Back to the Future: Retrogression and the High Court's Decision in Byrnes V Kendle

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I. INTRODUCTION Byrnes v Kendle (1) ('Byrnes') is an interesting and arguably contentious decision regarding the law of trusts in Australia. On the one hand, the case clarifies the duties of a trustee when no duties have been provided in the trust instrument. This in itself is useful bur unremarkable. On the other hand, the noteworthy aspect is the Court's approach to the interpretation of a trust instrument, the issue of intention to create a trust and the unanimous overruling of Commissioner of Stamp Duties (Qld) v Jolliffe (1920) 28 CLR 178 ('Jolliffe'). Certainty of intention to create a trust is one of the three 'certainties' necessary for the establishment of a valid trust. For just over ninety years, Jolliffe has provided authority for the proposition that the subjective as well as the objective (2) intention of a settlor at the time a trust was created should be considered by the court, and, if necessary, should outweigh the objective intention expressed in the trust instrument. Thus, prior to Byrnes, if a settlor created a trust for a purpose other than holding legal title to property for the benefit of a beneficiary, (3) the court could take this ulterior motive, together with other relevant facts and circumstances, into consideration when determining whether a valid trust had been created. Now, it would appear, such a broad and traditionally equitable approach to the construction of a trust instrument has been overruled, to be replaced by the requirement of a narrow and purely textual, rather than contextual, interpretation. In addition to the consideration of the interpretation and validity of trust instruments, all three judgments in Byrnes present comprehensive, helpful discussions of the defences of acquiescence, consent and waiver. There were three judgments handed down in the case. An individual judgment by French CJ, and two joint judgments by Gummow and Hayne JJ and Hayden and Crennan JJ. Although the reasoning and approaches taken in each of the decisions differ, they are all in agreement as to the conclusions drawn in relation to the major issues. As may be gathered from the following discussion, another common feature exhibited by all three is an implicit, and in some instances explicit, conservatism, manifested by a preference for restatement and explication. II. BACKGROUND Joan Byrnes and Clifford Kendle were married in 1980. They separated in 2007, but at the time of the High Court proceedings, had not divorced. Both parties had adult children at the time of their marriage. In 1984 Mr Kendle purchased a unit in Brighton, South Australia, which was financed with a loan under the Defence Service Homes Act 1918 (Cth). The unit was registered in Mr Kendle's name. In 1989, Martin Byrnes, Mrs Byrnes' son and a solicitor, advised the parties to execute a document in regard to the property which was described as an 'Acknowledgement of Trust.' The instrument provided (inter alia): 1. Subject to clause 2 [Mr Kendle] stands possessed of and holds one undivided half interest in the Property as tenant in common upon trust for [Mrs Byrnes] absolutely ('the Byrnes Interest'). It went on to provide that, should one of the parties predecease the other, the survivor would hold a life interest in the share of the deceased party. The instrument constituted a deed pursuant to s 41 of the Law of Property Act 1936 (SA), because it was executed by both parties, their signatures duly witnessed and the document was expressed as being sealed. In 1994, the Brighton property was sold and with the proceeds, the parties purchased a house in Rachel Street, Murray Bridge, South Australia. The Defence Services loan was transferred to the new property and a mortgage was also taken out with Westpac. As with the first property, Mr Kendle was the sole registered proprietor. In 1997 the parties executed a deed in relation to the Rachel Street property, which created Mr Kendle trustee of a half share in the Rachel Street properties on similar terms as the 1989 instrument. …