16 May 2023
A recent New South Wales Supreme Court decision serves as yet a further reminder of the need to carefully consider the appointment of executors under the terms of your will.
In Galea v Camilleri; The Estate of Patricia Camilleri  NSWSC 206, a number of the beneficiaries of the estate claimed against the executor, alleging misconduct in administering the estate. They alleged they suffered loss caused by the executor's failure to act in accordance with his administration duties, in particular his delay and other actions that they argued were in breach of his duties.
The beneficiaries also argued that the executor was not entitled to receive executor's commission, which the executor made a claim for between $400,000 and $500,000 (the estate was valued over $23 million).
While the court dismissed some of the allegations, or found that no loss had been suffered in relation to others, it found that the executor had defaulted in some instances where:
The court found that the executor's default in relation to the estate property (as outlined in (2) to (4) above) was very significant, particularly his lack of transparency in obtaining an interest in the property and the lack of consent from the beneficiaries.
When deciding whether the executor was entitled to a commission, the court considered factors such as:
The court found that while the estate administration was complex, the executor received considerable assistance from professionals. It also found that the estate administration was unnecessarily prolonged, leading to some loss for the estate. The executor's lack of transparency in not disclosing his interest in the purchase of the estate property and his failure to obtain informed consent was considered by the court as a breach of his duty, which was further compounded by his failure to invest the deposit and his delay of settlement, all to suit his own interests.
The court found that the executor materially failed the standard expected of him and the executor's claim for commission was rejected.
This case serves as a reminder that executors must administer an estate promptly and not cause unnecessary delay. Most importantly, executors must act in the best interests of the estate and not prefer their own interests above the interests of the beneficiaries. Having said that, the costs of bringing such a claim against an executor are significant with no guarantee of success. Therefore, choosing your executors with thought and consideration as to their fitness for the position is an essential aspect of any estate plan.
The information in this article is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this article is accurate at the date it is received or that it will continue to be accurate in the future.