A Supreme Court was recently asked to make orders dispensing with the need to produce an original Trust Deed and allow a photocopy of the Deed to be seen as the trust’s “constituting” or founding document in place of the lost original.

iStock 474264660 1The original – settled by his father in August 1972 with a $100 payment – established a trust for Neil Sutton and his family.

Following its establishment, the trust was unused and lay dormant for more than 30 years.

Neil’s father – Sir Frederick Walter Sutton – the proprietor until his death in 2004 of well-known Sydney car dealership Sutton Motors, left the business to Neil and his brothers under his will.

When Neil sold his share of the business in 2007, he identified the trust as the entity into which the sale proceeds should be paid and the so the trust became active. The sale proceeds were invested and generated substantial income over the years for Neil and his family.

The trust opened a bank account to receive the funds at which time only a copy of the 1972 trust deed was required to be produced.

The documentation collected by Neil’s solicitors from the law firm involved in establishing the trust did not include the original Deed. Other attempts were made over the years to locate it – through former family accountants and advisors – which succeeded only in recovering further copies identical to that Neil already had on hand.

As a result of the Banking and Financial Services Royal Commission, Australian banks became obliged to more strictly observe a “know your customer” (KYC) policy – as part of ever-increasing regulation – this one purportedly to control money laundering and terrorism activity.

Under KYC – overseen by Austrac – the trust’s bank required production of the original Deed for sighting, failing which the trust’s accounts were in effect frozen and could not be accessed.

Neil filed an urgent application to the NSW Supreme Court for orders that would allow the trust to continue to operate those accounts and open new ones as required.

Justice Guy Parker – noting he was not asked to rule whether the bank’s demand to sight the original Deed was a “correct interpretation” of KYC requirements – went on to state that such action clearly justified the need for the urgent application.

There was no doubt in Justice Parker’s mind that the photocopy of the Deed was “indeed a copy of an original which now cannot be found”, particularly as the various copies found from different sources were identical.

The issue confronting His Honour was the form of order that should be made to ensure that the trust could continue to be administered as if the photocopy Deed was the trust’s founding document, at least until the original was, if ever, located.

The order sought was a declaration that a photocopy was a “true copy” of the original Deed.

Justice Parker found that it was not proper for several reasons to make such a declaration. It was, he ruled, inappropriate to declare a “mere matter of fact”. Second, such an order would affect the interests of a number of parties  not represented in the court proceedings.

Instead of “declaratory” relief, His Honour reasoned it would be “an apt use” of the power under section 63 of the NSW Trustee Act 1925 to “give advice” that the trustees were justified in administering the trust on the basis that the photocopy was a true copy of the original Deed.

Other States have similar legislation to that in NSW.

Although the fortunate outcome was always likely, it is clearly preferable to keep close tabs on your original Deeds and related documents to avoid the considerable cost and delays of the legal proceedings required in this instance.

Sutton v NRS(J) Pty Ltd [2020] NSWSC 826 Parker J 26 June 2020