Trustees rights generally (indemnification and exoneration)

Caterpillar Financial Australia Limited v Ovens Nominees Pty Ltd [2011] FCA 677

A corporate trustee is acting properly in its capacity as trustee, it has the following rights (at [14]):

(i)          when a corporate trustee incurs a liability on behalf of the trust, it has a right of indemnity out of the trust assets and retains an equitable lien or equitable charge over the trust assets to secure that right of indemnity;

(ii)         it also has a right of exoneration out of the trust assets in respect of any prospective liability; and

(iii)        it has a right to deal with the trust assets, in accordance with the terms of the trust, to satisfy any liabilities in respect of which the right of indemnity or right of exoneration attaches, including the power to sell trust assets.