Hill v Zuda Pty Ltd as Trustee for the Holly Superannuation Fund & Ors

The High Court of Australia considered an appeal from the Full Federal Court concerning the interpretation of section 109 of the *Bankruptcy Act 1966* (Cth) and its application to a trustee of a superannuation fund. The appellant, Mr. Hill, sought to recover funds from the respondents, Zuda Pty Ltd as Trustee for the Holly Superannuation Fund and others, arguing that the trustee had improperly paid out funds from the superannuation fund to Mr. Hill's former spouse. The core of the dispute revolved around whether the trustee's actions constituted a contravention of section 109 of the *Bankruptcy Act*, which prohibits the disposal of property that is divisible among a bankrupt's creditors.

The central legal issue before the High Court was whether section 109 of the *Bankruptcy Act* applied to the trustee of a superannuation fund in circumstances where the bankrupt was a member of that fund. Specifically, the Court had to determine if the trustee's payment of funds to the bankrupt's former spouse, pursuant to a binding financial agreement and a court order, constituted a disposition of property that was divisible among Mr. Hill's creditors under the *Bankruptcy Act*. This required an examination of the nature of superannuation interests and their divisibility in bankruptcy.

The High Court held that section 109 of the *Bankruptcy Act* did not apply to the trustee of a superannuation fund in this context. The Court reasoned that the trustee's obligation was to administer the superannuation fund in accordance with its governing rules and relevant superannuation legislation, not the *Bankruptcy Act*. The payments made by the trustee were distributions from the superannuation fund to a member or their beneficiary, as permitted by the fund's trust deed and superannuation law, and therefore did not constitute a disposition of property divisible among the bankrupt's creditors. The Court emphasised that the trustee's duties were distinct from those of a trustee in bankruptcy.

The appeal was dismissed.