What happens if the administrator of an estate spends not only a particular amount of money but in fact spends all the money belonging to the estate, prior to the completion of the administration procedure and as a result the estate is left without funds available to pay off a debt owed by the estate to a creditor?
Furthermore, does it matter that the particular debt only arose after all the funds of the estate had been divided among the heirs to the estate?
In such a situation, can the Court, exercising its jurisdiction within the actual administration procedure, whereby the execution of the administrator’s duties is overseen, actually order such an administrator to pay the creditor with his own money, without a separate procedure in the form of an action filed against the administrator?
These questions arose in a recent case in Cyprus where, without a civil action having been filed against the administrator by the creditor, the First Instance Court - or the lower Court as referred to in the Supreme Court judgments - ordered the administrator to pay the amount owed to the creditor within a set number of days, forty-five to be exact. It was also decided that if this amount was not paid within such time, then the creditor would be entitled to take execution measures against the administrator.
The administrator applied to the Supreme Court of Cyprus for leave to apply for an order of certiorari so as to have the judgment issued by the lower Court annulled. The Supreme Court, composed of one Judge only, refused leave to apply for certiorari. Thus, the administrator appealed against this decision to the Supreme Court, composed this time of five judges, acting in its appellate function in relation to the judgment also issued by the Supreme Court Judge acting in his capacity as the First Instance Court in the certiorari process.
The Supreme Court decided that leave ought to have been granted and thus sent the case back to be tried by the same Judge again.
In effect, subsequent to leave having been given for the certiorari application to be heard, the same Judge followed the opinion expressed by the Supreme Court in its appellate function, reaching the conclusion that the creditor ought to have filed a civil action against the administrator rather than rely on the First Instance Court’s supervisory jurisdiction for the proper administration of the estate. Thus, an order for certiorari was issued whereby the decision given by the First Instance Court was overturned.
Itis worth noting that in all there are three relevant judgments to be read in relation to the procedure described above whereas within these judgments, of course, other caselaw is referred to, as well as, within the First Instance Judgment, excerpts from legal texts.
Basically, the matter examined has to do with what in legal terminology is called devastatit or, as stated in the lower court’s judgment, what will amount to such a violation or neglect of duty by an executor or administrator, as will make him personally responsible.
This particular species of misconduct is called in law a devastatit: that is, a wasting of the assets. It is defined to be a mismanagement of the estate and effects of the deceased, in squandering and misapplying the assets contrary to the duty imposed on them, for which executors or administrators must answer out of their own pockets, as far as they had, or might have had, assets of the deceased.
The content of this article is valid as at the date of its first publication. It is intended to provide a general guide to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on your specific matter before acting on any information provided. For further information or advice, please contact Manthos Mattheou, Head of Paphos Litigation Department, Tel. +357-26930800 or email Manthos.email@example.com