This is an application pursuant to s 63 of the Trustee Act 1925 (NSW) that the plaintiff trustee, Brailey Holdings Pty Limited (the "Trustee"), is justified in managing and administering two family trusts on particular terms in circumstances where, despite extensive searches, the original trust deeds (or copies) have not been able to be found.
The basis of the application is that, at the time the two lost trust deeds were settled, at least one other trust (the terms of which are in evidence) was settled at the same time. By reason of that and other circumstantial evidence which I shall set out below, the Court is satisfied that the Trustee has brought clear and convincing proof not only of the existence, but also of the contents, of the missing trust deeds - namely that they are relevantly in the same terms as the trust deed which is in evidence.
In considering this application, the Court has been considerably assisted by the thorough opinion of Mr D Barlin of Counsel, which formed part of the evidence, and by his oral submissions on behalf of the Trustee.
[2]
The facts
The late Ernest James Brailey had at least three children, David Brailey, Lynette Craig and Diana Vormister.
By deed of settlement made on 7 November 1973 between Guy Templeton Baker and Morris John Scott Garland (identified as the "No 4 Settlement"), what has been referred to in the evidence as the "GTB No 4 Trust" was settled. At the time it was settled the beneficiaries were specified to be Ms Vormister and her issue. Being numbered "4", I infer that there were settlements 1, 2 and 3.
Ms Vormister gives evidence that at the same time as the GTB No 4 Trust was settled, identical trusts were settled in favour of her siblings: the GTB No 2 Trust in favour of David Brailey and his issue, and the GTB No 3 Trust in favour of Lynette Craig and her issue. I was informed from the Bar table that the GTB No 1 Trust was not in question because it had vested.
Without any disrespect intended, the difficulty with Ms Vormister's evidence is that it is (based on the way in which it is expressed) hearsay. Unlike the case to which I refer in paragraph [13] below, Ms Vormister does not give evidence of actually having seen or read the other trust deeds.
The next piece of evidence relied upon is a document dated 1 July 1980 between David Ernest Brailey (described as the "appointor"), Morris John Scott Garland and the Trustee, entitled "Deed of Appointment (No 2 Settlement)". By that deed, which has been duly stamped, Mr Garland retired and the Trustee was appointed as trustee of what is recited as a "deed of settlement made 7 November 1973 between Guy Templeton Baker (hereinafter called "settlor") of the one part and the retiring trustee of the other part". This deed appears to be the only direct evidence of the existence of the GTB No 2 Trust deed. There is also an identical Deed of Appointment of the same date executed by Ms Vormister in relation to the GTB No 4 Trust.
The next piece of evidence is a copy of a document entitled "Deed Varying Settlement" between Ms Vormister and the Trustee dated 15 June 1984. That deed recites the GTB No 4 trust deed made on 7 November 1973 and varies that original trust deed by extending the class of Ms Vormister's family members eligible to be beneficiaries under the GTB No 4 Trust.
It appears that the extension of the class of beneficiaries under the GTB No 4 Trust (and I infer the GTB No 2 Trust and GTB No 3 Trust) gave rise to a dispute with the Commissioner of Stamp Duties. Presumably someone advising the Trustee had assumed that the Deed Varying Settlement would only be liable to nominal duty. However, the Commissioner of Stamp Duties took the view that ad valorem duty was exigible on the basis that the deed constituted a resettlement of the relevant trust.
The matters to which I have referred in the preceding paragraph are established by reference to an opinion of Mr B J Sullivan (then of Counsel) dated 26 October 1989 which was in evidence. Mr Sullivan's opinion includes:
"I am instructed as follows:-
1. The four discretionary trusts ("the Trusts") were established by four separate Deeds dated 7 November 1973.
2. Each Trust Deed provided, in clause 4, that the Trust property would be held upon trust to pay or apply the whole or such part of the settled property as the trustee thought fit towards the maintenance, support, education, advancement in life or benefit of any one or more of "the Beneficiaries". Each Trust Deed provided, in clause 5, that at the end of the "period of restriction" the trustee should pay or apply the whole of the settled property to or for the benefit of any one or more of the Beneficiaries in such proportions as the trustee in its absolute discretion thought fit.
3. Each Trust Deed identified "the Beneficiaries" in clause 2. In each case the relevant class was identified by reference to one or more named persons and their issue.
4. By four Deeds dated 15 June 1984 each Trust Deed was amended by omitting clause 2 and substituting a new clause in place thereof. The substitute clauses had the effect of nominating additional persons to be included in the class of Beneficiaries in each case.
5. The amending Deeds of June 1984 were submitted to the Commissioner of Stamp Duties with the expectation that nominal duty only would be assessed in respect thereof."
Finally, the evidence establishes, and I find, that the Trustee has, since at least 1984, administered each of the GTB No 2 Trust and the GTB No 3 Trust as if they were on the same terms as the GTB No 4 Trust, save as to the identity of the beneficiaries under the respective trusts.
[3]
Consideration
In Barp Nominees Pty Ltd [2016] NSWSC 990 ("Barp"), Pembroke J gave judicial advice in a very similar situation. I am indebted to his Honour's consideration of the relevant authorities, which I respectfully adopt. His Honour concluded (at paragraph [6]) that a party in the position of the Trustee had to satisfy the burden of demonstrating the need for "clear and convincing proof not only of the existence but also of the relevant contents" of the missing trust deed.
In Barp his Honour was also dealing with a situation where parents settled trusts for the benefit of each of their children. One of the trust deeds remained in existence but the other had been lost. His Honour was satisfied in that case that the circumstances demonstrated that the trust deeds would have been in identical terms, save for references to the particular beneficiaries.
The difference between the facts in Barp and the case at bar was that Pembroke J had the advantage of direct evidence from a witness who had in fact seen and read the terms of the lost trust deed. As I have observed in paragraph [7] above, that is not so in this case because Ms Vormister does not give evidence that she had actually seen or read the terms of the lost trust deeds.
However, that difference in the evidence is not fatal to the present application. Like Pembroke J, I have no difficulty in drawing the inference that where separate trusts are settled for the benefit of each of the children in a family, the likelihood is that those trusts will be in identical terms save for the identity of the particular beneficiaries. I therefore find that the lost trust deeds were in the same terms as the GTB No 4 Trust deed save for the identity of the beneficiaries.
Taking the evidence set out in paragraphs [4] to [11] above together and noting that at least two of the documents expressly refer to the "No 4 Settlement" and the "No 2 Settlement", I am satisfied that the evidence constitutes clear and convincing proof not only of the existence of the GTB No 2 Trust deed and the GTB No 3 Trust deed (and I find that they did exist), but also of their relevant contents.
Insofar as the contents of the lost deeds are concerned, the inference to which I have referred in paragraph [16] above is fortified by those parts of Mr Sullivan of Counsel's opinion set out in paragraph [11] above. The clauses to which Mr Sullivan refers in those parts of his opinion as being clauses in each of the trust deeds do appear in the GTB No 4 Trust deed which is in evidence before me.
The Trustee has prepared what has been referred to in the evidence as "facsimile deeds" for the GTB No 2 Trust and the GTB No 3 Trust. Those facsimile deeds are in identical terms to the GTB No 4 Trust deed, save for references to the beneficiaries appropriate to the relevant trust. I therefore find that those facsimile deeds reproduce the terms of the lost trust deeds.
For these reasons the Court concludes that the Trustee is entitled to advice to the effect that it is justified in managing and administering the GTB No 2 Trust and GTB No 3 Trust in accordance with the relevant facsimile deed.
[4]
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Decision last updated: 04 October 2018