Cook v Benson

The appeal concerned the application of section 120(1) of the *Bankruptcy Act 1966* (Cth) to a disposition of property by Mr Peter Benson, the first respondent, within two years of his bankruptcy. The appellant, Mr Cook, as trustee in bankruptcy, sought to avoid the disposition of $80,000, which represented a significant portion of superannuation entitlements Mr Benson received upon termination of his employment. Mr Benson had directed that this sum be rolled over into other superannuation funds. The central dispute was whether the recipients of these funds were "purchasers" who had given "valuable consideration" for the disposition, thereby exempting it from avoidance under section 120(1).

The High Court was required to determine whether the transfer of $80,000 from Mr Benson to the superannuation funds constituted a "settlement of property" that was voidable by the trustee in bankruptcy. Specifically, the Court had to consider whether the corporate respondents, as recipients of the rolled-over superannuation funds, qualified as "purchasers" who had provided "valuable consideration" for the disposition, as required by section 120(1) of the *Bankruptcy Act 1966* (Cth) to avoid avoidance. The Court also considered the commercial context of the transaction and the legislative history of section 120(1).

The Court reasoned that bankruptcy legislation operates as a special code and that while commercial sense is relevant, it does not alone exempt a disposition from avoidance. To fall within the exemption in section 120(1), a party must have given valuable consideration sufficient to make them a "buyer" in a commercial sense. The Court found that the corporate respondents were not "purchasers" or "buyers" in the ordinary commercial sense of the sums of money they received. The Court noted that the inclusion of the word "purchaser" in the legislation suggested an element beyond merely valuable consideration, a point reinforced by the legislative history. The Court concluded that the disposition of property was not made in favour of a purchaser for valuable consideration, and therefore, the property was available to the trustee in bankruptcy.

The appeal was dismissed with costs.