The Price of Liberty is Eternal Vigilance CI AR RC CUL UL IR THE RETURNED AND SERVICES LEAGUE AR C OF AUSTRALIA (NEW SOUTH WALES BRANCH) ANZAC HOUSE, 245 CASTLEREAGH STREET, SYDNEY NSW 2000 Telephone: (02) 9264 8188 Fax No: (02) 9264 8466 Email: firstname.lastname@example.org PATRON HER EXCELLENCY PROFESSOR MARIE BASHIR AC GOVERNOR OF NEW SOUTH WALES CIRCULAR NO: 25/06 FILE NO: 1923/13/D DATE: 13 MARCH 2006 TO: ALL HONORARY SECRETARIES AND SECRETARIES OF RSL SUB-BRANCHES DISTRICT COUNCILS AND STATE COUNCILLORS Dear Sir/Madam, SUB-BRANCH TRUSTEESHIP DUTIES AND RESPONSIBILITIES Addresses are advised that Circular 41/05 dated 16 May 2005 is hereby cancelled. This Circular provides general information and should be read together with The Constitution of The Returned and Services League of Australia (New South Wales). Yours sincerely Chris Perrin STATE SECRETARY -2- SUB-BRANCH TRUSTEESHIP DUTIES AND RESPONSIBILITIES GENERAL A sub-Branch Trustees’ duties arise out of several sources, including the Trust instrument itself (The RSL Constitution). The Common Law and Acts of Parliament (The Trustee Act). A Trustee is an honoured person in a sub-Branch. He is generally appointed by his fellow members because they see him as a custodian of their interest in their sub-Branch and a responsible person. The Officers and Committee of the sub-Branch should keep their Trustees fully informed as to any transactions affecting their Trusteeship, so that they can perform their duties in an efficient manner. State Branch and State Council are concerned that many sub-Branches and members of the League are apt to view the provisions of the Constitution dealing with Trustees and property namely Clause 50 and its associated By-Laws, with a degree of indifference, and as a result tend to by-pass the requirements, to the detriment of their members. TRUSTEESHIP The formal definition of a Trustee, is that he is a person entrusted with property of another and who is capable and possessed of natural ability to execute a Trust and to carry out his duties in a prudent matter similar to how he would act if the property belonged to him personally. A Trust is an equitable obligation binding a person (who is called the Trustee) to deal with property over which he has control (which is called Trust Property) for the benefit of persons (who are called beneficiaries) of whom he may himself be one, and any one of whom may enforce the obligation. Property includes real and personal property, and any estate or interest in any property, real or personal and any debt, and anything in action, and any claim or demand, and any other right or interest, whether in possession or not. A Trustee shall be answerable and accountable only for his own acts, receipts, neglects or defaults and not for those of any other Trustee, nor for any Banker, Broker, or other person with whom any Trust moneys or securities, nor for any other loss, unless the same happens through his own wilful neglect or default. The Authority of a sub-Branch Trustee comes from the appointment of a Trustee as a financial member of the sub-Branch who shall hold office as a Trustee in accordance with the Constitution of The Returned and Services League of Australia (New South Wales Branch). APPOINTMENT Clause 50 of the Constitution requires that every sub-Branch shall appoint three financial members as Trustees, in whom all real and personal property shall vest and they shall be empowered to prosecute, sue or maintain any legal action necessary against any person or corporation in respect of sub-Branch property. The Constitution also allows for the appointment of RSL Custodian Pty Ltd as sole Trustee or one of the Trustees of real and personal property, other than chattels. -2- Sub-Branch Trustees are initially nominated at a sub-Branch General Meeting and their names are recorded in a ‘Deed of Appointment’ which embodies a Declaration of Trust, setting out the fact, amongst other things that the Trustees hold real and personal property on behalf of the sub-Branch. To give effect to the nomination, the sub-Branch President is empowered under sub Clauses 50.8 and 50.14 to appoint new or additional Trustee/s as provided by the provisions of Section 6 and 7 of the Trustees Act (as amended) by Deed (Deed of Appointment). It is sufficient then that the President will execute a Deed of Appointment which must then be registered where real estate is involved with the Registrar General so that the name of the new Trustees can be entered on the Title Deeds of any real estate under Torrens Title. Where Trustees of a sub-Branch hold personal property only and not any real estate, it would be necessary to complete a ‘Deed of Appointment’ for personal property (available from State Branch). Sections 6 and 7 of the Trustee Act requires that any Deed of Appointment be registered in the General Register of Deeds. The actual procedure of the registration of a new Trustee/s should be undertaken by a solicitor. REPLACEMENT Where a Trustee is to be replaced it will be necessary that a new Trustee be appointed as provided for in the sub-Sections of Clause 50 in the Constitution. This must be done at a General Meeting of which fourteen (14) days notice has been given, specifying that a new Trustee is to be appointed. So that a solicitor may proceed to stamping the Deed of Appointment and registration thereof, in the case of Torrens Title land, the Stamp Duties Office requires to sight a stamped copy of the original Deed of Appointment to which the appointment relates. POWERS OF A TRUSTEE A Trustee has, speaking generally, power to do all acts necessary for the protection and administration of the Trust property. Some of these powers are: * A Trustee may invest in any of the securities authorised by the Constitution and By Laws and Trustee Act. * A Trustee may insure against loss or damage, whether by fire or otherwise, any insurable property, and against any risk or liability against which it would be prudent for a person to insure if he were acting for himself. * A Trustee may, in his absolute discretion, from time to time cause the accounts of the Trust property to be examined or audited by a person who publicly carries on the business of an accountant and shall for that purpose produce such vouchers and give such information to him as he shall require. The costs of the examination or audit, including the fee of the person making the examination or audit, shall be paid out of the capital or income. * A Trustee may, for the purpose of giving effect to the Trust or any of the provisions of the instrument, if any, creating the Trust or of any statue, from time to time, by qualified agents, ascertain and fix the value of any Trust property in such manner as he thinks proper. -3- * A Trustee may, instead of acting personally, employ and pay an agent, whether being a bank or a solicitor, stockbroker or any other person, to transact any business or do any act required to be transacted or done in the execution of the Trust or as the administration of the estate. * A Trustee may apply to the court for an opinion, advice or direction on any question respecting the management or administration of the Trust property or respecting the interpretation of the Trust instrument. Apart from the powers contained in the Trust instrument, a Trustee has certain statutory and implied powers. Some of these powers are exercisable by the Trustee in his discretion (providing such is not negated by the Trust instrument) and other powers may only be exercised with approval of State Council e.g., in equity it would be a breach of Trust to sell Trust assets without State Council approval as provided for under sub Clause 50.20. These are those acts where he has a discretion to act or not to act. A Trustee is: * bound to do what is expressly prescribed, (such as under sub Clause 50.3). * bound to act in accordance with the Trustee Act. * He must exercise his judgement actively and honestly. The imposes on him a duty to make proper and diligent enquiry to enable him to be properly and fully informed as to his actions or decisions. * In the exercise of his discretion a Trustee must act in good faith. * Powers and discretions in Trustees impose a real and binding obligation. * Sometimes a duty to act is coupled with a power to act discretionally. * A Trustee must exercise powers according to circumstances as they exist at the time. * A Trustee may freely discuss with those whom the Trust benefits the reasons for and against his exercising his discretionary powers in a particular way. * Trustees must act reasonably and prudently. TRUSTEES RELATIONSHIP WITH MANAGEMENT COMMITTEE A Trustees ex officio (by virtue of one’s office) membership of the Management Committee entitles him to: * attend Management Committee meetings * To speak on matters affecting his Trusteeship as such * To continue to exercise his rights and powers as Trustee – This ex-officio membership of the Management Committee does not limit the proper exercise of the Trustees rights and powers. * Chairman of sub-Branch management Committees may not circumscribe the proper conduct of the proceedings of a Management Committee meeting so as to deprive a Trustee speaking and making such enquiries as are relevant to matters affecting his Trusteeship only. The Chairman may not restrict the Trustees ability to comply with his duties under sub Clause 50.3. * A Trustee’s supervening powers and duties require him and entitle him to speak on matters affecting his Trusteeship such as to enable him to be properly and fully informed before he exercises his powers and discretions. * Trustees can speak on matters properly on the agenda of sub-Branch meetings affecting their Trusteeship involving sub-Branch finances investments and certainly property dealings involving them as Trustees. * Non-voting at such meetings is envisaged by sub Clause 50,18 which speaks of Trustees speaking and not voting at such meetings. * A Trustee, upon satisfying himself that he is acting in accordance with the duties and obligations of his office as Trustee, must implement the proper decisions of the Management Committee in so far as those decisions affect his Trusteeship. -4- DUTIES OF A TRUSTEE * not to breach the trust vested in him. * not to breach the document (such as the Constitution) under which the Trust was created. * to obey the terms of the Trust. * to comply with the requirements of the NSW Trustee Act 1925. * to act so to prevent a breach of Trust. * under sub Clause 50.3 the Trustees must keep detailed accounts of transactions relating to funds and property under the Trustee control (such as real estate vested in them for the sub-Branch). * Trustees must ensure the Trust property, including all original documents relating to such property are placed in a state of security. * The Trust property must be in the joint control of all the Trustees and not left in the possession of one or only some of them. Bearer bonds, for instances, should be deposited at a Bank in the joint names of the Trustees. * He is required to ensure property is properly maintained, properly insured and he may be called on to control or sell or convert property into money and invest the proceeds in accordance with the requirements of the Trustee Act. * Trustee powers and duties are specifically set out under Clause 50 of the Constitution some of which are summarised as follows: 50.2 Trustees may be removed as set out in this sub Clause. 50.3 Trustees must keep detailed accounts of their transactions relating to funds and property under their control. 50.4 No profit is to attach to the Trustees by virtue of his being a Trustee. 50.5 The sub-Branch real estate and personal property vests in the Trustees. 50.6 Upon ceasing to be a Trustee, the Trustee must hand over funds and property in his possession of the sub-Branch 50.9 Requirement for Declaration of Trust. 50.10 Declaration of Trust – registration requirement. 50.11 Trust to be declared/registered only once. 50.16 With State Council/Executive consent, the Trustees may deal with real estate or personal property held by them (including leasing, mortgaging and borrowing) pursuant to a resolution consented to by a sub-Branch meeting duly convened after prior written notice to all sub-Branch members. 50.17 An evidentiary provision. 50.18 The Trustees of an unincorporated sub-Branch shall be ex officio members of the Management Committee. Ex officio powers shall confer the right to speak on matters affecting their Trusteeship only and shall not extend to voting or the forming of any part of a necessary quorum of the Management Committee but the Trustees otherwise are not limited in their rights as individual members. 50.19 Reasonable rental is to be paid for sub-Branch premises by a Club or other body. 50.20 A sub-Branch may not dispose or alienate property without State Council/Executive approval. 50.21 No property of any kind over $10,000.00 in value nor leased land shall be acquired without State Council/Executive consent. 50.22 Donations under $5,000.00 are excluded from sub Clause 50.20. 50.22A Total of all donations made in amounts of less than $5,000.00 not to exceed $35,000.00 without State Council/Executive consent. 50.23 No expenditure (not being a donation) greater than $10,000 shall be made without State Council/Executive prior consent. 50.23A Total of all expenditure made in amounts of less than $10,000 not to exceed $35,000.00 without State Council/Executive prior consent. 50.24 Restrictions on sub-Branch loans and investments. 50.25 Relief from formal consents for re-investments previously approved. -5- 50.26 Special provisions relating to Clubs (other than licensed Clubs) providing for special ex- officio rights of the President and sub-Branch Trustees. 50.27 President/Trustee referred to in sub Clause 50.26 entitled to attend, speak and vote at meetings. 50.28 Possession of property by Committees referred to in Clause 50.26. 50.32 A procedural provision to hand over Title Deeds, documents etc. 50.33 An evidentiary provision. 50.34 A formal provision effecting sub-Branch officers in breach sub Clause 50.20 to sub Clause 50.24. 50.35 All statements of facts in Deeds of Appointment of new Trustees to be conclusive evidence. 50.36 Trustees may, with State Council/Executive consent guarantee and/or indemnifies the payment of moneys. LIABILITY FOR THE ACTS OF A CO-TRUSTEE A Trustee would not be answerable for any breach of any of his co-Trustees except in cases of loss suffered in respect of the Trust property in consequence of:- His having allowed the co-Trustee to receive Trust property without making due enquiry as to the subsequent proper handling of it. His having handed the Trust property to the co-Trustees without seeing to its proper application. Having failed to take steps to prevent or obtain redress for known contemplated or actual breach of Trust on part of the co-Trustee. RSL CUSTODIAN PTY LTD Sub Clause 50.14 was formed to allow sub-Branches to avail themselves of the complete security in relation to Trusteeship of real property other than personal property by the RSL Custodian Pty Ltd. RSL Custodian Pty Ltd is designed to relieve sub-Branches of what can be costly repetition of legal expenses in executing Memorandum or Transfer of land vested in one set of Trustees to another due to death, retirement or removal etc., of one or more members, an occurrence which is brought about from time to time, sometimes frequently. The legal position becomes even more complex and involved where a member of the Trust leaves the district leaving no forwarding address or goes abroad and fails to return. Where Trusteeship is accepted by RSL Custodian Pty Ltd IT DOES NOT DEPRIVE the sub-Branch of the control of its property in any way and the sub-Branch can at any time, should it desire, ask the RSL Custodian Pty Ltd to return such Trusteeship to the sub-Branch Trustees. It makes no difference whether Title is vested in sub-Branch Trustees or RSL Custodian Pty Ltd, should a sub-Branch wish to lease, mortgage or dispose of its land or buildings, it is still necessary in the first instance to obtain the prior consent of State Council or State Executive. The administrative procedure for the Transfer of Trusteeship of sub-Branch real property from the sub- Branch Trustees to RSL Custodian Pty Ltd is clearly detailed in By-Law No. 11. -6- CONCLUSION The Trustee Act places obligations on the Trustee as does Common Law and the Constitution of The Returned and Services League of Australia (New South Wales Branch). To generalise a Trustee in discharging his duties must observe all reasonable diligence in order to escape liability for any loss sustained by the Trust estate. The degree of diligence is that which a prudent man of business would exercise in dealing with his own private affairs. It is his duty to satisfy himself as to what is happening to Trust property. Without in anyway being an exhaustive set of examples the following give an indication of the extend of some of the obligations of a Trustee. If rent is not paid it is his responsibility to see that action is taken to recover it. If there is a sub-letting it is his duty to ascertain all details to see whether there is a breach of the lease. He must see to it that all necessary insurances are in force. He must ensure the property is kept in a reasonable state of repair. It is not open to him to say someone should have informed him. It is his legal obligation to inform himself as to what is happening to the Trust estate in the same way as if he was dealing with his own property. Trustees of sub-Branch property must be fully aware of their fiduciary responsibilities as Trustees and in particular that if Trustees are in breach of their duties, they are personally liable to the members of the sub-Branch out of their own pockets for any loss to the sub-Branch members or its property sustained as a result of their breach. Trustees under the provisions of the State Branch Constitution are obliged to ensure no property vested in their names (including Women’s Auxiliary, Youth Clubs or any other body formed under the Constitution) is sold, transferred, conveyed, alienated, mortgaged, leased or given to any person or corporation without the prior written consent of State Council being first obtained. Finally, what State Branch is concerned with is that sub-Branch members receive from their Trustees the standard care and respect for their interests they are entitled to under the law.