Terence Wong, senior associate with Sladen Legal, said the court found in the decision of Application by Gainer Associates Pty Ltd [2024] NSWSC 1437 that due to the lost trust deed for the Werner Thelen Family Trust (Trust), the corporate trustee of the trust (Gainer Associates Pty Ltd) would hold the assets for the sole beneficiary, the late Werner Thelen, husband of the late Gail Thelen.
“[It stated] the assets would form part of the estate of Werner rather than be held in the trust, which was found to have failed the certainty of objects test for the existence of a trust,” Wong said.
“This is the second time that Gainer-related questions have been brought to the court. The first one is related to an SMSF.”
In this case, the court heard that the only evidence of the establishment of a trust was from a fixed and floating charge in favour of the Bank of Western Australia by Gainer “in its own capacity and as trustee of the Werner Thelen Family Trust”.
“The information in that charge document included a date of establishment of the trust of 1 April 1982 and the parties to the trust were Gainer as trustee and Werner’s assistant Narelle Margaret Mayes (Narelle) as settlor,” Wong said.
“Narelle could not recall signing a trust deed or providing a settled sum, only signing documents as a witness for Werner.”
The facts continued that the assets of the trust from the most recent financial statements as at 30 June 2024 had a net value of $2.8 million and included a service station at Beenleigh in Queensland and cash in a bank account.
The court also heard that the step-in director of the trust had made numerous searches and inquiries to find any terms of the trust to no avail.
“As the trust deed could not be located and there was no other evidence as to its terms, the beneficiary’s class could not be identified and therefore the court found the trust failed for want of certainty of objects,” Wong said.
“On the failure of the trust, the court determined its assets were to be held on resulting trust in favour of Werner’s estate.”
The ruling stated: “As Sir John Stuart V-C said in Clarke v Hilton (1866) LR 2 Eq 810 at 815 in relation to failed trusts, ‘Where, however, an estate is given to a man in the character of a trustee, without anything to indicate that a beneficial interest is intended, then there is a resulting trust’.”
Consequently, as Gail was the sole beneficiary of Werner’s estate, the assets of the trust were to be paid directly into her estate.
Wong continued that counsel for the plaintiff submitted the court should “comfortably conclude” that what was recorded in the fixed and floating charge was a mistake, most likely someone recording Narelle as a party when she was no more than a witness for Werner’s signature.
“Alternatively, if Narelle was the settlor of the trust, because her position was merely secretarial, the court should conclude that Werner provided the settled property and that he did not intend to divest himself of any rights he had in that property to Narelle,” he said.
“The court preferred the evidence in the fixed and floating charge to Narelle’s lack of recollection of the trust deed of the trust and upheld the alternative position.”
In its ruling, the court said:
“[28] […] [T]he Court also finds that [Narelle] was the settlor in name only, with any initial settled property provided to her by Werner (for example, the generally nominal amount paid to the trustee as the initial corpus of the trust). This finding is based on the Court’s experience with family trust deeds and common knowledge to the effect that it is not unusual for the named settlor to be someone such as the family solicitor or accountant, or a secretary or clerk in the employ of such a person. Whatever their position, there could be no doubt that they were never intended [for Narelle] to have any beneficial interest in the relevant trust”.
