Liquidators generally have the power to assign causes of action belonging to a company, or claims conferred on the liquidator by the Corporations Act 2001 (Cth) (Act). However, a liquidator’s power to sell or assign causes of action has certain limitations which were considered in Anderson v Canaccord Genuity Financial Limited [2022] NSWSC 58 (Anderson Judgment). In particular, limitations may arise in circumstances where the company acted in a capacity as trustee of a trust, which highlights the complexities that generally arise when a corporate trustee is placed in liquidation.

In the Anderson Judgment, the Court found that where the causes of action arose from breaches of duty owed to a company in its capacity as a trustee of a trust, and the company in liquidation ceased to act as trustee (as is often the case), the proper plaintiff was the new trustee of the trust. Contrary to some previous cases, the Court also seems to suggest that liquidators can assign rights which are proprietary in nature (such as, for example, judgment debts) and personal rights (such as, for example, claims for misleading and deceptive conduct).

The Anderson Judgment creates some uncertainty about whether personal rights to sue which are held by a company are also capable of assignment, and if so what rights can be assigned. In circumstances where there are conflicting judgments, practitioners should seek legal advice prior to negotiating the assignment of claims which might be considered 'personal' to the company. In addition and in general, when considering whether to assign any claims or rights to sue, practitioners should carefully consider the nature and merits of the claims sought to be assigned.

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Trusting the signs to assign: assigning causes of action of trustee companies