Applications for Administration by Creditors – Conflicts of Interest

The Estate of Dean John Edmunds [2025] NSWSC 223 (18 March 2025) – Slattery J

This case involved an application made by the Deceased’s mother (plaintiff) for Letters of Administration in her capacity as a creditor of the estate.

Facts:

The Deceased died intestate. The Deceased had been married twice before but was divorced with four children (Deceased’s children or next of kin) at the date of his death. Although the Deceased’s children were entitled to apply for administration, they had no interest in making an application. In fact, there was correspondence from the solicitors for the Deceased’s children in 2021 advising that the Deceased’s children would not be making an application and that they were prepared to sign the necessary consents to the plaintiff applying for administration.

The Deceased’s estate was valued at approximately $250,000 comprising of a half share interest as tenants in common in two real estate properties in Oakland. One was a half interest in the Oaklands Hotel owned with the Deceased’s brother, and the other was a half interest in a residential property owned with the plaintiff’s partner. After the plaintiff applied for Letters of Administration as creditor of the estate, the court issued a number of requisitions requiring sufficient notice of the proceedings be provided to the Deceased’s children. Attempts made by the plaintiff to locate and correspond with the Deceased’s children caused delays to the administration of the estate. In fact, only one of the Deceased’s children could be communicated with by email. 

The plaintiff applied under section 14 of the Civil Procedure Act 2005 (NSW) for orders to dispense the requirement for notice of the plaintiff’s application for administration to be given to the next of kin under Rule 64 of the Supreme Court Rules 1970 (NSW).

Issue:

The issues before the court were firstly whether Letters of Administration should be granted to the plaintiff notwithstanding her position of conflict as a creditor of the estate, and secondly the degree of surveillance required to protect the interests of the next of kin in the estate given the conflict.

Determination:

The court recognised that in applying for administration, under section 63 of the Probate and Administration Act 1898 (NSW), preference is to be given to a spouse or next of kin of the Deceased before a creditor of the Deceased’s estate. The court held that an application made by a creditor is generally weaker because of the conflict of duty that arises where an administrator needs to act on behalf of the beneficiaries to preserve the estate, whereas a creditor brings claims against the estate to recover the full amount of their debt.

Notwithstanding the conflict of a creditor being appointed as administrator, the court considered that the estate was not large enough to appoint an independent administrator who would be entitled to charge professional fees and remuneration.

The court granted Letters of Administration to the plaintiff under section 74 of the Probate and Administration Act 1898 (NSW) because no one else was willing to undertake the estate’s administration, however, the Grant was made subject to conditions. Firstly, any distribution of the estate would require the consent of the next of kin or approval of the court. Secondly, the next of kin must be kept informed of the progress of the estate’s administration at least 2 months. Thirdly, any payment of a claim against the estate requires 21 days’ notice being provided to the next of kin with full details of the claim and reasons for payment to be made.

This case highlights the importance of legal personal representative protecting the interests of beneficiaries to an estate