Supreme Court rules that negligent administrator must be replaced
By George Tsardellis and Kriton Dionysiou
ON October 6, 2020 the Supreme Court of Cyprus upheld a decision of the District Court of Larnaca where the spouse of an incapable person was dismissed as administrator of the estate and other affairs of the latter. Following a petition by the sister of the incapable person, who became quadriplegic following an accident, the District Court of Larnaca dismissed the spouse of the incapable person and appointed the sister of the latter as administrator.
The decision of the lower Court was based on the fact that the spouse put at serious risk the estate of the incapable person as he was acting negligently and fraudulently. In particular, the spouse, in his capacity as administrator of the estate, spent in less than a year all the compensation the incapable person received for the accident, amounting to €250,000 without previously requesting the permission of the Court for such action. The sister of the incapable person was represented before the Supreme Court of Cyprus by Mr George Tsardellis, a senior associate of Elias Neocleous & Co LLC. The findings of the Supreme Court of Cyprus are of particular importance, both from a legal point of view but also from a humanistic.
One of the legal points raised by the appellant was that the sister of the incapable person lacked locus standi. This argument by the spouse was based on the fact that the relevant legal framework does not explicitly provide standing to a sister and/or brother to initiate proceedings for the purpose of substituting the administrator of an estate. To this point, however, the Supreme Court held that the sister of the incapable person, as the only Cyprus-based sibling of the latter, was entitled to issue proceedings for the purpose of substituting the administrator of the estate. After all, the Supreme Court of Cyprus noted that as a matter of principle the issue of this case is to protect in the best possible way the estate of the incapable person and, in particular, by removing the spouse as administrator of the estate.
Another critical legal point that was raised by the appellant was that the lower court went on to examine the legality of his actions with regard to the administration of the estate based on facts which were not submitted by the sister of the incapable person during the hearing of the petition. On this point, the Supreme Court held that the lower court was correct in taking into account a number of facts to determine the outcome of the case that were not submitted by the sister of the incapable person but emerged from the administration file of the lower court. According to the Supreme Court, the duty of the court is not simply to examine the legality of the conduct of the administrator by merely looking at the submissions of the disputing parties. On the contrary, it consists of a general duty to supervise and check the conduct of the administrator that trumps the strict scope of each application for substitution.
The importance of this ruling lies in the fact that by looking at the administrator file, which was in the sole possession of the registrar of the court, the lower court was able to determine whether the spouse was negligent in his conduct as administrator of the estate. Moreover, the Supreme Court reaffirmed the findings of the lower court that by omitting to submit bank statements and by failing to submit applications for the transfer of funds the spouse mismanaged in an unbecoming manner the estate, which finding was by itself enough to justify his removal as administrator.
The Supreme Court further held that the fact that the spouse provided during the court hearing information regarding the administration of the estate was not sufficient to alter the outcome of the judgments of the lower court. Lastly, the spouse attempted to justify his action on the basis that such unauthorised transfer of funds were made in good faith and under an emergency situation which eventually kept the incapable person alive and improved her overall condition. The Supreme Court rejected this argument and confirmed the decision of the lower court that by omitting to meet the guidelines for the administration of the estate of the incapable person the spouse is unsuitable and, thus, should be removed.
In the same vein, the argument by the appellant that the sister of the incapable person should have first examined the estate administration file before initiating court proceedings for the removal of the administrator was rejected. According to the Supreme Court, the applicable legal framework does not impose a duty to the concerned party to previously examine the estate administration file before initiating court proceedings for such disputes.
Last, but not least, the spouse submitted to the Supreme Court that the decision of the lower court to replace him as administrator constitutes a violation of his constitutionally and internationally protected right to private and family life. Despite that the spouse submitted the same argument to the lower court, the latter did not accept nor expanded on this argument. By the same token, the Supreme Court agreed with the lower court that such argument by the spouse is unfounded while confirming that his replacement as administrator of the estate was constitutionally compatible and within its scope of powers.
Concerned siblings not helpless
In conclusion, the declaration of the Supreme Court that the primary objective of the courts when it comes to this kind of proceedings is the protection of the estate of the incapable person opens the way for further judgments that may further specify the ways in which the estate of such persons should be protected. Moreover, the Supreme Court by accepting that the lower court had every right to examine the estate administration file before determining the outcome of the dispute illustrates the wide power of the courts have when it comes to determining the suitability of an administrator of estate. Ultimately, with the present judgment, the Supreme Court further facilitates persons who might choose to initiate proceedings for the substitution of the administrators of the estates of their loved ones in case where the formers are acting negligently and fraudulently.
- George Tsardellis and Kriton Dionysiou are members of the Nicosia Litigation Team of Elias Neocleous & Co LLC.