When Trust Property Moves in the Dark: Fiduciary Limits After Naaman v Jaken
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Published: 19 November 2025 | Reviewed: 19 November 2025
(3-minute read)
Case Summary
Naaman v Jaken Properties Australia Pty Limited [2025] HCA 1 (5 February 2025) is a major 2025 High Court decision clarifying what happens when a successor trustee deals with trust assets in ways that undermine the former trustee’s right of indemnification. The dispute centred on whether those dealings carry fiduciary consequences.
A former trustee retains an equitable right to have trust assets applied to reimburse or exonerate liabilities properly incurred while in office. That right gives the former trustee a beneficial (proprietary) interest in trust assets until indemnity is satisfied.
The High Court reaffirmed that principle but made a critical distinction about duties.
The four-judge majority (Gageler CJ, Gleeson, Jagot and Beech-Jones JJ) held:
“A successor trustee does not owe a fiduciary obligation to a former trustee in respect of the entitlement of the former trustee to indemnification out of the trust assets.”
The majority reasoned that although the former trustee retains a proprietary interest, equity already provides adequate protective tools, injunctions and receivers, without imposing a loyalty-based duty between trustees who otherwise stand at arm’s length.
A strong three-judge minority (Gordon, Edelman and Steward JJ) disagreed. Their Honours considered that once a successor trustee knows of the former trustee’s existing right of exoneration, the successor assumes responsibility requiring loyalty not to intentionally prejudice that right.
The factual background was striking: the successor trustee had dissipated trust assets, acting on a dishonest and fraudulent design by controlling minds who transferred property to related entities. But the majority concluded that even egregious conduct does not transform the structural nature of the relationship.
The appeal was ultimately dismissed.
Why It Still Matters
This judgment matters because it shows how easily trust property can be repositioned without notice to people who rely on its availability. The Court accepted that a former trustee is vulnerable to hidden dealings, a successor may transfer assets rapidly and quietly. But vulnerability alone is not the touchstone for fiduciary obligations.
That insight has broad significance beyond trusts law:
clients often experience power-imbalanced information flows;
adverse steps may be taken without visibility;
remedies exist, but only after harm starts;
and relying solely on litigation or equitable relief exposes people to delay and cost.
The case illustrates that in many legal settings, the greatest risk comes from what happens without you seeing it. Transparency and independent oversight become essential safeguards.
How to Avoid the Same Trap:
Independence & Fair-Process Safeguards
The risk revealed in Naaman v Jaken is ungoverned decision-making by someone who controls property or information that another person depends upon. In the case, the successor trustee’s ability to act unilaterally created the conditions for the loss.
Clean Law’s independence safeguards are designed to prevent this pattern from arising in client matters.
These safeguards include:
clear separation of roles so one lawyer monitors process fairness, disclosure, timing and conflicts;
public-interest governance that ensures decisions cannot be influenced by financial entanglement;
ACNC-regulated transparency;
Law Society trust-account audits;
and a strict no-referral-fee, no-profit-sharing rule so that loyalty remains undivided.
This governance exists to prevent situations where significant steps are taken without client visibility, a structural answer to the kind of silent asset movements highlighted in Naaman v Jaken.
Clients reading this case often ask how independent oversight works in practice and how it prevents one-sided dealings long before a dispute reaches court. Our governance explainer walks through these protections step by step.
Learn more → Independence & Safeguards Framework
Naaman v Jaken shows that equity provides remedies, but they operate once the damage is already unfolding. Structural independence, transparent oversight, audited processes and a clearly documented division of responsibilities, helps protect fairness before harm occurs.
If your matter involves opaque decision-making, fiduciary relationships, or concerns about how property is being dealt with, a quiet, confidential conversation can clarify safer options.
Book a confidential discussion → Secure a Private Consultation
By Nicky Wang
Principal Solicitor
Legal Liaison Ltd (trading as Clean Law)
Prepared in accordance with public-interest governance,
annual Law Society trust-account audits, and ACNC-reported standards.
Disclaimer: This page is intended to provide general information only and is not legal advice. The contents may not reflect the most current legal developments and do not take into account your individual circumstances. You should not act or refrain from acting on the basis of this information without obtaining legal advice tailored to your situation.
