This morning a 5-member bench of the Victorian Court of Appeal handed down judgment in the appeal from the decision of Robson J in Re Amerind (receivers and managers apptd) (in liq)  VSC 127; (2017) 320 FLR 118. The bench comprised Ferguson CJ, Whelan JA, Kyrou JA, McLeish JA and Dodds-Streeton JA.
In a unanimous judgment overturning the decision of Robson J, the plurality held that Amerind’s right of indemnity as trustee over trust assets for liabilities it incurred on behalf of the trust was property of the company (not, as his Honour had held at first instance, property of the trust) and that the priority regime in the Corporations Act therefore applied.
The Court held that the Commonwealth (following its advance under FEGS) was entitled to be paid by the Receivers before other creditors from particular assets.
Their Honours did however uphold Robson J’s decision that certain property in issue was subject to a circulating security interest, including cash in Amerind’s trade account, funds advanced to Amerind under a factoring arrangement, and miscellaneous receipts.
I note that there is also a judgment which addresses similar issues pending since it was heard on 10-11 August 2017 by the Full Court of the Federal Court in In the matter of Killarnee Civil & Concrete Contractors Pty Ltd (in liq) (WAD181/2016). I will keep an eye on that also.
More to follow re Amerind, with links to the judgment, once it is up on Austlii.
If anyone cannot wait that long, I recommend that you read the bankruptcy judgment from August last year of Derrington J in Lane v Deputy Commissioner of Taxation  FCA 953. In it, Derrington J took a different view to some of the conclusions of Robson J in Re Amerind. On the question of whether the trustee’s right of indemnity and lien was property of the trust or of the trustee, Derrington J queried whether a conclusion that the right of exoneration was property of the trustee necessarily meant that it was available to the trustee’s general creditors. His Honour took the view that whether the right of exoneration was a trust asset or a trustee asset, there was only one method by which the right could be exercised and that was by the application of trust funds to paying the claims of trust creditors (whether by the trustee or by the trust creditors exercising their right of subrogation to the right of exoneration and lien). Even if the right of exoneration is an asset of the trustee, any property received by a bankruptcy trustee is subject to all of the liabilities and equitable interests existing prior to the bankruptcy. Accordingly the trustee, and subsequently its bankruptcy trustee or its liquidator, could only ever apply trust funds in discharge of trust debts (at -). Derrington J concluded in that case that a trustee’s right of exoneration from trust property was an asset of the trustee.
Watch this space.