Australia: Passing your assignments: Getting straight A's as an assignee of debt – lessons from the High Court

Last Updated: 23 March 2012

By Alexander Danne;Ros O'Mally; Stuart Cormack


As an assignee or transferee of a debt, how can you ensure complete assignment and maximise the remedies available to recover the debt (or monies representing it)?

A recent High Court decision has brought this question sharply into focus, with the Court holding that the assignment of non-contractual remedies in respect of a debt is not effective unless expressly provided for.

How does this affect you?

This case:

  • raises potential concerns for assignees or transferees of debt – whose right to non-contractual restitutionary remedies in respect of the debt may have been lost; and
  • shows the willingness of the High Court to read down broad but unspecific language – providing a reminder of the importance of express and specific drafting.


In Equuscorp Pty Limited v Haxton[2012] HCA 7, the respondents invested in tax driven blueberry farming schemes. In breach of the Companies Code of each respondent's home state, a prospectus with respect to the schemes was not registered.

Each of the respondents entered into a loan agreement with Rural Finance Pty Limited (Rural) to meet ongoing expenses arising from their investment in the schemes. Rural entered into an asset sale agreement and deed of assignment (the Deed) with Equuscorp Pty Limited (the Appellant) assigning the loan agreements and amounts owing under them. The Deed was expressed to effect an "absolute assignment" of the debt and "all legal and other remedies" (emphasis added) under the loan agreements.

Due to the scheme's breach of the Companies Code the loan agreements were unenforceable. As an alternative to claiming under the loan agreements, the Appellant sought restitution of the funds advanced to the respondents as "money had and received". This left two issues for the Court to resolve:

  1. whether the remedy of restitution is capable of assignment; and
  2. if the remedy was assignable, had it been effectively assigned by the Deed?

At first instance, the Court accepted both that restitution could be and was effectively assigned to the Appellant. The Court of Appeal overturned this decision, holding that restitution had not been available to Rural (as the assignor) and therefore was not available to the Appellant (as the assignee) and that in any event, it had not been effectively assigned by the Deed.

The Court's decision

In dismissing the appeal, the High Court made the following rulings by majority1:

  1. the remedy of restitution, where the debt in question is unenforceable, is capable of assignment2; and
  2. the assignment by the Deed of the loan agreements and "all legal and other remedies" under them, only transferred to the Appellant the legal right to the debt together with legal remedies for the enforcement of the loan agreements. The alternative action of restitution was not seeking to enforce the loan agreements, but rather to utilise a separate restitutionary remedy arising from the money had and received by the respondents. This right to restitution was not assigned to the Appellant under the Deed.3

In reaching its decision, the High Court referred to an 1888 English decision4 on the interpretation of s25(6) of the Judicature Act 1873, a precursor and equivalent section to s199 of the Property Law Act 1974 (QLD). In the immediate case, the Court noted that such legislative provisions were the source of the "all legal and other remedies" language in the Deed. The High Court followed the treatment of this language set down by the 1888 English decision, noting the "inherent limitations" of the language and that it was "not apt to encompass non-contractual claims for restitutionary relief".

In a commercially minded but unfortunately dissenting decision, Heydon J's more practical approach, provided that the commercial intent behind the words "all legal and other remedies" was, in the context of an assignment of debt, to convey all means by which it might have been necessary for the Appellant to recover the economic equivalent of the debt, including through a claim for restitution for money had and received.5

How can you protect yourself?

To ensure you are protected as an assignee of debt in the event the assigned loan contract turns out at a later date to be unenforceable, assignment clauses must provide for the express assignment of non-contractual rights (including for restitutionary relief) in respect of money had and received.


1Majority judgment by French CJ, Crennan J and Kiefel J.
2Equuscorp Pty Limited v Haxton [2012] HCA 7 at 53.
3Equuscorp Pty Limited v Haxton [2012] HCA 7 at 63-64.
4Read v Brown (1888) 22 QBD 128 at 132.
5Equuscorp Pty Limited v Haxton [2012] HCA 7 at 161.

This publication is intended to provide a general information only and should not be relied upon as giving legal advice. For legal advice on a specific issue, please contact one of the lawyers at Gilbert & Tobin

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