Re Cleeve Group Pty Ltd
[2022] VSC 342
•21 June 2022
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2021 03681
| CLEEVE GROUP PTY LTD (IN ITS CAPACITY AS THE TRUSTEE OF THE CLEEVE GROUP TRUST) | Applicant |
| v | |
| TERENCE RAYMOND CLEEVE | Contradictor |
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JUDGE: | Gorton J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 31 May 2022, 1 June 2022 and 2 June 2022 |
DATE OF JUDGMENT: | 21 June 2022 |
CASE MAY BE CITED AS: | Re Cleeve Group Pty Ltd |
MEDIUM NEUTRAL CITATION: | [2022] VSC 342 |
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TRUSTS – Application by trustee for judicial advice – Lost trust deed – Whether executed trust deed existed – Whether executed trust deed has been lost – Where two competing versions of contents lost trust deed – Whether clear and convincing evidence necessary – Held that deed executed in the form of draft trust deed – Supreme Court (General Civil Procedure) Rules2015 r 54.02.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr J W S Peters QC Mr N Walter | Hall & Wilcox |
| For the Contradictor | Mr I Waller QC Mr C Lum | HWL Ebsworth Lawyers |
TABLE OF CONTENTS
A. Introduction.................................................................................................................................. 1
B. Relevant or uncontested factual background......................................................................... 2
C. The conflicting positions............................................................................................................ 8
D. Was there ever an executed trust deed?................................................................................... 9
E. Has the trust deed been lost?.................................................................................................... 13
F. What is required to prove the terms of the lost trust deed?............................................... 15
G. The executed deed was probably in the form of the Hall & Wilcox deed...................... 16
G.1Reasons for concluding that the deed was probably in the form of the Hall & Wilcox deed.............................................................................................................................................. 17
G.2Reasons for concluding that the deed was probably in some form other than the form of the Hall & Wilcox deed or was in the same form as the Finance Trust deed................. 22
G.2.1The instructions to BKR......................................................................................... 22
G.2.2The way the Finance Trust deed was created.................................................... 23
G.2.3The Deed of Advancement and the evidence of Peter Ziegler........................ 23
H. Disposition.................................................................................................................................. 25
HIS HONOUR:
A. Introduction
Cleeve Group Pty Ltd was registered on 19 November 1999. Shortly thereafter, it commenced to operate as if it were the trustee of the Cleeve Group Trust. In that name and in the purported capacity as trustee of the Cleeve Group Trust, it has:
(a) opened and operated an overdraft account with the National Australia Bank;
(b) given a charge to the National Australia Bank;
(c) guaranteed a loan made to another company associated with the Cleeve family;
(d) lent money to and received money from various members of the Cleeve family by way of establishing and maintaining loan accounts in their names;
(e) on occasions, entered into formal documented loan agreements with members of the Cleeve family;
(f) invested in businesses being run by various members of the Cleeve family;
(g) made distributions to various members of the Cleeve family or to entities associated with them;
(h) engaged in litigation against the estate of a member of the Cleeve family and other entities, and compromised that litigation on terms that it receive substantial sums in cash and shares; and
(i) prepared financial accounts and lodged annual tax returns.
However, no executed trust deed can be found. Cleeve Group Pty Ltd has brought this proceeding in which it seeks judicial advice pursuant to r 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 to the effect that it may operate its business on the basis that an unexecuted trust deed prepared in December 1999 by solicitors was in fact executed and that that deed continues to govern that trust. One member of the Cleeve family, Terence Cleeve, has been appointed as contradictor. Terence Cleeve accepts that a trust deed was executed in 1999 and that it has been lost, but contends that the trust deed that was executed was not in the form of the trust deed prepared in December 1999 by solicitors. Instead, Terence Cleeve asserts it was in the form of a trust deed typed up at his request by an employee that mirrored the terms of two earlier Cleeve family trust deeds. At the conclusion of the hearing, Cleeve Group Pty Ltd amended its originating motion to seek in the alternative the same relief but framed by reference to the form of trust deed put forward by Terence Cleeve.
To obtain the relief it seeks, Cleeve Group Pty Ltd is required to establish:
(a) first, that a trust deed was in fact executed in or around late 1999. If this cannot be done, then the ‘Cleeve Group Trust’ will fail and there would have to be some process of ascertaining the beneficial ownership of the assets held in the name of Cleeve Group Pty Ltd; and
(b) second, that the executed trust deed was in the form of that propounded. This second step involves, conceptually, leading secondary evidence of the contents of the executed trust deed. In order to do this, Cleeve Group Pty Ltd must first establish that the executed copy of the trust deed has been lost.
B. Relevant or uncontested factual background
The Cleeve family relevantly consists of Keith and Audrey Cleeve, their seven children, and numerous grandchildren. It seems that five of the seven children were relevantly involved in the family’s investments and projects. Of those five children, Damien and Laurence Cleeve worked as doctors and generated funds that were used by the family for investment purposes. Adrian Cleeve, who died in December 2016, was a lawyer but from 1986 ‘devoted himself full time to family projects’. The family’s projects included businesses that required considerable research and development. Terence Cleeve, who is an accountant, looked after the books and finances of the family, ‘was the financial controller of all Cleeve projects’, and, it seems, worked closely with Adrian Cleeve in the family businesses on an essentially full-time basis from mid-1991. Keith Cleeve Junior had little to do with the oversight of the family investments whilst Adrian was alive, but was involved in the operations of, and technology behind, Touchcorp Ltd, one of the family businesses.
By the time with which this case is concerned, the Cleeve family already had two family trusts. The first was established in 1980 and was referred to as the Finance Trust. The trustee was initially Australian Central Finance Pty Ltd, but from 22 May 2000 Adrian Cleeve took over as trustee. The second was established in 1995 and was initially called the Infomaniacs Trust, and its trustee was Infomaniacs Pty Ltd. On 27 March 2000, Infomaniacs Pty Ltd changed its name to Cleevecorp Pty Ltd, and the trust started to be called the Cleeve Trust. Both of these trusts were established by trust deeds in effectively identical form. Indeed, it is apparent that the Cleeve Trust deed was a photocopy of the Finance Trust deed, with amendments made to the schedules and execution pages. Executed copies of both of those deeds are available.
By 1999, the Finance Trust, and perhaps other members of the family or entities associated with them, were in a dispute with the Australian Taxation Office. For this reason, a decision was taken in effect to draw a line under the Finance Trust. It was decided to transfer some of the assets of the Finance Trust into the Cleeve Trust, and to establish a new family trust to take over some of the operations that had previously been performed by the Finance Trust. This new family trust was to be called the Cleeve Group Trust, and it is the trust deed for this trust that is the subject of this proceeding. Given that the relevant events took place some 23 years ago, few of the people involved could remember the detail of the relevant events, which is not surprising. The following is taken largely from the documentary record.
On 12 November 1999, Katherine Herniman of BKR Walker Wayland (‘BKR’) sent a fax to Terence Cleeve asking for instructions as to who were to be the officeholders and shareholders in the company to be incorporated and called Cleeve Group Pty Ltd. BKR was a firm of accountants. Terence Cleeve accepts that BKR was retained for the purpose of incorporating Cleeve Group Pty Ltd, but says that is all that BKR was retained to do.
On 15 November 1999, Melinda Nicholls of BKR sent an internal email to Annette Lincoln and Katherine Herniman of BKR. The email states that it was sent because Melinda Nicholls did not understand the instructions that had been given to her by Terence Cleeve. The parties have located a hard copy of this email, but not the electronic record. The hard copy has handwritten notes upon it. Nobody was able to say in whose handwriting the notes were. The piece of paper came from, I was told, the Cleeve family’s records, rather than BKR’s records, which suggests that the handwriting was probably the writing of someone within the broader Cleeve family. Importantly, amongst other notations, the following was written on the hard copy of that email:[1]
[1]The handwritten note provides: ‘The Cleeve Group Trust’ with an arrow drawn in the direction of ‘mirror Finance Trust Trust Deed’.
On 19 November 1999, Terence Cleeve faxed BKR the details of the persons who were to be officeholders and shareholders in Cleeve Group Pty Ltd.
Then, BKR engaged the law firm Hall & Wilcox to draw a trust deed. On 24 November 1999, Anthony Macvean of Hall & Wilcox emailed Annette Lincoln of BKR with what he described as ‘a draft of our pro forma discretionary trust’. Annette Lincoln of BKR forwarded that to Peter Ziegler, who was a friend and tax advisor to the Cleeve family. Annette Lincoln described it as ‘a draft only’, and sought that it be ‘reviewed for suitability.’ No response to that email has been located.
On 30 November 1999, Cleeve Group Pty Ltd was incorporated. Also on that day, Annette Lincoln of BKR sent to Terence Cleeve various documents required to be signed that related to Cleeve Group Pty Ltd, such as share certificates, consent to act forms, a 1999 annual return, notice of notice of appointment of public officer and the like. No trust deed was enclosed with this letter.
On 2 December 1999, Hall & Wilcox sent a letter addressed to Keith and Audrey Cleeve, but care of BKR. The letter included the following:
We enclose five copies of the deed of settlement for The Cleeve Group Trust (“the Trust”).
Please arrange for execution of all five deeds and return them to us for stamping, along with a cheque for $200.00 made payable to the State Revenue Office for stamp duty.
When reading the deed, we ask you to note the following principal features:
1. The Settlement
The Settlor is Sophie Karzis, who must pay to the Trustee the settled sum of $20.00 at the time of executing the deed. The cheque should be deposited in the Trust’s bank account and the first statement kept with the Trust’s records to prove payment. We also recommend that a photocopy of the cheque be taken and kept.
It is most important that the settlor is not reimbursed the settled sum.
2. The Trustee
The Trustee is Cleeve Group Pty. Ltd.
3. Primary Beneficiaries
Both of you are listed as the Primary Beneficiaries
…
8. The Appointor
…
Audrey is to assume that office.
…
10. Trust Operation
Without purporting to cover all matters which should be considered in relation to the operation of the Trust, we mention the following which you should keep in mind:
…
10.7 Your Wills
Trust property cannot be bequeathed by your wills. Accordingly, you should now consider the provisions of your wills in the light of the Trust.
…
Please telephone Tony Macvean … or Ben Hamilton… if you have any queries.
Keith and Audrey Cleeve were at that time elderly. Keith Cleeve was suffering from dementia. Audrey Cleeve was not. Both have since died. They were the ‘primary beneficiaries’ under the earlier two trusts referred to above. It is, perhaps, somewhat odd that this letter was addressed to them rather than to BKR directly, because it was BKR that was Hall & Wilcox’s client. That is made clear by Hall & Wilcox’s invoice. Hall & Wilcox invoiced BKR, not Keith and Audrey Cleeve. The fee was $350, and the time spent on it was less than one hour, which indicates that the deed provided was in accordance with Hall & Wilcox’s precedent, rather than a document that had to be adjusted in a way that required any significant legal input.
The 2 December 1999 letter enclosed a trust deed headed ‘the Cleeve Group Trust’. The deed appears to be in a standard form for a family trust. The precedent was ‘populated’ by including in the schedule Sophie Karzis, a lawyer who worked for the Cleeve family, as the settlor, Cleeve Group Pty Ltd as the trustee, Keith and Audrey Cleeve as the primary beneficiaries, $20 as the settlement sum, and Audrey Cleeve as the appointor. The Cleeve Group Trust was to be the name of the trust. The execution page provided for it to be executed by Sophie Karzis as settlor in the presence of a witness, and by Cleeve Group Pty Ltd by the affixing of its common seal in the presence of a director or directors.
Ben Hamilton, who gave evidence, confirmed that he had prepared both the letter and the proposed deed. He had prepared both from Hall & Wilcox’s precedents. He was an articled clerk at the time. He was unable to say who had asked him to prepare these documents or from whom he had obtained the information needed to do so, but assumed that, because he was an articled clerk at the time, he had received the instructions and the information from somebody else above him in the hierarchy at Hall & Wilcox.
Hall & Wilcox’s file, which was recovered from archives, did not contain within it any response to the 2 December 1999 letter, any relevant file notes, or any executed copies of the deed.
On 24 May 2000, a ‘Deed of Advancement’ was executed by Adrian Cleeve in his capacity as trustee of the Finance Trust and in his capacity as director of Cleeve Group Pty Ltd. This is the document by which it was sought to transfer funds or assets from the Finance Trust to the Cleeve Group Trust. The description of the parties includes the following:
CLEEVE GROUP PTY LTD … care of BKR … in its capacity as Trustee for the trust established pursuant to a Deed of Trust dated 19 November 1999 between Peter Ziegler as Settlor and Cleeve Group Pty Ltd as Trustee (‘The Cleeve Group Trust (“the Beneficiary”)
It is immediately apparent that the ‘Deed of Trust’ there described differs from the trust deed prepared by Hall & Wilcox. Hall & Wilcox only circulated the trust deed it prepared on 2 December 1999. Further, that deed had Sophie Karzis, rather than Peter Ziegler, as settlor.
On 12 August 2000, Cleeve Group Pty Ltd in its capacity as trustee of the Cleeve Group Trust gave a charge to the National Australia Bank. The charge was registered on 22 September 2000. Cleeve Group Pty Ltd also opened a business management account with the National Australia Bank in the name ‘Cleeve Group Pty Ltd as trustee for the Cleeve Group Trust’. Although the date on which this account was opened was not identified, I assume that it was at or prior to the giving of the charge. On 6 October 2000, the National Australia Bank debited Cleeve Group Pty Ltd’s account for various fees including a registration fee for the mortgage debenture and a fee of $280 for ‘Trust Deed Perusal’. The National Australia Bank no longer has a copy of the trust deed that it perused.
In or around 2001, Cleeve Group Pty Ltd and other entities and members of the Cleeve family gave a guarantee and indemnity to the National Australia Bank as security for the indebtedness of Solar Systems Holdings Pty Ltd, which was another company run by the Cleeve family. The copy of this document that has been produced is unsigned, but is on National Australia Bank letterhead and is stamped ‘For Guarantor’s Information Only’. No one contends that the guarantee and indemnity was not given. The list of guarantors relevantly includes the following (set out in boxes, which I have not included):
Trust name The Cleeve Group Trust
Trustee Cleeve Group Pty Ltd
Settlor Sophie Karzis
Date [left blank]
As noted above, from that time until now, Cleeve Group Pty Ltd has carried on its business as if it were the trustee of the Cleeve Group Trust.
After Adrian Cleeve died in December 2016, a dispute broke out within the family. Cleevecorp Pty Ltd and Cleeve Group Pty Ltd, in their capacities as trustees, commenced proceedings against Adrian Cleeve’s estate. The claims included, as I understand it, that Adrian and Terence Cleeve had diverted what should have been profits or profitable assets or opportunities for the family more generally into a trust in their own names. On 3 December 2017, Terence Cleeve resigned from his various positions within the trusts, and other members of the Cleeve family collected the books and records of the trusts from Terence Cleeve. On 11 March 2020, the proceeding against Adrian Cleeve’s estate was compromised on terms that provided for substantial assets being transferred into the Cleeve Group Trust.
C. The conflicting positions
Cleeve Group Pty Ltd contends that the executed trust deed was probably in the form of that prepared by Hall & Wilcox. Terence Cleeve, the contradictor, disputes that the family would have executed a deed in the form of the Hall & Wilcox deed. He contends that the deed was probably in the form of a pro forma that he says Sophie Karzis had typed up based on the Finance Trust. He relies on the fact that the way the beneficiaries were described in the Hall & Wilcox deed differed from the way the beneficiaries had been described in the earlier trust deeds.
The Hall & Wilcox deed had two categories of beneficiaries: ‘primary’ beneficiaries and ‘general’ beneficiaries. The ‘primary’ beneficiaries were Keith and Audrey Cleeve. The ‘general’ beneficiaries were, relevantly, Keith and Audrey Cleeve’s children and grandchildren and their spouses. The Finance Trust and the Cleeve Trust deeds had three categories of beneficiaries: ‘primary’ beneficiaries, ‘specified’ beneficiaries, and ‘general’ beneficiaries. The ‘primary beneficiaries’ were Keith and Audrey Cleeve. The ‘specified’ beneficiaries were Keith and Audrey Cleeve’s children and their spouses. The ‘general’ beneficiaries were, relevantly, such children or grandchildren or other relatives of Keith and Audrey Cleeve ‘as the Trustee may from time to time appoint’. Accordingly, Keith and Audrey Cleeve’s children and their spouses (that is, Terence Cleeve and his siblings and their spouses) were beneficiaries under both forms of the deed. But the situation with their children, that is, Keith and Audrey Cleeve’s grandchildren, was different. That generation were automatically beneficiaries under the Hall & Wilcox deed, but were beneficiaries under the Finance Trust and the Cleeve Trust deeds only if the trustee appointed them so.
Terence Cleeve also relied on the terms of the Advancement Deed referred to in paragraph 17 above in support of his argument that the deed was not in the form of the Hall & Wilcox deed.
D. Was there ever an executed trust deed?
As noted above, Terence Cleeve, who appeared as a contradictor, did not contend that no trust was ever executed. Nonetheless, I must still be satisfied that there was an executed trust deed before I can go on to consider, and to give advice in relation to, the form of any such document.
I am satisfied that a trust deed was executed in or about December 1999, in one form or another. I am satisfied of this for the following cumulative reasons, which are not in any particular order:
(a) I accept the evidence of Sophie Karzis that she and Adrian Cleeve took the signing of documents seriously and it would be ‘highly unlikely’ that a trust deed was not executed. She said it would be ‘unthinkable’ that they would have acted as if a deed had been executed when it had not or that they would have forgotten to execute it. It was part of her job to ensure that documents of this type were executed. The creation of this new trust was a significant event, and she struck me as an intelligent and capable operator.
(b) Further, Sophie Karzis has a memory, albeit vague, of executing a document broadly in the form of the trust deed prepared by Hall & Wilcox, although she conceded that might be a reconstructed memory. More importantly, she has a memory, albeit vague, of being the settlor of a trust (that she believed to be the Cleeve Group Trust). She has not been the settlor of any other trusts, and she remembers having to do some research on what it meant to be a settlor. She also has a memory, albeit vague, of paying to Adrian Cleeve the settlement sum of $20. Her evidence that she can remember paying the $20 to Adrian Cleeve because it seemed like ‘a bit of a joke … at the time’ was believable and her evidence referred to above was delivered in a convincing manner. There has been no suggestion of any other trust deed appointing her as settlor that provided for a $20 settlement to which she might have been referring. It is close to inconceivable that she would pay to Adrian Cleeve the settlement sum, but that they would not at or about that time also execute the trust deed. Although under cross examination she accepted that it was ‘possible’ that she never executed a document or paid the settlement sum, I interpreted that evidence as her acknowledging that possibility in the sense that anything was possible, rather than as a retreat from her evidence that she believes that she did so.
(c) I accept that, in the ordinary course of business, a bank that opens an account in the name of a company as trustee and obtains a charge as security will ask to see the trust deed and will not open the account and take the charge unless the trust deed has been properly executed.[2] The applicant produced a letter from a senior legal counsel from the National Australia Bank saying that he understood that the bank’s ‘practice’ in 1999 and 2000 was to obtain a certified copy of the trust deed or at least of its front page, schedule page and execution page, although he was not aware of any formal written policies in place along those lines. Of course, there may be occasions when this practice is not followed. However, the fact that the National Australia Bank opened an account in the name of Cleeve Group Pty Ltd as trustee for the Cleeve Group and took a charge as security increases the likelihood that a trust deed was executed.
(d) As noted above, in October 2000, Cleeve Group Pty Ltd as trustee for the Cleeve Group Trust gave a guarantee and indemnity to the National Australia Bank. This was to secure a loan of up to $5 million to another family entity. On 6 October 2000, the National Australia Bank debited the account in the name of Cleeve Group Pty Ltd as trustee for the Cleeve Group Trust with the sum of $280 as a fee for ‘Trust Deed Perusal’. I infer that this perusal of the trust deed was for the purpose of ensuring that the security would be enforceable. On this occasion, the bank had a direct interest in ensuring that this was so. Although it is possible that the National Australia Bank charged a fee without in fact perusing the trust deed, or that it perused the trust deed and did not notice that it had not been executed, that seems less likely than that it perused a trust deed and that the trust deed it perused had been properly executed.
[2]See, eg, The Application of M&L Richardson Pty Ltd [2021] NSWSC 105, [6] (Kunc J).
Cleeve Group Pty Ltd prepared accounts, filed tax returns, and generally operated in its purported capacity as trustee for the Cleeve Group Trust. It could not have lawfully done this if the trust deed had not been executed. The ‘presumption of regularity’ would therefore justify a prima facie conclusion that a deed had been executed. I have not placed any significant weight on this presumption in the circumstances of this case. The presumption has a significant role to play in cases where it is needed to establish formal compliance with some prior procedural step in order to establish the legality of some later action, especially where there is no proof one way or the other of the prior procedural act having been done.[3] But I do not consider that weight ought to be placed upon this presumption where the fact to which it would apply is a central issue in dispute.[4]
[3]Harris v Knight (1890) 15 PD 170, 179-180 (Lindley LJ); Kingham v Sutton (2002) 114 IR 137, 151 [59] (Wilcox and Marshall JJ).
[4]See, eg, Burnside v Mulgrew; Re the Estate of Grabrovaz [2007] NSWSC 550, [25] (Brereton J); Kingham v Sutton (2002) 114 IR 137, 151–2 [62]–[64] (Wilcox and Marshall JJ), 161–2 [115]–[116] (Kiefel J).
In forming the view that a trust deed was executed, I have not overlooked the fact that there are indications that a trust deed was not executed. I consider these below:
(a) The 2 December 1999 letter from Hall & Wilcox instructed the recipients to bank the $20 paid by the settlor and to keep a photocopy of the cheque. This was not done. That, however, does not cause me to doubt Sophie Karzis’s evidence that she gave Adrian Cleeve the money. The fact that this was not done really indicates a lack of evidence that might have supported the existence of a trust deed, rather than evidence that there was no such trust deed.
(b) The inability now to locate an executed copy of the trust deed is certainly at least consistent with no trust deed ever being executed, particularly where copies of the Finance Trust and Cleeve Trust deeds have been kept and not lost. However, the proposed deed was prepared by Hall & Wilcox for BKR, a firm of accountants. As noted in paragraph 31(b) below, Hall & Wilcox did not always receive back an executed copy of a deed prepared by them. It is understandable that Hall & Wilcox might not themselves take steps to ensure that the deed was properly executed and to maintain a copy, on the basis that the accountants advising the Cleeve family would look after this aspect of the transaction. It might be expected that BKR would ordinarily keep a copy of any executed deed, but there is no reason to think that this must always have happened. Similarly, it is apparent that the records of the Cleeve family have moved through different hands, including when being audited by the Australian Taxation Office. Documents can get mislaid. For these reasons, the fact that an executed deed cannot now be located is not, alone, sufficient reason to assume that no document was ever executed.
(c) The guarantee and indemnity that identified Cleeve Group Pty Ltd as trustee for the Cleeve Group Trust does not identify a date for the trust deed. The failure to include a date in respect of the Cleeve Group Trust is consistent with the parties having in their possession a trust deed that had not been executed. The details provided for the Finance Trust, which was also identified as a guarantor, did include a date. On the other hand, the details provided for the Cleeve Trust did not identify either the settlor or the date, and there is no dispute that an executed deed exists for that trust. It is possible that whoever completed the form simply omitted to include the date, as occurred with the Cleeve Trust.
As the above makes clear, in my judgment the indications that no trust deed was executed are outweighed by the indications that one probably was.
E. Has the trust deed been lost?
Cleeve Group Pty Ltd has made inquiries in an effort to locate a copy of the executed deed, none of which have been successful. More particularly, in addition to inquiries made of the various members of the Cleeve family, the following efforts and inquiries were made:
(a) BKR, who has since merged with WHK Horwath, no longer acts as accountants for the Cleeve family. It archived its records in 2005. It recalled those boxes and there was no trust deed among them. The partner at BKR who looked after the Cleeve family at the time, Ray Walker, was unable to assist. Annette Lincoln, who was the recipient of the email on the print out of which the handwritten notes were made, had no relevant recollection, and has advised that the other persons named on that email, whose contact details have not been found, would also be unlikely to be able to assist as they were acting as administrative assistants under the direction of the professional staff.
(b) Hall & Wilcox’s billing records, which are electronic, establish that a bill was sent to BKR on 6 December 1999 and paid in by 10 February 2000. They then closed their file in April 2000. They did not have an electronic document storage system in place at that time. They have located their hard copy file from their archives. That file contains the correspondence and other documents set out in paragraphs 10, 12 and 14 above, but no executed copy of the trust deed. Ben Hamilton, who prepared the correspondence, gave oral evidence. He had no independent recollection of the matter. Anthony Macvean, who was a senior associate in 1999 whose responsibilities including ‘managing the preparation of trust deeds’, had no independent recollection of the matter, but said that sometimes Hall & Wilcox would not receive an executed copy of a trust deed back from clients.
(c) Sophie Karzis, the person named as settlor in the draft deed, gave oral evidence, to which I refer in more detail below. She was unable to locate any executed copy of the trust deed.
(d) Peter Ziegler, who at the time was a friend and adviser to Adrian Cleeve at the time, gave oral evidence, to which I refer in more detail below. He was unable to locate any executed copy of the trust deed.
(e) The National Australia Bank was unable to locate any copy of the trust deed, and has advised that it is unlikely that it would retain that type of record beyond the seven years required.
(f) The Australian Taxation Office has advised that it has no copy of the trust deed in its records.
(g) Clayton Utz, King & Wood Mallesons and KCL Law (formerly Kliger Partners), each of which had provided advice to or acted for members of the Cleeve family or their entities in the 1990s or 2000s, were each asked if they had a copy of an executed trust deed. There was no suggestion that any of these firms were involved in the establishment of the trust. Clayton Utz advised that it had a matter under the name Cleeve Group Pty Ltd that was marked ‘scan and destroy’ and that it no longer had any hard copy documents. A copy of the trust deed could not be located among the electronic records it retained. King & Wood Mallesons said they had conducted ‘an exhaustive search’ including of their physical records and were unable to locate an executed copy of the trust deed. KCL Law obtained their files from archives, had a ‘brief look’, and said that the boxes did not seem to contain any original documents.
(h) The Australian and New Zealand Banking Group, the Commonwealth Bank of Australia and Westpac Banking Corporation were also approached, just in case, although it was not thought that the Cleeve Group Trust held any accounts with those banks. No response was received from the Australian and New Zealand Banking Group. Westpac and Commonwealth Bank of Australia confirmed that they had no records of any accounts or facilities with the Cleeve Group Trust.
I am satisfied that reasonable inquiries and searches have been made, and that the executed copy of the trust deed cannot be found. Accordingly, I am satisfied that the trust deed has been lost and is ‘not available’[5] to the applicant.
F. What is required to prove the terms of the lost trust deed?
[5]Evidence Act 2008 (Vic), Dictionary pt 2 cl 5.
Because the executed copy of the trust deed is ‘not available’ to the applicant, its terms may be proved by secondary evidence, including by the tendering of an unexecuted copy and by the drawing of an inference as to the form that the executed copy of the trust deed took.[6]
[6]Ibid s 48(4).
Some authorities have suggested that the terms of a lost will or a lost trust deed must be proved by ‘clear and convincing’ evidence.[7] That language derives from the law that considers the circumstances in which a contract may be rectified to accord with the parties’ intentions.[8] In my view, such a requirement may apply where a party is trying to establish the terms of a will or trust deed from the memory of people who had seen the lost document. If a will or deed is to be ‘redrawn’ from memory in that way, then just as is the case where a contract is being redrawn, one can understand the need for ‘clear and convincing’ evidence of the terms. This is, really, part of the notion referred to in Briginshaw v Briginshaw[9] that the standard of proof (or, as I prefer it, the level of satisfaction) required will naturally vary in accordance with the seriousness or importance of the issue.[10] But in this case, the terms of the lost deed are not sought to be proved from the testimony of those who claim to have seen a lost deed and to remember its terms. The terms themselves still exist, and are in writing, if it is first accepted that one of the documents available is a copy of the deed that was executed. So either there is no need to prove the terms through ‘clear and convincing’ evidence, or, if there is, the terms of the draft documents provide that ‘clear and convincing’ evidence.[11]
[7]See, eg, Maks v Maks (1986) 6 NSWLR 34, 36 (McLelland J).
[8]See, eg, Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 63, 712 [451] (Campbell JA) and the cases set out therein.
[9](1938) 60 CLR 336, 343-4 (Latham CJ).
[10]Ibid 343-4 (Latham CJ), 361-3 (Dixon J).
[11]See, eg, D R McKendry Nominees Pty Ltd [2015] VSC 560, where it was accepted that a lost trust deed was in the form of a solicitor’s usual pro forma deed; Sutton v NRS(J) Pty Ltd [2020] NSWSC 826, where it was accepted that a lost trust deed was in the form of an available photocopy; The Application of M & L Richardson Pty Ltd [2021] NSWSC 105, where it was accepted that lost trust deed was in the form of an unexecuted copy; Mantovani v Vanta Pty Ltd (No 2) [2021] VSC 771, where in the absence of any evidence as to the terms of the deed the schedule alone was insufficient.
Accordingly, I consider the relevant questions to be whether:
(a) the deed that was executed was, on the balance of probabilities, in the form of the Hall & Wilcox draft; or
(b) the deed that was executed was, on the balance of probabilities, in the form of the pro forma prepared from the Finance Trust deed; or
(c) although a deed was executed, the terms of that deed were not established on the balance of the probabilities.
The evidence that suggests that the executed deed was in the form of the Hall & Wilcox draft is relevant to the question of whether the trust deed was in the form of the pro forma prepared from the Finance Trust deed, and vice versa. But it is not a matter of deciding simply which of the two proffered options is the more probable. That would only be the case if it were proved that there was no other possible form of deed other than the two proffered options which could have been executed, which is not the case here.[12] It may be that the execution of neither deed is established on the balance of probabilities.
G. The executed deed was probably in the form of the Hall & Wilcox deed
[12]See Rhesa Shipping Co SA v Edmunds [1985] WLR 948, 955-6 (Lord Brandon of Oakbrook); Jones v Dunkel (1959) 101 CLR 298, 304–305 (Dixon CJ).
I am satisfied that the executed deed was probably in the form of the Hall & Wilcox deed.
I consider in Part G.1 below the material that suggests that the deed was probably in the form of the Hall & Wilcox deed, and I consider in Part G.2 below the material that suggests that the deed was probably in the form of the prior family trust deeds. Neither list is in any particular order. Although it is necessary to discuss the various matters one by one, I have considered and weighed, or synthesised, the various matters in order to reach my conclusion.
G.1 Reasons for concluding that the deed was probably in the form of the Hall & Wilcox deed
First, the contemporaneous documents establish that the Cleeve family (and probably Terence Cleeve) gave instructions to BKR to arrange for the preparation of a trust deed for the Cleeve Group Trust and what details to include in that deed. It may well be that the instructions, at least at one stage, were also that it be on the same terms as the Finance Trust deed, and that those instructions were not followed. But the conclusion that the deed was prepared on instructions from BKR is in my view compelled by the following facts:
(a) On or about 12 November 1999, BKR were asked to incorporate Cleeve Group Pty Ltd.
(b) On 15 November 1999, Melinda Nicholls of BKR had a discussion with Terence Cleeve at which the preparation of trust deeds was raised.
(c) On a later unspecified date someone else at BKR had another discussion with someone from the Cleeve family at which the terms of proposed trust deeds were mentioned.
(d) On 24 November 1999, BKR obtained a ‘draft’ of a pro forma discretionary trust from Hall & Wilcox.
(e) Annette Lincoln of BKR then forwarded this pro forma trust deed to Peter Ziegler, a friend and advisor to the Cleeve family, asking him to ‘review it for suitability for’ the Cleeve Group Trust.
(f) On or before 2 December 1999, Ben Hamilton of Hall & Wilcox prepared the Hall & Wilcox deed by ‘populating’ a precedent with the name and address of the settlor (Sophie Karzis), the name and ACN of the trustee (Cleeve Group Pty Ltd), the names and address of the primary beneficiaries (Keith and Audrey Cleeve), the name and address of the appointor (Audrey Cleeve), and the name of the trust (the Cleeve Group Trust). I infer that this information was provided to BKR by the Cleeve family. It is most unlikely that either BKR or Hall & Wilcox would have made those choices other than in accordance with specific instructions given to them by a member of the Cleeve family. It is notable that although Keith Cleeve had been the appointor of the Finance Trust, he was by this time suffering from dementia and in a home, and so the fact that Audrey alone rather than Keith was made the appointor of this deed indicates, again, that someone from the Cleeve family was giving these types of specific instructions.
(g) On 2 December 1999, execution copies of this deed were sent by Hall & Wilcox to BKR, and on 6 December 1999 Hall & Wilcox sent BKR a bill for its work, which was paid.
The fact that a trust deed was prepared by lawyers retained by accountants at the instructions of members of the Cleeve family and that it contained information that could only have come from the Cleeve family strongly indicates that the trust deed so prepared was the trust deed that was intended to be executed. The alternatives would be that there was some miscommunication, or change of mind, both of which seem less likely than that the deed was executed, as intended, in due course.
Second, as noted in sub-paragraphs 27(a) and (b) above, Sophie Karzis can remember executing a trust deed as settlor and she can remember paying Adrian Cleeve the $20 settlement sum. She cannot now say that the deed she executed was in the exact same form as the Hall & Wilcox deed, but she believes that the document that she executed was ‘substantially’ in that form. Importantly, she said that she has only once been the settlor of a trust. The facts that she has a memory of executing a deed that had her as the settlor, that she has only been a settlor for one trust, and that the Hall & Wilcox deed lists her as the settlor, point strongly, in the absence of any suggestion of any other form of deed that had her the settlor, to the deed she executed being the Hall & Wilcox deed.
Third, the Guarantee and Indemnity given by the Cleeve Group Trust prepared by the National Australia Bank had a page that listed the various guarantors on the bank’s form. Where it listed the Cleeve Group Trust, it had Cleeve Group Pty Ltd identified as the trustee, and Sophie Karzis identified as the settlor. This strongly suggests that the National Australia Bank saw a trust deed that had Sophie Karzis as settlor, or that it was told, at that time, by a member of the Cleeve family, that the Cleeve Group Trust had Sophie Karzis as settlor. As noted above, Sophie Karzis was the settlor in the Hall & Wilcox deed.
Fourth, and relatedly, I was not persuaded by Terence Cleeve’s evidence that:
(a) a pro forma of the Finance Trust deed had already been typed up in quarto format in 1999 that was readily available for use as an alternative form of trust deed; or
(b) the family would not have entered into a trust deed that was not in the same form as the Finance Trust deed or the Cleeve Trust deed.
Terence Cleeve claimed to have a specific memory of asking Sophie Karzis to type up a pro forma copy of the Finance Trust deed, of Sophie Karzis doing this, and of him proofreading it, all no later than October 1999. In his first affidavit sworn on 22 November 2021, he produced what he said was a true copy of the pro forma typed up by Sophie Karzis. When the electronic copy of the document produced by Terence Cleeve was examined, its metadata suggested that it had been created in 2005. Although this was not conclusive against the document first being created in 1999, as it may have been ‘saved as’ a new document in 2005, it does not support it having being prepared in 1999, and it at least casts doubt on Terence Cleeve’s recollection. Importantly, Sophie Karzis had no recollection of preparing a pro forma deed by copy typing the Finance Trust deed. She pointed out that she was not a copy typist and that it would have taken her a significant time to do so, it was not what she was employed to do, and that the document produced by Terence Cleeve was not in the format that she would typically use to prepare documents. She identified the use of underlining to emphasise words in the document produced by Terence Cleeve which she said was not her practice and that her practice was to use bold type to emphasise words. I accept this evidence.
Also, Terence Cleeve’s memory of the creation of the pro forma by Sophie Karzis seems to have emerged over time, as the following timeline demonstrates:
(a) On 3 June 2021, Terence Cleeve was provided by the solicitors for the applicant with a copy of the Hall & Wilcox deed, told that they believed that this was an unexecuted copy of the Cleeve Group Trust deed, and asked if he could locate an executed copy. Terence Cleeve responded by saying that he did not have an executed copy ‘of any Cleeve Group Trust Deed’. But he did not then indicate any belief that the Cleeve Group Trust deed that was executed was in a different form to the copy provided or that it was in the same form as the Finance Trust deed.
(b) On 11 June 2021, he was informed that Cleeve Group Pty Ltd was ‘intending to obtain guidance from the Court that it is appropriate to continue administering the Trust on the basis of the unexecuted trust deed which has been located.’ In response, Terence Cleeve asked for a copy of the proposed application before it was filed, but did not take the opportunity to tell the applicant that, in his view, it was making a mistake and that the form of the trust deed that was executed was instead in the form of the Finance Trust deed. He said that it ‘didn’t occur’ to him that it was his ‘role’ to say so.
(c) Then, on 21 June 2021, he sent an email to his brother Keith Cleeve Junior. In that email, Terence Cleeve asserted that the lack of inclusion of a category of ‘specified beneficiaries’ demonstrated that the Hall & Wilcox deed was ‘never a Cleeve trust, as all trusts were verbatim copies of the Finance Trust’. But he did not go on to say, when he well might have, that he could recall the preparation of a pro forma in accordance with the Finance Trust.
(d) On 14 October 2021, he was sent a copy of the application and affidavits prepared in support. On 22 October 2021, Terence Cleeve sent a lengthy letter to the solicitors for the applicant in which he set out his position in detail. In that letter, he asserted that he believed that he gave BKR telephone instructions ‘as to the specific structure’ of the proposed Cleeve Group Trust. He challenged the sufficiency of the material put forward in the application as a basis for concluding that the Hall & Wilcox deed was executed. He specifically referred to Sophie Karzis’s affidavit. He then concluded that it was ‘most likely’ that the Cleeve Group Trust deed would have been drafted ‘in similar terms to the trust deeds actually executed by the Cleeve family for the Finance Trust and the Cleeve Trust.’ He said:
I believe that this form of trust deed which was employed for the Finance Trust and the Cleeve Trust is a far more likely basis for the trust deed that was actually prepared for the CG Trust given past history within the Cleeve family as to how these other trust deeds were actually structured and organised.
It is striking, in my view, that Terence Cleeve did not indicate in this lengthy and detailed letter that he had asked Sophie Karzis to copy type a pro forma of the Finance Trust deed so that it was ready to be used for future deeds.
(e) On 22 November 2021, Terence Cleeve affirmed an affidavit in which he set out for the first time his assertion that he had arranged for Sophie Karzis to copy type the Finance Trust deed to be used as template for future trusts, and that he and Adrian Cleeve had ‘agreed’ that the Cleeve Group Trust deed should be in the same terms as the Finance Trust deed and the Cleeve Trust deed. He exhibited a print out of the document said to have been typed up by Sophie Karzis. He had not previously provided this document to the applicant, nor advised the applicant of his belief that the Cleeve Group Trust deed was in fact a populated copy of that pro forma deed. Nor had he previously advised the applicant that he and Adrian Cleeve had reached an agreement as to the form the trust deed would take.
Under cross-examination, Terence Cleeve accepted that at the time he sent his 22 October 2021 letter he did not have a memory of asking Sophie Karzis to type out the pro forma deed for later use. This was his explanation for not referring to that fact in that letter. When asked what it was that caused this memory to resurface, he said that it was seeing the pro forma deed that had been located on his computer backups. But this was not a persuasive explanation, because he already seen and printed out a copy of this document at least by August 2021, which was well before his 22 October 2021 letter.
The fact that Terence Cleeve spoke to someone at BKR about the terms of the trust deed goes against his contention that BKR was not asked to prepare a trust deed and that the Cleeve family (specifically, he and Adrian Cleeve) decided instead, to save costs, to use a re-typed copy of the Finance Trust deed.
I was not satisfied that there was, in 1999, a pro forma draft deed in the terms of the Finance Trust deed that had been prepared for use by Terence and Adrian Cleeve and that was thus available to be used to establish a family trust. If this were the case, and the Cleeve Group Trust were created in this way, I would have expected Terence Cleeve to have a memory of the process by which the deed itself was populated and then executed. Ultimately, I preferred the evidence of Sophie Karzis to the evidence of Terence Cleeve where they were in conflict.
G.2 Reasons for concluding that the deed was probably in some form other than the form of the Hall & Wilcox deed or was in the same form as the Finance Trust deed
G.2.1 The instructions to BKR
The handwritten note set out in paragraph 8 above indicates that, at some stage, someone told BKR that the trust deed to be prepared was to mirror the terms of the Finance Trust deed. It is unlikely that this was said otherwise than as part of some instructions given to BKR by someone from the Cleeve family. But, the deed that BKR arranged (and which was prepared by Hall & Wilcox) did not mirror the Finance Trust deed. That is indisputable. There is no basis to think that the deed was later amended. So this note really does no more than establish that at one stage the intention was that a trust deed be prepared that mirrored the Finance Trust deed; it does not establish that those instructions found their way to Hall & Wilcox, or that any trust deed was ever prepared in accordance with those instructions, let alone executed. Also, although there was a difference in the way in which the beneficiaries were defined, both deeds had broad definitions of who were or could be beneficiaries that included or could include extended family members and entities associated with them, and it is conceivable that someone at Hall & Wilcox or BKR preparing the deed thought that it was sufficiently close in form to the Finance Trust deed for it to be adequate for the Cleeve family’s needs.
G.2.2 The way the Finance Trust deed was created
The Cleeve Trust deed was prepared in 1995 from a photocopy of the Finance Trust deed that had been prepared in 1982. Only the schedules and the execution pages were ‘new’. The fact that the Cleeve family had created a new family trust in this way supported, in a general sense, Terence Cleeve’s contention that the Cleeve Group Trust deed had also been prepared, in-house, on the same terms. But it does not itself establish that the Cleeve family generally would not have agreed to a trust deed on terms different to those in the Finance Trust deed. None of the other members of the Cleeve family supported that view.
G.2.3 The Deed of Advancement and the evidence of Peter Ziegler
The Deed of Advancement, referred to in paragraph 17 above, contains a description of the Cleeve Group Trust that is inconsistent with it being in the form of the Hall & Wilcox deed. First, the date of the deed is said to be 19 November 1999, which is before Hall & Wilcox sent its populated deed to BKR. Second, it has Peter Ziegler as settlor.
These matters remain somewhat of a mystery. The date of 19 November 1999 is the date upon which Cleeve Group Pty Ltd was incorporated, and so that could explain why somebody described the trust as having been established on that date. It is also odd that a deed would have been executed with that date, when that was before even the date upon which BKR sent a pro forma deed to Peter Ziegler for review ‘for suitability’. It is difficult to see why the email to Peter Ziegler, referred to in paragraph 10 above, would have been sent if a trust deed had already been executed. And of course, it would mean that Hall & Wilcox were preparing their deed at a time when another deed had already been executed.
The reference to Peter Ziegler as settlor was not supported by any other material. He was the settlor of the Cleeve Trust that had been established in 1995. Having been sent a copy of the Hall & Wilcox deed and the email to him referred to in paragraph 10 above, and asked if he could assist, he wrote a letter stating that:
The content and purpose of [the Cleeve Trust] is a matter with which I am well-acquainted as I am the settlor of this Trust and intimately familiar with its context and the objectives sought to be achieved by Mr Adrian Cleeve in relation to its establishment.
Clearly, by way of contrast, at the time of that letter he had no recollection of being the settlor of the Cleeve Group Trust, nor any reason to doubt that Sophie Karzis was the settlor of that trust.
On 30 May 2022, Peter Ziegler was sent the National Australia Bank guarantee and indemnity, the Deed of Advancement, and the pro forma that Terence Cleeve had said had been typed out by Sophie Karzis, and was asked whether he had any knowledge as to what form the trust deed for the Cleeve Group Trust took. This communication was immediately prior to the trial, but Peter Ziegler had previously been assisting Terence Cleeve with his communications to the applicant and so was across the issues that this proceeding raised. Peter Ziegler said in response, inter alia:
Until seeing [the Deed of Advancement], I could not remember being the Settlor of The Cleeve Group Trust. However, as this Deed of Advancement has been executed by the parties thereto, I now have no reason to believe that I was not the Settlor of The Cleeve Group Trust. Unfortunately, with advancing years, memories do fade with the passage of time.
… I now believe having seen this Deed of Advancement that it is highly likely that at one of [my casual get-togethers with Adrian Cleeve and sometimes his brother, Terence Cleeve] I may have settled this trust deed for The Cleeve Group Trust, as we would often have a variety of different papers and documents on the relevant coffee table depending on the matters or issues being discussed at the time.
Peter Ziegler also gave oral evidence. His said his usual practice would be to keep a copy of a document that he signed, and he did not have a copy of any trust deed for the Cleeve Group Trust. When he was shown the National Australia Bank guarantee in re-examination that indicated that Sophie Karzis (and not he) was the settlor, he said that he had not noticed this when he expressed the views in writing set out above, and that it did cause him to ‘think twice’ about his conclusion. Ultimately, it seemed to me that his statement, informed by the terms of the Deed of Advancement, that it was ‘highly likely’ that he ‘may’ have settled the Cleeve Group Trust was merely him saying that if the material showed that he probably was the settlor, then he would accept that he was, but that he otherwise had no memory of being the settlor. In the absence of any actual memory of anything to do with the deed, his evidence was of little assistance, save to the extent that his lack of any memory of being settlor of this trust and his strong memory of being settlor of the Cleeve Trust probably indicates that, if anything, he was not the settlor of this trust.
Ultimately, I conclude that the description in the Deed of Advancement is mistaken. I note the evidence that was given to the effect that Adrian Cleeve was a ‘stickler’ and unlikely to make mistakes. But either the Deed of Advancement is mistaken, or the National Australia Bank’s document is mistaken. They cannot both be correct. Someone, somewhere, has made a mistake. Given the various matters referred to above, I conclude that it is more likely that the Deed of Advancement is mistaken.
H. Disposition
Weighing all the above, I am satisfied that a deed of trust in the form of the Hall & Wilcox deed was executed at or about the time that the Cleeve Group Trust opened its back account. I will make an order pursuant to r 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 to the effect that Cleeve Group Pty Ltd is and has been justified in managing and administering the Cleeve Group Trust according to the terms of the unexecuted trust deed prepared by Hall & Wilcox, which will be annexed to the orders.
I will hear the parties on the precise form of the order, and on the question of costs.
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