Belar Pty Ltd (in liq) v Mahaffey

[1999] QCA 2

Queensland Court of Appeal

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For Australian Law.

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Interrogate

Catchwords

1. Trusts and Trustees
2. › Trustee's right of indemnity
3. › Indemnity against trust assets
4. › Expenses properly incurred in conduct of trust business
5. › Effect of change of trustee on right of indemnity
6. › Whether former trustee must exhaust remedy against new trustee before proceeding against beneficiaries
1. Trusts and Trustees
2. › Trustee's right of indemnity
3. › Claim for indemnity against beneficiaries
4. › Requirement of fund or asset to which lien may attach
5. › Necessity of identifying trust property
6. › Whether claim fails where existence of trust assets not established
1. Trusts and Trustees
2. › Trustee's right of indemnity
3. › Creditor's right of subrogation to trustee's indemnity
4. › Whether subrogation limited to extent of available trust assets
1. Practice and Procedure
2. › Declaratory relief
3. › Utility of declaration
4. › Whether declaration hypothetical where plaintiff failed to establish facts necessary for relief
5. › Whether declaration appropriate where no real question resolved

Quick Take

A former trustee seeking indemnity from beneficiaries must first exhaust remedies against the new trustee, must establish the existence and identity of trust property to which the lien may attach, and must prove that liabilities were properly incurred in the execution of the specific trust. The creditor's right of subrogation to the trustee's indemnity is limited to the extent of available trust assets. A court should not make a hypothetical declaration of indemnity where the plaintiff has failed to establish the factual prerequisites for relief.