Category: Securitisation

Caterpillar Financial Australia Limited v Ovens Nominees Pty Ltd [2011] FCA 677

A corporate trustee enters liquidation, its position is as follows:

(i)          its right of indemnity, or exoneration, is retained (at [16]);

(ii)         it continues to have the right to meet creditors’ claims related to any liabilities incurred by it in its capacity as trustee, out of the trust assets (at [15]–[16]); and

(iii)        in addition, its liquidator has the right to claim costs and expenses incurred in winding up the corporate trustee insofar as that relates to its role as trustee and its liquidator has a right of indemnity against the trust assets in respect thereof and a right of exoneration against the trust assets in respect of any prospective liability (at [17]).

Caterpillar Financial Australia Limited v Ovens Nominees Pty Ltd [2011] FCA 677

A corporate trustee is acting properly in its capacity as trustee, it has the following rights (at [14]):

(i)          when a corporate trustee incurs a liability on behalf of the trust, it has a right of indemnity out of the trust assets and retains an equitable lien or equitable charge over the trust assets to secure that right of indemnity;

(ii)         it also has a right of exoneration out of the trust assets in respect of any prospective liability; and

(iii)        it has a right to deal with the trust assets, in accordance with the terms of the trust, to satisfy any liabilities in respect of which the right of indemnity or right of exoneration attaches, including the power to sell trust assets.