Administrators’ protection from liability

An administrator is responsible for the proper distribution of the estates assets to creditors or beneficiaries. The creditors must be paid in priority to the beneficiaries. If the administrator fails to fulfil its obligations, they may be held personally liable.

Section 92 of the Probate and Administration Act 1898 (NSW) enables an executor or administrator of an estate to distribute the estate assets to the beneficiaries free of the risk that they will remain liable to pay creditors of which they have no notice, through the publication of the approved notice, and delaying the distribution of the assets for the period required by the section.

Section 93 of the Succession Act 2006 (NSW) provides protection for an administrator who distributes an estate if the administrator serves the claimant with a notice disputing a claim, and the claimant does not prosecute the claim within three months thereafter, the administrator may apply to the Court for an order barring the claim.

Olsen v James [2020] NSWSC 1015 described the s 93 procedure as “the most direct way of bringing the question about the potential claim … to a head”. It requires a potential plaintiff to “put up or shut up”, particularly in respect of allegations which impact on the proper administration of the deceased’s estate at [118]

Background

Nola English, (the Plaintiff) is the administrator of the estate of her cousin Vivienne Snape (the deceased) who died, intestate, in March 2017. Nola was granted Letters of Administration of the deceased estate in April 2020.

At the time of the grant of administration, the estate was said to have an estimated value of approximately $3.1 million, comprising three parcels of real property, money in a bank account and shares in a public company.

Donald Stewart (the Defendant) submitted that, through his parents, he had a close familial relationship with the deceased for many years, and, has a family provisionclaim against the estate.

An administrator cannot disregard the claim, because it, honestly believes that the claim is without substance: Guardian Trust & Executors Company of New Zealand Limited v Public Trustee of New Zealand [1942] AC 115 at 128.

Hearing

In English v Steward [2022] NSWSC 268 the Plaintiff sought an order under s 93 of the Probate and Administration Act 1898 (NSW) that the Defendant be barred from making any claim against the Plaintiff, as administrator of the deceased’s estate.

The Defendant had known that the Plaintiff disputed his claim since at least July 2020, if not before. Notice of the claim was given within 18 months of the deceased’s death and particulars concerning the claim were provided to the Plaintiff, as administrator, over 2 years later. In this way, the Plaintiff had notice of the Defendant’s claim.

The Defendant had done little since August 2021 with no explanation as to why no steps have been taken to commence proceedings from when he knew that the Plaintiff, as administrator of the deceased’s estate, was disputing the claim.

The Court was satisfied that the actions of the Defendant have caused some delay in the administration of the deceased’s estate. Finding it would be oppressive and prejudicial not only to the administrator but also to those entitled to the distribution of the estate if the orders were not made.

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