There are words and phrases that are easily misunderstood or misrepresented.

Some of these are:

  • trust deed
  • governing rules
  • trust instrument

Trust Deed

The Australian Law Dictionary {Oxford University Press} defines “trust deed” as follows:

“The instrument (a deed of settlement) establishing a trust. The deed must have four essential elements of a trust (trustee, beneficiary, the trust property, and some obligation annexed to the property) along with the three certainties (intention, subject matter, object). An express trust must be established in writing by a DEED (signed, sealed and delivered) by a settlor, who settles an amount of money or other property on the trust and establishes the terms on which the trustee holds the trust property”

There is only one “Trust Deed” properly so called for any trust and that is the founding Trust Deed that establishes the trust. Subsequent Deeds that vary the terms of the trust are properly called Deeds of Variation or Amending Deeds.

Governing Rules

In superannuation trusts, the words “governing rules” are used for the terms of the trust. The governing rules are not a single document but a set of documents that includes:

  • The founding Trust Deed that established the trust
  • Any subsequent  Deed of Variation that amended the terms of the trust
  • Any order or direction from the court in relation to the trust
  • Any Act of Parliament specific to the trust
  • The relevant State Trustee Act
  • Relevant Commonwealth legislation

A consolidation Deed of Variation does not render the founding Trust Deed obsolete. The founding Trust Deed and Deeds of Variation that have been consolidated must be retained by the trustee so that a court would be able to determine a “true construction” of the terms of the trust.

Butterworths Australian Legal Dictionary defines “governing rules” as follows: “In relation to superannuation fund, approved deposit fund or a unit trust, any trust instrument, other document or legislation, or combination of these, governing the establishment and operation of the fund or unit trust.

Refer to Section 10 of the Superannuation Industry (Supervision) Act 1993 which defines “governing rules” as follows:

governing rules“, in relation to a fund, scheme or trust, means: (a) any rules contained in a trust instrument, other document or legislation, or combination of these; or (b) any unwritten rules; governing the establishment or operation of the fund,scheme or trust” Allsop J in Retail Employees Superannuation Pty Ltd v Croker [2001] FCA 1330 stated at [23]: “The phrase “governing rules of the fund” means the terms governing the conduct of the superannuation fund, which was a regulated superannuation fund under the Superannuation Industry (Supervision) Act 1993 (Cth). It is not limited to the schedule to the trust deed which set out the “rules for the management” of the fund. It means the terms of the trust under which the fund is carried on, which includes the “rules for the management” of the fund: clause 1.2 of the annexure to the deed of amendment dated 13 December 1988″.

Trust Instrument

A document expressing a trust. Generally, it spells out the rights, powers, and obligations of the trustee, and the kinds of investments the trustee may make pursuant to his or her trust obligation.”

Trust Document

A document evidencing a trust and the property subject to it, and necessary for the efficient management of the trust. Trust documents belong to a trustee in his or her capacity as trustee. Beneficiaries of the trust have a proprietary interest in the trust documents and are entitled to inspect then.

This right is also prescribed by Section 84B of the Trustee Act 1936 (SA) and the Trustee Regulations 2001 (SA).

In the case of Government Regulated Superannuation Funds this right is prescribed by subsection 1017C(5) of the Corporations Regulations 2001 and Regulation 7.9.45 of the Corporations Regulations 2001.