The recent decision of the High Court of Australia in Carter Holt Harvey Woodproducts Australia Pty Ltd v Commonwealth [2019] HCA 20 (Re Amerind) marks the end of a saga with significant implications for businesses operating as trading trusts.

In the context of many cases with diverse findings on the issue, Re Amerind serves to create nationwide certainty for whether the statutory priority regime applies to insolvent trading trusts. The High Court found that it does applies, holding that trust assets, to which the trustee’s right of indemnity from trust debts applies, are property of the trustee and not property of the trust.


Amerind Pty Ltd (Amerind) traded solely as the trustee of a decorative timber products business which had been placed into administration and then receivership. Upon completion of the receivership, the receivers had gained a surplus amount of $1.7 million from realising the trust assets.

The issue was, of course, how this surplus should be distributed.

The Commonwealth, as a priority creditor, argued that the assets were property of the trust rather than the trustee. It argued that it should be preferred in distribution of the surplus because of the unpaid obligations to employees outstanding under the Fair Entitlements Guarantee Scheme (FEGS) and the application of section 433 of the Corporations Act 2001 (Cth) (the Act).

The primary judge, Robson J, held that:

1. The assets were indeed property of the trust;
2. The right of indemnity is not property of the trust for the purposes of section 433 of the Act;
3. The priority regime does not apply to trust property; and as a result
4. The trust assets should be distributed pari passu rather than as priority assets.

The Court of Appeal of the Supreme Court of Victoria, applying previous Victorian jurisprudence, disagreed. The Court of Appeal instead found that the right of indemnity was indeed property of the company, relying upon the right of indemnity that a trustee company must use trust assets for its own benefit and exonerate itself from its liability to trust creditors.

High Court Consideration

Carter Holt Harvey Woodproducts Australia appealed to the High Court on two grounds:

Firstly, it was argued that section 433 of the Act did not afford priority to the Commonwealth because Amerind’s right of indemnity was not “property comprised in or subject to a circulating security interest” within section 433(2)(a); and

Secondly, that the Court of Appeal erred by concluding that the funds held by the Receivers were proceeds of Amerind’s exercise of its right of indemnity and therefore available for distribution within section 433 of the Act.

The High Court dismissed the appeal and unanimously held that in the winding up of a corporate trustee, trust assets to which the company is entitled, through the exercise of its right of indemnity, is included in the “property of the company”. Such property can be applied in satisfaction of the claims of creditors, but only in satisfaction of trust liabilities to which that right relates. Furthermore, the Court also held that section 433(3) of the Act required the receivers to pay the debts in accordance with the statutory priorities in a winding up.

A majority came to this conclusion by reasoning that the right of indemnity itself was not “property of the company”, but the inventory to which the right related was. As such the receivers were entitled to apply the proceeds from realising these assets in satisfaction of the claims of trust creditors, just as Amerind would have been.


This decision provides much wanted certainty about the application of section 433 of the Act to trust assets in situations where an insolvent company acted solely as trustee for a single trading trust. Despite a clear ruling from the High Court, insolvency practitioners still need to exercise caution when handling trust assets in more complex corporate-trust structures, such as companies that trade only partially as trustee of a trust, or companies that trade as trustees of multiple trusts. Examples of these principles applying to more complex situations have been seen in decisions of the Federal Court in a post Re Amerind context.