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A recent High Court decision of Ms. Justice Stack in
Re Joseph Kelly, Deceased [2024] IEHC 87 has
given useful guidance regarding the factors the Court will consider
in an application pursuant to section 27(4) of the Succession Act
1965 (the “1965 Act“) in the context of
intended repossession proceedings. Section 27(4) provides that
“where by reason of any special circumstances, it appears
to the High Court….to be necessary or expedient to do so, the
Court may order that administration of a deceased estate may be
granted to such person as it thinks fit” and is the
section pursuant to which an application for the appointment of an
administrator ad litem is made, more commonly by a plaintiff in
intended proceedings seeking to pursue a claim against a deceased
estate, where no grant of representation has been extracted.
Who or what is an administrator ad litem?
An administrator ad litem is a person appointed by a Judge of
the Probate Court to apply to extract letters of administration
(with or without will annexed) in a deceased estate, limited in any
way the Court deems fit. It is usually granted to an independent
solicitor (nominated by the applicant) who has consented to the
making of the Order. The application is usually made by way of
originating Notice of Motion in the non-contentious Probate List of
the High Court on a Monday. In the context of an administrator ad
litem appointed to substantiate intended proceedings to be issued
by the applicant, the grant of administration ad litem will state
on its face that it is limited for the purpose of substantiating
named proceedings and may also recite further limitations,
depending on what is contained in the Order. This may include, for
example, an undertaking by the applicant (or intended plaintiff)
not to take any steps in the intended proceedings beyond issue and
service for a period of six months. The making of the Order
appointing the administrator ad litem itself is not the final step
in the matter. An application will thereafter need to be made to
the Probate Office (which application will need to include the
perfected Order) and the administrator ad litem will only be
formally appointed as the legal personal representative of the
deceased estate once the grant issues from the Probate Office. It
is only then does the administrator ad litem have standing and the
intended proceedings may be issued. The likely timings of these
procedural steps are of vital importance if the relevant limitation
period applicable to the cause of action in the intended
proceedings is fast approaching.
Factual background
The intended proceedings to be issued by the applicant in the
instant case (Pepper) involved the usual claim for possession of
properties which were provided as security for three separate loans
advanced by Bank of Scotland Ireland to the deceased (the
“Deceased“) and his brother between the
period August and October 2007, which loans subsequently went into
default. The Deceased died on 5 August 2016, but no representation
to his estate had ever been extracted. The date of death was over
two years prior to the intended proceedings being brought by Pepper
and in the circumstances, the Court had to consider whether section
9(2) of the Civil Liability Act, 1961 (the “1961
Act“)1 had the effect that the
proceedings were not maintainable. The Court had to consider these
matters in its determination as to whether there were
“special circumstances” which meant that it was
either “necessary” or
“expedient“, within the meaning of section 27(4)
of the 1965 Act, to permit someone other than the person ordinarily
entitled to extract letters of representation in the estate of the
Deceased. Ms. Justice Stack ultimately granted the application,
however some important issues identified in the decision are
detailed below.
What are the key take aways?
- Prior notice – while Ms. Justice
Stack acknowledged that lenders may have difficulty in ascertaining
whether a deceased died testate or intestate and/or who may be
entitled to extract representation in a deceased estate, she stated
that prior to any ad litem application, some reasonable steps
should be taken to identify family members or at the very least, to
write to those entitled to represent the deceased at his/her last
place of residence. The Court noted that this address would often
be known to the lender as it will be found on bank statements,
statements of account, previous correspondence, loan documentation
etc. Family members or those entitled to extract a grant may be
identified on the death notice of the deceased
on rip.ie, which would normally state the name(s) of
any surviving spouse, children, siblings etc. The purpose of the
notification of the intention to bring the application is to give
family members of the deceased the opportunity to communicate their
position as regards extracting the grant. For example, perhaps they
may wish to extract the grant and defend any intended proceedings,
on the basis that they would have access to more information
relevant to any potential defence. In the instant case, the
daughter of the Deceased appeared in person on one occasion and
there was evidence that the brother of the Deceased was aware of
the application, but there was still no indication that an
application for representation would be made. Further, it was clear
that Pepper was taking steps to enforce its security. Consequently,
the Court held that there were “special
circumstances” which warranted making the Order pursuant
to section 27(4). - “Necessary” or
“expedient” – the next question to
be considered was whether it was “necessary” or
“expedient” that an Order would be made. The
Order is discretionary and therefore the Court had to consider
whether it should be made in circumstances where the application
was brought more than two years after the death of the Deceased,
which is outside the limitation period pursuant to section 9(2) of
the 1961 Act. The Court opined that it would be undesirable to make
an Order where it is obvious that any debt sought to be recovered
is statute barred. This is in circumstances where the limitation
period pursuant to section 9 is a matter to be pleaded in a
defence, rather than being an absolute bar to proceedings. However,
an administrator ad litem is appointed only to allow an intended
plaintiff to constitute proceedings and he/she is not obliged to
take active steps to defend proceedings, particularly where he/she
may not have the requisite instructions or knowledge of relevant
facts to plead a defence. For example, Pepper in this instance only
acquired the loans and related security in 2018 and it appeared
from the statements of account that there may have been a default
on at least one of the loans prior to this, but after the date of
death of the Deceased. It was therefore possible that a formal
demand in respect of that loan was made prior to the acquisition of
the loans, and that fact would only be known to the family members
of the Deceased, who may have access to documentation relating to
the loan. The Court considered the decision in Cawley v
Dun Laoghaire Rathdown County Council2 as a
useful authority in circumstances where the Court of Appeal held in
that case that a co-defendant should be joined to proceedings when
it seemed likely that the cause of action was statute barred,
unless it could be the case that the cause of action was
“hopelessly statute barred“. Ms. Justice Stack
held in this case that an Order under section 27(4) should not be
made for the purpose of constituting an action which is doomed to
fail, but short of that, the merits of the action can be determined
in the course of the substantive intended proceedings. - Which limitation period? – the
Court noted that the critical issue in considering which relevant
limitation period applies (i.e. the two-year period under section
9(2) of the 1961 Act or the longer periods provided in the Statute
of Limitations) is to identify when the cause of action accrues. If
the cause of action accrues before the date of death, then the
claim is one which is “subsisting” prior to
death and is therefore deemed to “survive“. The
two-year limitation period under section 9(2) applies to all
actions which “survive“. However, causes of
action which do not accrue prior to death cannot be said to
“survive” death. So, if the cause of action
accrues prior to death, then proceedings need to be instituted
within two years of the date of death. Conversely, if it accrues
after death, then the usual limitation period under the Statute of
Limitations applies, namely either six or twelve years from the
date of death, depending on whether the relevant obligation is
contained in a deed. - Necessary proofs to be exhibited –
the Court went on to state that the first step in considering
whether the intended proceedings are hopelessly statute barred is
to examine the loan documentation, which would consist of the loan
offer and acceptance and the relevant terms and conditions. They
would often provide that where a borrower fails to make payment(s),
this would be an event of default, a formal demand would be served
and no cause of action would accrue until the demand is served.
However, in some instances, no formal demand is required and the
sums may become automatically due and owing on the event of a
default, as defined in the terms and conditions. In addition, a
repayment date may be expressly stated in special conditions of the
facility letter which would generally override general terms and
conditions, in which case the cause of action would accrue from
that specific date. It is therefore a necessary proof in an
application pursuant to section 27(4) that all of the relevant loan
documentation and mortgage(s), including the applicable terms and
conditions, are exhibited, together with any formal demand for
payment. If the applicant doesn’t have a copy of any demand for
payment and/or information as to whether formal demand was made,
then statements of account should be exhibited which may assist in
establishing whether it is likely that a demand had previously been
made and if so, when. In the instant case, the default occurred
after the death of the Deceased, in circumstances where the loan
terms were for a period of ten years and therefore the repayment
dates were September 2017, in respect of two loans, and October
2017, in respect of the third. In the circumstances, the Court was
satisfied that for the purposes of the application before it, it
could not be said that the intended proceedings were clearly
statute barred by reason of section 9(2) of the 1961 Act, albeit it
was not making a final determination on that specific issue. As the
administrator ad litem was being appointed to
“substantiate” the intended proceedings, there
would be no obligation on him/her to raise this issue by way of
defence to the proceedings, but it would be open to family members
of the Deceased to raise the issue if they saw fit.
Having regard to all of the foregoing, the Court found that
there were special circumstances which made it either necessary or
expedient to allow someone other than the persons next entitled to
extract a grant in the estate of the Deceased and granted the
application on the usual terms.
Conclusion
The decision provides useful guidance for lenders in particular
on the steps which should be taken before an application to appoint
an administrator ad litem is contemplated, in addition to detailing
the necessary proofs in any such application. However, it can often
be the case that applications of this nature need to be made on an
urgent basis, particularly where there is a looming statute date.
In addition, there may be a dearth of information available to the
applicant. In that regard, it is important that information
gathering is commenced and reasonable notification to next of kin
of the deceased issued as soon as possible, to ensure that the
application can be heard and determined in the Probate List, and
the relevant application subsequently lodged in the Probate Office,
with sufficient time before the expiry of any limitation
period.
Footnotes
1. Section 9(2) of the 1961 Act provides that
“no proceedings shall be maintainable in respect of any
cause of action whatsoever which has survived against the estate of
a deceased person unless either:
(a) proceedings against him in respect of that cause
of action were commenced within the relevant period and were
pending at the date of his death; or
(b) proceedings are commenced in respect of that
cause of action within the relevant period or within the period of
two years after his death, whichever period first
expires“.
“Relevant period” here means
the period of limitation prescribed by the Statute of Limitations
or any other limitation enactment.
2. [2021] IECA 266
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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