CARTER HOLT HARVEY WOODPRODUCTS AUSTRALIA PTY LTD V COMMONWEALTH THE TRUE NATURE OF THE TRUSTEE'S RIGHT OF INDEMNITY

This case note considers the High Court's recent decision in Carter Holt Harvey Wood-products Australia Pty Ltd v Commonwealth (2019) 93 ALJR 807 ('Re Amerind'). In Re Amerind, the Court resolved a longstanding controversy, holding that the interest a corporate trustee has pursuant to its right to be indemnified against trust liabilities is property divisible among the trustee's creditors in its winding-up under the Corporations Act 2001 (Cth). This note considers the background to the decision and explains the Court's reasoning. It shows that the Court's reasoning supports the fundamental yet overlooked proposition that the interest the trustee has is a legal interest in the trust property. This conclusion supports the view that a retiring trustee is entitled to retain sufficient trust property as against a new trustee to ensure that its right of indemnity is satisfied.