Canada: Pursuing Costs From An Estate With Insufficient Assets

If an estate matter is set to proceed to trial, and the estate has insufficient assets to satisfy the potential debt upon which an action is brought, various issues may arise not only for the potential creditor, but also the executor of the estate. While the potential creditor may be wondering how it will pursue costs or judgment if it succeeds at trial, the executor will in turn be considering how they will fulfill a costs award or satisfy judgment against the estate. These are important points to consider, as failing to do so could have significant personal repercussions for the executor.

Plene Adminstravit

If the executor establishes that the estate does not have any assets to satisfy potential debt(s), they must plea plene administravit on behalf of the estate. This Latin term, translated to "fully administered," is a doctrine and defence available to the executor when a creditor brings a claim against the estate, but there are insufficient assets in the estate to satisfy any judgment and costs. Alternatively, if the executor has some assets, but not enough to satisfy the judgment and costs, a plea of plene administravit praeter will render him liable only to the amount of assets proved to be in his or her hands as executor.

If plene administravit is plead and a court finds that the assets of the estate were fully distributed prior to the executor obtaining any notice of the claim, it may provide a defence for the executor. However, it is not a complete defence as the doctrine shifts the onus to the creditor applicant to prove that estate assets existed, or ought to have existed, in the hands of the executor to satisfy the judgment at the time the action was commenced.¹

In the absence of an express plea of plene administravit, the executor is taken to conclusively admit that there are sufficient assets to satisfy the judgment against the estate. If the debt and costs cannot be levied on the assets of the deceased, the executor will be personally liable for the full amount of the claim and costs.²

In certain circumstances, a failure to plead plene administravit at the outset of an action does not exclusively bar the executor from amending their defence to add the doctrine at a later date. For example, a trial judge's decision to permit an amendment to plead plene administravit at the close of trial was upheld by the Ontario Court of Appeal in Brummund v Baumeister Estate.³ In that case, the evidence at trial made clear that there was no money in the estate, and the Court of Appeal affirmed that there was no prejudice to the applicant in allowing the amendment.

Devastavit

Should the creditor applicant obtain judgment in an action where the defence of plene administravit or plene administravit praeter is not advanced, he can only acquire judgment for payment from the executor personally by charging the defendant with a devastavit and seeking relief in damages.⁴ A devastavit, meaning "a wasting of assets", is a mismanagement of the estate assets of the deceased by the executor.⁵

To save time, a devastavit may be alleged in the original action, and should the applicant succeed in proving it at trial, they become entitled to a personal judgment against the executor. In the alternative, the applicant may merely sue for the claim, and upon the recovery of judgment, issue execution de bonis testatoris, or on the property of the testator as distinguished from the individual property of his executor. If the Sheriff returns nulla bona, or finds no property to seize, to such an execution, and the applicant wishes to proceed against the executor, the applicant must bring another action alleging a devastavit, of which the return of the Sheriff is sufficient proof. Having impliedly admitted assets in the original action, the executor is bound by that admission and will not be permitted to raise the question again in the second action.⁶

It is important that executors, creditors, and their counsel are familiar with these doctrines and understand their legal and fiduciary obligations and the steps that must be taken should the estate have insufficient funds to satisfy potential costs and judgment.

Footnotes

1 Brummund v Baumeister Estate, 2000 CanLII 16988 (ON CA).

2 Commander Leasing Corp v Aiyede (1983) CanLII 1649 (CA) [Commander].

3 Supra note 1.

4 Browne v Fox (1921), 1921 CanLII 750 (MB QB), as cited in Commander.

5 Supra note 2.

6 Supra note 4.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.