notably, the financial statements provided relate to the period after it was discovered that the trust deed was lost, yet Mr Totos deposes that since that time the trust has been administered in accordance with the terms of the precedent trust deed. The evidence as to the searches undertaken is limited in its utility and the evidence of the activities of the trust over the years is sparse. The evidence of the Family Court orders are insufficient for the presumption of regularity to be applied in respect of the trust.

43 The Court is not satisfied that all reasonable efforts to locate the trust deed have been carried out or that evidence of its existence is incapable of being procured, particularly where Mr Moses' evidence suggests that it is likely that four original deeds were executed in 1984.

44 As stated, the plaintiff's originating motion also seeks orders confirming the power of the trustee to effect the relevant transactions, as defined, alternatively, the power to enter into the proposed transactions, alternatively, orders approving the relevant transactions dating back to 1984. The evidence of the proposed transactions is mostly secondary evidence and is not verified by any documentary evidence, with limited evidence provided for the detail of the transactions undertaken by the trust over the past 35 years.

45 Accordingly, the proceeding will be dismissed and, subject to any further submissions, the Court will order that the costs of the contradictor be paid by the plaintiff.

[1] Maks v Maks (1986) 6 NSWLR 34, 36 (McLelland J). See also D. R. McKendry Nominees Pty Ltd [2015] VSC 560 (22 September 2015) [7], [10].

[2] D. R. McKendry Nominees Pty Ltd [2015] VSC 560 (22 September 2015) [22]; Payten v Perpetual Trustee Company [2005] NSWSC 345 (15 April 2015) [97].

[3] Re Thomson [2015] VSC 370 (31 July 2015) [12] citing Knox County v Ninth National Bank, [1893] USSC 8; 147 US 91, 91 (1983). At paragraphs [13]-[22], I discussed the application of the relevant principles to a situation involving a lost trust deed.