The Executor's Year in the Law of the Cayman Islands

That has not been the law for a century and a half. The reforms of the nineteenth century, and the practice which has grown upon them, allow the court to determine a particular question, or to give a particular direction, without assuming the administration of the estate at large, so that estates are administered out of court by the representative and the court is resorted to when there is something for it to decide. An administration conducted under the modern law is, in the ordinary case, an efficient thing. It would be idle to pretend that complaints of delay disappeared with the abuses which had provoked them, and estates are still said, sometimes with reason and sometimes without, to be taking too long.

The executor’s year is, upon first acquaintance, an unpromising subject. It concerns a single period of twelve months, dealt with shortly in two sections of the Succession Act (2021 Revision), and it might be supposed that a rule expressed so briefly could be understood without much reflection and applied without any. That would, however, be a mistake. The commencement of the year and its expiry are among the very few fixed marks in a process which is otherwise, and of necessity, a matter of judgement and degree, and a good deal turns upon what is taken to happen when the year has run.

The reason is that the year is the point at which two interests meet which do not naturally agree. On the side of the heirs and the residuary beneficiaries stands the question which is, in common experience, the one most often asked in the administration of an estate and the one least often answered to the satisfaction of the person asking it, that is, how long the administration is to take, and what may be done about it if the explanation offered for the delay is not a satisfactory one. On the side of the personal representative, who in an estate of any substance will commonly be a professional, and who may be dealing with beneficiaries whose impatience is sometimes well founded and sometimes not, stands the question of his own position, whether the passing of the year has put him in the wrong, and what he must show, and to whom, if it is said that it has.

Neither question can be answered without deciding what the year is, and it is upon that anterior point that the argument which follows turns.

Section 5 provides that personal representatives shall have one year within which to realise and administer an estate; section 7 requires the representative, within one year of the grant, to file accounts showing receipts and distributions, verified by affidavit and open to the inspection of those beneficially interested. Two questions arise upon these provisions, namely:

1. Whether section 5 requires that the administration of an estate be completed at the expiry of the year, whether the year be reckoned from the death or from the grant.
2. What section 7 adds, and in particular whether the account which it requires is an account of a completed administration.

Before these questions are approached it is necessary to say something, at what may seem disproportionate length, about the institution which section 5 enacts. The section is not an invention of the Cayman legislature, and it cannot be construed as though it were. It puts into statutory words a rule which the common law had worked out over a long period and which it had expressed, more than once, in words very close to those which the draftsman has used. If that rule is understood, the answer to both questions follows, and follows without difficulty.

The rule at common law

The rule is that of the executor’s year, and it is a rule of reasonable time. A year is the period which the law prima facie allows a personal representative for getting in and realising the estate; if he has not done so when the year has run, he is not for that reason in default, but the onus lies upon him, if the matter is raised, to show why he has not.

The authority ordinarily cited is Grayburn v Clarkson (1867–68) LR 3 Ch App 605, and it repays reading. Executors had been directed to convert the estate with all convenient speed; hazardous shares remained unsold at the end of the year. Page Wood LJ held that there is no fixed rule requiring conversion within the year, that the year is the prima facie rule only, and that executors who have not converted must show some reason, the onus being thrown upon them where the point is fairly raised (at 606). Selwyn LJ, agreeing, said that a direction to sell with all convenient speed does not make it obligatory upon executors to sell at any precise, definite or particular time, and that they may exercise a reasonable discretion (at 608). Attention ought to be drawn to what follows from delay which is not justified, since it is instructive: the executor is liable for the loss which his delay has occasioned. Nothing is said, in that case or in any other reported decision, about the administration being treated as at an end, or about any breach arising from the passage of the twelve months by itself.

The textbooks say the same, and they say it without qualification. Williams, Mortimer and Sunnucks [60-01] treats the year as existing for convenience, so that the representative may obtain full information as to the debts and the assets with a view to a proper distribution, and adds that he may distribute earlier if he wishes. Halsbury’s Laws (5th edn, 2021) vol. 102 [964] records that the rule has been described as prima facie and not fixed, and that a representative who honestly postpones a sale beyond the year is not liable for the loss which the postponement occasions. Snell’s Equity (35th edn) returns to the point three times. Upon the payment of debts, there is no rule of law requiring payment within the year, the question in each case being what due diligence requires, and the onus at the year’s end lies upon the representative [32-001]; upon distribution, the circumstances may justify a longer period [33-001]; and upon the ascertainment of residue, the year is not to be slavishly followed where injustice would result [33-018].

One should fix two features of the rule in mind before turning to the statutes, since everything that follows depends upon them. The first is that the year yields to the circumstances of the particular estate, measuring what is ordinarily reasonable and doing no more than that. The second, and the more important for present purposes, is that the question which the year poses at its expiry is a question about the diligence of the representative, to be answered by an account of what has and has not been got in, and not a question whether the estate has been wound up.

That the rule assumes an administration still going on may be seen from In re Johnson; Sly v Blake (1885) 29 Ch D 964, where the machinery of the rule presupposed assets not yet got in. Chitty J held that the beneficiary’s present right to receive could not accrue until each reversionary asset had been reduced into the administrator’s possession (at 971), and that an administrator cannot take advantage of his own wrong by delaying to get the assets in (at 972). The year in that case operated as a floor beneath the beneficiary’s remedies; it was not treated as setting any limit upon the administration itself.

The statutory rule in England

When Parliament came to enact the distribution aspect of the year, it enacted the rule as it stood. Section 44 of the Administration of Estates Act 1925 provides that, subject to the other provisions of that Act, a personal representative is not bound to distribute the estate of the deceased before the expiration of one year from the death. Three things may be said about it.

First, as to its form. The section is negative and protective: what it gives the representative is an immunity from being compelled to distribute early, and Snell [33-001] treats it as the statutory source of the common-law proposition that a legatee cannot require payment before the year has elapsed even where the will has directed payment sooner, while the representative may pay sooner if he chooses.

Secondly, as to its history. Section 44 succeeded an earlier suspensory provision, the Statute of Distributions 1670, s.7, applied through the Land Transfer Act 1897, s.3(2), for which see Snell [32-001]. A section which continues a rule already in existence is not readily to be read as having brought into being an obligation which that rule did not contain.

Thirdly, and this is the material point, the courts have gone on treating the statutory year as the common-law year, with its flexibility unimpaired. Under the modern law the representative who has not distributed at the year’s end bears the onus of justification and nothing heavier, and the circumstances may justify a longer period. Had section 44 converted the year into a peremptory limit, this could not have survived; it has survived, for the reason that there was never anything for the section to convert.

The lesson for the Cayman Islands provision may be shortly stated. A statute which enacts the executor’s year takes the institution as it finds it. What it finds is a prima facie and defeasible rule of reasonable time. A statute enacting that rule, whether in the negative English form or in some other form, is to be read as enacting the rule, unless its language reverses it in terms which admit of no other reading. To construe a statutory executor’s year as a peremptory limit would be to say that the legislature, in codifying a rule, inverted the character which the rule had always had, and a court will not reach that conclusion readily.

Section 5 of the Succession Act

The words of section 5 are not newly minted, and their provenance is worth pausing over. They echo, almost word for word, the terms in which the common law had itself expressed the rule. In In re Johnson at 970 Chitty J spoke of the general rule that an executor or administrator is allowed, in an administration case, one year to complete the administration of the estate.

The correspondence is close and, it seems, not accidental. Chitty J’s ‘is allowed … one year’ is what section 5 enacts as ‘shall have one year’; his ‘to complete the administration of the estate’ is section 5’s ‘within which to … administer an estate’. What matters is that when Chitty J used these words he used them of a rule which he was in the very act of displacing, holding the year to give way to special circumstances relating to the getting in of the estate. The language which section 5 has adopted therefore carries with it, and carries upon its face, the prospect of its own defeasibility.

Read in the scheme of the Act, section 5 does three things upon the administration side, and it may be convenient to take them separately.

It confers a protected period. At English law the year is the period before the expiry of which distribution cannot be compelled. Section 5 confers the same period, and the scheme of the Cayman Act gives that period its practical edge in s.28(2), under which a person entitled to land may apply to compel a conveyance only after the year has run, and then only upon a written request which has gone unanswered. That section cannot be given any sensible meaning upon a completion reading. If the estate were required to be wound up within the year there would be nothing at the year’s end for the beneficiary to compel; the section proceeds upon the footing that the administration may then still be incomplete, and it gives him an application, not a cause of action upon a breach already committed.

It fixes the measure of diligent realisation. The year is the prima facie reasonable time for converting what ought to be converted, beyond which the onus falls upon the representative to justify his retention, for which see Grayburn, and Halsbury’s [964]. The words ‘realise and administer’ carry this and, so far as can be seen, nothing besides.

It brings in the duty to account. Section 7 requires accounts of receipts and distributions to be filed within a year of the grant, supported by affidavit and open to inspection. The undertaking prescribed by Form P.A. 1(b) of the Probate and Administration Rules (2008 Revision) is to file a general account accounting for the whole of the assets.

Upon this last point something more should be said, since it meets the completion argument upon its own ground. What is enforced at the year’s end is an obligation to account for the whole of the assets. An obligation in that form assumes assets not yet distributed, for the way in which one accounts for what is unrealised and undistributed is by setting it out; a duty to list what remains cannot be a duty to have nothing remaining. Forms P.A. 3 and P.A. 5 are consistent with this, binding the representative to administer well and truly and to make a just account and distribution account whenever he is lawfully required to do so. The obligation to distribute is thus open-ended and arises upon demand. It is the accounting alone which is annual.

The affirmative form of section 5

It will be observed that section 5 is cast affirmatively, where section 44 is cast negatively, and the point is mentioned chiefly in order to dispose of it.

The difference is one of form. ‘Shall have one year within which to’ is the language of entitlement: the subject of the sentence is the representative, and what he shall have is the year. The words confer a period, as the negative English formula confers an immunity, and neither imposes upon him a duty to finish. If the affirmative form points anywhere it points away from a limit, since what is granted is time, and a grant of time in which to do a thing is not an order that the thing be done before the time expires. The reader may test this upon the ordinary reading of a clause providing that the tenant shall have 28 days within which to remedy a breach. Nobody supposes that such a clause obliges the tenant to have remedied by the twenty-eighth day.

There is a second and a stronger point. The affirmative form stands closer to the common law than the English section does. The common law speaks of the representative being allowed a year, as Chitty J had it in In re Johnson, and as Chadwick LJ had it, upon the executor’s year, in In re Loftus, decd [2007] 1 WLR 591. ‘Shall have one year’ renders that allowance faithfully, and the allowance, as has been shown, was prima facie and defeasible. The divergence of wording affords no foothold for the contention that the administration must be complete within the year.

The arithmetic of the Act

What has been said so far is an argument about the character of an institution, and arguments of that kind may in principle be met by the answer that the legislature intended something else. There is a further argument of a different order, which ought to be set apart because its value lies wholly in its independence of everything that has gone before. It requires no view of Grayburn, no concession about codification, and no reasoning at all from the nature of the institution. It is a cross-check upon the Act’s own dates.

A grant cannot issue within 28 days of the death (r.17), and as much as six months, and longer where there is a dispute, may elapse before the grant is obtained (s.4). Section 7 and Form P.A. 1(b) measure the accounting year from the grant and not from the death. A provision whose own machinery permits the accounting year to close well over eighteen months after the death cannot have been framed upon the footing that the administration must be complete within twelve. The choice of anchor was not made at random: it was made because completion within a year of the death is not a thing the Act’s own timetable permits the representative to achieve. Upon a construction requiring him to finish within twelve months of the death, he would in a great many estates be obliged to have completed an administration which he could not lawfully have begun.

One qualification ought to be, and is, added, because the argument is stronger when its limits are stated. The arithmetic disposes of the reading which measures the year from the death; it does so by itself and it admits of no answer. It does not, of itself, reach the reading which measures the year from the grant, that variant being chronologically possible; and it is the common-law and scheme arguments set out above which meet it. The argument is to be deployed for what it is, a complete answer upon one branch of the contention and a strong indication upon the other, and to claim more for it would be to invite the obvious reply.

It may be added that the year appears in the scheme from two different anchors, s.28(2) reckoning from the death and s.7 from the grant. A single fixed terminal date would not behave in this way; a measure of reasonable time, applied as each function requires it, would. And where an estate has had successive representations, the accounting year of s.7 attaches to an office and runs from the grant to that office, so that a representative appointed in replacement takes his own year from his own appointment and does not take over his predecessor’s expired period.

The remedies of the residuary heir

It may be objected that unless section 5 imposes a limit the residuary heir has no protection against a representative who is dilatory. This should not be accepted, since it seems that his remedies, when they are set out, confirm rather than answer what has been said.

The point was dealt with by Chadwick LJ in In re Loftus at [28]–[29]. To assert that the beneficiary has no remedy is not the position; his primary remedy where he complains of unjustified delay is an administration action, and the power to remove and replace a personal representative is a further route to the same end. That time does not run against him under a limitation provision is only to say that time does not run; his remedies for delay are untouched by it. Williams, Mortimer and Sunnucks [60-11], reviewing that case, confirms that the executor’s year has no direct significance for limitation, being neither a date from which time runs nor a date by which the administration must be complete.

In the Cayman Islands the heir who thinks the administration too slow may require an account, section 7 entitling him to inspect the accounts which the representative is bound to file, the general account exposing what has and has not been got in; and it is here, in practice, that the onus recognised in Grayburn is worked out, since it is here that the representative must show his grounds for continuing to retain. He may apply under s.28(2), after the year and upon an unanswered written request, for an order compelling a conveyance of land. He may bring an administration action, or apply to have the representative removed and another put in his place.

Each of these remedies works by requiring the representative to justify his progress, or by compelling him to take a particular step, or by putting somebody else in his room, and not one of them assumes that the administration ought already to have been concluded. They are the remedies which suit an administration that is going on and needs to be moved along, which is the state of affairs the executor’s year has always contemplated. Upon a completion reading the greater part of this apparatus would have nothing to do, and a scheme is not to be construed so as to leave so much of itself without employment.

Powers to postpone

Where the will contains an express power to postpone sale, calling in and conversion, as wills commonly do, and couples it with a provision that the trustee shall not be liable for loss occasioned by the postponement, a completion reading would override a testamentary power lawfully conferred, while the reading here urged leaves it standing. The case is here stronger than Grayburn, where a direction to convert with all convenient speed was nevertheless held to leave the executor a reasonable discretion as to timing. Williams, Mortimer and Sunnucks is directly in point, stating that where there is a power to postpone sale considerable delay may be justified [60-01, n.1].

A qualification is needed here also: a power to postpone sale and conversion is a power to defer realisation, that is, to choose when the assets shall be turned into money. It is not in terms a power to defer the distribution of what has been realised, and still less is it a licence to leave an administration unconcluded for reasons having nothing to do with the retention of the assets. Such a clause answers the objection upon the realisation limb, and it sits naturally with a direction contemplating, for instance, that a dwelling be retained for the use of a grandchild, which is by its nature a holding for a long term. It does not authorise dilatory administration at large, and a representative who had got in and converted the whole estate and then sat upon the proceeds could not invoke it, that not being what a power to postpone a sale protects. Upon that limb he must rely upon the general law, that is to say, upon the not-bound-to-distribute character of section 5 and section 44, upon the remedy of compulsion after the year in s.28(2), upon the open-ended accounting obligation of the Rules, and upon the onus recognised in Grayburn and in Snell.

Matters not relied upon

This discussion has throughout been confined to the administration-side incidents of the executor’s year, that is, to the duties of the representative, the accounting and the compulsion. Reliance has not been placed upon the construction- and entitlement-side incidents, which are the commencement of interest upon legacies, the apportionment valuation date, the ascertainment of residue, and the conversion of foreign currency. These are collected in Williams, Mortimer and Sunnucks ch. 60, sub-sections C to H, and include the rule in Allhusen v Whittell (1867) LR 4 Eq 295, which in England and Wales has been disapplied for post-2013 trusts by the Trusts (Capital and Income) Act 2013, s.1(2)(d). These are mentioned only so that it may be seen that they have been looked at and put aside. They are concerned with who takes and with the time at which his interest vests, and they are governed by the construction of the will and by the entitlements arising under it; they have nothing to say upon the question with which section 5 deals.

Conclusion

Upon the first of the questions posed at the beginning of this article, the better view is that section 5 does not require the administration of an estate to be completed within one year, whether the year be reckoned from the death or from the grant. It enacts the executor’s year, a rule of reasonable time which the common law had long treated as prima facie and defeasible, and which is enforced by throwing upon the representative the onus of justifying his delay. Upon the second, section 7 requires an account of the whole of the assets, and in requiring it assumes an administration still in train.

None of this leaves the beneficiary who thinks an administration too slow without recourse. His recourse is to call for an account, to apply for an order compelling a particular step, or to seek the representative’s removal, and no one of these depends upon reading the year as a term. There is no reason to think the year will bear that weight, or that the Act intends it to.

This article treats ss.5 and 7 of the Succession Act (2021 Revision) as a matter of general principle. The points arising do not appear to have been the subject of a reported Cayman decision squarely determining it. Nothing here is advice upon any particular estate.