Assignment and novation: Margin lending transactions: Goodridge v Macquarie Bank Limited

This recent decision by the Federal Court of Australia considers the effectiveness of assignment and novation provisions in relation to margin lending transactions.

While the findings of this case are limited to the particular facts, the decision reiterates the need for financiers and corporate trustees to have an excellent understanding of their rights and obligations under transaction documents before attempting to assign or transfer arrangements. This can be of particular importance when a loan book is being transferred as opposed to a single loan.

Facts

Ross Goodridge (Goodridge) entered into a margin lending arrangement with Macquarie Bank Limited (Macquarie) in the form of a loan and security agreement (Agreement).