The estate faces substantial uncertainty, which justifies the administrator's cautious approach
The Supreme Court of South Australia declined a beneficiary's request for an interim distribution from an estate, citing the administrator's justified caution due to unresolved claims, litigation risks, and the need to preserve the estate's ability to meet its obligations.
In Moffa v Starr (No 2) [2024] SASC 132, the applicant, one of ten residuary beneficiaries, argued that his financial hardship warranted an advance on his share of the estate. At the time of his passing in 2017, the deceased owned interests in several properties and other assets, including a significant stake in a unit trust. The estate has been the subject of protracted legal proceedings involving challenges to the validity of the deceased’s will, disputes over asset management, and various cost claims.
The applicant contended that the administrator had been overly cautious in withholding an interim distribution. He sought a modest portion of the cash currently held by the estate, claiming his circumstances necessitated urgent financial relief. The court, however, found that the administrator had acted within the scope of his duties by prioritizing the estate’s ongoing liabilities and potential litigation.
The administrator argued that unresolved matters required the estate to retain sufficient funds. These included a significant outstanding cost claim, issues related to the estate’s stake in the unit trust, and the potential need for litigation regarding property interests and asset recovery. The administrator also cited concerns that making distributions to one beneficiary might lead to demands from others, creating further complications.
The Supreme Court acknowledged the applicant’s financial difficulties and recognised that interim distributions are sometimes warranted. However, the court emphasized that the estate faces substantial uncertainty, including potential claims and litigation expenses, which justify the administrator’s cautious approach. The court determined that it would not compel an interim distribution unless it was clear that the administrator’s refusal constituted a failure to fulfil his duties. The court encouraged the administrator to keep the situation under review and to act promptly if circumstances allowed for distribution to alleviate the applicant’s hardship.
