Bishopsgate Insurance Aust Ltd (in Liquidation) v Benson

The New South Wales Court of Appeal considered a dispute between Bishopsgate Insurance Australia Ltd (in liquidation) and Benson and others. The liquidator of Bishopsgate sought to recover moneys paid by the company to the respondents, alleging these payments constituted voidable transactions under the Corporations Law.

The central legal issues before the Court were whether the payments made by Bishopsgate to the respondents were voidable as unfair preferences or as fraudulent conveyances. Specifically, the Court had to determine if the respondents received property of Bishopsgate in circumstances where Bishopsgate was insolvent, and if the respondents were thereby given a preference over other creditors, or if the transactions were entered into with the intent to defraud creditors.

The Court of Appeal analysed the evidence concerning Bishopsgate's financial position at the time of the payments and the knowledge of the respondents regarding that position. It applied the principles of insolvency law, including the tests for establishing unfair preferences and fraudulent conveyances, considering factors such as the timing of the payments, the nature of the transactions, and the respondents' awareness of Bishopsgate's insolvency. The Court affirmed that for a preference to be voidable, the company must have been influenced by a desire to prefer the creditor, and the creditor must have had reasonable grounds to believe the company was insolvent.

The Court of Appeal dismissed the appeal, upholding the primary judge's findings that the payments were not voidable as unfair preferences or fraudulent conveyances.