E.S.L. (A Minor Suing by her Mother and Next Friend A.L.) v J.H.

• Jurisdiction: Ireland
• Judge: Mr. Justice Twomey
• Judgment Date: 03 June 2021
• Neutral Citation: [2021] IEHC 383
• Date: 03 June 2021
• Docket Number: [2018 No. 449 SP]
• Court: High Court

In the Matter of the Estate of J.J., Deceased

and

In the Matter of Section 117 of the Succession Act, 1965

Between

E.S.L. (A Minor Suing by her Mother and Next Friend A.L.)

Plaintiff

and

J.H.

Defendant

and

P.J. and A.D.

Notice Parties

[2021] IEHC 383

[2018 No. 449 SP]

THE HIGH COURT

Transfer of assets – Estate – Administration – Defendant seeking an order preventing the transfer of the assets of the ancillary administration of the deceased’s estate to the principal administration of his estate – Whether the High Court should follow the decision of the English Court of Appeal in Re Lorillard [1922] 2 Ch. 638

Facts: The substantive proceedings involved a claim by the plaintiff, the deceased’s daughter, pursuant to s. 117 of the Succession Act 1965 for proper provision to be made for her from the deceased’s estate in Ireland. The defendant sought an order preventing the transfer of the assets of the ancillary administration of the deceased’s estate (in Ireland) to the principal administration of his estate (in England), where he had lived and worked. The order was sought on the grounds that the creditors of the deceased who were based in England would be statute barred under Irish law if the court permitted the Irish assets to be administered in Ireland, but those creditors were not statute barred under English law from claiming against those assets if the estate was administered in England. In seeking the order preventing the transfer of the assets to the principal administration in England, the High Court was asked to follow the decision of the English Court of Appeal in Re Lorillard [1922] 2 Ch. 638.

Held by Twomey J that the Court declined to follow Re Lorillard and refused to make an order preventing the transfer of the Irish assets to England, which if granted would be to the detriment of those creditors in England. Twomey J noted that the effect of the order sought would be to facilitate a form of legal arbitrage and forum shopping, whereby the testator and his beneficiaries preserve wealth in their family to the detriment of creditors by taking advantage of the differences in the legal protection for creditors in disparate jurisdictions.

Twomey J refused to prevent the transfer, by the Irish administrator, of assets from the deceased’s estate to the principal administration in England. Twomey J refused the order sought by the defendant permitting him to administer the deceased’s estate in accordance with the provisions of the Irish will. Twomey J directed the defendant to comply with any request to transfer assets from the deceased’s estate to the English administrator to discharge the debts owed to English creditors.

Order refused.

JUDGMENT of Mr. Justice Twomey delivered on the 3rd day of June, 2021

INTRODUCTION

1 Should an Irish court prevent the transfer of the assets of the ancillary administration of a deceased's estate (in Ireland) to the principal administration of his estate (in England), where he had lived and worked? That is the question for consideration in this case. The order is being sought on the grounds that the creditors of the deceased who are based in England would be statute barred under Irish law if the court permits the Irish assets to be administered in Ireland, but those creditors are not statute barred under English law from claiming against those assets if the estate is administered in England. Accordingly, the effect of the court order would be to prefer the beneficiaries of the deceased's estate over the creditors of his estate.

2 This issue has not previously been addressed by the Irish courts and it arises in circumstances where the substantive proceedings involve a claim by the plaintiff, the deceased's daughter, pursuant to s. 117 of the Succession Act, 1965 for proper provision to be made for her from the deceased's estate in Ireland.

3 In seeking the order preventing the transfer of the assets to the principal administration in England, this Court is being asked to follow the decision of the English Court of Appeal in Re Lorillard [1922] 2 Ch. 638. In that case, there was a refusal by an English court to transfer the assets from an ancillary administration (in England) to a principal administration (in America), where the debts of the deceased were not statute-barred in America, but they were statute barred in England.

4 For the reasons set out below, this Court declines to follow Re Lorillard and this Court refuses to make an order preventing the transfer of the Irish assets to England, which if granted would be to the detriment of those creditors in England. It is noted hereunder that the effect of the order sought would be to facilitate a form of legal arbitrage and forum shopping, whereby the testator and his beneficiaries preserve wealth in their family to the detriment of creditors by taking advantage of the differences in the legal protection for creditors in disparate jurisdictions.

SUMMARY

5 This case involves a testator (J) who died domiciled in England in May 2017 at the age of 56 having executed two wills. The first will executed by J dealt with his property in Ireland and his second will disposed of J's property in England (for ease of reference, the wills are referenced herein as the “Irish will” and the “English will”, respectively). As J was domiciled in England at the time of his death, the English administration of his estate is the principal administration and the Irish administration of his estate is the ancillary administration.

6 J's estate in England appears to be insolvent and therefore his English creditors are unlikely to be fully paid if they are to have recourse only to his English assets. In contrast, J had few, if any, creditors in Ireland (since he lived and carried on business in England) and his Irish estate is estimated by the Irish administrator to be worth €1.14 million.

7 Even though the deceased's wife (P) from whom he was separated, and his daughter (E) (that he had with his former partner (A)) are also resident in England, both P and E are nonetheless seeking an order from the Irish courts to have his Irish property administered in Ireland under Irish law, rather than having the assets of the ancillary administration (in Ireland) sent to the principal administration (in England) where J was domiciled, as would usually happen in these situations.

8 P is the residuary legatee under J's Irish will and therefore stands to gain €1.14 million approx., subject to the claim of J's daughter, E, for proper provision (under s. 117 of the Succession Act, 1965) against J's estate, which claim P is resisting.

9 It seems clear that P and E, who live in England, are not seeking to have the Irish property in J's estate administered in Ireland for sentimental reasons but rather for financial reasons since the net effect of the court order they seek would be to deprive the creditors of J based in England (the “English creditors”) of the right to claim against the €1.14 million in Irish assets, and thereby entitle P to this sum, subject to E's claim on those assets. Although P and E are provided for under the English will, as this part of the estate appears to be insolvent, they are unlikely to receive any benefit from J's estate out of the English assets.

10 The reason an order from this Court (preventing the transfer of Irish property to J's estate in the country in which he was domiciled) would have this beneficial financial effect for P and possibly for E (if her s. 117 claim were to be successful), is because of the different limitation periods which attach to claims by creditors against a deceased's estate in the two jurisdictions.

11 In England, the limitation period for such claims is six years, while in Ireland it is two years. In this case, two years have already passed since the date of J's death and so it is likely that the English creditors will be statute barred in any claim they might make against the Irish estate of J, if his estate was not to be administered as a whole, but was to be administered separately in Ireland and England.

12 However, if J's estate was to be administered as a whole in England, the place of the principal administration, the English creditors are unlikely to be statute barred in any claim they bring against J's estate in England, as six years have not passed since the date of J's death.

13 The likely net effect therefore of the court order which is sought by P and E is that P (and possibly E) would become entitled to the €1.14 million worth of Irish assets at the expense of the English creditors, who would not have their debts fully paid by J's estate.

14 There is no Irish authority on whether a court should refuse to transfer assets from an ancillary administration (in Ireland) to a foreign principal administration because the debts of the deceased in the principal administration (in this case, England) would be statute-barred in Ireland. However, P and E place particular reliance on the persuasive, but non-binding, authority of Re Lorillard, since in that case, England was the location of the ancillary administration and both the English High Court and Court of Appeal refused to transfer the assets of the Deceased to the principal administration in America since the debts of the Deceased's estate in America would have been statute barred under English law, even though they were not statute barred under American law.

DETAILED BACKGROUND

15 It is helpful for an understanding of the claims made by the respective parties, to set out some background facts. These can be summarised as follows:

Separate submissions were made in this case on behalf of Mr. Hally, on behalf of E (through her mother, A) and on behalf of P. Counsel acting for each of these parties adopted the submissions of the other parties, since they all seek the same outcome, namely to have this Court exercise its discretion to refuse the transfer of the Irish...