Grants made to creditors of Estates

Estate of Dean John Edmunds[2025] NSWSC 223 

Background 
Dean John Edmunds died suddenly on 15 November 2019, apparently intestate (without a Will). He was divorced and survived by four children, who are his next of kin. His estate, valued at a net $256,827, primarily consists of a half interest in the Oaklands Hotel and a residential property in Corowa. More than five years after his death, the estate remained unadministered, causing distress to his mother (the plaintiff, Janice Isabella Edmunds) and other family members1. 

Application for Administration 
The plaintiff, as a creditor of the estate, applied for administration because the deceased’s children, though entitled, showed no interest in applying. Under the Probate and Administration Act 1898 (NSW) s 63, priority is given to a spouse or next of kin, but if they do not apply, the Court may grant administration to a creditor or another suitable person. At paragraphs 12 – 13 of the judgement, Justice Slattery said as follows:  

1. Ordinarily, where a creditor/applicant for administration is competing with an application for administration by the next kin, the next of kin’s application will be preferred. A creditor’s claim for administration is weaker than that of any other applicant with an interest: Hawke v Wedderburne (1868) LR 1 P&D 594; Estate of Maynard (1886) 12 VLR 313; Re Cable (1969) 89 WN (Pt1) (NSW) 516 at 521.  
2. The hierarchy in Probate and Administration Act, s 63 and the Court’s caution in appointing a creditor as administrator are explained by the position of conflict of duty and interest in which such an appointment places the creditor/administrator. The creditor’s duty, if appointed administrator, is to administer the estate for the benefit of the beneficiaries and therefore to resist claims against the estate. But the creditor’s self-interest is to prosecute and recover the full amount of the creditor’s claim from the estate. 

Creditor’s Interest 
The plaintiff advanced substantial funds to the deceased and his brother to purchase and support the Oaklands Hotel business. At the time of the application, $43,430 remained owing to her, with further advances made after the deceased’s death to maintain mortgage payments. The Court accepted the plaintiff as a legitimate creditor. 

Notice to Next of Kin 
Efforts were made over several years to notify the deceased’s children and obtain their consent to the plaintiff’s application, as required by court rules. Despite some communication, the children did not consent or apply for administration themselves. The Court was satisfied that sufficient notice had been given and that the children had no intention to apply1. 

Court’s Decision 
The Court granted administration to the plaintiff as creditor, noting that while the law prefers next of kin, a creditor may be appointed when next of kin are unwilling or unavailable. The Court highlighted the potential for conflict of interest in such appointments, as a creditor-administrator must balance their own claim with duties to the beneficiaries1. 

Legal Issues and Directions 
The Court published its reasons to assist in resolving anticipated legal issues, such as possible conflicts of interest, the need for further evidence regarding the deceased’s marital status, and the risk that legal costs could consume the modest estate. The Court emphasized the need to clarify whether the deceased was divorced from his second wife, as this could affect the distribution of the estate under the Succession Act 2006 (NSW)1. 

Conclusion 
Administration of the estate was granted to the plaintiff as creditor, given the inactivity of the next of kin. The Court set out orders to prevent distribution of the estate until further dipsutes were resolved, to facilitate fair administration of the estate, mindful of the estate’s modest size and the need to avoid unnecessary legal costs. 

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