CPLC Work in Progress Seminar: 'Insolvent Trusts: Resolving Competing Priorities in Equity and under Statute'

Speaker: Mr James McComish, Owen Dixon Chambers (Melbourne)

Abstract

If a trustee becomes insolvent, it is usually a simple matter of appointing a new, solvent, trustee; but what if it is the trust, rather than the trustee, that is insolvent? In other words, what happens if the trustee has properly incurred debts which exceed the value of the trust assets? Difficult questions of competing priorities can arise, particularly if the insolvency of the trust coincides with the insolvency of the trustee. Employee creditors may be particularly vulnerable. The extent to which such disputes can be resolved by the statutory priority rules applying in personal or corporate insolvency, or by non-statutory rules of equitable priority, remains controversial. Notwithstanding broad similarity in the law of trusts and insolvency in the common law world, different jurisdictions approach these questions in a variety of different ways.

This paper explores the problem of priorities and the insolvent trust from a doctrinal and comparative point of view, and will offer a preview of the impending decision of the High Court of Australia in Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth of Australia.

This seminar is open to all LLM, MCL and PhD students, Faculty members and Faculty visitors.