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Trusts

Sutherland v Woods [2011] NSWSC 13. Hallen AsJ. 3.2.11.

100 One must start with the general propositions regarding trusts, succinctly stated by Kenneth Martin J, in Saunders v Deputy Commissioner of Taxation [2010] WASC 261 at [22], about which there cannot be much dispute:

"[22] I have already referred to the three critical requirements for a valid creation of a trust:
certainty of intention;
certainty of subject matter;
and certainty of object or beneficiary.
The following further principles emerged as relevant.
1. The existence of a trust is to be determined with reference to a declaration of trust by the subjective intention of the settlor, although that intention may be inferred from objective circumstances: Commissioner of Stamp Duties (Qld) v Jolliffe [1920] HCA 45; (1920) 28 CLR 178; Starr v Starr [1935] SASR 263; and White v Shortall [2006] NSWSC 1379; (2006) 68 NSWLR 650, 673 [128]-[129] (Campbell J).
2. Because it is a subjective intention which is at issue, the parol evidence rule does not limit the evidence which may be taken into account in determining whether a trust was validly declared: Starr v Starr (266); Owens v Lofthouse [2007] FCA 1968 [62]-[72].
3. Subjective intention may be inferred from language employed in the written instrument: Re Australian Elizabethan Theatre Trust; Lord v Commonwealth Bank of Australia (1991) 30 FCR 491 at 503.
4. Subjective intent may also be inferred from the conduct of the parties as well as from the surrounding circumstances in a particular case: Cohen v Cohen (1929) 42 CLR 91.
5. Generally speaking, the legal onus of establishing that the intention to create a trust existed at the relevant time remains with the person asserting the existence of the trust: Re Armstrong (Dec) [1960] VR 202 at 206; Hyhonie Holdings Pty Ltd v Leroy [2004] NSWCA 72 [45]; Pascoe v Boensch [2008] FCAFC 147; (2008) 250 ALR 24 [21].
6. Where there is an unambiguous use of language in a written instrument establishing a trust, the evidentiary onus will shift to a contradicting party to show that a trust does not exist through the establishment, if possible, of a contrary intention: Stephens Travel Service International Pty Ltd (recs and mgrs apptd) v Qantas Airways Ltd (1988) 13 NSWLR 331 at 340-343.
7. The evidentiary onus falls upon the party seeking to show the contrary intention and strong evidence is required to do so: Re Steel; Public Trustee v A-G (SA) [1925] SASR 272.
8. The evidence as to a contrary intention may be circumstantial. All relevant circumstances may be examined to determine whether there actually was the intention to create a trust: Kauter v Hilton (1953) 90 CLR 86; Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd [2000] HCA 25; (2000) 202 CLR 588.
9. Subsequent events may be proved to negate a finding as to an intention to create a trust. Circumstantial evidence that will be admissible to be weighed in this process may include the circumstance where an ostensible declarant of a trust nevertheless continues to exercise personal dominion over the property the subject of the declaration of trust: Arthur v Public Trustee (1988) 90 FLR 203 at 209-210; Hyhonie Holdings Pty Ltd v Leroy [2003] NSWSC 624 [34]-[41] (result affirmed on appeal in Hyhonie Holdings Pty Ltd v Leroy [2004] NSWCA 72); Owens v Lofthouse .
10. Evaluations of subjective intention towards the establishment of a trust raise issues of fact which are to be determined by reference to the particular circumstances of each individual case.
11. The word "sham" is an expression carrying a well understood legal meaning: see Equuscorp Pty Ltd v Glengallan Investments Pty Ltd [2004] HCA 55; (2004) 218 CLR 471 [46], where it was observed that a sham "refers to steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences" (referring to Sharrment Pty Ltd v Official Trustee in Bankruptcy (1988) 18 FCR 449)."
George v Webb & ors [2011] NSWSC 1608. Ward J.

214 It is clear that the onus of proof lies on those who assert that a trust was created ( Peter Cox Investments, at [49]; Re Armstrong (1960) VR 202; In the matter of Travel House of Australia Pty Ltd; Browne v The Deputy Commissioner of Taxation ( Murray J, Supreme Court of Victoria, 1978, unreported). 

215 In the present case, there is no uncertainty as to the subject matter of the trust (it is the sum deposited by Mrs George). The question is whether the intention to create a trust, and the object of the trust (ie the purpose for which the money was to be used, is sufficiently clear).

216 In On Equity , at [6.180]) the "three certainties" are as described in Knight v Knight (1840) 3 Beav 148, at 172-173; (1840) 49 ER 58, at 68, where Lord Langdale MR stated:

 As a general rule, it has been laid down, that when property is given absolutely to any person, and the same person is, by the giver who has power to command, recommended, or entreated, or wished, to dispose of that property in favour of another, the recommendation, entreaty, or wish shall be held to create a trust.

First, if the words are so used, that upon the whole they ought to be construed as imperative;

Secondly, if the subject of the recommendation or wish be certain; and

Thirdly, if the objects or persons intended to have the benefit of the recommendation or wish be also certain.

or as described in Wright v Atkyns (1823) Turn & R, at 157; (1823) ER 1051, at 1056:

In order to determine whether the trust is a trust this Court will interfere with, it is matter of observation,

First, that the words must be imperative, that the words are imperative in this case there can be no doubt;

Secondly, that the subject must be certain, and that brings me to the question what is meant by the words "the property"; and

Thirdly, that the object must be as certain as the subject, and then the question will be, whether the words "my family" have as much of the quality of certainty, as this species of trust requires.

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