Civil liability of an administrator of an estate

It can be examined through a lawsuit and not in the procedure of administration of the estate of the deceased

The duties and powers of an administrator of the estate of a deceased are defined by law. Their obligation is to ascertain the heirs, whether any of them are incapacitated, to find the assets and any debts of the estate, secure tax releases and distribute the estate in accordance with the inheritance rights of each heir, taking into account the provisions of the will, if any.

The administrator is under an obligation to locate the assets as soon as possible, to pay expenses and any debts according to their order of priority and make an assessment of the remaining part of the estate, if necessary, as well as execute the will in accordance with the law. There may be a need to sell part or all of the estate when there are debts, taxes, dues and expenses, which are not covered by the movable property or even where a specific item, due to its nature, loses its value. In this case, the administrator may apply to the court for directions and obtain a relevant order for the sale, unless he obtains the written consent of all heirs.

A serious issue arises if the administrator is found to be squandering the estate in violation of their duty. According to the law, they must act diligently and not dispose assets to the heirs while there are debts or potential claims against the estate. The administrator has the duty to protect the estate. Its disposal in a manner causing loss to a third person may create a personal liability to the administrator. In such a case, the civil liability of the administrator can be ascertained in the course of a lawsuit instituted by the creditor and not in the context of the administration.

In a judgment issued by a single judge of the supreme court on September 15, the court referred to a previous judgment of the plenary session of the supreme court between the same litigants issued on March 11. The plenary session did not dispute the obligations of the administrator nor the fact that he may become personally liable to compensate a creditor of the estate. The court indicated that the crucial question was whether this liability could be established and the consequences to be imposed in the context of the administration of the estate, as the lower court had done, or whether a lawsuit was required. The disposal of the estate incorrectly, does not inevitably assign personal liability to the administrator. The court held that, on the basis of the prima facie examination, such a liability could be established only in the course of a lawsuit against the administrator.

According to the facts, the administrator of the estate of a deceased was ordered by a lower court to return the amount distributed to the heirs from the accounts of the deceased within 45 days, otherwise the creditor would have the right to take enforcement measures against them personally. The court decided that the administrator violated his duties resulting in its squandering for the benefit of the heirs to the detriment of the creditor.

The administrator filed an appeal and applied to the supreme court requesting leave to file a certiorari in order to annul this decision. The supreme court, with a single judge, did not find that there were exceptional circumstances to grant the leave.

However, the plenary session of the supreme court overturned the decision, deciding that the assignment of personal liability to the administrator with the procedure followed – prima facie outside the institutional framework of civil liability, which is the trial of a lawsuit, a procedure that would guarantee the rights of the administrator – constituted exceptional circumstances. The supreme court accepted the appeal giving leave to the administrator to file an application with summons for the issuance of a certiorari. With a single judge, it issued the certiorari and annulled the decision of the lower court, considering that the claim could only be raised by a lawsuit.

George Coucounis is a lawyer practicing in Larnaca and founder of George Coucounis LLC, [email protected]