Equity Trust v Halabi (Privy Council)

The retiring trustee (RT) sought to rely on the indemnity in the Deed of Retirement and Appointment (DORA) in respect of its claim from the trust fund in relation to its significant liability. The question at stake was whether RT's claim should rank in priority to other creditors and subsequent trustees. If all the liabilities were justified, then the trust would be "insolvent". RT argued that as their indemnity was the first in time, they should recover the whole of the trust fund (which was in any case insufficient to cover its liability). If they had no such priority, then RT would recover significantly less than the full value of the trust fund, and be more substantially out of pocket in view of other trustees and creditors' claims.