In Bass & Bass and Anor [2016] FamCAFC 64 (29 April 2016) the Full Court (Strickland, Murphy and Kent JJ) considered a child support trust that had been established pursuant to a consent order between the parties. The husband appealed Aldridge J’s refusal to order the return to him of $300,000 by the trust on the ground that the trust was settled by him for the purpose of private school fees, whereas the child had not undertaken and would not undertake private school ([5]). The husband argued that the beneficial interest in the moneys settled by him on the trust was only so far as necessary to provide for the purpose of private schooling, so that the monies were held beneficially for him by way of resulting trust.
Murphy and Kent JJ (with whom Strickland J agreed) said (from [19]):
“ The husband achieved, by the making of the consent orders and the establishment of the CST [Child Support Trust], his manifest intention of eliminating any past, current or future administrative assessment of child support for the child or indeed (by order 24) for any other of the children of the marriage.
( … )
[21] The means by which the (legally represented) husband and wife sought to end any further administrative assessments of child support was to include in the consent orders obligations for them to establish a child support trust for the child. As is recorded in the consent orders, the child has intellectual difficulties and consequent special needs.
[22] The orders required the husband to cause $350,000 to be paid into a bank account in the names of both parents as trustees of the CST as it was defined in the consent orders. Order 22.4 specified five mandatory terms to be included as terms of the CST:
22.4 the terms of the Child Support Trust must include the following terms:
22.4.1 until the CST is wound up, its capital must be applied to meet the obligations referred to in Order 16.
22.4.2 the trustee shall pay education or tutoring expenses additional to those specified in Order 16 as agreed between the parties in writing.
22.4.3 the trustee shall cause the CST to be wound up on 31 December 2015 unless the parties agree in writing to extend the date for the winding up of the trust.
22.4.4 upon the winding up of the trust the trustee shall hold any residual corpus in the CST for [the child] absolutely.
22.4.5 all income of the CST is to be paid to the husband as and when it is received on the basis that the Husband is solely responsible for:
22.4.5.1 all costs associated with the administration of the CST (except the costs referred to in Order 22.2); and
22.4.5.2 all tax arising on income received by the CST.
( … )
[26] … importantly the trial judge made reference to the consent orders providing (at 22.4.3 and 22.4.4) for the CST to be wound up on 31 December 2015 (unless otherwise extended by agreement) and that upon the winding up of the CST ‘the trustee shall hold any residual corpus in the CST for the child absolutely’. The trial judge concluded from these terms [that] ‘[t]he surplus is there for his [the child’s] benefit. That is [as] valid a purpose as any’.
[27] His Honour concluded on this issue:
‘99. I do not accept the submission of the husband that the sole or primary purpose of the Trust was for the provision of a private school education or that the purpose of the Trust has failed.’
[28] We agree with the conclusion reached by the trial judge and his Honour’s reasons for the conclusion that the CST did not fail by reason of failure of purpose. We agree with the trial judge’s conclusions that the CST had several purposes which he identified.”
As to the husband’s resulting trust argument, the Court said (from [31]):
“ There is nothing novel or contentious about the proposition that a resulting trust in favour of the settlor arises as to that part of the beneficial interest of the property in question which has not been disposed of by the express trust created by the settlement (see Gummow J in the Re Australian Elizabethan Theatre Trust; Lord v Commonwealth Bank of Australia and Ors [1991] FCA 344; (1991) 30 FCR 491 (‘Re Australian Elizabethan Trust case’) at p 500).
[32] However, as discussed in Jacobs’ Law of Trusts in Australia … at [1208] at p 238 the particular circumstances involved in each case are determinative of that issue. ( … )
( … )
[34] Intention plainly plays an important part in the examination of the particular circumstances of the case and, fundamentally, the proper construction of the terms of the CST. However, as expressed in Scott and Ascher on Trusts … vol 1, s 4.1, cited with approval by Gummow and Hayne JJ in Byrnes v Kendle [2011] HCA 26; (2011) 243 CLR 253 at [58]:
‘In some situations, legal consequences do turn on actual intentions, as in the case of those charged with certain crimes. Ordinarily, however, the legal effect of a transaction does not depend on the parties’ secret intentions, but on the outward manifestations of their intentions. For practical reasons, we disregard the parties’ undisclosed states of mind. To be accurate, therefore, it is necessary, when dealing with the creation of a trust and its terms, to speak not of the settlor’s intention but of the settlor’s manifestation of intention.’
[35] That principle is particularly important in this case. As will be seen, we consider that here the settlor’s intention is plainly manifest in the terms of the CST and reinforced by the circumstances in which it was established.
( … )
[44] No express term provides for any residue to revert to the husband, nor does any express term allude to any such outcome. It cannot be contended that this was an oversight. Aside from the fact that it would have been a simple matter of drafting to achieve that outcome if it were intended, other terms of the consent orders point to the opposite intention.
( … )
[54] In our judgment there is merit in each of the submissions of behalf of the case guardian that:
a. The ordinary rules of construction (including the principle of objectivity) as applied to the construction of contracts are applied in the interpretation of a Court Order: JKB Holdings Pty Ltd v de la Vega [2013] NSWSC 501 Lindsay J at [87];
b. The fact that an inter partes contract/agreement was intended to be, and was in fact, given expression in orders of the Court must be taken into account: JKB Holdings Pty Ltd v de la Vega (above) at [82] citing Morgan v 45 Flers Avenue Pty Ltd (1987) 11 NSWLR 573 at [579] D:E;
c. Where the terms of the Court’s order are sufficiently clear to govern the parties’ rights, the Court does not resort to extrinsic evidence of their intention: at [85] citing Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at [352]: Western Export Services Inc v Jireh International Pty Ltd [2011] HCA 45; 86 ALJR 1 at [3] to [5]; and
d. The same rules of construction of contracts apply to trusts: Byrnes v Kendle (above) per Heydon and Crennan JJ at [102].
[55] We find no merit in the husband’s contention that he retained any beneficial interest in the fund upon establishment of the CST, and consequently we reject his contention as to a resulting trust in his favour in the residue.”
The husband’s appeal was dismissed.