In the Estate of Woodrow: Application for Executor’s
[2023] ACTSC 129
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
| Case Title: | In the Estate of Woodrow: Application for Executor’s |
| Commission | |
| Citation: | [2023] ACTSC 129 |
| Hearing Date: | 19 May 2023 |
| Decision Date: | 30 May 2023 |
| Before: | Curtin AJ |
| Decision: | See [72] |
Catchwords: | WILLS, PROBATE & ADMINISTRATION – Executors – Claim for commission – s 70 of the Administration and Probate Act 1929 (ACT) – Discretion of the Court – Meaning of “just” – Evaluative judgement – Where the estate was large and required complicated administration – Whether the amount sought by the |
| applicant was just | |
| Legislation Cited: | Administration and Probate Act 1929 (ACT), s 70 Court Procedure Rules 2006 (ACT), r 2748 |
| Probate & Administration Act 1898 (NSW), s 86 | |
| Cases Cited: | Hawkins v Barkley-Brown [2010] NSWSC 48 Nissen v Grunden (1912) 14 CLR 297 |
| Re Estate Ford: Application for Executor’s Commission [2016] | |
| NSWSC 6 | |
| Re Estate Gowing: Application for Executor’s Commission | |
| (2014) 17 BPR 32,763 Phillips, Re; Estate of Joel [2007] NSWSC 639 | |
| Text Cited | E S Vance, Executors Commission (LBC, 1969) Mason & Handler, Succession Law and Practice NSW (Lexis Nexis, 1985) RS Geddes, CJ Rowland and P Studdert, Wills Probate and Administration Law in NSW (LBC, Sydney, 1996) |
| Hastings and Weir, Probate Law and Practice (LBC, 1948) | |
| Parties: | Paul John McCarthy (First Applicant) |
| Peter William Ashley Crothers (Second Applicant) | |
| Representation: | Counsel |
| R Badgery (Applicants) | |
| Solicitors | |
| Badgery & Rafferty Solicitors (Applicants) | |
| File Number: | PRO 802 of 2020 |
| Curtin AJ: | |
| Introduction |
1. This is an application brought by the two executors of the estate of Elizabeth Lyle Woodrow 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) seeking an Order allowing them commission to be paid out of the assets of the estate.
Principles
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:
2748 Estate 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.
4. In this case, the executors have complied with r 2748 and have filed an account of the
administration of the estate 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].
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.
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].
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.
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].
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
33. When the application was heard by the Court the only material provided (in addition to
the probate file) was a copy of the will, a copy of the Executor’s, Administrator’s or
Trustee’s affidavit and account sworn on 23 April 2023 (by Mr Ashley, who resides in
Bourke, NSW) and sworn on 2 May 2023 (by Mr McCarthy, who resides in the ACT) and
a five paragraph affidavit of Mr McCarthy deposing to a further distribution to the trustee
and receipt of a tax refund from the Australian Taxation Office
34. The Court expressed its concern about the lack of information provided in that material
insofar as that material provided only a summary description of some of the facts which
would be relevant to the exercise of my discretion and any assessment of commission.
Subsequently, and by the Court’s leave, a further affidavit of Mr McCarthy sworn 23 May
2023 was filed and has been read in the proceedings.
The facts
36. Ms Woodrow died on 8 June 2020.
37. Probate of the will was granted to the executors on 22 September 2020.
38. The deceased had no living relatives within the Australian Capital Territory and died
during a period of lockdown caused by the Covid-19 pandemic.
39. The executors arranged a funeral service for the deceased and organised for that service
to be live streamed due to the lockdown.
The executors traced the deceased’s remaining relatives, both interstate and in the
United Kingdom, to provide them with details of that live streaming.
41. One of the executors gave a eulogy at the deceased’s funeral, organised a wake, and a
later memorial service for the internment of the deceased’s ashes.
42. The value of the assets of the estate was estimated at a little under $6.5 million with
liabilities of approximately $30,000.
43. The estate consisted of approximately eight bank accounts or term deposits, two security
accounts each containing a number of shares in different companies, a residential aged
care bond and some personal belongings.
44. The executors were required to pay legacies, each in the sum of $250,000, to three
specific legatees.
45. The will provided that after payment to those specific legatees, the residual estate was
to be paid into a trust for the trustee to apply the net income from the trust fund to ten
listed charities.
46. The executors were required to create and manage an estate account with a local bank
in order to redeem and transfer the term deposit and bank accounts into the estate
management account.
47. The executors were required to engage specialist taxation advice on a potential capital
gains tax liability on the disposal and transferring of the shares mentioned above.
48. The executors also required specialist taxation advice because the deceased was in
receipt of a Swedish pension which had been paid to her over a period of some 18 years,
but which had not been declared for taxation purposes in Australia. This required the
executors to apply for a private ruling from the Australian Taxation Office. It also required
further specialist accounting advice followed by the preparation of 16 years of income
tax returns and the obtaining of advice on income tax compliance requirements and the
administration of the assets. Ultimately the estate was assessed for income tax in the
sum of a little over $200,000.
49. Specialist legal advice from a barrister experienced in the area was also sought in
relation to the necessity or otherwise for a possible application for rectification of the will.
50. The possible rectification of the will arose in circumstances where the deceased had
attended her solicitor's office in December 2016 to prepare a new will, her husband
having passed away a month earlier. While carrying out their instructions, the deceased's
solicitors sought and obtained from the Public Trustee and Guardian earlier wills of the
deceased and her husband dated in 2009. Having done so, the solicitors prepared, and
the deceased signed a will dated 13 December 2016. That is the will for which probate
was granted in this Court.
51. However, unbeknown to the solicitors, the Public Trustee and Guardian had prepared
later wills (after the 2009 wills) for the deceased and her husband in 2012 and which
were not reflected in the 2016 will. This led to the consideration of a possible rectification
suit and the retention of experienced counsel to provide advice. Ultimately no rectification
suit was commenced.
52. Some difficulty was experienced in transferring assets to the trustee mentioned above.
The trustee was of the view that after payment to the specific legatees and payment of
the liabilities of the estate, the remaining assets of the estate should be sold by the
executors and the cash proceeds transferred to the trustee. However, the executors’
legal advisors were of the view that such a course of action would attract a capital gains tax liability in the hands of the executors. This was confirmed by the Australian Taxation
Office in its private ruling. Ultimately that advice was followed, and the relevant assets
were transferred in specie to the trustee.
In Mr McCarthy’s affidavit sworn 23 May 2023 he deposes to time and effort expended
for the benefit of the deceased prior to her death. That time and effort is not relevant to
the present application because the present application concerns commission for
performance in the office of executor.
54. The other executor, Mr Crothers, resides in Bourke, NSW. To undertake his duties as
executor he has been required to drive to Canberra on several occasions. The drive is
approximately eight hours long one way.
55. Mr McCarthy kept a diary and has set out in two schedules the time taken on various
tasks performed by him in the period between the deceased’s date of death (8 June
2020) and the end of December 2022 (Schedule 1) and some tasks attended to in 2023
(Schedule 2), excluding incidental telephone calls and attendances of less than 15
minutes.
56. The Schedules assert that Mr McCarthy spent approximately 73½ hours performing his
duties as executor.
57. Other than the evidence of several round-trip drives of 16 hours from Bourke to Canberra,
there is no evidence of the time taken by Mr Crothers in performing his duties as
executor. I assume several means three, and therefore Mr Crothers spent some 48 hours
in travelling time.
58. The executors helpfully provided the following table (Exhibit 1 in the application and
which is set out below) to the Court setting out the values of the capital realisations,
income collections and the value of assets transferred in specie, together with a range
of percentages applied to each category of asset.
59. The executors submitted that, firstly, they be allowed a commission or percentage, and
secondly, the appropriate percentages they should be allowed were: 1.25% on capital
realisations ($53,199.05), 3% on income collections ($8,046.95) and 1.5% on the value
of the assets transferred in specie ($50,966.27). If those percentages were allowed the
total sum allowed would be $112,212.27.
60. Mr Crothers’ travelling time, even though onerous in some respects, was of course not
accompanied by the responsibility, anxiety and worry involved with performing an
executor’s tasks and ought not be regarded as attracting remuneration to the same
degree as would be attracted by him performing the work of an executor. No evidence
has been provided from him in relation to the estate work he undertook.
61. Be that as it may, the total time spent by the two executors as revealed in the evidence
provided (excluding incidental matters of less than 15 minutes) is 125 hours rounded off.
62. Using that amount of time (125 hours) as a test of the value provided to the estate for
the claimed amount ($112,215 rounded off) reveals that the executors are claiming at a
rate of $898 (rounded off) per hour. That seems to me to be excessive.
63. Of course, any commission is not to be assessed purely on a time-costing basis, but the
time spent on the administration of the estate is one integer to be considered.
64. Having regard to the evidence before me, I am of the opinion that there were some
difficulties in administering the estate, but those difficulties were not numerous nor overly
taxing, and the executors had the advice and assistance from professional advisors.
65. The estate is not overly large but is larger than the estates for most Australians. Larger
estates tend to attract a lower rate of commission: Re Estate Gowing at [55].
66. The estate was relatively simple, albeit with two complications involving income and
capital gains tax issues.
67. The assets were comprised largely of shares and various bank deposits. Although there
were more than a few of each, each was relatively easily administered.
68. The executors have agreed between themselves that any commission awarded will be
divided between them in equal shares (T 2.21).
69. On the evidence before me, I am of the opinion that it would be just to allow a commission
of 0.25% on capital realisations, 2.0% on income collections and 0.5% on assets
transferred in specie. On the table provided by the applicants, those commissions would
result in a lump sum of $32,993.20. I shall round that up to $33,000.
70. As Lindsay J said in Re Estate Gowing, the ultimate, resultant dollar amount is that which
is to be weighed in the balance. $33,000 is equivalent to $264 per hour for the 125 hours
(other than those attendance and telephone calls less than 15 minutes) spent by the
executors administering the estate and travelling for that purpose. I should note that I
have not calculated the commission based on that hourly rate, but simply used it as one
way of assessing the just allowance to be made considering the degree of time spent,
the difficulties encountered and the degree of responsibility, anxiety and worry involved
in circumstances where the executors had the assistance of professional advisors.
71. On the evidence before me, the realisations were largely (though not wholly) more in the
nature of mechanical realisations and collections rather than the exercise of not
inconsiderable judgement, knowledge of non-cash asset values, knowledge of current
market conditions and knowledge of when and how to sell and like matters. There was
some exercise of judgement and responsibility in relation to the income tax and the
capital gains tax matter, but no evidence of much judgement and responsibility with the
remaining matters. That is not a criticism of the executors at all, but a realisation that
they were assisted by professional advisors, a fact to be weighed in the balance.
Orders
72. I make the following orders:
1. The executors be allowed commission (for the period 8 June 2020 to 2 May 2023)
in the total sum of $33,000 (representing commission at the rate of 0.25% on capital
realisations, 2.0% on income collections and 0.5% on assets transferred in specie
and rounded up to the nearest $1,000).
2. The allowance shall be divided equally between the executors.
3. The costs of the application shall be paid out of the estate of the deceased on the
indemnity basis.
I certify that the preceding seventy-two [72] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Acting Justice Curtin.
Associate:
Date:
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