In the Estate of Wilson: Application for Executor’s Commission
[2023] ACTSC 186
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | In the Estate of Wilson: Application for Executor’s Commission |
Citation: | [2023] ACTSC 186 |
Hearing Date: | On the papers |
Decision Date: | 19 July 2023 |
Before: | Curtin AJ |
Decision: | (1) The application in proceedings filed on 8 June 2023 is dismissed. (2) The costs of the application shall be paid out of the estate of the deceased on the indemnity basis. |
Catchwords: | WILLS, PROBATE & ADMINISTRATION – Executors – claim for commission – s 70 of the Administration and Probate Act 1929 (ACT) – discretion of the Court – whether the evidence establishes that the responsibility, anxiety and worry of administering the estate is beyond what would ordinarily be required – whether the task of administering an estate is onerous – office of executor is prima facie a gratuitous one – application dismissed |
Legislation Cited: | Administration and Probate Act 1929 (ACT), s 70 |
Cases Cited: | In the Estate of Woodrow: Application for Executor’s Commission [2023] ACTSC 129 |
Parties: | Brian Peter Munn ( Applicant) |
Representation: | Solicitor Griffin Legal ( Applicant) |
File Number: | PRO 263 of 2023 |
CURTIN AJ:
Introduction
1․This is an application brought by the administrator (Mr Munn) of the estate of the late William Ernest Wilson pursuant to s 70 of the Administration and Probate Act 1929 (ACT) (the PAA Act) and r 2748 of the Court Procedure Rules 2006 (ACT) (the Rules) seeking an Order allowing him commission to be paid out of the assets of the estate.
2․For the reasons set out below the application is refused. That is essentially because, in layman’s terms, administrators usually work for free. They may sometimes be entitled to a commission, but that is exceptional and usually only occurs where the task of administering an estate is onerous, or where the responsibility, anxiety and worry of administering the estate is beyond what would ordinarily be required. The evidence does not establish any of those factors.
3․I appreciate Mr Munn is of limited means and undertook his task voluntarily and generously without any expectation of reward. However, the law does not allow me to reward that generosity in the circumstances proved on the evidence provided.
Principles
4․In the Estate of Woodrow: Application for Executor’s Commission [2023] ACTSC 129, I set out the applicable principles regarding the awarding of commissions to executors and administrators. To avoid the need for extensive cross-referencing I set out what I there said at [2]-[3] and [5]-[32]:
2. Section 70 of the PAA Act says:
70 Executors etc may be allowed commission
The Supreme Court may allow out of the assets of a deceased person to the person’s executor, administrator or trustee the commission or percentage for his or her services that is just.
3. Rule 2748 of the Court Procedure Rules 2006 (ACT) relevantly says:
2748Estate of trust accounts—application for commission
(1)If an executor or administrator of an estate applies for an order for the allowance of commission out of the estate, the executor or administrator must file a full and correct account of the administration of the estate.
(2)…
(3)An account mentioned in subrule (1) or (2) must be verified by affidavit.
…
5. Allowance of a commission will ordinarily not be granted unless there has been a substantial distribution effected: Mason & Handler, Succession Law and Practice NSW (Lexis Nexis, 1985), at [1441.1].
6. The history and nature of the Court’s jurisdiction to allow executors to be paid commission were described by the High Court in Nissen v Grunden (1912) 14 CLR 297.
7. Executors, as well as other fiduciaries, speaking generally, may not derive any profit or advantage from his or her position if not duly authorised to do so. The office of executor is prima facie a gratuitous one: Re Estate Gowing: Application for Executor’s Commission (2014) 17 BPR 32,763 at [44].
8. The allowance of commission is discretionary and may be refused for any proper reason such as, for example, an executor’s breach of trust, neglect, or disregard of fiduciary obligations: Re Estate Gowing at [67]-[68].
9. An executor does not have an entitlement to a commission, only an entitlement to approach the Court to seek one. That is, the allowance of a commission or percentage is an exception to the general position that the office of executor is a gratuitous one and an executor must convince a Court to exercise its discretion in his or her favour.
10. Section 70 of the PAA Act and r 2748, as well as the Court’s inherent jurisdiction, provide sources of power by which an executor may seek to be remunerated by reference to the particular circumstances of the case.
11. An allowance of executor’s commission is customarily, but not always, expressed in the form of a percentage of entries in the estate’s accounts, such as a percentage of income collections, a percentage of capital realisations and/or a percentage of the value of assets transferred in specie during the period covered by the accounts. On occasion, a lump sum may be awarded and assessed other than by way of a percentage calculation. Each case depends on its own facts.
12. In short, a commission is awarded to an executor, where it is awarded, for his or her “pains and trouble”. Those words appear in the NSW equivalent to s 70 of the PAA Act (being s 86(1) of the Probate & Administration Act 1898 (NSW)) but do not appear in s 70. Rather, s 70 refers simply to “his or her services”.
13. Given the long history of the office of executor and the considerable body of authority devoted to it and to the Court’s inherent jurisdiction to allow a commission to executors in appropriate cases, I see no warrant to ascribe any different meaning to the words of s 70 (“his or her services”) than have been given to the words of s 86(1) (“pains and trouble”). Coherence of the law, where possible, is a valuable commodity in a federation such that exists in this country.
14. Section 70 of the PAA Act says that the quantum of any commission or percentage allowed is that which “is just”. In NSW the touchstone is “just and reasonable” (s 86(1) of the Probate & Administration Act 1898 (NSW)), however I see no substantive difference between the two terms.
15. The purpose behind the allowance of a commission or percentage is a recognition that the obligations of an executor can be so onerous as to require relief from the ordinary position that the office of executor is performed gratuitously and, secondly, a recognition that unless a commission or percentage is allowed in appropriate cases, then prospective executors might decline to serve in that office.
16. In an appropriate case, the inherent jurisdiction of the Court to allow remuneration to an executor could extend to allowing a commercial return for the services supplied, although the Court’s inherent jurisdiction is not generally exercised to grant a commercial rate of remuneration to business interests engaged in the administration of a deceased estate. The more summary statutory entitlement provided by s 70 (or s 86(1) in NSW) sits comfortably with an allowance of remuneration at something less than a commercial rate of return to a fiduciary: Re Estate Gowing at [75]-[77].
17. Nevertheless, what s 70 of the PAA Act requires is an allowance that “is just”.
18. In assessing what “is just” (at least in terms of assessing “pains and trouble”) the learned author in E S Vance, Executors Commission (LBC, 1969) summarised the authorities and listed the matters relevant to consider at pp 187-190.
19. When speaking of “pains and trouble” (in the NSW statute and what I would include under “his or services” in the ACT statute) matters such as responsibility, anxiety and worry are considered under “pains” and work done considered under “trouble”.
20. In terms of the work and judgement involved in the execution of the office of executor, a distinction is to be made between realisations requiring the exercise of not inconsiderable judgement, prompt decision-making, knowledge of non-cash asset values, knowledge of current market conditions and knowledge of when and how to sell, with those realisations which consist more of mechanical realisations and collections.
21. The extent to which the executors have availed themselves, at the expense of the estate, of the services of professionals, such as solicitors and accountants, should also be considered. That is, where the estate has paid for the acumen and services of professional advisors, the provision of those services would have relieved the executors of a degree of responsibility, anxiety, worry and work.
22. Other administrative matters which can be considered include the degree of responsibility, anxiety, worry and work involved in:
(i) the interpretation of the will;
(ii) the ascertainment of assets and liabilities;
(iii) the valuation of assets;
(iv) the ascertainment of beneficiaries;
(v) settlement with and correspondence with beneficiaries;
(vi) problems encountered by the executors in the course of administering the estate; and
(vii) the amount of mechanical work attending to the realisation and distribution of assets.
23. The degree of responsibility involved is relevant, especially in larger estates.
24. The time taken to undertake the work of executor is relevant, as is the size and complexity of the estate, the amount of work undertaken by the executor and the diligence of the executor in administering the estate: Re Estate Ford: Application for Executor’s Commission [2016] NSWSC 6 at [55].
25. The assessment of what “is just” is an evaluative judgement not amenable to precise mathematical calculation. It involves an element of intuitive judgement informed by such evidence as is provided in relation to the matters relevant to the determination. It is a notoriously difficult exercise: Re Estate Gowing at [51].
26. Rates of commission have been referred to in a number of cases and publications.
27. In Phillips, Re; Estate of Joel [2007] NSWSC 639 Windeyer J referred to “usual rates of commission” between 0.25% and 2.5% on capital realisations, 1% to 2% on assets transferred in specie, and 1% to 5% on income at [11].
28. In Hawkins v Barkley-Brown [2010] NSWSC 48 Slattery J accepted, at [68]-[69], as rates of commission commonly allowed in practice, those rates published in Mason & Handler, Succession Law and Practice NSW (Lexis Nexis, 1985) at [1441.1.3]. Those rates were: from 0.25% to 2% on capital realisations; from 2% to 4% on income collections; and from 1% to 2% on assets transferred in specie. His Honour said that for large estates, lower rates should be selected, namely: 1% on capital realisations, 2% on income collections, and 0.5% on assets transferred in specie.
29. In RS Geddes, CJ Rowland and P Studdert, Wills Probate and Administration Law in NSW (LBC, Sydney, 1996) at [86.20] on p 586, the rates suggested were: from 0.25% to 2.5% on capital realisations, from 1% to 5% on income collections, and from 0.25% to 1% on assets transferred in specie.
30. In the second edition of Hastings and Weir, Probate Law and Practice (LBC, 1948) the learned authors provide, at p 274, a proposed set of “ordinary” rates being: 0.75% to 2.5% on capital, and 1% to 5% on income.
31. At the end of the day, all those rates are guides only; the determinative facts being the facts of the particular case. That is, percentage rates are guidelines only: Re Estate Gowing at [59].
32. As Lindsay J said in Re Estate Gowing at [61], the assessment of remuneration that is “just and reasonable” (or “just” in the ACT) requires that the ultimate, resultant dollar amount is that which is to be weighed in the balance. For that reason, there is no need to decide between the differing ranges of rates of commission earlier referred to.
The Evidence
5․In this case, Mr Munn has complied with r 2748 of the Rules and has filed an account of the administration of the estate verified by affidavit.
6․The account reveals the total value of receipts to be a little under $70,000. Disbursements were a little over $33,500 leaving a precise balance of $36,474.77 (NB. The figure in the account is $36,156.77 but this is incorrect. The difference is immaterial to this judgment).
7․Mr Munn’s affidavit evidence is that he undertook the work described in a table included in his affidavit, on the dates referred to therein and for the hours specified. The Table was in the following form:
Item
Date received
Task
Hours worked
1.
20 December 2022
Attend Gordon Home to search for Will and Testament
3
2.
21 December 2022
Attend White Lady Funerals to arrange funeral
1.5
3.
22 December 2022
Attend Gordon Home – Clothes for funeral/papers; Attend Alliance Bank Tuggeranong Branch to close account and arrange funeral deposit
3
4.
26 December 2022
Sorting out papers
3
5.
27 December 2022
Sorting out papers
3
6.
4 January 2023
Attending Griffin Legal for wills and estate instructions
1.5
7.
9 January 2023
Attend St George Bank regarding payment for Letters of Administration
1
8.
9 January 2023
Alliance Bank Belconnen re balance of funeral costs
1
9.
21 January 2023
Attend Gordon Home – start of the clean-up
6
10.
25 January 2023
Attending Griffin Legal to provide death certificate and review of deceased’s wife’s will
1.5
11.
28 January 2023
Gordon Home – clean-up
3
12.
24 February 2023
Attend Gordon Home – skip delivery
1
13.
25 February 2023
Attend Gordon Home – clean-up
7
14.
27 February 2023
Gordon Home – obtain quote form the cleaning company
1
15.
3 March 2023
Attend Alliance Bank Belconnen regarding funeral payment
1
16.
10 March 2023
Meeting with agent for Gordon Home valuation
3
17.
11 March 2023
Repair wall in Gordon Home
2.5
18.
14 March 2023
Attend Griffin Legal to drop off receipts and invoices, give instructions
1
19.
17 March 2023
Obtain quote from painter for Gordon Home
1
20.
1 April 2023
Attend Gordon Home to inspect paintwork
1
21.
10 April 2023
Attend Gordon Home to inspect cleaner’s progress
2
22.
15 April 2023
Attend Gordon Home for final clean-up and removal of remaining items to tip
3
23.
28 April 2023
Attend Griffin Legal to drop off invoices and signed forms
.5
24.
17 May 2023
Attend Griffin Legal to drop off invoices and give instructions for payment and distribution
.5
25.
Various
Attend to various emails and requests from Griffin Legal
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8․Mr Munn claims a commission of $2,280. That sum was calculated based on Mr Munn having done 57 hours of work at a rate of $40 per hour.
Decision
9․Applying the relevant principles outline above I regret that I am unable to accede to Mr Munn’s application.
10․As noted earlier in this judgment in the extracts quoted from my decision in Woodrow, and expressed in layman’s terms, administrators usually work for free. They may sometimes be entitled to a commission, but that is the exception rather than the rule. The awarding of commission usually only occurs where the task of administering an estate is onerous (beyond the ordinary), or where the responsibility, anxiety and worry of administering the estate is beyond what would ordinarily be required.
11․In this case the evidence does not establish any of those factors. Mr Munn, kindly and generously it must be acknowledged, undertook the tasks he set out in his table and spent the time he did for the benefit of the deceased’s last living relative and out of respect for his deceased friend. But those are matters which the legal principles to which I have referred do not take into account in the awarding of commission.
12․On the evidence the administration of this very small estate was not unduly onerous, the responsibility, anxiety and worry of administering the estate was not beyond what would ordinarily be required, and, to some extent, Mr Munn had the assistance of his solicitors. In those circumstances it is not just (in the legal sense of that word) to allow a commission.
Orders
13․I make the following Orders:
(1)The application in proceedings filed on 8 June 2023 is dismissed.
(2)The costs of the application shall be paid out of the estate of the deceased on the indemnity basis.
| I certify that the preceding thirteen [13] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Acting Justice Curtin. Associate: Date: |
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