High Court of Ireland Decisions

1. The Special Summons served in these proceedings seeks an order that the Court should remove the Defendant from his position as Executor of the estate of the late Christopher Flood, and appoint an alternative in his place because the Plaintiffs are dissatisfied with his administration of the estate.

Christopher Flood, of Borris, in County of Carlow, died on the 28 July 1996. He had made a will on the 11 July 1989, and probate issued on the 27 November 1997. While the will named three executors, two declined to act and probate issued to the Defendant as Executor.

Both the Plaintiffs and the Defendant are brothers and all three are children of the late Christopher Flood. There are several affidavits filed in the matter, all or almost all by children of the late Christopher Flood, and it is obvious that there is a clear dispute and what I might call a regrettable dividing line between several siblings on the one hand and other siblings (or their spouses) on the other hand.

Although there are reliefs listed in the Special Summons, for the moment, what I am asked to decide is whether at this stage, it is proper or appropriate that the Defendant should continue to act as Executor of the estate of the late Christopher Flood in circumstances where it is alleged the Defendant borrowed money from his late father. It is alleged by the Plaintiffs that the repayment of this loan is money now due to the estate, and that the Defendant has refused to acknowledge this. In the circumstances, it is said by the Plaintiffs that this stance of the Defendant is in conflict with his role as executor, because as such executor he is obliged to get in all the assets for the estate, being a trustee thereof for the beneficiaries.

The Plaintiffs submit that, if the Defendant were removed and another person appointed to act as administrator, it is the case that such person would then seek to recover the monies alleged by the Plaintiff to be due to the estate from the Defendant.

Mr Howard submits for the Plaintiff that the authorities on misconduct are sufficient to remove an executor, and cites In re: Loveday (1900) P 155 in support of the same, and the Irish cases of Spencer v Kinsella [1996] 1 ILRM 401 and Arnott v Arnott, 58 ILTR 145. Under this latter decision, it is open to the court to remove a trustee if his position is detrimental to the beneficiaries.

Mr Howard submits that the Plaintiffs position is prejudiced by the Executor's current position, and the stance he has adopted and he relies on S 10 (3) of the Succession Act 1965.

Essentially, the dispute between the Plaintiffs and the Defendant boils down to this. In early 1989 or thereabouts, it is alleged that the late Christopher Flood transferred money to the Defendant. It amounted to a sum of more than £40,000.00 in total. It is not disputed that a sum of money passed from him to the Defendant, and the exact sum is not significantly in dispute.

What is certainly in dispute is the nature of the transaction between the Defendant and his late father Christopher Flood. It is claimed by the Defendant that the money was given as a gift, not as a loan, and that it is not money recoverable by the estate at all. In the circumstances it is said by the Defendant, no conflict could exist.

Numerous affidavits have been filed all from the several children of the late Christopher Flood, together with one affidavit from a Father Nicholas Moore, on behalf of the Plaintiffs, as to certain matters, which arose in 1994.

Leaving aside altogether the question as to whether the monies were a loan or a gift for the moment, the following factual matters can be gleaned from the affidavits and from the additional information, which I sought as to the purchase of lands referred to by the Defendant:

1. The late Christopher Flood had a bank account with The Bank of Ireland, in, I believe, Borris, Co Carlow.

2. In 1988 Mr Flood was discussing with his then Solicitors, John J Duggan & Co, of Carlow, his entitlement, if any, to secure a State pension.

3. Mr Flood had apparently spoken to his then bank manager as to the possible options, which he might consider if he wished to pursue his claim to a pension. Among these was one by which his money would remain mine" and would be released to the siblings (his children) on death.

4. In early January 1989, according to a copy of a withdrawal docket, he withdrew the sum of £37,000.

5. That £37,000 was then immediately lodged into a joint account in the names of Flood/Parsons bearing account number '-- 33921". This docket seems to me to be one, which was written, by a bank official because of the manner in which it was completed.

6. A duplicate statement of that account, being number 82033921, and in the name of "Mary Parsons" but headed (in hand) '-A/C Jack Flood & Mary Parsons" discloses that that account existed since 1984, and by' the end of 1988 there was no money in the account. This statement shows the following additional information:

(a) an additional sum was transferred from Mr Christopher Flood's account in the amount of £5432.42 making a total transfer by the end of January 1989 (Including interest) of £42687.36.

(b) from that account a sum of 40,000 was debited, and withdrawn or transferred in late 1989.

(c) the remaining sum continued to have interest accruing on it, and no withdrawals took place, at least until the end of 1994, the last date appearing on the statement.

7. Of the £40.000, £10.000 was lodged into an account in the name of "Jack Flood", at the end of 1989, at the Bank of Ireland, where it remained, untouched but accruing interest until 1991, when the entire sum together with interest, was withdrawn. It amounted to £11.271.80.

8. The balance of 30,000 was sent to The Investment Bank of Ireland, by the Defendant, for investment into an IBI Lifetime Portfolio. Receipt for this was acknowledged by letter of the 25 October 1989 from the Bank.

9. The affidavits do not disclose when, if ever, this money was redeemed or realised, though this appears to have happened at some time prior to the death of the late Christopher Flood.

10. The Defendant purchased certain lands in Carlow. The date of the contract for the purchase of this was the 29 October 1991, and the date of closing was March 1993. The price was 177.000.

11. The Inland Revenue Affidavit filed on behalf of the Defendant avers to the fact that in 1989 the late Christopher Flood gave, by way of gift, the sum of £18,500 to each of the Defendant and Mary Parsons.

I now return to the affidavits. There is a conflict of fact on the affidavits. For the Plaintiffs, affidavits have been filed by Sylvester Flood, Brian Flood, Elizabeth Sheehan and Fr Nicholas Moore, and on behalf of the Defendants, by Jack Flood, Michael Flood, Mary Parsons, James Flood and Thomas Flood.

On behalf of the Plaintiff it is said that the true interpretation of the events which have occurred is that the monies were placed in an account where the late Christopher Flood had access to them, although in the names of two children, that there was no independent use of the funds for all the time they were in the joint names of the Defendant and his sister Mary Parsons, that there was never a gift to the Defendant, but that when the Defendant wanted to purchase lands in 1991 or in 1993, he sought and obtained a loan of the monies in question, and that this is due to the estate. It is also said by the Plaintiffs that the Defendant acknowledged, on more than one occasion, that the monies were a loan, both to his siblings -- or some of them -- and also to Father Nicholas Moore, who has sworn an affidavit to that effect.

The acknowledgement to Father Moore came in 1994, prior to the death of the late Christopher Flood in 1996 and not long after the closing of the sale of lands to the Defendant (in respect of which the Defendant admitted he used the monies). Further in relation to the purchase of the lands, Brian Flood has sworn on affidavit that he was approached by the Defendant seeking a loan for the purchase, agreed to give the money, but the matter did not come up again. The Defendant in his affidavit acknowledges that this occurred. Mr Brian Flood says that this approach was made in October 1991.

On behalf of the Defendant it is said that the monies were left to him and Mary Parsons. On affidavit the Defendant states that his father was "making a gift to us jointly of the said sum." This appears to be at odds with the averment in the Inland Revenue Affidavit that a sum of £18,500 was given to each of Mary Parsons and Jack Flood. The Defendant and Mary Parsons say that Christopher Flood never controlled the monies once they were transferred in 1989. However, it does seem to be unusual that, if the monies were truly owned by the Defendant and Mary Parsons, it would be necessary at all for the Defendant to have asked another brother for monies which he admits he did, in the precise amount which was involved, namely, £30,000. If he owned one half of the full monies of nearly £43,000 it seems odd that that was not the first port of call for borrowing which the Defendant needed. I make no finding on this of course, but believe it is a matter for consideration at the end of the day.

The Defendant contends that in order to set aside the gift claim made by him it would be necessary to establish that the monies were given in trust, and that such a trust will not be implied but must be found in express words. It is argued on this point that a presumption lies in favour of the parties holding the monies in their own names, which would defeat a claim that a resulting trust had been created. The defendant therefore says that if it was a gift the limitation period has caused any cause of action to be extinguished.

The Defendant further says that he does not recall saying to any of the persons who claimed it to be so, that he had received the monies as a loan, although the Defendant is careful not to deny that he said so. The Defendant also swears he does not recall admitting to any of those parties, including Father Moore, that a sum of 7000 had been repaid.

What is curious about this sum of £7000 is that it is the exact sum, which the Defendant acknowledges he returned, not to his late father Christopher Flood, but to his sister Mary Parsons. I do not find it coincidental that this figure is reflected in both sets of affidavits. What is clearly not admitted by the Defendant on affidavit is that he said anything about the sum of £7000, even by way of repayment to Mary Parsons, although there would have been no difficulty in doing so, were the Defendant's contention, and that of Mary Parsons correct, namely that monies were given as gift. Indeed, in the context of such a gift, the explanation that a sum had been borrowed from Mary Parsons, and a sum repaid to her, would not have gone amiss, and would be consistent with the Defendant's contention.

The Defendant does, however, argue that there was no admission of the type, which is required to extend the limitation period pursuant to the provisions of the Statute of Limitations, because of course any such admission, must be made in writing and must be made to the person to whom the debt is owed. It is certain that there is no evidence that any such admission was made in writing, and also there is no evidence whatsoever that any such admissions was ever made to the late Christopher Flood, deceased. In these circumstances, it is said, that even if it was originally a loan, and therefore a debt, which would have been repayable, the time limit has expired and no cause of action exists in respect of those monies by virtue of any supposed extension of the limitation period arising from what the Plaintiff calls "an admission".

I am unable to say, on the affidavit evidence that the sum was or was not given by the late Christopher Flood to the Defendant and his sister by means of a gift or by means of a loan. However, I am of the view that there is a sufficient question mark over the transfer of the funds to justify considering the appointment of an alternative person as administrator of the estate of the late Christopher Flood. It is not appropriate to do so, unless the circumstances do, in fact, warrant it, and the court should be slow to accede to such an application. Mr O'Doul on behalf of the Defendant argued that the Court's jurisdiction to revoke a grant should only be exercised in circumstances of serious misconduct and that no such misconduct exits here. He also argues that it should not be invoked if the Plaintiffs evidence on the matter is not strong.

Before therefore acceding to the application, I now turn to further argument made on behalf of the Defendant that the court should not accede to the request, even if there were grounds to do so, because any claim, which did exist, has been extinguished by virtue of the Statute of Limitations.

This involves a consideration of the likely dates when the monies were advanced, or utilised, both before and after the death of the late Christopher Flood, and the effect, if any, of the claim that the Defendant acknowledged that it was indeed a loan and not a gift.

The key dates appear as follows:-

(a) In late 1989 a sum of money was transferred from the account of Christopher Flood into an account, at that time in the name of Mary Parsons, subsequently designated as being a joint account in the names of the Defendant and Mary Parsons;

(b) The monies were utilised in part to secure investment funds with growth value, and most of the balance remained in a separate account in the joint names, leaving a small sum in the original Mary Parsons account;

(c) No further transactions appear on the account(s) in question between then and 1991, when the second joint account, which held over £11,000, was closed. There is no indication as to where this last sum went.

(d) The balance of the monies in the original Mary Parsons account, amounting to over 4000, remained in that account at least to 1994;

(e) At some unspecified date, the £30,000, which had been deposited was withdrawn and utilised, in accordance with what the Defendant says towards the purchase of a farm by the Defendant.

(f) The contract was executed in 1991 and the contract closed in 1993.

(g) The late Mr Christopher Flood died on the 28 July 1996:

(h) Probate was granted on the 27 November 1997.

If monies were given in January 1989 by means of a gift, no claim could be made in respect of the same. If it were given by way of loan, at that time, the loan would be repayable by January 1995. If no demand was made for repayment during that period, and there was no acknowledgement of the debt within that statutory period, no claim could be made either by the late Christopher Flood while alive or by any other person on behalf of the estate, since there remained no debt after the January 1995 date. If the loan were acknowledged as being just that, namely a loan to the Defendant, then the limitation period would run from the time of acknowledgement. The claim, which is made, is that, even if the loan was given in 1989 an acknowledgement was made in 1994 and again in 1995, and therefore the debt was not extinguished after 6 years from the beginning of 1989, but a lot later.

If monies were given to the Defendant and Mary Parsons jointly or otherwise, but in circumstances where the money although held in their names nevertheless continued to belong beneficially to Christopher Flood, then the triggering date for the Statute is the date when the monies were "loaned", or appropriated out of the full sums in favour of the Defendant. That appears to be either October 1991 when the contract was signed or March 1993 when closing occurred. It is acknowledged by the Defendant that he borrowed the monies, but says this was from Mary Parsons.

Since I cannot decide the outcome of this conflict at this time, it is certain that on one interpretation of events, the limitation period did not expire prior to the death of the late Mr Flood. In the foregoing circumstances, it is only where I hold that the monies were given as a gift in 1989, and remained as a gift, with no element of a beneficial interest remaining in Christopher Flood, that I could find the cause of action had expired.

Since I cannot do so with any degree of certainty it seems to me that the Defendant's argument that the statute of limitation period expired and no cause of action could exist, cannot stand.

Since the Defendant has clearly stated -- and this has been confirmed by the Defendant's Solicitors -- that he does not intend to return the monies to the estate, and intends to continue to claim it was a gift, it seems to me that the Defendant is, on the facts, in a complete conflict between his role as Executor, since as such Executor he has no intention of ensuring the monies are returned to the Estate, and his role as possible debtor to the estate.

In these circumstances, I have to consider finally whether, even accepting that there is a conflict, it would nevertheless not be appropriate to appoint an alternative person to administer the estate of the late Christopher Flood. The real basis for the Defendant's argument against such an appointment is that the Plaintiff, or indeed an appointed administrator could not as a prudent administrator; expend the monies in question on an action, which, the defendant says, has little chance of success. Whereas I think it is proper to take into account the fact that a prudent administrator might not embark on such a course of action, nevertheless in the circumstances of this case, I am satisfied that the Plaintiff has set out and established sufficient facts to suggest that there is a serious matter to be considered. That serious matter arises from the following matters:-

(a) the fact that monies were transferred at a time when the late Mr Flood was being advised as to how he might avoid having directly in his hands, monies which might preclude him from securing a pension from the State;

(b) there is some "evidence" of this in a note, which appears to record the advices given by his bank manager at the time, or shortly beforehand; I do not suggest that this is "evidence" strictly so called, but it is an indicator in support of the Plaintiffs case;

(c) there is the fact that, at least until 1991 the monies remained entirely unexpended in the hands of the Defendant and Mary Parsons save for the investment of part of this in a fund, which, in turn, was not touched by either these persons:

(d) there is the fact that at a time when he was seeking monies for the purchase of a farm, the Defendant first went to his brother seeking a loan which is inconsistent with the claim made by him that he was given either a joint sum of money, or -- as is alleged in the Inland Revenue Affidavit -- a separate smaller, sum of money;

(e) there is the fact that, when he did not proceed with the request for the loan from his brother, he utilised monies from the funds which until then, had remained unexpended:

(f) there is the question of the acknowledgement allegedly made by him that it was at all times a loan from the late Mr Flood. It is easy to confuse the question of an acknowledgement of a debt for the purposes of the Statute of Limitations, which must comply with certain statutory requirements, with an acknowledgement that the monies were in the form of a loan as opposed to a gift. I am satisfied that, on the question as to whether the monies were advanced by way of loan or gift there is some evidence, including evidence of an independent person that the Defendant acknowledged it was a loan. That does not appear to me to be affected by the statutory requirement for acknowledgement for the purposes of the limitation period. It is simply a question of fact.

A Court should not remove an executor from his role, unless it is satisfied that it is necessary so to do. It is clear from the decision in Dunne v Heffernan, unreported November, 1997, that The Supreme Court considers this should only occur where the court is satisfied it must be done, and that court made it clear that it is a very serious step to take. It is not justified because one of the beneficiaries appears to have felt frustrated and excluded, but requires serious misconduct and/or serious special circumstances on the part of the executor to justify such a drastic step.

In a further, most unusual case, Glynn, Deceased: Ireland and The Attorney General v Kelly [1992] 1 IR 361, the circumstances were extraordinary, because the executor had murdered a sister of the deceased and would have thereby benefited prematurely from the will by reason of its terms. However, in that case it was said:

"The issue as to whether or not the gift or the remainder interest would be forfeited would have to be determined by proceedings between the estate of the testator and the person nominated to be executor personally."

That appears to be the exact circumstances here, although of course, there is no suggestion that the seriousness of the present case is anything approaching that of the Kelly case.

Having regard to the decision of the Supreme Court in the Dunne case above, and although I am reluctant to take steps which would in any way have the effect of depleting the value of the estate, nevertheless I am also satisfied that a very serious matter arises in the administration of the estate and the only way in which that can be dealt with is to remove the Defendant as executor, pursuant to the provisions of Section 26(2) of the Act of 1965 and appoint an alternative to the Defendant, pursuant to Section 27(4) of the Act.

Since this is a matter, which could have the effect of further, alienating the parties to the present proceedings, I propose to adjourn the matter to a future date, for the purposes of hearing representations from each of the counsel, as to the name of an appropriate person to be so appointed, preferably by consent, and failing which the court will appoint a person to administer the estate of the late Christopher Flood.