Description

The risk is real!

It is a fundamental premise of trust law that trustees act personally. As noted in Worksafe New Zealand MHI Haumaru Aoteaoa v RH & Jury Trust & Ors.

[16]  Liabilities a trustee incurs in the performance of that trusteeship are personal to the trustee.14  However, trustees may be reimbursed from, or pay directly from, trust assets for any expense reasonably incurred in the execution of the trust.15  Some trust deeds contain a clause indemnifying the trustee more generally, but trustees cannot be indemnified for actions which are in breach of trust due to their dishonesty, wilful misconduct, or gross negligence.16  Generally, trustees are shielded from liability for the actions of their co-trustees.17  This principle is limited by the usual requirement to act jointly.18

What many trustees fail to appreciate is the many ways in which trustees can inadvertently lose rights of indemnity. This is explored in McKean Family Trustee Limited v McKean in the following terms:

[41] However, the general rule that trustees are indemnified does not apply in certain situations, namely:

• in hostile litigation
• where the trustee's costs are unreasonable or not properly incurred
• where there has been misconduct by the trustee; and/or
• where the trustee is acting partisan in their own interests

In the same case the court opined:

[58] The case law is clear that while a trustee is entitled to be indemnified for its costs in administering the trust and in carrying out its duty to protect the trust estate for the benefit of the beneficiaries, a trustee's costs in hostile proceedings, where for example it is defending itself from removal or advancing a claim in its own cause, will not be met by the trust.

This popular webinar, which will include a case book will consider recent case law developments, canvasses how and why trustee liability arises, the extent to which trustees can limit their liability and seek indemnity from the trust fund.

HIGHLIGHTS
This webinar, which will conclude with a question and answer section, will:

• canvass the relevant provisions of the Trusts Act 2019
• critically assess the risks trustees face with respect to different types of litigation by reference to the Buckton and Alsop categories and other relevant assessments of risk
• discuss the importance of Beddoe applications
• consider the outcome of recent cases to demonstrate how trustee liability arises and the practical steps that can be taken to manage the risks of trusteeship.

WHY ATTEND
Although it is common for a deed of trust to limit a trustee’s liability to the assets of the trust, many circumstances can arise where a trustee is personally liable for losses to the trust or profits that have risen from self-dealing. Accordingly, it is essential that trustees (and their advisers) understand and manage the risks inherent in the appointment as a trustee.

ORIGINAL BROADCAST DATE

1 May 2024

LEARNING OUTCOMES

Attendees will learn:

• How to practically assess the risks of trusteeship
• The extent to which trustees can limit liability and be indemnified
• The parameters of properly incurred expenses in a trust context, and
• The risks of partisan dealings and hostile actions. 

SUITED TO

This webinar is targeted at practitioners at all levels but will be of particular benefit to practitioners who advise trustees or who are trustees or directors of trustee companies.

PRESENTER

Vicki Ammundsen, Director, Vicki Ammundsen Trust Law Limited.