Complex Appeals

CHRIS O'CONNOR
PARTNER
Complex Appeals
02 February 2018 - By Kimberly Lawrence

An executor's primary obligation is to carry out the terms of the will. Executors owe duties to the beneficiaries of the will. However, executors also have obligations – in some situations – to potential claimants against an estate. A duty of even handedness will exist in some circumstances. The exact content of that duty, and when it will be owed, can be difficult to determine.

The recent case of Estate of Carson [2017] NZHC 3144 considered the estate of a father who made no provision for his children, with whom he had had no contact since his separation from their mother more than 30 years prior to his death. One year had passed since the grant of probate. His four children were unaware of his death. The estate was substantial. The executors of the estate sought the court’s directions as to their obligations toward the children, who did not have the status of beneficiaries of the estate, only the status of potential claimants. One of the questions was whether the executors were obliged to locate the children and notify them of the death of the deceased.

Duty of even-handedness

The law in this area was set out in the case of Sadler v Public Trust [2009] NZCA 364, [2009] NZFLR 937, (2009) 28 FRNZ 474. The starting point is that executors and trustees owe a duty to treat beneficiaries even-handedly. The Court of Appeal looked at a number of categories where executors may also owe such a duty to potential claimants against an estate (at [41]):

  1. “A duty of even-handedness extends to potential claimants against an estate where an executor is aware that they wish to make a claim.

  2. “This duty extends to ensuring that an executor does not actively and dishonestly conceal relevant material about the estate from potential claimants who seek information about the estate.

  3. “We leave open the question of whether the duty of even-handedness may extend to those of whose claim the executor ought to be aware. We also leave open whether any duty of even-handedness to such potential claimants would extend to a duty to inform those potential claimants of the fact of death.

  4. “There is no general duty on an executor to advertise the fact of death or to inform all potential claimants of the fact of death. This applies even where there may be a suspicion (but not sufficient to bring the potential claimant within category … (c) above) that a particular potential claimant may wish to make a claim. This means that the question left open by this Court in Price v Smith [2004] NZFLR 329 (see at … (c) above) has now been answered in the negative.”

In the recent Carson case, the trustees of the trust which was to receive the residuary estate submitted that there was no duty to notify the deceased’s estranged children of his death, in circumstances where no contact had been made and no enquiries were being made in relation to the estate. That is, that the case fell into category (d) of Sadler.

 

PHYLLIS STRACHAN
PARTNER