New South Wales Consolidated Acts

TRUSTEE ACT 1925 - SECT 100A

100A Limitation of liability of beneficiaries in respect of trustees

(1) The rule of equity known as the rule in Hardoon v Belilios is abolished.

Note : The rule is considered to have originated in the decision of the Privy Council in Hardoon v Belilios[1901[#93] AC 118 . The NSW Law Reform Commission recommended the abolition of the rule in Report 144 (2018): Laws relating to beneficiaries of trusts . This section gives effect to Recommendation 2.1 of that Report.

(2) Accordingly, a beneficiary under a trust (whether created before, on or after the commencement day) is not liable to indemnify the trustee or make any other payment to the trustee or any other person for any act, default, obligation or liability of the trustee arising on or after the commencement day unless--

(a) the beneficiary has agreed in writing to be liable, or

(b) subsection (3) applies.

(3) This section does not prevent a trustee of an investment trust from recovering any amount that a beneficiary under the trust is liable to pay for a right, interest or other entitlement to profits, income or other returns generated by the trust.

(4) To avoid doubt, this section does not affect any liability that a beneficiary under a trust may have in a capacity other than as a beneficiary.

(5) In this section--

"commencement day" means the day on which this section commenced.

"investment trust" means any trust (however described) created for the purpose of generating profits, income or other returns for its beneficiaries using funds provided by them, and includes a unit trust scheme within the meaning of the Duties Act 1997 .