Abstract/Summary

The trustee’s indemnity, at its simplest, is the right of the trustee to have recourse to trust property for expenses properly incurred in the service of the trust. It is a proprietary right, but there is no legislation determining its priority rules between trust entities. While the rules for priority as between trustees and beneficiaries, trust creditors and personal creditors, and between trustees have been settled by the courts, the others have not.This article therefore considers the possible priority rules and their justifications in those cases. In doing so it sets out the settled rules for convenient reference and basis for further argument. It goes on to consider cases of contests between trust creditors of the same class, between trust creditors of different classes (bearing in mind contractual and legislative provisions limiting recourse to personal assets) and between beneficiary-investors.