DB and JM and JW
[2006] WASAT 68
•22 MARCH 2006
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
STREAM: HUMAN RIGHTS
ACT: GUARDIANSHIP AND ADMINISTRATION ACT 1990 (WA)
CITATION: DB and JM and JW [2006] WASAT 68
MEMBER: JUSTICE M L BARKER (PRESIDENT)
MS J TOOHEY (SENIOR MEMBER)
MR J MANSVELD (MEMBER)
HEARD: 29 NOVEMBER 2005
DELIVERED : 22 MARCH 2006
FILE NO/S: GAA 1848 of 2005
BETWEEN: DB and JM
Applicants
AND
JW
Represented Person
Catchwords:
Guardianship and administration-Remuneration paid to an administrator - Remuneration fixed by the Tribunal - Remuneration cannot be incurred prior to an order for administration - Public Trustee role in examining accounts of an administrator - Public Trustee method of accounting for remuneration not in accordance with the operation of the Guardianship and Administration Act 1990 - Right of review by an administrator to a decision by the Public Trustee to declare a loss to an estate
Legislation:
Guardianship and Administration Act 1990 (WA), s 64, s 72, s 80, s 117
State Administrative Tribunal (Conferral of Jurisdiction) Amendment and Repeal Act 2004 (WA), s 443
State Administrative Tribunal Act 2004 (WA), s29, Part 3, Division 3
Result:
The application is allowed. Certificate of loss is cancelled.
Category: B
Representation:
Counsel:
Applicants: Self-represented
Represented Person : Self-represented
Solicitors:
Applicants: Self-represented
Represented Person : Self-represented
Case(s) referred to in decision(s):
Nil
Case(s) also cited:
Nil
REASONS FOR DECISION OF THE TRIBUNAL:
Summary of Tribunal's decision
DB and JM were appointed the joint administrators of the estate of JW in December 2003 for 12 months. They had provided professional services to JW for some years and at the date of their appointment as administrators were owed fees for work done prior to their appointment.
In March 2004, the former Guardianship and Administration Board authorised the administrators to be paid remuneration and fixed an amount for the 12 months of the administration order pursuant to the provisions of the Guardianship and Administration Act 1990 (WA).
During the first year of the administration the administrators paid themselves for what was owed them at the start of the administration as well as a portion of the fees incurred after the administration commenced. At the end of the first year the estate of JW owed some of the remuneration incurred in that year.
The Public Trustee in his role of examining the accounts of private administrators under the Guardianship and Administration Act 1990 made a decision that the fees actually paid to the administrators in the first year of the administration, which included payment of fees owed at the start of the administration, should be classified as remuneration of the administrators. According to the Public Trustee this meant that the administrators had been paid remuneration for the first year of the administration in excess of that allowed by the Guardianship and Administration Board in the order made in March 2004. The Public Trustee further decided that a loss had occurred to JW's estate and that the administrators should repay the loss which was represented by the amount of fees allegedly overpaid.
The administrators made an application to this Tribunal saying that they disagreed with the decision of the Public Trustee and that they had not been overpaid in remuneration.
The Tribunal decided that the amount of professional fees owed by the JW to DB and JM prior to their being appointed her administrators was a debt of her estate at the commencement of the administration order and was not to be classified as remuneration for the purposes of the order made by the Guardianship and Administration Board in March 2004. This meant that the fees incurred by JW's estate in the first year of the administration were less than provided for in the order of March 2004 and no loss to her estate had occurred.
The Tribunal cancelled the overpayment of remuneration calculated by the Public Trustee and authorised the administrators to refund themselves the amount they had paid JW's estate at the direction of the Public Trustee.
The issue
These reasons relate to an application by DB and JM, joint administrators (the administrators) for JW (the represented person), seeking a review of a decision by the Public Trustee that a loss of $13 839.15 occurred to the represented person's estate because of an overpayment of remuneration to the administrators.
DB and JM were first appointed joint plenary administrators of the estate of the represented person on 19 December 2003 by the former Guardianship and Administration Board (the Board). The appointment was for 12 months and included a direction that the administrators submit a proposal for their remuneration and an estimate of the cost of administration in the first year within 28 days of the date of the order.
An order was made by the Board on 19 March 2004 which fixed the remuneration for the administration of the represented person's estate as $14 500.00 per annum for the provision of portfolio management and taxation services and $19 500.00 per annum for the ongoing costs of the administration.
A further order was made by the Board on 26 March 2004 for the administrator to pay DB from the estate of the represented person the amount of $4000.00 as costs relative to proceedings of 19 December 2003. The order was made pursuant to s 16(4) of the Guardianship and Administration Act 1990 (the GA Act).
Most of the jurisdiction and functions of the Board were absorbed by this Tribunal from 24 January 2005. The function of examining accounts under s 80 of the GA Act passed to the Public Trustee from that date.
The order for administration was reviewed by the Tribunal on 18 July 2005 and 29 August 2005. DB and JM were reappointed joint plenary administrators of the estate of the represented person and were authorised to be paid remuneration of no more than $34 000.00 per annum which was to include portfolio management, taxation and all other services as administrators exclusive of the goods and services tax (GST). The $34 000.00 was the same amount authorised in the order of the Board on 19 March 2004, but was not separated into specific amounts for portfolio and taxation services and other costs of administration.
On or about 10 August 2005, the Public Trustee issued a certificate of loss in the sum of $13 839.15 to the administrators in respect of the accounts for the estate of the represented person for the period 20 December 2003 to 19 December 2004.
By way of letter dated 30 September 2005, the Public Trustee advised the administrators of his intention to recover the loss that had been determined on the estate of the represented person.
On 21 October 2005 the administrators filed an application for review of the Public Trustee's decision with the Tribunal.
The hearing on 29 November 2005 was attended by the administrators and a representative of the Public Trustee (the Public Trustee)
Decision
The Tribunal has decided to allow the application for review of the Public Trustee's certificate of loss and the decision is reversed. The certificate of loss for $13 839.15 will be cancelled and the administrators will be authorised to repay themselves the sum totalling $13 839.15 for services carried out under contractual arrangements which were entered into prior to being appointed administrators of the represented person's estate.
The Tribunal will provide reasons for its decision by firstly stating the relevant legislation, then summarising the submissions of the parties and lastly discussing the submissions against the legislation to come to its findings.
The relevant legislation
By virtue of s 443 of the State Administrative Tribunal (Conferral of Jurisdiction) Amendment and Repeal Act 2004 (WA) (Conferral Act), s 80 of the GA Act was amended to transfer the functions of the Board, in respect to the submission and examination of accounts, to the Public Trustee.
Section 80 of the GA Act provides:
"80.Accounts
(1)An administrator shall submit accounts to the Public Trustee as required by, or prescribed by regulations, except so far as the administrator is exempted from doing so by the Public Trustee.
[(1a)repealed]
(2)When a sole administrator of the estate of a represented person dies, a person having possession of any books, papers or documents relating to that estate shall deliver them to the Public Trustee.
(3)The Public Trustee shall examine any accounts lodged under subsection (1) or delivered under subsection (2) and may ¾
(a)allow them;
(b)disallow any amount paid;
(c)determine that any amount or asset has been omitted, or that any loss has occurred.
(4)Where the Public Trustee ¾
(a) disallows an amount paid or determines that an amount or asset has been omitted or that any loss has occurred; and
(b)determines that there has thereby been a loss to or diminution of the estate,
the administrator is liable to the estate for such loss or diminution, except to the extent that the Public Trustee relieves him of liability.
(5)Accounts that have been examined under this section and allowed by the Public Trustee are conclusive unless the administrator acted dishonestly, in bad faith or without reasonable cause.
(6)The Public Trustee shall issue a certificate as to any loss or diminution for which an administrator or his estate is liable under subsection (4), taking into account any relief allowed by the Public Trustee under that subsection, and the Public Trustee may recover the same from the administrator or his estate for the benefit or the estate of the represented person as a debt due in a court of competent jurisdiction.
(6a)A person aggrieved by a decision of the Public Trustee under subsection (3) may apply to the State Administrative Tribunal for a review of the decision."
This section does not apply to the Public Trustee in the Public Trustee's capacity as an administrator.
The Conferral Act has under s 80(6a) created a new right of review under the GA Act by allowing a person aggrieved by a decision of the Public Trustee to disallow any amount paid or determine that any amount or asset has been omitted, or that a loss has occurred, to apply for a review of that decision to this Tribunal.
The authorising of remuneration to be paid to an administrator is provided under s 117 of the GA Act:
"117.Remuneration
(1)The State Administrative Tribunal may fix remuneration or a rate of remuneration and order that the same be paid to an administrator out of the estate of the represented person if the Tribunal considers that, because of the size or complexity of the estate or both, remuneration should be paid to the administrator.
(2)A guardian, and except as provided in subsection (1) an administrator, shall not receive remuneration for services rendered to the represented person.
(3)Nothing in this section -
(a)prevents the Public Trustee from receiving remuneration under the Public Trustee Act 1941; or
(b)limits the operation of section 16 of this Act or section 39, 87 or 88 of the State Administrative Tribunal Act 2004.
(4)Subject to subsection (3)(a), a corporate trustee shall only be entitled to commission in respect of the capital of the estate of a represented person to the extent that the State Administrative Tribunal expressly allows."
The Public Trustee's contentions
The Public Trustee submits that the administrators paid themselves remuneration of $51 839.15 during the first year of the administration, which ended on 19 December 2004, and that this was in excess of the amount allowed by the Board in its orders of 19 March 2004 and 26 March 2004. The calculation made by the Public Trustee is this: the Board allowed $14 500 for portfolio and taxation services, $19 500.00 for ongoing administration costs and $4000.00 as a "one-off" payment for costs. These amounts total $38 000.00 which, when deducted from the $51 839.15 actually paid in the year ended 19 December 2004, results in an overpayment of $13 839.15. The overpayment is a loss to the represented person's estate and should be recovered from the administrators.
The Public Trustee acknowledges that an amount of $21 388.40, which is included in the $51 839.15 the administrators paid themselves from the represented person's estate, is for professional work completed by DB and JM for a period prior to their being appointed administrators on 19 December 2003. The Public Trustee accepts that the fees of $21 388.40 were properly incurred.
The Public Trustee argues that, as the expense of remuneration must be authorised by the Tribunal, it is for that reason different to the other expenses of an estate. Unlike other expenses which an administrator pays from an estate in the normal course of an administration, the amount of remuneration that can be paid is fixed by the Tribunal for a particular period and payment cannot deviate from that amount. Moreover, the amount of remuneration authorised by the Tribunal for a period is represented by the amount actually paid to the administrators in that period irrespective of when the expense or part of the expense might have been incurred, which in the case of the represented person was prior to the initial administration order made on 19 December 2003.
The Public Trustee further submits that there is a potential for a conflict of interest when administrators pay themselves and that is why payment should only be made when authorised by the Tribunal and limited to what the Tribunal order allows in a period.
The Public Trustee finally submits that the Tribunal should consider authorising payment to the administrators of the amount which is the subject of the alleged loss to the estate by way of the application of s 72 of the GA Act or s 29 of the State Administrative Tribunal Act2004 (WA) (SAT Act). The submission is that the operation of these provisions enables the Tribunal to authorise the administrators to make any disposition or transaction considered to be in the represented person's best interests (s 72(1)) or otherwise make any order the Tribunal considers appropriate (s 29(3)).
The administrators' contention
The administrators state that they, in their separate professional capacities, had provided services to the represented person for a number of years prior to their appointment as joint administrators on 19 December 2003. At the date of appointment they were owed, in aggregate, $21 388.40 for work done prior to 19 December 2003.
The amount of $21 388.40 was recorded by the administrators as a debt owing by the represented person on the form provided by the Public Trustee to detail the represented person's estate at the commencement of the administration. The form is titled by the Public Trustee as "Form A".
The administrators submit that during the year ended 19 December 2004 they paid themselves fees of $30 450.75 for services provided during that year. When added to $21 388.40 which is the amount owing for professional services for the period prior to 19 December 2003, the total is $51 839.50 which is the amount actually paid in the first year of the administration. The amount of $30 450.75 includes GST which when deducted makes the net amount $27 682.50. Fees owing for the year ended 19 December 2004 and unpaid at that date are $6047.50 exclusive of GST. The total of the fees incurred for the year ended 19 December 2004 is therefore $33 730.00 which is within the authorised amount of $34 000.00.
The administrators submit that they have complied with the order of 19 March 2004 fixing the remuneration for the represented person's estate at up to $34 000.00 per annum.
Findings of the Tribunal
When an administrator is appointed by the Tribunal pursuant to the GA Act, the appointment is made at the time the Tribunal makes a declaration that the person is unable by reason of a mental disability to make reasonable judgments in respect of matters relating to all or any part of his estate and that he is in need of an administrator (s 64(1) and s 64(2)). The appointment is not retrospective. The authority and duties and responsibilities of an administrator contained in the GA Act commence upon appointment.
It follows that when an order for remuneration is made under s 117 of the GA Act, the earliest date from which it can apply is the date of the appointment of the administrator.
In the case of the represented person, the administrators were appointed on 19 December 2003. By way of an order dated 19 March 2004 remuneration was fixed at a total of $34 000.00 for the 12 months the initial order was to run.
Prior to their appointment as administrators, DB and JM had provided professional services to the represented person. The fees incurred for those services stood at $21 388.40 at 19 December 2003 and, in the view of the Tribunal, was a debt to the estate of the represented person at the date of the commencement of the administration. That debt should not be classified differently to any other debt of the estate because of the mere coincidence that it was owed to the persons who would later be appointed the represented person's administrators. The payment of the debt in the course of the administration did not alter its character to something other than a debt. It therefore could not and did not become remuneration as that is provided for in s 117 of the GA Act as a consequence simply of the timing of the payment. The debt did not accrue in the course of the administration but prior to it and it therefore cannot be captured by s 117.
The Tribunal agrees with the submissions of the administrators that the fees which were the subject of the remuneration order made by the Board for the first year of the administration, were incurred for that period in the sum of $33 730.00. This amount falls within the amount fixed by the order of 19 March 2004 and there is therefore no loss to the estate as submitted by the Public Trustee.
The Tribunal would therefore allow the application for review of the order for administration and cancel the certificate of loss of $13 839.15 made by the Public Trustee.
Orders
1.The application for review is allowed.
2.The certificate of loss in the sum $13 839.15 issued by the Public Trustee against the administrators of the estate of JW is cancelled.
I certify that this and the preceding [39] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
JUSTICE M L BARKER, PRESIDENT
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