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ARTICLE · 28 APRIL 2012

The importance of comprehensive assignment provision in debt trade documentation

Clayton Utz
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A recent High Court decision demonstrates the importance of drafting a comprehensive assignment provisions in transfer documents.

AustraliaCorporate/Commercial Law
Peter Bowden (Formerly With Clayton Utz)
Peter Bowden (Formerly With Clayton Utz)
Samuel Cottell
Samuel Cottell
Paul James
Paul James
Nick Poole
Nick Poole
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Key Points:

As well as all legal and other remedies, the assignment should specifically provide that any restitutionary rights in respect of the assets are also assigned.

Purchasers of debt must ensure that the documentation effecting debt trades properly assigns all rights (including restitutionary rights) attached to the debt as well as the debt itself.

A recent High Court decision demonstrates the importance of drafting a comprehensive assignment provision in any transfer documentation. Failure to do so may limit the rights of any purchaser of the debt (Equuscorp Pty Ltd v Haxton [2012] HCA 7).

Equuscorp Pty Ltd commenced proceedings in the Supreme Court of Victoria claiming "loss and damage" stemming from breaches of certain loan agreements that had been assigned to it by Rural Finance Pty Ltd. Equuscorp was unsuccessful at first instance and then again on appeal.

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