"Pay the trust's funds to the estate!"

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A Tee was the trustee of a trust with about $2.8m in assets. The trust had two beneficiaries, Spouse 1 and Spouse 2: [2], [8]

Spouse 1 died in 2014 bequeathing their estate entirely to Spouse 2: [2], [11]

The Tee lost the trust deed: [2]

While general law dictated some of the terms of the trust, having lost the trust deed the Tee has no certainty about the beneficiaries of the trust (aside from Spouse 1 and Spouse 2): [3]

The Tee was incorporated in 1982 and some evidence suggesting a deed settling the trust was entered into at or around that time: [5], [6]

ATO records showed the trust was used for investment activity and that it distributed income to Spouse 1 and Spouse 2, and no one else: [10]

Spouse 2 died in 2022 and an interim administrator of their estate was appointed: [12]

At the time of their death, Spouse 2 was sole dir and shareholder in the Tee, which was also trust of the Spouses’ SMSF: [13]

An independent IP was appointed director of the Tee: [14]

The IP gave evidence of numerous searches and enquiries conducted in relation to the trust deed, which did not lead to its being found: [15]

This case was distinguished from usual trust deed cases (which sometimes deal with a photocopied deed, an unsigned deed, or a deed relied upon in relation to a very similar trust) noting that there was no evidence of any deed at all. Nor was there any evidence of the deed’s terms: [16]

The Court found that without the deed, the trust’s benefs could not be identified meaning (without certainty of object) the trust failed. A resulting trust arose in favour of Spouse 1. Spouse 2, as Spouse 1’s benef, stood to take in those circs: [17]

The Court accepted as common knowledge of the general practice that a trust deed for a “family” trust will inevitably include more members of that family than the “main beneficiaries”, typically the relevant spouses: [20, [21]

Having taken judicial notice of this, the Court considered that there would be more beneficiaries of the trust than Spouse 1 and Spouse 2 but - due to the absence of the deed - there could be no certainty as to who those beneficiaries might be.Whether due to their status as (likely) settlor of the trust or the conclusion that Spouse 1 did not intend to divest themselves of the assets in the corpus of the trust then - the trust having failed for uncertainty - a resulting trust arises in favour of Spouse 1: [25] - [27]

The Court advised that (Spouse 1 having died, and Spouse 2 being sole benef of Spouse 1’s estate) the Tee would be justified in paying the corpus of the trust into Spouse 2’s estate: [30]

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