Investigation of tool-using behaviours has long been a means by which to explore causal reasoning in children and nonhuman animals. Much of the recent research has focused on the "Aesop's Fable" paradigm, in which objects must be dropped into water to bring a floating reward within reach. An underlying problem with these, as with many causal reasoning studies, is that functionality information and reward history are confounded: a tool that is functionally useful is also rewarded, while a tool that is not functionally useful is not rewarded. It is therefore not possible to distinguish between behaviours motivated by functional understanding of the properties of the objects involved, and those influenced by reward-history. Here, we devised an adapted version of the Aesop's Fable paradigm which decouples functionality information and reward history by making use of situations in which the use of a particular tool should have enabled a subject to obtain (or not obtain) a reward, but the outcome was affected by the context. Children aged 4-11 were given experience of a range of tools that varied independently in whether they were functional or non-functional and rewarded or non-rewarded. They were then given the opportunity to choose which tools they would like to use in a test trial, thereby providing an assessment of whether they relied on information about functionality or the reward history associated with the object or a combination of the two. Children never significantly used reward history to drive their choices of tools, while the influence of functionality information increased with age, becoming dominant by age 7. However, not all children behaved in a consistent manner, and even by 10 years of age, only around a third exclusively used functionality as a basis for their decision-making. These findings suggest that from around the age of 7-years, children begin to emphasize functionality information when learning in novel situations, even if competing reward information is available, but that even in the oldest age-group, most children did not exclusively use functionality information.