A Trustee can be reimbursed for expenses and liabilities “properly incurred” for the administration of the trust.
The question as to what is meant by “properly incurred” was the subject of a case before the Victorian Court of Appeal in Nolan v Collie  VSCA 39; (2003) 7 VR 287.
The Court noted at [53}:
The negative test is the relevant test, that is to allow indemnification for what has not been shown to have been improperly incurred. Thus it may be shown that a particular act is either outside the relevant power, done in bad faith, or exercised with an absence of the care and diligence that a person of ordinary prudence should exercise.
A summary of this case is as follows:
A transcript of this case can be found here.
This tab updated on 22 March 2015