Trustee Liability

Trustee liability is an important aspect of the role of a trustee that must be managed and protection sought when possible.  Where trustees are uncertain as to the appropriate course of action, or more commonly want to safely embark on a course of action, s 66 of the Trustee Act 1956 enables trustees to apply to the Court for directions concerning any property subject to a trust or respecting the management or administration of any such property or respecting the exercise of any power or discretion vested in the trustee.  A trustee acting under a direction from the court is protected from liability for any act subsequently declared to have been a breach of trust provided that the trustees is not guilty of fraud, wilful concealment or misrepresentation in obtaining the court’s direction. See the Trustee Act 1956 at s 69

In New Zealand Māori Council v Foulkes, Kós J described the s 69 as “simply an enactment of a broad Equitable jurisdiction that has long resided in the Chancery Courts.”

As noted by Kós J at [46] the ambit of s 66 is not confined to mere points of minor importance but rather provides a “parallel source of jurisdiction to resolve any substantial question of law concerning the meaning or administration of a trust.”

However, s 66 is not generally an appropriate avenue where there are disputed issues of fact.

Equitable lien

Trustees have an equitable lien that survives their removal or retirement as a trustee.  This can be protected by caveat.   However, a caveat lodged in such circumstances can be removed by the Court if the ground on which the caveat was originally claimed no longer exists.  See Savage v Paul.


  • New Zealand Māori Council v Foulkes [2014] NZHC 1777
  • Savage v Paul [2020] NZHC 743

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