Harrison (Trustee) v King (a Bankrupt) (No 2)

Harrison (Trustee) v King (a Bankrupt) (No 2) concerned a dispute before Jarrett J in the Supreme Court of New South Wales. The trustee in bankruptcy sought to recover from the bankrupt certain property, specifically a sum of money, which the trustee alleged was held by the bankrupt on trust for the bankrupt's wife. The core of the dispute revolved around whether the bankrupt had indeed held this money on trust, or if it was beneficially his own property, and therefore available to his creditors.

The primary legal issue before the court was to determine the true nature of the bankrupt's interest in the sum of money in question. Specifically, the court had to ascertain whether the bankrupt had established a valid express trust over the funds for the benefit of his wife, or if the funds remained his own property, subject to the claims of his trustee in bankruptcy. This involved an examination of the bankrupt's intentions and actions concerning the money.

Jarrett J reasoned that for an express trust to be established, there must be clear evidence of the settlor's intention to create a trust, certainty of subject matter (the property to be held on trust), and certainty of objects (the beneficiaries). In this instance, the court found that while the bankrupt had made statements suggesting an intention to provide for his wife, there was insufficient evidence to demonstrate a clear intention to divest himself of beneficial ownership of the money and to hold it on trust for her. The court concluded that the bankrupt had not effectively created a trust, and therefore the money was part of his divisible property.