Pascoe v Boensch

Case [2008] FCAFC 147

FEDERAL COURT OF AUSTRALIA

Pascoe v Boensch [2008] FCAFC 147

EXPRESS TRUSTS – creation by unilateral declaration – certainty of intention and object – Conveyancing Act 1919 (NSW) s 23C(1)(b) and (c) requirement of writing – construction of a written document in the context in which it was made – actual present intention to create a fixed trust for the benefit of the children disclosed

Conveyancing Act 1919 (NSW) ss 23C(1)(b), 23C(1)(c)
Bankruptcy Act 1966 (Cth) s 121

Commissioner of Stamp Duties (Q) v Jolliffe (1920) 28 CLR 178 cited
Hagan v Waterhouse (1991) 34 NSWLR 308 cited
Harpur v Levy (2007) 16 VR 587 cited
Hawkins v Clayton (1988) 164 CLR 539 cited
Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271 cited
Kinsela v Caldwell (1975) 132 CLR 458 cited
Knight v Knight (1840) 3 Beav 148 cited
Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2005) 223 ALR 560 cited
Pascoe v Boensch (No 3) [2007] FMCA 2039 affirmed
Re Armstrong (decd) [1960] VR 202 cited
Re Tyler:  Graves v King [1967] 1 WLR 1269 cited
Richards v Delbridge (1874) LR 18 Eq 11 cited
Trident General Insurance Co Limited v McNiece Bros Pty Limited (1988) 165 CLR 107 cited
Vandervell v Inland Revenue Commissioners [1967] 2 AC 291 cited

Dal Pont and Chalmers, Equity and Trusts in Australia (4th ed., 2007)
Ford and Lee, Principles of the Law of Trusts

SCOTT DARREN PASCOE v FRANZ BOENSCH and SABINE BOENSCH

NSD 35 of 2008

FINN, DOWSETT AND EDMONDS JJ
18 AUGUST 2008
SYDNEY


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 35 OF 2008
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:

SCOTT DARREN PASCOE
Appellant

AND:

FRANZ BOENSCH
First Respondent

SABINE BOENSCH
Second Respondent

JUDGES:

FINN, DOWSETT AND EDMONDS JJ

DATE OF ORDER:

18 AUGUST 2008

WHERE MADE:

SYDNEY

THE COURT ORDERS THAT:

1.The appeal be dismissed.

2.The appellant pay the respondents’ costs of the appeal. 

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.


IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

NSD 35 OF 2008
ON APPEAL FROM THE FEDERAL MAGISTRATES COURT OF AUSTRALIA

BETWEEN:

SCOTT DARREN PASCOE
Appellant

AND:

FRANZ BOENSCH
First Respondent

SABINE BOENSCH
Second Respondent

JUDGES:

FINN, DOWSETT AND EDMONDS JJ

DATE:

18 AUGUST 2008

PLACE:

SYDNEY

REASONS FOR JUDGMENT

THE COURT

  1. This appeal concerns both the proper application of elementary principles of the law of trusts and, somewhat obliquely for reasons which will appear, the requirements of s 23C(1)(b) and (c) of the Conveyancing Act 1919 (NSW). In issue is the construction and legal effect, if any, of a written document signed by both of the respondents which bears the title “Memorandum of Trust”. On the trial of a preliminary question, a Federal Magistrate held (and so answered the question) that the Memorandum of Trust constituted a valid declaration of trust: Pascoe v Boensch (No 3) [2007] FMCA 2038.…

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Pascoe v Boensch [2008] FCAFC 147
Case
[2008] FCAFC 147
Decision Date

CaseChat Overview and Summary

In the case of Pascoe v Boensch, the respondents sought to establish the enforceability of a memorandum of trust executed by Mr Boensch, claiming that it was intended to create a trust for his children. The case was initially heard in the Federal Magistrates Court, where the Federal Magistrate determined that the memorandum was not a sham and that Mr Boensch held the entire beneficial interest in the property on trust for his children. The appellant, Mr Pascoe, subsequently appealed this decision to a higher court, raising questions about whether Mr Boensch's declaration in the memorandum satisfied the necessary requirements to establish a valid trust. The appeal centred on whether the memorandum demonstrated the requisite certainty of intention, subject matter, and objects (beneficiaries) to constitute a valid trust under equity law.

The central legal issues the court had to address were whether Mr Boensch's declaration in the memorandum satisfied the necessary requirements for establishing a valid trust, specifically whether there was certainty of intention to create a trust, certainty as to the subject matter of the trust, and certainty as to the objects of the trust. The court examined the language of the memorandum, the surrounding circumstances, and the context in which it was created to determine Mr Boensch's actual intention and the terms of the trust he intended to create. The court also considered whether the memorandum complied with the statutory requirements of the Conveyancing Act, particularly those concerning the creation of trusts.

The court found that the memorandum was not a sham and that Mr Boensch intended to create a trust for his children. The court concluded that the Federal Magistrate's findings were supported by the evidence and that there was sufficient certainty in the memorandum to establish the trust. The court held that the context and circumstances surrounding the creation of the memorandum, including Mr Boensch's intention to provide for his children and his concerns about potential claims on the property by a future partner, were relevant in determining the intention behind the memorandum. The court emphasised that the intention to create a trust must be actual and present, and it found that Mr Boensch's declaration in the memorandum met this requirement. Consequently, the appeal was dismissed, and the respondents were awarded their costs.

In conclusion, the court upheld the Federal Magistrate's decision that the memorandum of trust was valid and enforceable, dismissing the appeal and awarding the respondents' costs.

Orders

Orders of the court

1. The appeal be dismissed.

2. The appellant pay the respondents’ costs of the appeal.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

FINN, DOWSETT AND EDMONDS JJ
Because of the view we take of the memorandum, we are content to deal with it for the purposes of the preliminary question on the basis that it attracts the requirements both of s 23C(1)(b) – as is implicit in the Federal Magistrate’s decision – and s 23C(1)(c), which the respondents contend has clearly been satisfied. We would note, though, that in the circumstances, if subpara (1)(b) is satisfied, so also will be subpara (1)(c). THE DECISION BELOW The Federal Magistrate did not accept that the memorandum was a sham. He accepted that at the time the memorandum was signed Mr and Ms Boensch were the legal owners of the property but that Ms Boensch held her interest on trust for Mr Boensch who had, in consequence, the entire beneficial interest in the property. In consequence, subject to satisfying the writing requirements of s 23C(1)(b) of the Conveyancing Act, Mr Boensch could declare himself to be trustee of that interest. The Federal Magistrate considered that by the Memorandum of Trust he constituted himself trustee of that interest for his children. We would note his Honour accepted Mr Boensch’s evidence when it was challenged in cross-examination.THE APPEAL While there are six grounds of appeal now relied upon, the appeal in substance concerns the question whether in the circumstances Mr Boensch satisfied the various requirements necessary to be complied with to constitute a voluntary trust of his beneficial interest by way of declaration in favour of his two children. By way of preface we would observe that no challenge has been made to the Federal Magistrate’s finding that the memorandum was not a sham. We would also note again that no explicit challenge is made to the sufficiency of the memorandum for Conveyancing Act purposes, if in fact a trust was constituted by the declaration. For the purposes of this appeal, it is necessary to refer briefly to certain elementary principles of trust law relating to the voluntary constitution of a trust by way of declaration. We emphasise both “voluntary” and “declaration” for the reason that where valuable consideration is given for the creation of a trust somewhat different principles can apply if the trust is not fully constituted at the time of the declaration. (i) Essential to the voluntary creation of any express trust, whether arising by declaration or transfer, is that the trust itself satisfies the three certainties outlined by Lord Langdale in Knight v Knight (1840) 3 Beav 148 at 173, ie there must be certainty of intention to create a trust; certainty as to the subject matter of the trust; and certainty as to the objects (or beneficiaries) of the trust: on the three certainties see generally Ford and Lee, Principles of the Law of Trusts, Chs 2, 4 and 5; Dal Pont and Chalmers, Equity and Trusts in Australia (4th ed, 2007) Ch 17. The first and third of these have been put in issue in the appeal. (ii) Though there is no required formula to be used to create a trust: Richards v Delbridge (1874) LR 18 Eq 11 at 14; the declarant must manifest an intention presently to create a relationship in respect to property which the law characterises as a trust: Re Armstrong (decd) [1960] VR 202. The intention must be one actually had: Commissioner of Stamp Duties (Q) v Jolliffe (1920) 28 CLR 178; and it must be to create an immediately operative trust: Harpur v Levy (2007) 16 VR 587 at [62]-[63]. An intention that the trust be constituted at a later date will be ineffective to create a trust either at the time of the declaration or at that later date. The ultimate onus of proving the intention to create a trust rests on the parties seeking to propound it: Hyhonie Holdings Pty Ltd v Leroy [2004] NSWCA 72 at [45].

Ratio Decidendi

Legal Principle Established

Established by: FINN, DOWSETT AND EDMONDS JJ

The respondents contend that no proper challenges have been made to the Federal Magistrate’s findings of primary fact. In any event, though, it is contended that in light of the evidence and his Honour’s unchallenged acceptance of Mr Boensch’s evidence about his immediate intention to create a trust, the appeal must be rejected.CONSIDERATION We begin with the trite observation that, while Mr Boensch’s intention, if any, to constitute a trust and the terms of it, are to be divined from the language used in the memorandum, the court may in construing it have regard to the surrounding circumstances known to Mr Boensch and to the purpose and object of the transaction: see Trident General Insurance Co Limited v McNiece Bros Pty Limited (1988) 165 CLR 107 at 121; Herdegen v Federal Commissioner of Taxation (1988) 84 ALR 271 at 277; see also Dal Pont and Chalmers, at 459, on the convergence of principles of construction in relation to resort to “context” or “surrounding circumstances”; see Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2005) 223 ALR 560 at [78]-[79]. As we will indicate below, context is of no little importance in this matter. Importantly, Mr Boensch’s actual intention and the terms actually intended may properly be inferred from all the circumstances if they can properly be said to be nonetheless manifest on the proper construction of the memorandum itself: see Trident General Insurance Co above. We would note in passing that, in the setting of the Conveyancing Act, at least, intention cannot be presumed or imputed: for the difference between inferring and imputing intention see Hawkins v Clayton (1988) 164 CLR 539 at 570. To appreciate what is conveyed by the Memorandum of Trust it is important to understand the context and the circumstances of its making. We would note the following:(i)Mr and Ms Boensch were at the time of the creation of the document only recently divorced. They had two infant children, aged 9 and 7. (ii)On separation Mr and Ms Boensch entered into an agreement for shared custody of the children, child support and the division of property. Prior to the making of the property settlement consent orders, Mr Boensch had a number of conversations with Ms Boensch in which he spoke of the need to make provision for the support of their children and to give them a start for life.(iii)The Federal Magistrate accepted Mr Boensch’s evidence of his concern on learning that a new partner in a future relationship with him may be able to make a claim on the Rydalmere property. If such a claim was made he would not then be in a position to make his intended gift to his children to give them a start in life nor would he be able to finance his 50 per cent child support contribution.(iv)In talking to others at the time about his concern, he was made aware of the trust concept. This led to his being led to a person who, as his Honour found, was not a solicitor but who prepared the memorandum. Mr Boensch located a Justice of the Peace who witnessed their signing of a copy of the memorandum.