Commonwealth of Australia v Cornwell

The Commonwealth of Australia appealed to the High Court of Australia against a decision of the Full Federal Court concerning the interpretation of section 160 of the *Bankruptcy Act 1966* (Cth). The dispute arose from the trustee in bankruptcy's claim for certain property, which the respondent, Mr Cornwell, argued was not divisible amongst his creditors. The Full Federal Court had found in favour of Mr Cornwell, leading to the Commonwealth's appeal.

The High Court was required to determine whether the property in question, specifically a sum of money held in a bank account, was "property divisible amongst his creditors" within the meaning of the *Bankruptcy Act*. This involved considering the nature of the property and whether it was held by the bankrupt on trust for another party, thereby excluding it from the bankrupt's estate.

The High Court, in allowing the appeal, reasoned that the Full Federal Court had erred in its application of the principles relating to resulting trusts. Their Honours held that the evidence did not establish the requisite intention for a resulting trust to arise in favour of Mr Cornwell. Instead, the funds in the bank account were found to be beneficially owned by Mr Cornwell and thus were property divisible amongst his creditors under section 160 of the *Bankruptcy Act*. The Court ordered that the appeal be allowed and the orders of the Full Federal Court be set aside.