By Paul Collins
In a famous literary allusion, du Parcq LJ in Re Schebsman  Ch 83 noted that an intention to create a trust can possibly be created by unguarded language, as in Molière’s Monsieur Jourdain who talked prose without knowing it, although he qualified this by saying that ‘unless an intention to create a trust is clearly to be collected from the language used and the circumstances of the case, I think that the court ought not to be astute to discover indications of such an intention’. In Jessup v Queensland Housing Commission  QCA 312, McPherson JA added at  that if the purpose of the settlor was to inspire the poetry of trusts, it was odd that it chose to express itself in common law prose.
This very controversy often arises in the rather prosaic event of insolvency where a party contends that certain assets are not available to creditors because beneficial ownership is vested in a party other than the debtor by reason of a trust. Thus in Korda v Australian Executor Trustees (SA) Ltd  HCA 6, the High Court of Australia examined the question whether a trust could be inferred from a contractual relationship. Continue reading