Nadine Whyte, O’Neal Webster, details the guidance delivered by Justice Vicki Ellis on the appointment of personal representatives in intestate estates.
The shares of a BVI company are situated in the BVI and therefore if a member of a BVI company dies, the appropriate grant must be obtained from the BVI court before the shares can be distributed to the beneficiaries of the deceased. In order to obtain the appropriate grant, an application for a Grant of Probate (if the deceased left a will) or a Grant of Letter of Administration (if he did not leave one) has to be made to the BVI High Court.
It is clear that the vast majority of BVI companies are owned by persons who are not domiciled in the BVI. When those persons pass away, the shares in that BVI company will normally form part of their estate, and fall to be distributed in accordance with the law of the place where the deceased is domiciled. However, the law of the place where the shares are located determines procedural issues such as who has the right to apply for the relevant grant. If there is a will in place, then it is clear that this will be the executor named in the will. If there is no will and the beneficiaries can come to an agreement among themselves, then the person they have selected will be able to apply for the grant. Where there is no agreement among the beneficiaries, the question then arises as to who has the right to apply for the grant.
O’Neal Webster was recently called upon to advise in such a case where a dispute arose among the beneficiaries of the estate of the deceased father regarding the control of the father’s estate. The father controlled various BVI companies that in turn controlled various companies operating in the Far East.
In a landmark judgement, Justice Vicki Ellis, in the High Court in the British Virgin Islands, comprehensively set out the guiding principles for the appointment of an administrator in the estate of a member of a BVI company who died intestate domiciled outside of the BVI.
The Judge acknowledged that the laws of the BVI are silent as to the order of priority for the entitlement to apply for letters of administration and therefore by virtue of section 11 of the West Indies Associated Supreme Court (Virgin Islands), the BVI Court must exercise its jurisdiction in conformity to the law and practice administered for the time being in the High Court of Justice UK. As such, the Court held that relevant practice and procedure for the appointment of a personal representative within the BVI is governed by the English Non-Contentious Probate Rules (the “NCPR”).
The Court indicated that where a person dies domiciled outside of the BVI, NCPR 30 applies. The Court held that NCPR 30 does not fix an order of priority where a person dies intestate and domiciled outside the Territory, rather the Court may appoint any person who either has been entrusted with the administration of the estate by a court of the deceased’s domicile or where there is no such person, anyone who is beneficially entitled to the estate under the law of the place where the deceased died domicile or to any person the court deems fit.
In the case before the Court, no one was entrusted with the administration of the estate by a court of the deceased’s domicile. However, the parties before the court were all beneficially entitled to the deceased’s estate and the Claimant and the Defendant/Counterclaimant applied to be appointed administrator.
As a result, the Court had to consider the relevant criteria which must be taken into account when considering the appointment of an administrator from among persons who are equally entitled. The criteria which the Court considered are summarised below:
(a) - The grant should be made to the person who is likely best to convert the deceased’s estate to the advantage of the beneficiaries;
(b) -The court will exclude an applicant if he:
(i) is shown to be bankrupt or insolvent;
(ii) is shown to be of extreme ill health or incapacity; or
(iii) lacks probity or good character
(c) - the court will exclude an applicant if the applicant is shown to have an interest incompatible with the due administration of the estate
(d) - the court will prefer the applicant who has the largest beneficial interest or alternatively, the one who is selected by the majority of the other parties interested
(e) - if all the factors mentioned above are equal, the court will prefer the first applicant simply on the basis that he applied first.
In the instant case, the Court found that not only was the Claimant the first to apply for grant, she also had the majority interest. Notwithstanding, the Court considered the evidence in opposition to her appointment and found that it was not cogent enough to militate against her being appointed administrator of the deceased’s estate.
Applying the above criteria, the Court dismissed the Defendant’s counterclaim to be appointed administrator on the basis that there was compelling evidence that he would not convert the deceased’s estate to the advantage of the beneficiaries and that he had not acted in the best interest of the estate.
The Defendant in his alternative claim requested that an independent administrator be appointed instead of the Claimant. The Court accepted that it had a discretion to appoint an independent administrator pursuant to NCPR 30(1)(c) if it was satisfied that the circumstances required such an appointment, notwithstanding that some other person had been entrusted with the administration of the estate by a court of the deceased’s domicile or is beneficially entitled to the estate and is willing and able to take the grant.
The Court refused to appoint an independent administrator as it found that:
(a) - after considering all relevant factors, the Claimant qualifies and should be selected as administrator;
(b) - it has not been demonstrated that she is unfit or incapable of performing her duties as administrator
(c) - having been selected by the majority, she has the greater chance of promoting harmony among competing interests;
(d) - it was not convinced that the litigation and expense of surrounding the estate would be avoided or diminished by appointing an independent administrator – this was the basis on which the appointment of the independent administrator was sought;
(e) - the Claimant had applied for, obtained and held a grant of letters of administration ad c-olligenda bona for the purpose of collecting and preserving the estate of the deceased since 2011, despite attempts to set aside the grant on the basis of breach of duty.
This judgement makes it patently clear that the English NCPR applies in the BVI as regards the appointment of an administrator of the estate of a deceased who died intestate outside the BVI and who held shares in a BVI company.
The judgement is a welcome development to the jurisprudence of the BVI and provides greater certainty to beneficiaries of intestate estates.
Nadine Whyte, Senior Associate, O'Neal Webster, British Virgin Islands