Allsop CJ speech on insolvent trading trusts (my summary)

I just finished reading a speech delivered by Allsop CJ (Federal Court) regarding insolvent trading trusts.

For any insolvency nerds out there (like me), it’s well worth the read!

My takeaway points:

1. We are over thinking insolvent trusts. The Corporations Act applies to trading trusts – get over it! **This one might be me reading a lot into His Honour’s dislike of the compartmentalisation of equity and common law principles as separate tranches

2. The right of exoneration (ie an indemnity enjoyed by the trustee over trust property) is PROPRIETARY. You wouldn’t describe your right to your home as both a legal right and then as an equitable right. You’d just say that you have a legal proprietary right to your home. The same can be said with insolvent trusts

3. My other takeaway was the feeling of a veiled swipe at Government for 40 years of not amending statutes to fix insolvent trust confusion. 40 years ago the High Court dealt with these issues in Octavo Investments Pty Ltd v Knight [1979] HCA 61, and yet Government let it fester.

If you get the chance to skim read it, check out the last paragraph for some inspiration:

In legal reasoning, … there can be utility, but danger …, in giving physical form and structure in the imagination to conceptions, principles and relationships. … The judgments in [Amerind] repay careful reading, and re-reading, for their illumination of this danger.”

insolvency svvoidables trusts

Link to the full speech is here and the below is a picture of the start.


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