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Beneficiaries, Directions, indemnity, Indmenity, Trustees, Trusts

Disputatious, unreasonable and uncooperative

MacIntosh v Thomas relates to the administration of an estate where there has been considerable disharmony between the beneficiaries and the trustees in circumstances where the court has acknowledged that the trustees have displayed “displayed considerable patience, forbearance and professionalism in dealing with the behaviour of the [beneficiaries] …”

The decision is largely fact-specific.  However, usefully there is a useful discussion regarding the ability and reasonableness of trustees to seek an indemnity from beneficiaries.  As noted in the judgment:

  • trustees have an equitable non-possessory lien over trust assets that arises at the time that the trustee incurs the liability in question.  See Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd and Camray Farms Ltd v BL (Nature Sunshine) Trustees Ltd
  • trustees are entitled to retain assets to enforce their equitable lien.  However, [editor’s note] it is not clear whether this right extends to trustees who have retired or been removed as a trustee
  • when the value of a potential contingent claim is unknown or has not yet crystallised, trustees are entitled to make a reasonable estimate of potential liability
  • a trustee’s right to an indemnity survives retirement or removal
  • on distribution of an estate, trustees are entitled to obtain security in respect of potential future liabilities of the trustees arising from their action as trustees. They are entitled to be “sufficiently and effectively protected against potential risk”.  See Roome v Edwards

References:

  • MacIntosh v Thomas [2020] NZHC 860
  • Custom Credit Corporation Ltd v Ravi Nominees Pty Ltd 8 WAR 42 at 52-53
  • Camray Farms Ltd v BL (Nature Sunshine) Trustees Ltd [2019] NZHC 2531
  • X v A New Law Digest 6 August 1999
  • Trust Law Committee Consultation Paper (UK) The proper protection by liens indemnities or otherwise of those who cease to be trustees (December 1999)
  • Dimos v Dikeakos Nominees Ltd (1997) 149 ALR 113, (1996) 68 FCR 39 (Federal Court of Australia, Full Court)
  • Roome v Edwards [1981] 1 All ER 736 at 744 per Lord Roskill
  • Re Yorke (deceased), above n 22, at 911-924

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