The background of this matter is set out at , ,  and  of the High Court judgment as follows:
 The plaintiff, Camray Farms Ltd (Camray), and the second defendant, the
Gordon Moore Trust (GMT), each claim priority to the proceeds of sale of properties in Ohaupo known as the Neighbouring Property and Property.
 Camray is a former trustee of the Camray Farm Trust and, in that capacity, a
former owner of the Property. Through its liquidators (who were appointed in 2013) Camray claims priority to the proceeds of sale of the Property pursuant to a right of indemnity for liabilities incurred in Camray’s capacity as trustee. The right of indemnity gives rise to an equitable lien. That lien was protected by a caveat lodged by the liquidators over the Property.
 The right of indemnity is said to arise in relation to a GST liability (in respect
of which there is no dispute), and other liabilities listed in Camray’s last set of financial accounts from 2009 and 2010. None of the creditors listed in those financial accounts have made claims in the liquidation. Two of them were liquidated and removed from the Companies Register. Whether these liabilities can support the exercise of the trustee’s indemnity is a live issue in this case. Camray also makes a claim in relation to its liquidators’ costs. These costs have not been finally quantified but those already incurred well exceed the total proceeds of sale.
 GMT claims priority to the proceeds of sale through mortgages registered
against both properties. Those mortgages are said to secure a loan advanced by GMT to the trustees of the Nature Sunshine Trust. The trustees of the Nature Sunshine Trust were the owners of the Neighbouring Property before it was sold.
As noted at  to understand the dispute it is necessary to understand the security interests and the relative priorities. These are depicted as follows:
Address: 497 Ngahinapouri Road CT: SA55A/567, Lot 2–3 DP 68692
Previous owner: trustees of Nature Sunshine Trust
Owner at time of sale: BLTNSTL as trustee of Nature Sunshine Trust
Address: 316 Forkert Road CT: 571681, Lot 1 DP 450118
Previous owner: Camray as trustees of Camray Farm Trust
Owner at time of sale: BLTNSTL as trustee of Camray Farm Trust
FMC’s first registered mortgage
FMC’s first registered mortgage
GMT’s second registered mortgage
GMT’s disputed mortgage
Caveat by Damian Botherway (non-party)
As noted at :
“If Camray can establish its claim to the Property, and prove that GMT’s
mortgage is invalid, it will rank behind FMC in relation to that Property. GMT will have the second ranking mortgage on the Neighbouring Property. Both Camray and GMT will be equally affected if FMC’s debt is treated as being discharged solely from one property or the other. In that event, both Camray and GMT accept that their respective entitlements to the proceeds of sale are to be determined by the doctrine of marshalling by apportionment.”
Camray’s caveat over the Property was lodged to protect its equitable lien as trustee. Camray also claims a lien over the proceeds of sale of the Property in respect of its liquidator’s costs and disbursements, the quantum of which is not yet known.
The background of the matter is complex and the ultimately turns on its facts. However, the case provides useful guidance regarding a trustee’s right of exoneration, and whether this can support a caveat. The discussion at  to 72], which is summarised as follows provides a useful assessment of a a trustee’s rights of indemnity:
- A trustee has a right of indemnity against the trust assets for liabilities incurred
in the performance of the trustee’s duties. The right of indemnity may be expressly provided for in the trust deed, or implied at equity.
- There is a statutory right of indemnity provided for in s 38(2) of the Trustee Act 1956. The Trusts Act 2019 also provides for a statutory right of indemnity.
- The right of indemnity against trust assets exists where a trustee has paid trust
expenses from personal funds and the trustee seeks recoupment of those funds (the right of recoupment).
- Where liabilities have been incurred by a trustee, but have not yet been paid. In that case a trustee who wants the liabilities met out of trust assets, seeks to be exonerated for those liabilities (the right of exoneration).
- A trustee’s right of indemnity takes priority over the beneficiaries’ interest in
the trust property. It is considered inequitable for a beneficiary to benefit
from the property without also bearing the burden associated with that property. See Lewin on Trusts and Ford and Lee Principles of the Law of Trusts
- However, a trustee can only call on the indemnity if a liability has been properly incurred. Where there has been a breach of the trust, rights of indemnity can be lost. See Levin v Ikiua
- A trustee retains the right of indemnity, and its equitable lien, even
after it has resigned as trustee or been replaced and a new trustee takes the trust property subject to the former trustee’s equitable proprietary interest arising out of the right of indemnity. See Ford and Lee Principles of the Law of Trusts.
- Protection and enforcement of the trustee’s right of indemnity is by way of an
equitable lien over the assets of the trust, which is proprietary in nature. See Re Suco Gold.
- It has not been clear whether the right of exoneration creates a proprietary interest in the trust property. However, in Camray Farms Edward J was of the the view that the current position in New Zealand (see LSF Trustee Ltd v Footsteps Trustee Co Ltd (in liq)) appears to be that it does and proceeded on that basis. Accordingly, an equitable lien can support the registration of a caveat, and may be enforced just like any other charge over land, that is, by order of sale or court order. See 
- However, note the whether a right of indemnity by way of exoneration from the trust assets gives rise to a caveatable interest has been questioned by some commentators such as HAJ Ford, Trading Trusts and Creditors Rights; Bill Patterson “Trustees Indemnities, equitable liens, subrogation and caveats: has the law taken a wrong turn?” and Andrew Steele “Trustees Indemnities, Equitable liens, Subrogation and Caveats”
- A trustee’s lien comes into existence when the right of indemnity arises, that is at the time the liability was incurred. The amount of the liability does not need to be determined in order for the trustee’s charge or lien to arise. See .
- Trust creditors can claim against trust property by way of subrogation to the
trustee’s right of indemnity in cases where judgment against the trustee would be fruitless. Were this not the case, beneficiaries could be unjustly enriched at the cost to a third party.
- A corporate trustee’s right of indemnity and equitable lien passes to a liquidator upon liquidation. This raises an issue about whether the assets recovered are generally divisible among creditors. That issue was considered in Re Suco Gold Pty Ltd. In that case the Full Court of the Supreme Court of Australia drew a distinction between the trustee’s rights of recoupment and rights of exoneration. The Court held that proceeds may be divisible amongst the general pool of creditors where the trustee in liquidation has discharged the liability and is seeking to recoup that sum out of the trust property.
However, where the trustee is exercising rights of exoneration, then the right of indemnity is limited to the discourage of the trustee’s liabilities incurred in the performance of the trust and does not exist to recover assets for more general
distribution to creditors. See Re Suco Gold Pty Ltd at 881.
- A liquidator is entitled to have recourse to trust property for the purposes of meeting the costs and expenses of a liquidation in so far as they relate to the trust. If there are non-trust liabilities, then the liquidators’ expenses must be apportioned between recovery of the trust and non-trust liabilities.
- See Re Suco Gold Pty Ltd at 883.
- In Levin v Ikiua, Heath J drew a distinction between the bankruptcy of an individual trustee and the liquidation of a corporate trustee. In the
latter case, his Honour held that the assets of the company do not vest in a liquidator. Therefore, any property held in trust will be excluded from property available for distribution to company creditors.
- In Australia, the liquidators’ right to remuneration has been most recently
confirmed in Neeeat Holdings (In liquidation), where the Court said that the premise underpinning recovery of liquidators’ costs relating to the trust assets is that the trustee’s obligation to pay trust debts can be performed only through the liquidator. Accordingly, the liquidators’ right to remuneration is regarded as a debt incurred in performing the duties of the trustee. However, the indemnity will be limited to properly incurred costs, as is the case with a trustee. See Re Berkeley Applegate (Investment Consultants) Ltd
- The recovery of liquidators’ costs and fees is not pursuant to the order of priorities stipulated in the Companies Act 1993, but according
to the rules of equity that apply when a trust is wound up. See .
- Camray Farms Limited (in Liquidation) v BL (Nature Sunshine) Trustee Limited  NZHC 2536
- Camray Farm Limited (in liquidation) v BL (Nature Sunshine) Trustee Limited as Trustee of the Camray Farm Trust  NZHC 659 (2 April 2019)
- Lynton Tucher, Nicholas Le Podevin and James Brightwell Lewin on Trusts (19th ed, Sweet & Maxwell, London, 2015) at [22.037]; and Ford and Lee Principles of the Law of Trusts (looseleaf ed, Thomson Reuters, 2018) at [14.250]
- Levin v Ikiua  1 NZLR 400 (HC) at 
- Re Suco Gold (1983) 7 ACLR 873, cited with approval in Official Assignee v Menzies HC Auckland CIV 2010-404-5457, 14 February 2011
- LSF Trustee Ltd v Footsteps Trustee Co Ltd (in liq)  NZHC 2619 at 
- Official Assignee v Menzies, HC Auckland CIV 2010-404-5457 14 February 2011 at 
- HAJ Ford, Trading Trusts and Creditors Rights (1981) MULR 1
- Bill Patterson “Trustees Indemnities, equitable liens, subrogation and caveats:
has the law taken a wrong turn?” (paper presented to New Zealand Law Society Trusts Conference, June 2011)
- Andrew Steele “Trustees Indemnities, Equitable liens, Subrogation and Caveats” (2013) 15 BCB 155
- Neeeat Holdings (in liq)  FCA 61
- Re Berkeley Applegate (Investment Consultants) Ltd (No 1)  1 Ch 32