Definition of a “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.

If the original Trust Deed does not provide a Power of Amendment  the original Trust Deed cannot be amended by another Deed. {The terms of the trust can only be amended by a Court or by an Act of Parliament}.

If a Power of Amendment is provided then subsequent Deeds that vary the terms of the trust are properly called Deeds of Variation or Amending Deeds. The original Trust Deed will generally prescribe whether a Deed must be used to amend the terms of the trust or whether an instrument under hand is sufficient.

Under the common law a Deed must be used to amend the terms of another Deed.

Therefore if the original Trust Deed does not prescribe that an instrument under hand can be used to mend the terms of the trust, then the common law provisions apply.

Regulation 28 if the original Trust Deed made on the 23 December 1913 prescribed that a Deed must be used to amend the terms of the original Trust Deed.

Geraint Thomas in Thomas on Powers (1st Edition) states at [5-126]:

“Subject to the aforesaid statutory provisions, the donor of a power may specify whatever requirements he chooses for the exercise of a power, provided he does not transgress any rules of law or equity, and those requirements must be strictly observed. {Rutland v Doe d. Wythe (1843) 10 Cl & Fin 419; Frazer v Riversdale [1913] 1 I.R. 539}.

“Whatever arbitrary terms the grantor of the power may impose upon the party executing it, or however absurd and unreasonable they may seem to be, they must be fulfilled; as if it were required that the instrument executing the power be witnessed by persons of a particular stature, or written on paper of a particular colour” {Rutland v Doe d. Wythe (1843) 10 Cl & Fin 419 at 425}.

Thus many and varying conditions, stipulations or perquisites can occur. The most common requirements are, in fact, rather more prosaic, and would seem to be those which stipulate that:

  • The power is exercisable only by means of some particular instrument(s): or
  • The consent of some person other than the donee of the power must be obtained before exercise; or
  • Some express reference must be made to the power upon exercise.

Covenants

A formal agreement or promise in a Trust Deed or under seal is referred to a covenant {Russell v Watts (1885) LR 10 App Cas 590,611}.

Generally, an implied covenant has the same legal effect as if it had been expressly included in the instrument {Williams v Burrell (1845) 1 CB 402: 135 ER 596)}.

Additional covenants can be included in the terms of a trust by statute, for example Section 52 of the Superannuation Industry (Supervision ) Act 1993.

Proper Law

The High Court of Australia in Augustus v Permanent Trustee Co (Canberra) Ltd [1971] HCA 25; (1971) 124 CLR 245 stated at [8]:

“It has not been disputed by any of the parties to the appeal that the general rules established in relation to contracts are applicable in deciding questions of the choice of law in relation to such voluntary settlements as that which is contained in the deed. In my opinion, those rules are applicable. That means that, subject to qualifications to which some reference will be made later herein, it was open to the parties to make their own choice of law. If they have expressed their intention on that matter, effect will be given to it : see Vita Food Products Inc. v. Unus Shipping Co. Ltd. (1939) AC 277, at p 290 . If they have not expressed an intention, the law to be applied must be ascertained as “a matter of implication to be derived from all the circumstances of the transaction”: see Bonython v. The Commonwealth (1951) AC 201, at p 221 . (at p252)


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This tab updated on 15 March 2015