equitable assignment australia

Equitable assignment

Practical law uk glossary 2-107-6540  (approx. 3 pages).

• The assignor can inform the assignee that he transfers a right or rights to him.
• The assignor can instruct the other party or parties to the agreement to discharge their obligation to the assignee instead of the assignor.

• Programs and Courses

Equity and Trusts

An undergraduate course offered by the ANU Law School .

• Code LAWS2205
• Unit Value 6 units
• Offered by ANU Law School
• ANU College ANU College of Law
• Course subject Laws
• Areas of interest Law
• Academic career UGRD
• Prof Pauline Ridge
• Mode of delivery Online or In Person
• Offered in Second Semester 2021 See Future Offerings

• Introduction

Learning Outcomes

Indicative assessment, inherent requirements, requisite and incompatibility, prescribed texts, preliminary reading, assumed knowledge, other information.

• Offerings and Dates

The objective of the course is to provide students with an overall understanding of the law of equity with special emphasis on fiduciary obligations, trusts, equitable assignment of propoerty and equitable remedies.  The course will consider the history of equity, basic principles which dominate its jurisprudence and the relevance of equity today; the nature of fiduciary obligations, recognised categories of fiduciaries and the extension of these categories in recent times, breach of fudiciary obligations, defences and remedies for the breach of fiduciary obligations; the requirements for express trusts, the liability of a third party to a breach of trust or fiduciary duty, and the remedies for breach of trust and fiduciary duty, including tracing.  The course then shifts its focus to equity more generally by considering the equitable rules for assignment of property and the remedies of specific performance and injunctions.

Upon successful completion, students will have the knowledge and skills to:

• Explain and apply to a factual problem the law relating to fiduciary obligations, trusts (including express, resulting and constructive trusts), equitable remedies, tracing and equitable assignment. Such discussion should note any unresolved or ambiguous questions of law and propose a reasoned answer to the problem that acknowledges strengths and weaknesses of the arguments made;
• Analyse and predict how unresolved or ambiguous questions of equitable doctrine could be resolved by the courts;
• Describe and evaluate fundamental themes underlying and connecting the specific doctrines covered, including the relationship of equity to other parts of the law.

This course assumes a knowledge of contract, property and legal history. The subject reinforces and deepens understanding of specific doctrines referred to in other courses such as Contracts, Property, Corporations Law and Family Law.

• The assessment for this course will include a compulsory mid-semester component (format TBA) [25%], a compulsory, end of semester formal exam [65%] and a compulsory tutorial participation component [10%]. The indicated mark allocations are based upon the 2013 assessment scheme and are subject to change. (25) [LO null]

The ANU uses Turnitin to enhance student citation and referencing techniques, and to assess assignment submissions as a component of the University's approach to managing Academic Integrity. While the use of Turnitin is not mandatory, the ANU highly recommends Turnitin is used by both teaching staff and students. For additional information regarding Turnitin please visit the ANU Online website.

Not applicable

G E Dal Pont,  Equity and Trusts: Commentary and Materials , ( Lawbook Co). The current edition of this casebook as at June of the year that the course is taught will be prescribed. If in doubt, check with the course convenor.

Students must rely on the approved Class Summary which will be posted to the Programs and Courses site approximately 2 weeks prior to the commencement of the course.

The course assumes knowledge of contract, property and legal history. The subject reinforces and deepens understanding of doctrines referred to in other courses such as Contract, Property, Corporations Law, Restitution Law and Family Law.

Tuition fees are for the academic year indicated at the top of the page.  

Commonwealth Support (CSP) Students If you have been offered a Commonwealth supported place, your fees are set by the Australian Government for each course. At ANU 1 EFTSL is 48 units (normally 8 x 6-unit courses). More information about your student contribution amount for each course at Fees . 

If you are a domestic graduate coursework student with a Domestic Tuition Fee (DTF) place  or international student you will be required to pay course tuition fees (see below). Course tuition fees are indexed annually. Further information for domestic and international students about tuition and other fees can be found at  Fees .

Where there is a unit range displayed for this course, not all unit options below may be available.

Course fees

Offerings, dates and class summary links.

ANU utilises MyTimetable to enable students to view the timetable for their enrolled courses, browse, then self-allocate to small teaching activities / tutorials so they can better plan their time. Find out more on the Timetable webpage .

Second Semester

Responsible Officer: Registrar, Student Administration / Page Contact: Website Administrator / Frequently Asked Questions

• Contact ANU
• Freedom of Information

+61 2 6125 5111 The Australian National University, Canberra CRICOS Provider : 00120C ABN : 52 234 063 906

• Our Services
• Meet our People
• Legal Insights

Equitable Assignment: The question is how the parties viewed the transaction not how the transaction was recorded

Business Finance Pty Ltd (receiver and manager appointed) v Partner Invest Pty Ltd (in liquidation) [2022] NSWSC 1 was a dispute between the external administrators of the plaintiff and defendant companies. Marcus Ayres was the appointed receiver and manager of Business Finance Pty Ltd ( Business Finance ) and Andrew Sallway was the liquidator of Partner Invest Pty Ltd ( Partner Invest ).

In a transaction that occurred before the external administrators were appointed, there was a question as to whether Partner Invest had assigned its rights as a lender, mortgagee, and secured party in a particular loan to Business Finance as an equitable assignment for value.

These two companies were related and shared a common director, Frankie McDad. At the time of the loan, Partner Invest was wholly owned by McDad, who was the sole director. In September 2016, Business Finance was incorporated and wholly owned by Partner Invest. The primary business of both companies was to raise funds from private investors to use in providing non-bank business loans which were secured by mortgages, caveats, general security agreements, and personal guarantees. Business Finance and Partner Invest executed an Administrative Services Agreement on 28 September 2016, and accordingly, Partner Invest was involved in administering Business Finance’s loans.

The loan that was the subject of the case was to JML Property Group ( JML ). In 2017, JML borrowed funds from Partner Invest for the purposes of constructing two townhouses and to purchase a sand quarry (the JML Loan ). The security of the loan was first-ranking mortgages in favour of Partner Invest over properties in Kangaroo Flat, Bendigo, and Golden Square. Personal guarantees were also provided by the family members of the sole director and shareholder of JML and further, a security interest was granted by JML over all present and after-acquired property.

In the lead up to settlement, Business Finance transferred $830,000 from their operating account to Partner Invest’s solicitors trust account with the description ‘Buy Loan 652’. These funds were recorded in the trust account statement as received from Partner invest and described as ‘Mortgage – Advance from Partner Invest to JML’.

Intercompany Transfers

As the companies were related, other intercompany transfers did take place. From 27 October 2016, funds were credited to Business Finance’s account from Partner Invest. Mr Sallway reconstructed Partner Invest’s trust accounts, which revealed that at the time of the JML Loan, Business Finance had received $2.7 million from Partner Invest. By August 2018, Partner Invest had transferred $4.25 million and emails from McDad indicated the purpose was to sponsor equity to boost Business Finance’s loan book amount to $34 million.

Equitable Assignment

Mr Ayers submitted on behalf of Business Finance that the JML loan had been equitably assigned by Partner Invest, by reason of the $830,000 transfer from Business Finance. Mr Sallway however, put forward that Mr Ayers evidence was miscellaneous, unsigned correspondence that had been cobbled together.

There was no record of an agreement to assign the loan or show any intention to assign or transfer the JML Loan to Business Finance. However, the records kept by Business Finance and Partner Invest, as noted a number of times by Her Honour, were poor and incomplete. Further, the records kept by Partner Invest’s solicitors were ‘something of a mess.’ [1]

As a purported assignment in equity, the transaction should take the form of and be intended as an immediate transfer of the beneficial interest, distinct from an agreement to assign it. [2] Except where writing is required by the Statute of Frauds , no formality is necessary beyond a clear expression of an intention to make an immediate disposition. The JML Loan is an interest in land, so section 53 of the Property Law Act 1958 (Vic) and section 126 of the Instruments Act 1958 (Vic) were relevant. Section 126 states that an agreement can be evidenced by a memorandum or note of the agreement so long as it is signed by the person to be charged.

In considering the existence of an equitable assignment, Justice Rees asked two questions:

• Was there a manifestation by Partner Invest of an intention to transfer the equitable interest in the JML Loan and associated security to Business Finance in a manner binding upon itself?
• Was there a clear expression of an intention to make an immediate disposition?

Based on the transaction documents, Her Honour considered that Partner Invest intended to immediately sell and Business Finance intended to immediately buy the JML loan and associated securities. Although the documents were executed by Partner Invest as lender and mortgagee, when the time came to complete the transaction it was apparent that the loan would be a Business Finance loan and would form part of its portfolio. Partner Invest wanted to support the establishment of Business Finance’s portfolio of loans, which is evidenced by providing funds to Business Finance and transferring loans as sponsor equity.

Justice Rees was less interested in how the companies and Partner Invest’s solicitors recorded the transactions and considered how the parties to the transaction viewed the matter. By doing so, her Honour ordered that on 2 January 2018, by equitable assignment for value, Partner Invest had assigned to Business Finance all of its rights as the lender under the JML Loan. As a result, Business Finance holds an equitable mortgage over the Kangaroo Flat and Bendigo properties and a charge over the property subject to the PPSR.

Key Takeaway

The existence of an equitable assignment for value does not necessarily turn on how the documents record the transaction. Instead, it is important how the parties to the transaction view the matter and whether they would consider that the transfer was for an equitable interest and for immediate disposition.

If you found this insight article useful and you would like to subscribe to Gadens’ updates, click here .

Authored by:

Guy Edgecombe, Partner Caitlin Miller, Graduate

[1] Business Finance Pty Ltd (receiver and manager appointed) v Partner Invest Pty Ltd (in liquidation) [2022] NSWSC 1 (7 January 2022) at [5].

[2] Norman v Federal Commissioner of Taxation (1963) 109 CLR 9 at 30–1; [1963] HCA 21.

Get in touch

• Guy Edgecombe
• Partner, Brisbane
• +61 7 3223 4738
• [email protected]

Articles / Insights

• Australia's strongest environmental laws have commenced in NSW with significant changes to EPA powers and penalties for environmental offences
• Draft legislation on Privacy Act Reforms brought forward to August as the Government respond to the ‘violence against women’ crisis
• The Legal 500 Life Sciences Comparative Guide 2024 – Australia
• Gadens Regulatory Recap – 30 April 2024
• New Mandatory Merger Control Regime Promises Balanced Reform

Gadens acknowledges the Traditional Custodians of the land on which we work, and pay our respects to Elders past and present.

© Gadens 2024

• Legal Notices
• Privacy Policy
• Subscription
• Awards and recognition
• Corporate social responsibility
• Diversity and equality
• Leaders in technology
• Market leading expertise
• International

Using a modern browser that supports web standards ensures that the site's full visual experience is available. Consider upgrading your browser if you are using an older technology.

University of Technology Sydney

• How to use this handbook
• General information
• Principal dates
• Academic year dates
• Analytics and Data Science
• Communication
• Creative Intelligence and Innovation
• Design, Architecture and Building
• Engineering
• Health (GEM)
• Information Technology
• International Studies and Social Sciences
• Transdisciplinary Innovation
• Study package directory

70517 Equity and Trusts

Warning: The information on this page is indicative. The subject outline for a particular session, location and mode of offering is the authoritative source of all information about the subject for that offering. Required texts, recommended texts and references in particular are likely to change. Students will be provided with a subject outline once they enrol in the subject. Subject handbook information prior to 2024 is available in the Archives .

Description

This subject explores the range of doctrines and remedies that were originally developed in the Courts of Chancery in England to ameliorate the harshness of the common law and provide remedies where none were available at law. Equitable principles are all fundamentally grounded in the concept of 'conscience'. Despite the antiquity of these doctrines, equitable principles continue to have enormous practical relevance, particularly in modern commercial litigation. Equitable doctrines and principles reach into many areas of legal practice: family law, superannuation, wills and probate, property law and intellectual property, to name a few. But it is in civil litigation that a solid understanding of equitable principles and remedies is essential: no litigation lawyer can afford not to be aware of how to apply equitable principles to seek the valuable remedies available in equity. The subject also examines the equitable concept of the 'trust' whereby an interest in property is legally owned by one party, but held for the benefit of another person or purpose permitted by law. Trusts are commonly used in both private arrangements and increasingly for commercial purposes. The popularity of unit trusts and trading trusts as versatile commercial vehicles is on the rise, as there are particularly advantageous consequences for taxation and insolvency through the use of a trust. Significant developments to equitable principles have occurred through a number of Australian High Court decisions, particularly since the 1980s. The subject compares Australian equity with other common law jurisdictions to understand international divergence in the scope of certain principles.

This subject takes a very hands-on, practical approach to learning the skills required in practice in applying equitable principles.

Subject learning objectives (SLOs)

Upon successful completion of this subject students should be able to:

Course intended learning outcomes (CILOs)

This subject also contributes specifically to the development of the following graduate attributes which reflect the course intended learning outcomes:

• Legal Knowledge A coherent understanding of fundamental areas of legal knowledge including: a. The Australian colonial and post-colonial legal system, international and comparative contexts, theoretical and technical knowledge; b. The broader contexts within which legal issues arise and the law operates including cultural awareness, social justice and policy; c. The impact of Anglo-Australian laws on Indigenous peoples, including their historical origins in the process of colonisation and ongoing impact; and d. The principles and values of justice and ethical practices in lawyers' roles. (LAW.1.1)
• Ethics and Professional Responsibility A capacity to value and promote honesty, integrity, accountability, public service and ethical standards including: a. An understanding of approaches to ethical decision making and professional responsibility; b. An ability to recognise, reflect upon and respond to ethical issues likely to arise in professional contexts in ways that evidence professional judgment, promote justice and serve the community; and c. An ability to reflect on and engage constructively with diversity in practice. (LAW.2.1)
• Critical Analysis and Evaluation A capacity to think critically, strategically and creatively, including the ability to: a. Identify and articulate legal issues in context, including the skill of critical reading and writing; b. Apply reasoning and research to generate appropriate responses; c. Engage in critical analysis and make a reasoned choice amongst alternatives; and d. Think creatively in approaching legal issues and generating appropriate responses. (LAW.3.1)
• Research skills Well-developed cognitive and practical skills necessary to identify, research, evaluate and synthesise relevant factual, legal and policy issues. (LAW.4.1)
• Communication Effective and appropriate communication skills including: a. Highly effective use of the English language to convey legal ideas and views to different and diverse audiences and environments; b. An ability to communicate to inform, analyse, report and persuade; c. An ability to strategically select an appropriate medium and message; d. An ability to assess how messages are received and alter communication strategies accordingly; and e. An ability to be responsive and adaptive to the perspectives of collaborators, clients, counter parties and others. (LAW.5.1)

Teaching and learning strategies

Strategy 1. Preparation for lectures

You will need to read the prescribed text and set case(s) set out in the Subject Guide on Canvas and listen to podcasts addressing the lecture topics. Tutors will assume students are already familiar with the lecture materials.

Strategy 2. Online Quiz

The first assessment is a 20 Question Quiz on Canvas to test the essential principles from the lectures in Modules 1 and 2. A solid working knowledge of legal principles underpins the Graduate Attribute (Legal Knowledge (1.0)) and enables you to more confidently engage in finding solutions to legal problems. The quiz is assessable and will make up 10% of your total assessment. The quiz will provide you with early feedback on your developing understanding of essential principles.

Strategy 3:

The tutorial program has been specifically designed to scaffold your learning in the skills of analysing legal problems and communicating that analysis in relation to the availability of equitable relief for a client. These skills are practised and developed throughout the tutorial program.

There are 10 x 2 hour tutorials in the course. In the tutorial series, students will have the opportunity to discuss the principles applicable to giving legal advice on hypothetical legal problems, and discuss theoretical / jurisprudential aspects of the Equitable principles and doctrines.

The tutorial discussion topics and problems are all set out on the Canvas site. You will need to read and prepare for your participation in tutorials each week. You should also read over and think about all the tutorial questions, to understand the scope of the tutorial and be able to contribute to the discussion in class. During this time, tutors will provide you with feedback in relation to the relevance and strength of your contributions and you will have the opportunity to ask for further feedback on your understanding of the issues.

Strategy 4:

Research skills are essential for every lawyer. In this subject, your mid-session Assessment Task 2 is a piece of written advice based on legal research. The advice must be written in a plain legal English style, appropriate for professional client communication. You will need to commence researching and analyzing the relevant cases when the question is released to allow enough time for writing and proof-reading the advice. You will have the opportunity to ask questions in tutorials about how to approach this task.

Strategy 5:

The skills practised throughout the session in relation to articulating reasons for legal advice culminate in an assessable task, applying your written communication skills as covered in Graduate Attribute 5.0 Communication and Collaboration.

Written Legal Advice: being the final assessment task, the written Legal Advice is due in the final assessment period. This is written legal advice in a form appropriate for a communicating with clients or other legal professionals, which is done under authentic time constraints: it is due 2 days after the questions are released online. The best preparation for this final assessment task is ongoing revision of the analytical approaches to giving legal advice practised in tutorials throughout the session.

Subject Delivery:

The course is structured around learning two topics per week through engaging with the online lectures and other materials, and then developing skills in applying those principles during the corresponding tutorial (1x 2hours) held in the following week. There are 12 weeks of lectures and 10 tutorials.

The topics, the prescribed reading, tutorial questions and assessment tasks are all set out in the Equity & Trusts Subject Guide available on Canvas. Read this Guide before commencing the course for further information about the course, and on a weekly basis in relation to what to do each week.

Content (topics)

Module 1: HISTORY AND NATURE OF EQUITY

Introduction to Equity

• Comparison between common law and Equity Historical development of Equity
• Maxims of Equity
• Judicature System and modern administration of Equity

Module 2: EQUITY AND THE LAW OF OBLIGATIONS?

Doctrines of Unconscionable Dealing and Undue Influence

• Undue Influence – elements and application
• Unconscionable Dealing – elements and application
• Categories of estoppel at common law and in equity Proprietary Estoppel
• Promissory Estoppel

Module 3: EQUITY AND PROPERTY – EQUITABLE INTERESTS IN PROPERTY AND ASSIGNMENT OF PROPERTY IN EQUITY

Equitable Estates and Interests

• What is Property?
• Multiple classification of equitable rights
• Equitable proprietary interest, mere equity and personal equities
• Examples of equitable proprietary interests

Assignment of Property in Equity

• Equitable assignment of legal property
• Equitable assignment of equitable property
• Assignment of future property
• Writing requirements for the assignment of equitable interests

Module 4: TRUSTS

Express Trusts

• Elements of a trust
• Creation of Express Trusts
• Types of Express Trusts, including Charitable
• The three certainties: intention, subject matter, object
• Complete constitution, secret and precatory trusts
• Charitable trusts

Duties, Powers, Liabilities and Rights of Trustees, Rights of Beneficiaries

• Duties of a trustee
• Powers of a trustee
• Rights of a trustee
• Liability of a trustee for breach of trust
• Rights of beneficiaries and beneficiaries under a discretionary trust

Trusts imposed by Law – Resulting Trusts

• Automatic resulting trusts
• Presumed resulting trusts
• Presumption of advancement Illegality
• The Quistclose trust

Module 5: EQUITABLE REMEDIES AND PROCESSES

Constructive Trusts

• Nature of a constructive trust

Liability of Third Parties for Breach of Fiduciary Obligation or Breach of Trust

• The rule in Barnes v Addy
• Knowing receipt
• Knowing assistance
• Nature and purpose of tracing

Account of Profits

• Nature of remedy
• Calculation of account of profits

Equitable Compensation

• Nature of the Remedy and its availability
• Calculating Equitable Compensation

Assessment task 1: Online Quiz

Assessment task 2: client advice, assessment task 3: take-home assignment, required texts.

M W Bryan , S E Degeling, M S Donald and V J Vann, A Sourcebook on Equity & Trusts (Cambridge University Press, 3rd ed, 2023)

Recommended texts

• Bryan MW, Vann VJ and Barkerhall Thomas S, Equity & Trusts in Australia (Cambridge, 3rd ed., 2023)
• Evans M, Jones B and Power T, Equity & Trusts (Lexis Nexis Butterworths, 4th ed., 2016)
• Heydon D, Leeming M, Turner, P, Equity Doctrines & Remedies , (LexisNexis Butterworths, 5th ed, 2015)
• Heydon JD, Leeming MJ, Jacobs' Law of Trusts in Australia , (LexisNexis Butterworths, 7th ed, 2006)
• Radan P, Stewart C, Principles of Australian Equity & Trusts Cases and Materials (LexisNexis Butterworths, 2nd ed, 2014)
• Heydon JD & Loughlan PL, Cases and Materials on Equity & Trusts , (LexisNexis Butterworths, 8th ed, 2011)
• Covell W & Lupton K, Principles of Remedies , (LexisNexis Butterworths, 2008)
• Ford HAJ, Lee WA, Bryan MW and Glover J, Law of Trusts (Thomson Reuters, available via Westlaw AU)

Students are advised to use the databases in the UTS online library resources to locate authorised reports of cases on line.

Students may also access case reports on austlii, and medium neutral citations of recent cases (since 2000) are provided in the Subject Guide for this purpose.

Reports, Journals and General References

• Journal of Equity
• Law Quarterly Review
• Australian Guide to Legal Citation

Other resources

Other Materials

Students are advised to be aware of relevant policies, rules and regulations that might be applicable to their candidature and assessment matters.

• UTS Coursework Assessment Policy
• UTS Coursework Assessment Procedures

Unauthorised Recording of Classes

Audio or visual recording of classes by a student for this subject is strictly prohibited unless written approval is sought and given in advance from the Subject Coordinator. Approval for audio or visual recording will usually be limited to medical or hardship reasons, and if approved, must be arranged by the student.

Lecture Recordings

Apart from the three in person lectures noted in the program, lectures will be pre-recorded and made available on Canvas, so that students can listen to them at a convenient time, but always ahead of the tutorial covering the same material. Tutorials will be conducted on the assumption that students have already listened to the lecture material and completed the readings. Tutorials will be held face-to-face (with one tutorial on zoom ), and will not be recorded. Attendance at tutorials is compulsory.

UTS: Handbook | Site map

Equitable Assignment: Everything You Need to Know

An equitable assignment is one that does not fulfill the statutory criteria for a legal assignment, but is binding and upheld by the courts in the interest of equability, justice, and fairness. 3 min read updated on February 01, 2023

An equitable assignment is one that does not fulfill the statutory criteria for a legal assignment, but is binding and upheld by the courts in the interest of equability, justice, and fairness.

Equitable Assignment

An equitable assignment may not appear to be self-evident by the law's standard, but it presents the assignee with a title that is protected and recognized in equity. It's based on the essence of a declaration of trust; specifically, essential fairness and natural justice. As long as there is valuable consideration involved, it does not matter if a formal agreement is signed. There needs to be some sort of intent displayed from one party to assign and the other party to receive.

The evaluation of a righteous equitable assignment is completed by determining if a debtor would rationally pay the debt to another party alleging to be the assignee. Equitable assignments can be created by:

• The assignor informing the assignee that they transferred a right to them
• The assignor instructing the other party to release their obligation from the assignee and place it instead on the assignor

The only part of an agreement that can be assigned is the benefit. Generally speaking, there is no prerequisite for the written notice to be received or given. The significant characteristic that separates an equitable assignment from a legal assignment is that most of the time, an equitable assignee may not take action against a third party. Instead, it must rely on the guidelines governing equitable assignments. In other words, the equitable assignee must team up with the assignor to take action.

The Doctrine of Equitable Assignment in Wisconsin

In Dow Family LLC v. PHH Mortgage Corp ., the Wisconsin Supreme Court issued in favor of the doctrine of equitable assignment. The case was similar to many other foreclosure cases, except this one came with a twist. Essentially, Dow Family LLC purchased a property and the property owner insisted the mortgage on the property had been paid off. However, in actuality, it wasn't. 

Prior to the sale, the mortgage on the property was with PHH Mortgage Corp. When PHH went to foreclose on the mortgage, Dow Family LLC contested it. There was one specific rebuttal that caught the attention of the Wisconsin Supreme Court. The official mortgage on record was with MERS, an appointee for the original lender, U.S. Bank.

Dow argued that PHH couldn't foreclose on the property because the true owner was MERS. Essentially, Dow was stating that the mortgage was never assigned to PHH. Based on this argument, PHH utilized the doctrine of equitable assignment.

Based on a case from 1859, Croft v. Bunster, the court determined that the security for a note is equitably assigned when the note is assigned without a need for an independent, written assignment. Additionally, Dow contended that the statute of frauds prohibits the utilization of the doctrine, mainly because it claimed every assignment on a property must be formally recorded.

During the case, Dow argued that the MERS system, which stored the data regarding the mortgage, was fundamentally flawed. According to the court, the statute of frauds was satisfied because the equitable assignment was in accordance with the operation of law. Most importantly, the court avoided all consideration regarding the MERS system, concluding it was not significant in their decision. 

The outcome was a major win for lenders, as they were relying on the doctrine specifically for these types of circumstances.

Most experts agree that this outcome makes sense in the current mortgage-lending environment. This is due to the fact that it is still quite common for mortgages to be bundled up into mortgage-backed securities and sold on the secondary market.

Many economists claim that by not requiring mortgages to be recorded each time a transfer is completed, the loans are more easily marketed to investors. Additionally, debtors know who their current mortgage company is because the new lender must always notify the current borrower in order to receive payment. It was determined that recording and documenting the mortgage merely provides a signal to the rest of the world that the property owner secures a debt.

If you need help with an equitable assignment, you can  post your job  on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Hire the top business lawyers and save up to 60% on legal fees

Content Approved by UpCounsel

• Assignment Legal Definition
• Assignment Law
• What Is the Definition of Assigns
• Legal Assignment
• Assignment and Novation Agreement: What You Need to Know
• Assignment of Rights Example
• Assignment of Rights and Obligations Under a Contract
• Partial Assignment of Contract
• Assignment Contract Law
• What is an Assignment and Assumption Agreement

• Practical Law

Equitable assignment

Practical law uk glossary 2-107-6540  (approx. 3 pages).

• The assignor can inform the assignee that he transfers a right or rights to him.
• The assignor can instruct the other party or parties to the agreement to discharge their obligation to the assignee instead of the assignor.
• General Contract and Boilerplate
• Breach of Lease Covenants
• Security and Quasi Security

Speak Directly To a Lawyer Now

• Phone This field is for validation purposes and should be left unchanged.
• State * QLD ACT NSW NT SA TAS VIC WA
• Date * DD slash MM slash YYYY
• Time : Hours Minutes AM PM AM/PM
• Name This field is for validation purposes and should be left unchanged.

Equitable Estoppel

Estoppel is an equitable remedy whereby a court can estop someone from reneging on certain promises. In the absence of a legal contract , there is still recourse through common law . In the past, there were distinct types of estoppel that served as either a cause of action (a sword) or a defence against an action (a shield). In more recent decades, the courts have begun to embrace a more unified doctrine of equitable estoppel. This article explains equitable estoppel as a broad legal concept, with further elaboration on examples of promissory and proprietary estoppel.

Types of Equitable Estoppel

Historically, the courts have recognised promissory and proprietary estoppel as separate doctrines, with disparate establishing elements and remedies.

Promissory estoppel provides a remedy when a person has relied upon another person’s promise to their own detriment. This form of estoppel can only arise when there is a preexisting legal relationship between the parties. For instance, there is an established legal relationship between an employer and an employee, or between a building contractor and a client.

When someone makes a claim on the basis of promissory estoppel, they need to prove five elements in order to establish a legal interest. Specifically, there must be:

• A legal relationship between the parties, most commonly established through a contractual agreement;
• A promise or assurance that was reasonably believable in the circumstances;
• Reliance on the promise that was justifiable in the circumstances;
• Detriment as a result of the person relying on the promise; and
• It would be unconscionable for the person to be allowed to get away with reneging on their promise.

Proprietary estoppel, on the other hand, occurs in more narrow circumstances. It arises when someone asserts a proprietary interest in a property on the basis of a promise. Proprietary estoppel requires that the party seeking a remedy has relied on the promise to their detriment. It is also necessary for it to be unconscionable for the property owner to renege on the representation. Unlike promissory estoppel, proprietary estoppel is capable of being a cause of action in its own right: it is thus both a sword and a shield.

The basic principle in both estoppel doctrines is that a person cannot go back on a promise if the person to whom the promise was made has relied upon it to their detriment. In recent years the courts have recognised that both doctrines serve a single purpose in protecting against inequity. As such, some recent case law has seen a greater acceptance of a general merged doctrine of equitable estoppel.

The leading case on equitable estoppel in Australia is Waltons Stores (Interstate) Ltd v Maher (1988). In this case, a builder (Maher) agreed to commence work on a property on the understanding that the newly built premises would be leased to Waltons Stores (Waltons). Maher relied on Waltons representations, but once Maher demolished the old building and commenced the new building, Waltons reneged on the agreement. While there was no written contract, the High Court of Australia held that Maher had suffered detriment because of his reliance on Waltons’ representation and subsequent unconscionable conduct. Waltons was therefore estopped from denying the existence of the contract. This case set a precedent in Australia over the right of a plaintiff to claim equitable estoppel.

Following Waltons and subsequent estoppel cases, the courts were less concerned with the distinction between proprietary and promissory estoppel. In Evans v Evans [2011], for instance, the NSW Court of Appeal found no necessity to distinguish between the application of proprietary and promissory estoppel.

However, there does remain some practical differences between the two types of equitable estoppel. Notably, proprietary estoppel only relates to claims against land interests. Also, a claimant may rely upon proprietary estoppel even without clear evidence that the defendant made an explicit promise. On the other hand, relying on proprietary estoppel does require a plaintiff to prove that their reliance on the promise was detrimental to their interests.

The courts can order a range of remedies on the basis of equitable estoppel. Typically, the relief is either a fulfilment of the plaintiff’s expectation or sufficient damages to compensate for any loss incurred as a result of the expectation. The courts may be particularly inclined to fulfil the plaintiff’s expectations if it is exceptionally difficult to calculate the plaintiff’s loss.

Establishing equitable estoppel is more complicated than proving that someone has broken their promise. It is necessary to demonstrate that it would be unconscionable to allow the person to get away with breaking their promise.

The team at Armstrong Legal can help you to assess if these doctrines apply to your circumstances. The team can provide assistance if you have questions about any aspect of equity or contract law. Please contact or call 1300 038 223 today for any legal advice.

This article was written by Dr Nicola Bowes

Dr Nicola Bowes holds a Bachelor of Arts with first class honours from the University of Tasmania, a Bachelor of Laws with first class honours from the Queensland University of Technology, and a PhD from The University of Queensland. After a decade working in higher education, Nicola joined Armstrong Legal in 2020.

Trust litigation is any type of legal dispute over the creation or operation of a trust. Trust law cases will…

From the Latin resultare (meaning to spring back), a resulting trust is created automatically when certain circumstances occur. A resulting…

Proprietary estoppel is an equitable doctrine. It applies when the owner of a property induces another person to believe that…

Sydney Office

Level 8 66 Goulburn Street Sydney NSW 2000

Melbourne Office

Level 13 575 Bourke Street Melbourne VIC 3000

Brisbane Office

Level 5 95 North Quay Brisbane QLD 4000

Canberra Office

Suite 2, Level 6 17-21 University Avenue Canberra ACT 2601

Perth Office

Suite 207 22 St Georges Terrace Perth WA 6000

What is an Assignment of Debt?

By Vanessa Swain Senior Lawyer

Updated on February 22, 2023 Reading time: 5 minutes

This article meets our strict editorial principles. Our lawyers, experienced writers and legally trained editorial team put every effort into ensuring the information published on our website is accurate. We encourage you to seek independent legal advice. Learn more .

Perfecting Assignment

• Enforcing an Assigned Debt 

Recovery of an Assigned Debt

• Other Considerations 

Key Takeaways

Frequently asked questions.

I t is common for creditors, such as banks and other financiers, to assign their debt to a third party. Usually, an assig nment of debt is done in an effort to minimise the costs of recovery where a debtor has been delinquent for some time. This article looks at:

• what it means to ‘assign a debt’;
• the legal requirements to perfecting an assignment; and
• common problems with enforcing an assigned debt. 

Whether you’re a small business owner or the Chief Financial Officer of an ASX-listed company, one fact remains: your customers need to pay you.

This manual aims to help business owners, financial controllers and credit managers best manage and recover their debt.

An assignment of debt, in simple terms, is an agreement that transfers a debt owed to one entity, to another. A creditor does not need the consent of the debtor to assign a debt.

Once a debt is properly assigned, all rights and responsibilities of the original creditor (the assignor ) transfer to the new owner (the assignee ). Once an assignment of debt has been perfected, the assignee can collect the full amount of the debt owed . This includes interest recoverable under the original contract, as if they were the original creditor. A debtor is still responsible for paying the outstanding debt after an assignment. However, now, the debt or must pay the debt to the assignee rather than the original creditor.

Purchasing debt can be a lucrative business. Creditors will generally sell debt at a loss, for example, 20c for each dollar owed. Although, the amount paid will vary depending on factors such as the age of the debt and the likelihood of recovery. This can be a tax write off for the assignor, while the assignee can take steps to recover 100% of the debt owed. 

In New South Wales, the requirements for a legally binding assignment of debt are set out in the Conveyancing Act :

• the assignment must be in writing. You do this in the form of a deed (deed of assignment) and both the assignor and assignee sign it; and
• the assignor must provide notice to the debtor. The requirement for notice must be express and must be in writing. The assignor must notify the debtor advising them of the debt’ s assign ment and to who it has been assigned. The assignee will send a separate notice to the debtor, putting them on notice that the debt is due and payable. They will also provide them with the necessary information to make payment. 

The assignor must send the notices to the debtor’s last known address.  

Debtor as a Joined Party

In some circumstances, a debtor will be joined as a party to the deed of assignment . There can be a great benefit in this approach . This is because the debtor can provide warranties that the debt is owed and has clear notice of the assignment. However, it is not always practical to do so for a few reasons:

• a debtor may not be on speaking terms with the assignor; 
• a debtor may not be prepared to co-operate or provide appropriate warranties; and
• the assignor or the assignee may not want the debtor to be made aware of the sale price . This occurs particularly where the sale price is at a significant discount.

If the debtor is not a party to the deed of assignment, proper notice of the assignment must be provided.  

An assignment of debt that has not been properly perfected will not constitute a legal debt owing to the assignee. Rather, the legal right to recover the debt will remain with the assignor. Only an equitable interest in the debt will transfer to the assignee.  

Enforcing an Assigned Debt 

After validly assigning a debt (in writing and notice has been provided to the debtor’s last known place of residence), the assignee is entitled to take any legal steps available to them to recover the outstanding debt. These recovery options include:

• commencing court proceedings;
• obtaining a judgment; and 
• enforcement of that judgment.

Suppose court proceedings have been commenced or judgment already entered in favour of the assignor. In that case, the assignee must take steps to have the proceedings or judgment formally changed into the assignee’s name.  

In our experience, recovery of an assigned debt can be problematic because:  

• debtors often do not understand the concept of debt assignment and may not be aware that their credit contract contains an assignment of debt clause;
• disputes can arise as to whether a lawful assignment of debt has arisen. A debtor may claim that the assignor did not provide them with the requisite notice of the assignment, or in some cases, a contract will specifically exclude the creditor from legally assigning a debt;
• proper records of the notice of assignment provided to the debtor must be maintained. If proper records have not been kept, it may be difficult to prove that notice has been properly given, which may invalidate the legal assignment; and
• the debtor has the right to make an offsetting claim in defence to any recovery action taken by the assignee. A debtor may raise an offsetting claim which has arisen out of a previous arrangement with the assignor (which the assignee may not be aware of). For example, the debtor may have entered into an agreement with the assignor whereby the assignor agreed to accept a lesser amount of the debt owed by way of settlement. Because the assignee acquires the same rights and obligations of the assignor, the terms of that previous settlement agreement will bind the assignee. The court may find that there is no debt owing by the debtor. In this case, the assignee will have been assigned nothing of value. 

Other Considerations 

When assigning a debt, it is essential that the assignee, in particular, considers relevant statutory limitation periods for commencing proceedings or enforcing a judgment debt . In New South Wales, the time limit:

• to file legal proceedings to recover debts is six years from the date of last payment or when the debtor admitted in writing that they owed the debt; and
• for enforcing a judgment debt is 12 years from the date of judgment.

An assignment of a debt does not extend these limitation periods.  

While there can be benefits to both the assignor and the assignee, an assignment of debt will be unenforceable if done incorrectly. Therefore, if you are considering assigning or being assigned a debt, it is important to seek legal advice. If you need help with drafting or reviewing a deed of assignment or wish to recover a debt that has been assigned to you, contact LegalVision’s debt recovery lawyers on 1300 544 755 or fill out the form on this page.  

An assignment of debt is an agreement that transfers a debt owed to one entity, to another. A creditor does not need the consent of the debtor to assign a debt.

Once the assignee has validly assigned a debt, they are entitled to take any legal steps available to them to recover the outstanding debt. This includes commencing court proceedings, obtaining a judgment and enforcement of that judgment.

We appreciate your feedback – your submission has been successfully received.

Register for our free webinars

Demystifying startup funding: strategies for growth, accc enforcement and priorities: key takeaways for in-house counsel, sponsoring overseas workers for your hospitality business, safeguarding vulnerable clients: mandatory ndis & in-home aged care reporting, contact us now.

Fill out the form and we will contact you within one business day

Related articles

Dealing With Proceedings in the Small Claims Division of the NSW Local Court

What Are the Pros and Cons of a Writ for Levy of Property? 

I’m a Judgment Debtor. What are the Next Steps?

How Can I Enforce a Judgment Debt in New South Wales?

We’re an award-winning law firm

2023 Fast Firms - Australasian Lawyer

2022 Law Firm of the Year - Australasian Law Awards

2021 Law Firm of the Year - Australasian Law Awards

2020 Excellence in Technology & Innovation Finalist - Australasian Law Awards

2020 Employer of Choice Winner - Australasian Lawyer