Get your Deeds in a Row

The absence of a trust deed makes it difficult to prove a trust’s existence and almost impossible for a trustee to efficiently administer the trust.  Seemingly routine activities, like opening bank accounts, borrowing money and making distributions, can fail as a result. The Victorian Court of Appeal’s March 2023 decision in the case of Vanta Pty Ltd v Mantovani ¹ highlights the crucial importance of trust deeds as well as the need to act swiftly when a trust deed cannot be found. 

In an increasingly litigious world where divorce, blended families and estrangement are not uncommon, it’s easy to see why proactively locating trust deeds and keeping them up to date is fast making its way to the top of good advisors’ to-do lists.

The Facts in Vanta Pty Ltd v Mantovani ²

• Vincenzo and Teresa Mantovani had four children: Giovanni, Nicola, Salvatore and Carmine.
• Vincenzo died on 20 July 1974.
• The Mantovani Family Trust (Trust) was established in 1976.  Vanta Pty Ltd (Vanta) was appointed as trustee of the Trust.
• In the 1970’s and 1980’s, properties previously owned by Vincenzo and Teresa were transferred to Vanta as trustee for the Trust.
• Teresa died on 14 October 2015.  From the date of her death, her children were in dispute regarding entitlements to assets of the Trust and her estate.
• Despite extensive searches, the original deed for the Trust could not be located.  A copy of the schedule was all that was held by the parties.
• At the time proceedings were brought, Nicola and Salvatore were the directors and shareholders of Vanta.
• From April 2017, Giovanni sought details of the Trust from Vanta, Nicola and Salvatore and made numerous requests for access to the Trust’s documents and accounts.
• Giovanni applied to the Court for orders, including that if the trust deed could not be located the Trust would fail and the assets of the Trust would be held subject to a resulting trust in favour of Teresa’s estate. This would occur because if the Trust failed, the Trust’s assets would revert to the Settlor, Teresa’s father. As she was the residuary beneficiary of his estate as well as a contributor of Trust assets herself, her estate would then become entitled to the Trust’s assets, allowing Giovanni to challenge her estate.
• The parties agreed that the trust deed had been lost and that the details in the schedule were accurate.

Victorian Supreme Court

Mantovani v Vanta Pty Ltd (No 2) [2021] VSC 771

In 2021, the Victorian Supreme Court held:

• that in the absence of the trust deed and clear and convincing secondary evidence as to its contents, the Trust failed for uncertainty; and
• accordingly, that Vanta held the Trust property subject to a resulting trust in favour of Teresa’s estate (on the basis that she was the residuary beneficiary of her father’s estate and that she contributed commercial and residential property to the Trust).

Vanta, Nicola and Salvatore appealed the decision of the Victorian Supreme Court. 

Victorian Court of Appeal

Vanta Pty Ltd v Mantovani [2023] VSCA 53

The Victorian Court of Appeal was satisfied that the secondary evidence identified the essential terms of the Trust and that it satisfied the three certainties test: certainty of intention, subject matter (trust property) and objects (beneficiaries).  As a result, on 16 March 2023, it set aside the orders previously made by the Victorian Supreme Court and ordered that new proceedings be commenced to determine what orders should be made to enable the Trust to continue to be administered in a proper fashion or, if the Court determines, to be wound up.

What Next for the Mantovani Family?

Despite the Court of Appeal holding that the Trust property continues to be held by Vanta as trustee of the Trust, the terms of the Trust and the conditions on which Trust assets are held are yet to be determined.  It is possible that the Court orders that Vanta (controlled by Nicole and Salvatore) should be removed as trustee and a new, independent trustee be appointed to enable the Trust to be administered going forward.  The Court of Appeal noted that they had not been required to determine whether Vanta committed any other breaches of trust or whether Giovanni had any other remedies against Vanta, “such as an order for the taking of accounts or an order for the removal of Vanta as trustee.” ³  They also noted that:

• Vanta, as a responsible trustee, should have possessed a copy of the trust deed;
• Vanta should have applied to the Court sooner to seek directions as to how to continue to operate the Trust in the absence of a trust deed; and
• criticism of Vanta at the Supreme Court level was mainly valid.

What Next for Advisors?

We will continue to follow this case and keep our clients updated, leaving them to focus on what they can be doing to mitigate these kinds of risks for their clients. Here are our top tips:

Proactively locate trust deeds

Don’t wait until an issue arises in relation to a trust before you start looking.  Commence an administrative project to ensure that trust deeds (and any amendments) for all trusts you look after can be located and that you hold copies.

Copies of trust deeds for any trusts set up with Acis in the last 10 years can be downloaded from the Acis Platform. For trusts set up using Acis’ Power of Attorney Service, signed copies will be available on the Platform. Get in touch if you’d like to know more.  

If you’re looking for older trust deeds or those for trusts not set up through Acis, try other advisors (including former and current accountants, lawyers and financial planners), banks, titles offices and offices of state revenue.

Read the Deeds (and keep them up to date)

It’s difficult to imagine how you can ensure trust distributions and/or other important actions are valid if you don’t read the trust deed to confirm.  Ensure you (and/or your team) consult the trust deed whenever actions in relation to a trust are proposed, to ensure their validity. 

Proactively keeping trust deeds updated and issue free is increasingly becoming a focus of advisors.  The outcomes are far better than discovering issues in the context of another matter, for example a marital breakdown or a transaction involving a bank.  Acis has developed Trust Evolve™, a comprehensive product combining technical trust deed review and amendment with practical tools such as distribution templates and checklists. Find out more about Trust Evolve™ or Get in touch.

Act swiftly if trust deeds cannot be located

Where, despite extensive searches a trust deed cannot be located, consider a Deed of Confirmation and/or an application to the Supreme Court.

Acis can prepare a Deed of Confirmation, which:

• acknowledges that a signed, original copy of a trust deed has been lost, misplaced or destroyed;
• ratifies the trust’s establishment; and
• adopts terms (annexed to the deed) as the terms of the trust. Where a copy of the original trust deed is available, this would be adopted. Where a copy is not available, terms similar to those adopted at the time the trust was originally established will be adopted.

It may also be prudent, or even necessary, for an application to be made to the Courts for a declaration regarding the validity of the terms of the trust.

The time is now. Be proactive and mitigate trust deed risk.

As always, the team at Acis is here to help. Contact us to discuss further.

¹ Vanta Pty Ltd v Mantovani [2023] VSCA 53 

² Mantovani v Vanta Pty Ltd (No 2) [2021] VSC 771 and Vanta Pty Ltd v Mantovani [2023] VSCA 53 

³ Vanta Pty Ltd v Mantovani [2023] VSCA 53, [154]

Acis does not provide advice in relation to commercial law, taxation, duty, company law or any other matter. We do not purport to provide advice nor should you construe anything in any correspondence with us, or material provided by us, as advice of any kind.

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