Studdert (deceased), Re The Estate of

Personal representatives must ascertain and pay the deceased’s debts and liabilities before distributing the estate. Where potential creditors are unascertained, the court adopts a practical approach. The representatives need take only reasonable steps to identify and notify possible claimants, assessed in light of the nature and likelihood of the liabilities. The court balances protection of potential creditors against beneficiaries’ reasonable expectation of receiving their entitlement. Directions may be given in stages, including targeted enquiries and publicity, and distribution may be restrained where there is a real prospect of claims. Any restraint must remain proportionate and should not continue indefinitely without review.

The personal representatives of Michael Studdert sought directions concerning the administration of his estate. The residuary estate was left to the EAC Educational Trust, but evidence raised a real prospect that the deceased had committed historic sexual assault in England and Wales and abroad, potentially giving rise to claims against the estate.

The defendants, trustees of the residuary beneficiary, took no active part. The central issue was what reasonable steps the representatives should take to identify possible creditors and whether distribution of the estate should be restrained pending further enquiries.

1. The court held that the starting obligation of personal representatives is to ascertain and pay the deceased’s debts and liabilities, with creditors taking priority over beneficiaries. That obligation is not absolute where liabilities are unascertained.
2. On an application for directions, the court takes a practical view. The representatives need take reasonable steps to locate and identify possible creditors. The appropriate steps depend on the circumstances, including the nature of the potential liabilities and the degree of likelihood that they exist. The court must balance the protection of possible creditors against beneficiaries’ reasonable expectation of payment.
3. The court adopted the helpful principles identified in Re Yorke (deceased) [1997] 4 All England 907, including consideration of the reasonable probability of future demands and the practical nature of the inquiry. It also applied the balancing approach referred to in National Westminster Bank plc v Lucas and others [2014] EWHC 653 (Ch).
4. The evidence justified a finding that the deceased had committed historic sexual assault in England and Wales, Poland, Denmark and Italy. The representatives were therefore directed to undertake staged and extensive enquiries, including contacting relevant institutions and establishing multilingual websites and social-media entries.
5. Distribution of the net estate was prohibited until further order. That was proportionate for the time being because potential claimants required a reasonable opportunity to come forward, although the prohibition should not remain indefinitely. The representatives were to report further, and the residuary trustees could apply to lift the restriction.