Loss of Governance

The central enabling factor in the fraud and then later in the attempt to cover up this fraudulent Breach of Trust is the loss of governance that the members of this occupational pension trust experienced, not once but twice.

There was an attempt to gain control of the surplus in three pensions funds in the United Kingdom by the executives of Elders IXL Limited when Elders IXL Limited acquired the Courage Brewing Group in 1986, however there was no loss of governance by the Members of the funds and the Management Committee was able to seek advice and directions from the Court in order to protect the funds surpluses.

The case Re Courage Group’s Pension Schemes [1987] 1 WLR 495 is a case that is frequently cited in trust law cases.

Further details of this case can be found here.

Removal and Appointment of Trustees

From 1913 to 1974 the sponsoring Employer held the power to remove and appoint Trustees. However in 1974 the Regulation of the Fund were amended to provide a power to the Member to remove and appoint two natural person Trustees and for the Pensioners to remove and appoint one natural person Trustee. The sponsoring Employer retained the power to remove and appoint the remaining two natural person Trustees.

This occurred two decades before there was a statutory requirement for member-elected Trustees.

The amendments to the Regulations of the Fund that provided for the power for the Members and Pensioners to remove and appoint natural person trustees can be found here.

It is provision of the Trustee Act 1936 (SA) that trustees of trusts established in South Australia, must be resident in South Australia and can only be temporarily absent for 12 months unless on military service.

The power to remove and appoint trustees is construed as a “fiduciary power” even when the power is help by a person who is not a “fiduciary” such as an Employer.

More details on the legal aspects of the removal and appointment of trustees can be found here.

The Power of Amendment

The Power of Amendment {Regulation 50} specifically requires a Deed to be used to vary the number of trustee, however a document dated 20 December 1982 described on its face as a “Resolution” and that was not duty stamped as a Deed purportedly reduced the number of trustees from five to one.

This was confirmed in the Recitals of the “Jarrett Deed”.

The Elliott Resolution

The document dated 20 December 1982 that was used as justification for removing five natural person trustees, resident in South Australia from office and replacing them with a sole corporate Trustee resident in Victoria was signed twice by John Dorman Elliott, once in his capacity as a Director of the sponsoring Employer, and again in his capacity as a natural person trustee.

More information of the “Elliott Resolution” can be found here.

The purported corporate Trustee

The removal of the all five natural person trustees from office was void and ineffective, since the sponsoring employer only held the power to remove and appoint two of the five natural person trustees.

The purported “Resolution” dated 20 December 1982 did not alter the number of trustee since the document was not a Deed and it was not executed by a majority of the Directors of the sponsoring employer. The document was executed by the wrong party – the legal person – the company Elders IXL Limited.

The appointment of a Victoria resident Trustee was also in breach of the provisions of the Trustee Act 1936 (SA) that requires the trustees of trusts established in South Australia to be resident in South Australia. A condition that had been complied with from 1913 to 20 December 1982.

There were no member-elected Directors on the Board of the corporate Trustee and so the appointment of the Victorian resident Trustee is also void under the doctrine of a “Fraud on a Power”.

A purported trustee that has not been lawfully appointed to the office of trustee in accordance with the terms of the trust and the general law is known as a Trustee de son tort. A Trustee de son tort {or “de facto trustee” }retains the liabilities of a lawfully appointed trustee but cannot exercise any of the powers of a lawfully appointed trustee, including exercising the Power of Amendment or exercising the power to consent to a proposed amendment to the terms of the trust.

More details on a Trustee de son tort can be found here.

Fraudulent Instruments of Variation

All instruments executed on or after 20 December 1982 that purport to amend the terms of the occupation pension fund established on 23 December 1913 are void and ineffective, for the simple reason is that they have been executed by the wrong parties.

The Power of AmendmentRegulation 50 requires that the instrument used to vary the terms of the trust must be a Deed and the Deed must be executed by:

  • a Majority of the Directors of the sponsoring employer; and
  • a majority of the Trustee, how by law must be lawfully appointed to the office of trustee

IMPORTANT: The Power of Amendment was not given to the legal person – “the Company”.

The document dated 20 December 1982 was not a Deed and it was not executed by a majority of the Directors of the sponsoring Employer.

The purported “Deed of Variation” dated 26 August 1986 was executed by the “Principal Employer” and by a Trustee de son tort. It was not executed by the correct parties

More information on the “Jarrett Deed” can be found here.

Many subsequent instruments that purported to amend the terms of the trust were not even Deeds and all were executed by the “Principal Employer” and a Trustee de son tort. All subsequent amending instruments are also void and ineffective.

The terms of the occupational pension trust established on the 23 December 1913 have not been lawfully amended since the late 1970s.

Second Loss of Governance

After Robert Maxwell and his sons plundered the pension funds of the Mirror Newspaper Group in the early 1990s, the Parliament of Australia mandated the “equal representation rule” requiring members to elect an equal number of Directors if their employer-sponsored superannuation fund had a corporate Trustee.

Therefore from 1993 the purported corporate Trustee was required to appoint an equal number of member-elected Directors, however the last member elected Directors resigned in 2010 and 2011 and were never replaced.

The second loss of governance is covered in more detail here.


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This tab updated on 22 March 2015