How can you pay $1 million for a farm and find out later that you do not own it?

It can easily happen (and I have seen it) where a person acquires land by taking control of a trust from a family member and the relevant technicalities are not strictly adhered to.

In 2016, trust lawyers had a timely reminder of the importance of strictly complying with the terms of trust deeds when the Supreme Court handed down the decision known as the Mercanti case.

In that case, the trust deed for the MMT Trust (which owned a retail business and real estate) and trust deed for the FW Trust (which owned a wholesale business) were amended by a deed of variation, as part of a family succession plan, to provide for the son to be the Appointor of each trust in place of the father.

When the relationship between father and son broke down, the son utilised his position as Appointor to appoint his own company as trustee of both trusts.

The Court found that the son’s appointment as Appointor of the MMF Trust was valid, but his appointment as Appointor of the FW Trust was invalid, because the amending provision in the FW Trust Deed was not broad enough to allow for the deed of variation (although the appointment could have been achieved validly through a different part of the trust deed).

As a result, the son lost the assets of the FW Trust. It pays to obtain the advice of a lawyer with qualifications and experience in trust law when dealing with trusts.