The Court of Appeal gets tough on a Personal Representative

The case of Lane -v- Cullens has highlighted the need for Personal Representatives to look out for potential claims against the estate before they distribute assets, and to make a prompt claim against solicitors who fail to warn them of the risks.

Mr Lane was appointed the Personal Representative for the estate of his sister, Mrs Eason, who died in 1997. The Defendant, Cullens solicitors, acted for Mr Lane in relation to the administration of the estate.  

Mrs Eason's estate amounted to £61,000, of which £55,000 was attributable to the sale of her property. The next of kin included Mr Lane, his brother, and the children of his other sister, who had predeceased Mrs Eason. Mrs Eason had made a Will that left all her estate to one of her nieces (Mrs Hannah). However, the Will was improperly executed so the intestacy rules applied to the estate. Under these rules Mr Lane was entitled to a third of the estate, as was his brother. The remaining third of the estate was to be distributed between Mrs Hannah and her sister.

In 1998, Mrs Hannah started a claim that the property was held on trust for her so should not be distributed in accordance with the intestacy rules. However due to funding difficulties she was unable to pursue through the Courts at that time.  In 2001, Mr Lane distributed £20,000 of the estate to himself, and £20,000 to his brother. Mrs Hannah then issued proceedings against him claiming to be entitled to all of the estate by virtue of the trust.

The Court found that this trust existed, and that Mr Lane and his brother should redistribute their shares to Mrs Hannah. To make matters worse, as Mr Lane's brother was unable to pay back his share the court ruled that Mr Lane should pay this sum as well.

It was clear that Mr Lane's solicitors should have advised him that he should not have paid out money while there was a potential claim against the estate.  As he had paid out the money, Mr Lane had committed a breach of that trust and faced a large bill for legal costs.

Unfortunately there was yet more misery for Mr Lane when he attempted to make a claim for professional negligence against his solicitors. The Court ruled that his claim had been made outside the period specified in the Limitation Act 1980 so was dismissed. Under the Limitation Act, Mr Lane should have make a claim within 6 years from when the solicitors breached their duty. According to the Court of Appeal, that 6 year period started when he decided to distribute funds from the estate, opening himself up to liability against Mrs Hannah. As six years had passed from this date before a claim was made against his  solicitors, he was out of time altogether.

The moral of the story for personal representatives is clear. Firstly, where potential claims against the estate exist they should be investigated thoroughly to make sure there is nothing to prevent the distribution of assets (and, if necessary, a declaration should be sought from the Court setting out the position). Secondly, if it transpires that a personal representative has been badly advised in relation to the distribution of assets, he should not allow the clock to count down on the prospect of claiming in negligence against his former advisers.

Ashfords' Inheritance Disputes Team can assist on any disputes regarding Wills, the administration of estates and Inheritance Act claims. Please visit our webpage for more information: http://www.ashfords.co.uk/inheritance_disputes_probate_disputes_contested_wills/

 Ashfords LLP is regulated by the Solicitors Regulation Authority.  The information in this note is intended to be general information about English law only and not comprehensive.  It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.