Page 99
Authorised by the Parliamentary Counsel
[s 136]
Trusts Bill 2025
Part 9 Indemnities and protection of trustees and other persons
1991, of intention to apply for a grant within the meaning of
the Succession Act 1981, section 5.
136 Protection of trustee distributing after closing day
(1) A trustee who gives notice under section 135 of the trustee’s
intention to distribute trust property—
(a) may, after the closing day, distribute the trust property
having regard only to the claims, whether formal or not,
of which the trustee has notice at the time of the
distribution; and
(b) is not liable, in respect of any of the trust property
distributed after the closing day, to any person of whose
claim the trustee had no notice at the time of the
distribution.
(2) If the trustee gives more than 1 notice under section 135, a
reference in subsection (1) to the closing day is a reference to
the latest in time of the closing days stated in the notices.
(3) For subsection (1)(a), it does not matter whether the trustee
has notice of a claim because the claim has been made in
response to the notice given under section 135 or has
otherwise come to the trustee’s notice.
(4) This section does not affect the right of any person to enforce
a remedy for the person’s claim against a person to whom a
distribution of any of the trust property has been made.
Note—
See division 3 in relation to remedies for the wrongful distribution of
trust property.
(5) Subsection (4) does not limit section 144 or any other defence
available, under an Act or at law or in equity, to the person to
whom the distribution is made.
(6) In this section—
closing day see section 135(1)(a).
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Page 100
Authorised by the Parliamentary Counsel
[s 137]
Trusts Bill 2025
Part 9 Indemnities and protection of trustees and other persons
Division 2 Claims against trust property and
trustees
137 Definitions for division
In this division—
claim, in relation to a trust—
(a) means a claim—
(i) to or against the trust property; or
(ii) against the trustee personally because the trustee is
under a liability for which the trustee is entitled to
reimbursement out of the trust property; but
(b) does not include—
(i) a claim under the Succession Act 1981, part 4; or
(ii) a claim that is an application to revoke a grant of
probate or letters of administration; or
(iii) a claim for which insurance is required to be, and
is, maintained under an Act.
claimant means a person who makes a claim in relation to a
trust, whether as a creditor or beneficiary or otherwise.
potential claimant means a person who may make a claim in
relation to a trust, whether as a creditor or beneficiary or
otherwise.
138 Trustee may require claimant or potential claimant to
start proceeding
(1) This section applies if a trustee does not accept a claim in
relation to the trust that has been made, or that the trustee has
reason to believe may be made, by a claimant or potential
claimant.
(2) The trustee may, by written notice given to the claimant or
potential claimant, require the claimant or potential
claimant—
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Page 101
Authorised by the Parliamentary Counsel
[s 139]
Trusts Bill 2025
Part 9 Indemnities and protection of trustees and other persons
(a) to start a proceeding to enforce the claim within 6
months after the day the notice is given; and
(b) to prosecute the proceeding with appropriate diligence.
139 Trustee may apply to court for orders in relation to claim
(1) The trustee may, not earlier than 6 months after the day notice
is given to the claimant or potential claimant under section
138, apply to the court for orders under section 140 in relation
to the claim.
(2) If the trustee has given notice under section 138 to 2 or more
claimants or potential claimants—
(a) the trustee may seek orders against any or all of the
claimants or potential claimants in a single application;
but
(b) the application may not be made earlier than 6 months
after the latest day notice is given under section 138 to
any of the claimants or potential claimants.
140 Court may make orders in relation to claim
(1) This section applies if, on the hearing of an application made
by the trustee under section 139, the claimant or potential
claimant does not satisfy the court that the claimant or
potential claimant—
(a) has started a proceeding to enforce the claim; and
(b) is prosecuting the proceeding with appropriate
diligence.
(2) The court may, by order—
(a) extend the period for the claimant or potential claimant
to start a proceeding to enforce the claim; or
(b) bar the claim (including for all purposes); or
(c) enable the trust property to be dealt with without regard
to the claim.
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Page 102
Authorised by the Parliamentary Counsel
[s 141]
Trusts Bill 2025
Part 9 Indemnities and protection of trustees and other persons
(3) Also, the court may make the other orders and give the
directions about the proceeding or the claim that the court
considers appropriate, including, for example, any of the
following orders or directions—
(a) an order or direction that a beneficiary of the trust be
given notice of the application;
(b) an order that a beneficiary of the trust be made a
respondent to the application;
(c) an order imposing conditions;
(d) an order about the costs of and incidental to the
application.
(4) If, under section 139(2), the application seeks orders against 2
or more claimants or potential claimants, the court may make
orders against any or all of the claimants or potential
claimants.
141 Contesting trustee’s right to indemnity
(1) This section applies if a beneficiary of the trust—
(a) is not a party to an application made by the trustee under
section 139; and
(b) is not made a respondent to the application by an order
made under section 140(3)(b).
(2) An order made by the court on the application does not affect
the beneficiary’s right to contest a claim of the trustee to be
entitled to indemnify themself out of the trust property.
Division 3 Remedies for wrongful distribution
of trust property
142 Definitions for division
In this division—
claimant see section 143(1)(b).
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Page 103
Authorised by the Parliamentary Counsel
[s 143]
Trusts Bill 2025
Part 9 Indemnities and protection of trustees and other persons
recipient see section 143(2).
143 Enforcement of remedies for wrongful distribution
(1) This section applies if—
(a) a trustee wrongfully distributes trust property; and
(b) a person (the claimant) suffers loss because of the
wrongful distribution.
(2) The claimant may enforce the same remedies against the
trustee, and against any person to whom the wrongful
distribution has been made (a recipient), as the claimant could
enforce against a personal representative who has wrongfully
distributed the estate of a deceased person.
(3) The claimant is not required to exhaust all remedies that may
be available to the claimant against the trustee before starting
a proceeding to enforce a remedy under subsection (2) against
a recipient.
144 Effect of change of position of recipient
(1) This section applies if—
(a) the claimant starts a proceeding to enforce a remedy
under section 143(2) against a recipient; and
(b) the recipient has received the distribution of the trust
property in good faith; and
(c) in the court’s opinion, the recipient has so changed the
recipient’s position in reliance on the propriety of the
distribution that it would be inequitable for the claimant
to enforce the remedy against the recipient.
(2) The court may make an order it considers to be just in all the
circumstances.
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Page 104
Authorised by the Parliamentary Counsel
[s 145]
Trusts Bill 2025
Part 9 Indemnities and protection of trustees and other persons
145 Other defences available to recipient not limited
Section 144 does not limit any other defence that may be
available to the recipient under an Act, or at law or in equity.
Division 4 Particular protections for trustees
146 Protection relating to notice when person is trustee of
more than 1 trust
(1) This section applies to a trustee who is acting for more than 1
trust.
(2) The trustee is not, in the absence of fraud, to be taken to have
notice of any matter in relation to a trust only because notice
of the matter is, or was, given to the trustee when acting for
another trust.
(3) In this section—
matter includes an instrument, a fact and a thing.
147 Protection in relation to receipts
(1) This section applies if—
(a) a trustee signs a receipt for the payment of an amount or
for securities in order to comply with the requirements
in relation to the giving of receipts by trustees; and
(b) the trustee does not receive all, or any, of the amount or
securities.
(2) The trustee is accountable only for the amount or securities
actually received by the trustee.
148 Protection in relation to acts and omissions of other
persons and losses
(1) A trustee—
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Page 105
Authorised by the Parliamentary Counsel
[s 149]
Trusts Bill 2025
Part 9 Indemnities and protection of trustees and other persons
(a) is personally liable only for the trustee’s own acts or
omissions; and
(b) is not personally liable for the acts or omissions of—
(i) another trustee; or
(ii) an agent appointed by the trustee; or
(iii) a financial institution, broker or other person with
whom any trust funds are deposited.
(2) A trustee is not personally liable for the insufficiency or
deficiency of any security, or any other loss, unless the
insufficiency, deficiency or loss results from the trustee’s own
breach of trust.
Note—
See section 81 for the court’s power to set off gains and losses.
(3) This section applies subject to sections 52, 54, 77 and 98.
149 Expenses reasonably incurred in administering trust
A trustee may—
(a) reimburse themself out of the trust property for the
expenses reasonably incurred in administering the trust;
or
(b) pay or discharge from the trust property the expenses
reasonably incurred in administering the trust.
150 Protection against liability for rents etc. under lease
(1) This section applies if—
(a) a trustee is, for any reason, liable in relation to—
(i) any rent, covenant or agreement reserved by or
contained in a lease; or
(ii) any indemnity given for any rent, covenant or
agreement mentioned in subparagraph (i); and
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Page 106
Authorised by the Parliamentary Counsel
[s 150]
Trusts Bill 2025
Part 9 Indemnities and protection of trustees and other persons
(b) before assigning the lease as mentioned in subsection
(2), the trustee—
(i) satisfies all liabilities under the lease that may have
accrued, and been claimed, up to the date of the
assignment; and
(ii) if necessary, sets apart a fund that is enough to pay
any future claim that may be made in relation to a
fixed and ascertained amount that the lessee agreed
to expend on the leased property (even if the time
for expending the amount has not arrived).
(2) If the trustee assigns the lease to a person entitled to call for an
assignment of the lease, the trustee—
(a) is not required to appropriate any further amount from
the trust property to meet any future liability under the
lease; and
(b) may distribute the remaining trust property, other than
any fund set apart as mentioned in subsection (1)(b)(ii),
to the persons entitled to the trust property.
(3) A trustee who acts under subsection (1)(b) and distributes the
remaining trust property under subsection (2)(b) is not
personally liable for any later claim under the lease.
(4) Nothing in this section affects the right of the lessor, or a
person deriving title under the lessor, to follow the trust
property into the hands of the persons to whom the trust
property has been distributed.
(5) In this section—
lease includes—
(a) an agreement for a lease; and
(b) an instrument giving an indemnity as mentioned in
subsection (1)(a)(ii) or varying the liabilities under the
lease.
person entitled, to call for an assignment of a lease, includes a
purchaser and a beneficiary under the will, or on the intestacy,
of a deceased person.
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Page 107
Authorised by the Parliamentary Counsel
[s 151]
Trusts Bill 2025
Part 9 Indemnities and protection of trustees and other persons
Division 5 General
151 Evidence about vacancy in trust or removal of trustee
(1) This section applies in relation to a statement in an
instrument, under which a new trustee is appointed or a trustee
is removed, about—
(a) the circumstances in which the vacancy in the office of
trustee arose; or
(b) the circumstances in which the trustee was removed.
(2) The statement is conclusive evidence of the circumstances in
favour of any of the following persons acting in good faith—
(a) a subsequent purchaser;
(b) a debtor making payment to a new or continuing trustee
of the trust;
(c) the relevant registrar or another person registering or
otherwise recording a dealing with the trust property.
(3) Also, the vesting of the trust property on the appointment of
the new trustee, or on the removal of the trustee, is as valid in
favour of a subsequent purchaser acting in good faith as it
would be if the statement were true.
152 Protection for persons registering dealings with trust
property
(1) If a trustee has joined with another person in the sale of trust
property, the relevant registrar or another person registering or
otherwise recording a dealing with the trust property is not,
when registering or recording a dealing relating to the sale—
(a) affected by notice of the circumstances of the
apportionment of the proceeds of sale; or
(b) required to inquire into those circumstances.
(2) Also, the relevant registrar is not required to inquire into the
surrender, by a trustee, of—
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Page 108
Authorised by the Parliamentary Counsel
[s 153]
Trusts Bill 2025
Part 9 Indemnities and protection of trustees and other persons
(a) freehold or leasehold land; or
(b) a water allocation or a lease of a water allocation.
153 Protection for purchasers and mortgagees
A purchaser or mortgagee paying or lending an amount to a
trustee on a sale or mortgage of trust property is not required
to inquire into—
(a) whether the amount is needed or is not more than is
needed; or
(b) whether the trustee has power to effect the sale or
mortgage; or
(c) how the amount is applied.
154 Receipts given by trustees
If a person pays an amount, or transfers or delivers property,
to a trustee—
(a) the written receipt of the trustee, or an agent appointed
by the trustee to give receipts, is a sufficient discharge
for the amount or property; and
(b) the person paying the amount or transferring or
delivering the property—
(i) is not required to see to the application of the
amount or property; and
(ii) is not answerable for any loss or misapplication of
the amount or property.
155 Power of court to relieve trustee from personal liability
(1) This section applies if it appears to the court that a trustee is,
or may be, personally liable for a breach of trust.
(2) The court may relieve the trustee either wholly or partly from
personal liability for the breach of trust if the court is
satisfied—
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Page 109
Authorised by the Parliamentary Counsel
[s 156]
Trusts Bill 2025
Part 10 Remuneration of trustees
(a) the trustee has acted honestly and reasonably; and
(b) the trustee ought fairly to be excused—
(i) for the breach of trust; and
(ii) for omitting to obtain the court’s directions in the
matter in which the trustee committed the breach
of trust.
Note—
See part 11, division 8 in relation to applications to the
court for directions about matters relating to a trust.
156 Power of court to make beneficiary indemnify for breach
of trust
(1) This section applies if a trustee commits a breach of trust at
the instigation or request, or with the written consent, of a
beneficiary.
(2) The court may, if it considers it appropriate, make an order
indemnifying the trustee, or a person claiming through the
trustee, out of the beneficiary’s interest in the trust property.
157 Indemnity for acts done under court order
Each order purporting to be made under this Act is a complete
indemnity to a person for any act done under the order.
Part 10 Remuneration of trustees
158 Definitions for part
In this part—
professional charges, of a professional trustee, means all
usual professional or business charges for business transacted,
time expended, and acts done by the trustee or the trustee’s
firm, including acts that a trustee who is not in a profession or
business could have done personally.
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