The High Court has ruled that an estate administrator’s legal costs take priority over a beneficiary’s costs where an insolvent estate cannot pay both, even when both sets of costs were awarded as “costs in the administration of the Estate”.
Mr Justice Oisín Quinn delivered the judgment on 21 November 2024 in proceedings brought by Myles Gilvarry, the estate’s administrator, against William Naylor. The court proposed to grant a declaration in the terms sought in the special summons. The judgment does not set out a final order beyond that proposed declaration.
The dispute followed a long probate case over the estate of Michael Hoare. Naylor challenged his father’s 2006 will, which left a 122-acre farm in Tipperary to Naylor’s sister, Jean Maher. He succeeded in a proprietary estoppel claim and was found entitled to the farm, but his challenge to the will failed. The Court of Appeal upheld the farm ruling, on condition that Naylor disclaim a €150,000 bequest under the will. It awarded him 75% of his High Court costs and all his appeal costs, as costs in the administration of the estate. Maher’s appeal costs were also designated administration costs.
Gilvarry, a solicitor who had acted for Maher, later secured her removal as executrix and was appointed administrator in 2019. Further litigation between him and Maher concerned another estate property. The court said the estate was insolvent and could not meet all the costs incurred. Gilvarry estimated estate assets at about €450,000, while claimed legal costs exceeded €1.5 million. Those figures included about €967,000 in costs for the executrix and administrator, and €193,000 already paid by Naylor, with a further €350,000 claimed for counsel.
Both sides accepted that their relevant costs were administration expenses under the Succession Act 1965. Naylor argued that the shortfall should be shared proportionately, pointing to his substantial success in the probate case and the costs orders made in his favour. Gilvarry relied on historical legal practice and authorities that placed an executor’s costs ahead of other litigants’ costs when the estate was insufficient.
Quinn J found that the Act did not expressly state how competing administration expenses should rank when they exceeded the estate’s assets. He interpreted the provision in light of the earlier common-law practice, legal texts and related legislation, and concluded that the law required the executor’s or administrator’s costs to be discharged first. The judgment determined priority between the two categories of costs; it did not find that the estate had enough assets to pay the administrator’s costs in full.