In the Matter of the Aged and Infirm Persons Property Act 1940: Public Trustee v Patrick Digby Holroyd Hill and Ian Allan McFarlane (as the Managers of the Estate of Bradley Seymour Cranfield) No. SCGRG85/2442

[1993] SASC 4309

COURT IN THE FULL COURT OF THE SUPREME COURT OF SOUTH AUSTRALIA KING CJ(1), OLSSON(2) AND DEBELLE(3) JJ

CWDS
Trusts and trustees - award of damages - protection order made under Aged and Infirm Persons Property Act 1940 - appointment of manager - basis of remuneration - remuneration by fee for service - relevant principles - although general rule is that remuneration should be by commission no basis for interfering with order. Aged and Infirm Persons Property Act 1940s.31. Re Gambling (1966) SASR 134; Re Duke of Norfolk's Settlement Trusts (1982) Ch 61; MacBean v Trustees Executors and Agency Co Ltd (1916) VLR 425; Allen v Union Fidelity Co of Australia (1986) 6 NSWLR 341 and Re Stratton (1981) WAR
58, applied. Campbell v Nangle (1985) 40 SASR 161; Strauss v Wykes (1916) VLR
200; In Re Barr Smith (1920) SALR 380 and Roman Catholic Trust Corporation for the Diocese of Melbourne v National Trustees, Executors and Agency Co of Australasia Ltd (Kaye J, Supreme Court of Victoria 26/6/81, unreported), discussed.

HRNG ADELAIDE, 7 July 1993 #DATE 10:12:1993
Counsel for appellant:     Mr J Doyle QC with Mr P White
Solicitors for appellant:    Crown Solicitor
Counsel for respondent:     Mr T Gray QC with Mr R Cameron
Solicitors for respondent: Scales and Partners

ORDER
Appeal dismissed.

JUDGE1 OLSSON J This matter went forward as an application for leave to appeal from an order of Legoe J, whereby he authorised the respondents to make time based charges, according to the scale of professional charges used by them in the ordinary course of their accountancy practice, in respect of their duties as duly appointed managers of a protected estate. The Court heard full argument as to the substance of the appeal in the course of the application for leave. 2. It should be said, at the outset, that the original application to Legoe J and this present application do not arise out of any specific criticism of the conduct of the respondents, or of the charges actually made by them to date. They seek simply to have the Court identify broad general principles of approach for future guidance in this and other cases. 3. I first turn to the background facts. The file related to this matter reveals that, on 20 April 1988, Bradley Seymour Cranfield ("the protected person") obtained a judgment in the sum of $960,000, against one Murray, by way of damages for negligence. He had sustained very serious injuries as a consequence of a motor vehicle accident which occurred on 15 August 1982, whilst he was a passenger in a motor car driven by Murray. In the accident he sustained severe brain damage. 4. On 20 April 1988, after hearing detailed evidence on the question, Legoe J made a protection order, pursuant to the provisions of section 8a of the Aged and Infirm Person's 2 Property Act ("the Act") in respect of the whole of the estate of the protected person. By that order he appointed the present respondents, who are Chartered Accountants, to be private managers of the protected estate. 5. As I read the reasons for decision published by the learned judge at the time, he was moved to do so because of the relevant prior experience of one of the respondents and the fact that, by virtue of the fact that their practice conducted an office at Victor Harbor close to where the protected person resided, they would be able to give ongoing personal attention to the administration in a manner beneficial to him. On the hearing of the application leading to the making of the protection order Legoe J received evidence as to the comparative costs - in terms of remuneration - which would be incurred if the administration was carried out by Public Trustee or a corporate trustee Company, by way of contrast with the fee for service basis of remuneration then sought by the respondents. 6. At the end of the day he simply made an order, in more or less the common form, appointing the respondents as joint managers of the protected estate. The order, as sealed and entered, did not contain any express reference to the basis of remuneration to be paid to the managers. 7. Following the making of the protection order, the respondents embarked upon the administration of the relevant fund, which, after the making of proper initial disbursements, amounted to a net figure of just under $900,000. The present invested capital in the hands of the managers still remains at about that sum. 8. Acting on the understanding that it was implicit from the making of the order, on the footing of evidence given by one of the respondents before Legoe J as to the basis of remuneration which would be sought, that the learned judge had accepted such basis as proper and appropriate, the respondents thereafter charged remuneration on that basis. They rendered periodic accounts to Public Trustee in conformity with their obligations pursuant to section 19 of the Act. 9. Those accounts disclosed regular debits in favour of the respondents, calculated on a professional fee for service basis, for the work done by them in and about their administration of the protected estate. It has never been disputed that the work charged for was properly done and that the charges made were debited at normal professional rates in accordance with the evidence originally given before Legoe J. 10. During 1991, correspondence was exchanged between Public Trustee and the respondents as to the proper basis of remuneration for their services. Public Trustee contended that, having regard to the provisions of section 31 of the Act, no authority existed for the retention of any form of remuneration; and that an application ought to be made by the respondents to regularise the situation. 11. This led to ongoing correspondence on the topic. Eventually, the respondents made formal application to Legoe J for an order as to their remuneration pursuant to section 31. This sought to regularise past debits on a fee for service basis and to authorise future remuneration on a like footing. 12. Section 31 of the Act is expressed in these terms:-
    "31. (1) All expenses properly incurred by the manager in
    respect of the maintenance of the protected estate, or the
    administration of the protected estate, shall be charged against
    and payable out of that estate; and in addition, there shall be
    payable in respect of all moneys forming part of the protected
    estate, and coming under the control of the manager, such
    remuneration by commission or otherwise to the manager, and such
    other charges, as are allowed by the court in any manner thought
    fit by the court.
     (2) If the Public Trustee is the manager, there shall be
    payable in respect of all moneys forming part of the protected
    estate and coming under the control of the Public Trustee, a
    commission and fees determined in accordance with regulations
    made pursuant to section 112 of the Administration and Probate
    Act, 1919-1937, or as is otherwise allowed by the court, and such
other charges as may be allowed by the court." 13. The respondents' application was debated before Legoe J at some length by counsel appearing both for the respondents and Public Trustee, it being the stance of Public Trustee that, in both this and like administrations, the proper approach was to regard the managers as standing on the same footing as trustees of a deceased estate. So, it was argued, the principles espoused by this court in In re Barr Smith (1920) SASR 380 ought to be applied and that, at least in the future, remuneration ought to be allowed on a per centage commission basis. The respondents resisted such a proposition and contended that it was implicit in the original order appointing them that they ought to be remunerated on the basis indicated in the evidence given by the respondent Hill which led to their appointment, namely by means of a proper fee for service. 14. On 22 September 1992 Legoe J published reasons in which, after reciting in some detail the differing contentions advanced before him, he had this to say:-
    "I do not accept the interpretation which has been put on
    the provisions of the Act, particularly s.31(1), by counsel for
    the Public Trustee. In my judgment that section does provide for
    the remuneration by commission or otherwise to the private or
    personal manager and such other charges as may be allowed by the
    Court in any manner thought fit by the Court. It seems to me
    that the remuneration by commission or otherwise to the manager
    is such remuneration as is appropriate for the type of manager
    who has been appointed. In this case professional accountants
    were appointed for reasons which were given at the time of the
    making of the order. That situation has not changed, indeed the
    general circumstances as appear from the papers have confirmed
    the appropriateness of making an order to those professional
    persons. In my opinion the making of a fixed lump sum or charges
    would not be appropriate in this case. It would be too
    inflexible to fix an upper limit of commission along the lines
    stated in R.111.09 whereby remuneration of a commission of 5
    percent is allowed on all income collected and a capital
    commission of 4 percent on the first $50,000.00, 3 percent on the
    next $50,000.00, 2 percent on the next $100,000.00 and 1 percent
    on the balance. Such remuneration by way of commission is
    payable on an annual basis. The accounts in this case show that
    the professional accountants have charged appropriate fees for
    the work that they have actually done. These fees are contained
    in the annual statements which have been filed in the Court
    pursuant to the provisions of s.19 of the Act and R.111.07. The
    Public Trustee is obliged to report on these statements and has
    in fact done so each year. Furthermore, those accounts have been
    audited. In my judgment payment of remuneration by commission to
    these managers would be entirely inappropriate and would be
    inflexible. In my judgment the requirements of section 19 of the
    Act and Rule 111 give a sufficient protection, which is not only
    contemplated but authorised by the Act for the protection of the
    estate. This procedure for professional charges remuneration is
    authorised by section 31(1) of the Act. For these reasons, in my
    opinion, there should be an order that the statements which have
    been filed in the Court in respect of the management of the
    protected estate should be accepted as satisfactory and a
    reasonable statement of the affairs of the protected estate. The
    charges to the managers should be accepted as reasonable as
    stated by the auditor in each of the annual reports on file. In
    my opinion there has been no technical breach of trust by the
    managers in this matter. In my judgment the provisions of the
    Trustee Act are not applicable for the purpose of fixing any
    Commission by way remuneration." 15. He proceeded to pronounce a formal order which, in effect, confirmed the charges actually made by the respondents for their past work and authorised them, in the future, to charge against and deduct from the protected estate "remuneration calculated according to the scale of professional fees used by them in the course of their accountancy practice." 16. Public Trustee now seeks to appeal from that order, as a party said to have been joined pursuant to section 22 of the Act, for the purpose of seeking a review of the principles applicable to situations of the nature of that the subject of such order. 17. A threshold question which arose on the hearing of the appeal was whether or not the order appealed against was interlocutory in nature or a final order; and thus whether an appeal lay as of right or only by leave. 18. As to that issue perhaps the most helpful discussion of this type of question is to be found in Southern Cross Exploration NL and Others v Fire and All Risks Insurance Company Ltd and Others (1990) 21 NSWLR 200. A question arises as to whether the relevant order has finally determined the rights of the parties in a principal cause pending between them. 19. When applied to this case I do not think that such a question can be answered in the affirmative. These are not true inter parties proceedings in a principal cause. The application was merely directed to an ancillary administrative question arising in the course of a wider context of a protection order made within an action for damages. I would hold that the order sought to be impugned is, technically, interlocutory in nature and that leave to appeal is required. 20. I return to the mainstream issues in this matter. It must be recognised at the outset that administrations of the nature of those conducted in consequence of a protection order made pursuant to the provisions of section 8a of the Act are by no means fully to be equated with those related to trusts arising in deceased or settled estates. The very nature of the work to be done and the nature and width of discretions to be exercised is fundamentally different. A section 8a order bears upon an already liquid fund, its subsequent investment and a style of administration of it and the income which it generates which is akin to that of a wise and caring parent looking to the reasonable needs of a child; and the most beneficial and sensible means of satisfying those needs. An essential incident of that task is usually its long term, ongoing nature and the need for sensitive and responsible interaction with the protected person and his or her family. It is a far cry from marshalling and getting in assets in a deceased estate, and then disposing of them in accordance with a fixed trust. The discretions and responsibilities to be exercised or accepted in the latter type of situation are usually very different in nature extent and duration from those typically attaching to a section 8a administration. 21. So it is that some care must be exercised in seeking to import into such an administration either the approach, or the percentage allowances adverted to, in In re Barr Smith. Furthermore, it must be stressed that that case by no means sets out to erect rigid bases of commission remuneration. The 8 rates referred to in that case are intended only to be used in routine situations. There is reserved to a Master a wide power to vary them or make some other form of allowance as may be appropriate, in recognition of particular situations in particular cases. That, in my experience, is a discretion quite frequently exercised where proper justification exists for doing so. 22. What is particularly significant for present purposes is that the statute itself expressly sets out to confer on the judge dealing with the matter a discretion to prescribe "such remuneration by commission or otherwise to the manager, and such other charges, as are allowed by the court in any manner thought fit" by it. It is difficult to envisage a conferral of discretion in wider terms and, in my opinion, this Court ought to be slow to attempt to circumscribe it by the adoption of rigid principles which could have the effect of removing the flexibility which the legislature has seen fit to confer. 23. It may well be that, in the more routine and simple cases in relation to which section 8a orders are made, the preferable course will, as a matter of practical expediency, be to commit this type of administration to Public Trustee on the basis of a fairly normal commission type remuneration. On an "overs and unders" basis this will usually produce a result which is simple, predictable and fair to the protected persons concerned. 24. Indeed, in some cases of very substantial awards, that strategy may also commend itself to the judicial officer concerned as being the most expedient approach. 25. However, as recent history has demonstrated, it will, from time to time, be more efficacious and beneficial to a protected person not only to appoint a private or corporate manager or managers, but also to prescribe a special basis of remuneration tailored to meet the specific circumstances. Section 31 of the Act itself expressly recognises such a possibility. 26. In my opinion, where such a course is proposed proper, suasive evidence ought to be placed before the court to demonstrate both the desirability and demonstrable benefit to a protected estate of appointing a manager other than Public Trustee and to justify a departure from a commission based prescription as to remuneration to be paid. 27. In the latter regard it may well be that the commencement point for consideration ought to be a potential commission at rates which are not unduly disproportionate to those normally payable to Public Trustee. However I consider that, upon adequate justification, the Court ought not to shrink from resorting to a very different approach if the circumstances suggest the desirability and efficacy of so doing. 28. There is, of course, a wide range of options available. In some situations resort to the type of approach adopted by Walters AJ in Re Gambling deceased (1966) SASR 134 may have considerable merit, combining, as it does, the possibility an admixture of commission and supplemental professional fees. In others the nature of the administration may suggest a fee for service basis of remuneration, provided that some workable method of vouching and periodic review can be devised. 29. It must be acknowledged that one practical problem with the lastmentioned approach is that it is open ended and could lead to a situation in which fees charged become disproportionate to fund income, to the point at which some different approach would need to be formulated. 30. It was argued before us that a fee for service scheme presents Public Trustee with difficulty, in that there is no very satisfactory method of ascertaining whether the fees charged are, or are not, fair and reasonable. Whilst a commission based remuneration has the obvious advantage of simplicity it, nevertheless, seems to me that the perceived difficulty is more apparent than real. It is common ground that Public Trustee is required to oversee a number of administrations of this type and therefore must have some general idea of reasonable levels of charges. Moreover, in the instant case, it already has some history of annual fee levels to guide it and can call for detailed justification at any time. 31. However, at the end of the day, the correct test must always be what scheme is in the best interest of the protected person, both as to the type of manager appointed and the nature of the remuneration stipulated. Within the bounds of sensible levels of management expenditure the Court should strive to establish the best and most beneficial environment for that person. 32. That is essentially what Legoe J has done in the instant case. It is beyond question that he has thoroughly investigated this issue on two separate occasions and has exercised his discretion in a manner consistent with the principles which I have above outlined. It has simply not been demonstrated that he has fallen into error, by either misapprehending the facts or breaching any relevant principle. On the contrary, it seems to me that, to date, the managers have approached their responsibilities with diligence, sensitivity and in a manner best calculated to satisfy the best interests of the protected person. There is no suggestion that the charges made by them have been in any sense extravagant. 33. What must not be overlooked in this particular case is that, for reasons which have not been impugned, Legoe J consciously opted for the appointment of private managers to best meet the personal needs of this protected person, as he perceived those needs. He did so after careful scrutiny and on the basis of oral evidence. It was, from the outset, implicit in the appointment that the personal managers would, as the basis of their appointment, seek to be remunerated on a fee for service basis. To now turn around and seek, unilaterally, to negate the very basis upon which they accepted their appointment, and upon which they have satisfactorily discharged their duties since 1988, would be both unconscionable and unthinkable. 34. In my opinion there has been no ground made out upon which this Court could possibly intervene to overturn the order appealed against. I would refuse leave to appeal. 35. Of course if, over time, a situation were to develop whereby the level of fees charged appeared to be assuming a quantum disproportionate to the income of the fund administered, then a need for some review of arrangements might well arise. However, that is for another occasion, which may never arise. 36. For the reasons expressed by Debelle J, I agree that Public Trustee ought to pay the costs of the respondents as between solicitor and client.

JUDGE2 KING CJ I would refuse leave to appeal for the reasons given by Olsson J.

JUDGE3 DEBELLE J Mr B S Cranfield had been awarded damages totalling approximately $1,000,000 for severe personal injuries he sustained in a motor vehicle accident. His injuries were so severe that the Court considered it desirable to make a protection order in respect of the estate pursuant to s.8a of the Aged and Infirm Persons' Property Act, 1940 ("the Act"). On 20 April 1988 a protection order was made and, by the same order, the applicants were pursuant to s.10 of the Act appointed managers of the estate. The order made no express provision for the terms on which the applicants should be remunerated for their services. 2. The applicants are chartered accountants. Since their appointment, they have advised Mr Cranfield and administered the estate. They have rendered accounts on a regular basis for their professional services. The applicants have charged for their services on a fee for service basis, the fees being calculated according to the scale of professional fees used by them in the ordinary course of their accounting practice. 3. In accordance with the requirements of the Act and Rule 111 of the Supreme Court Rules, the applicants have filed annual returns as to their administration of the estate, its assets, income and liabilities. In each year Public Trustee has conducted an audit of the affairs of the estate pursuant to s.19 of the Act. 4. The applicants manage a number of other estates where protection orders have been made pursuant to s.8a of the Act. They have adopted the same practices and procedures in their administration of those estates and, in particular, they have charged for their services on a fee for service basis. Public Trustee had drawn the attention of the applicants to the fact that, in the case of this and other estates managed by them, no order has been made as to the basis upon which they are to be remunerated. Public Trustee also questioned whether the appropriate basis for remuneration should be a commission or a fee for service. 5. The applicants applied for an order nunc pro tunc that they be remunerated according to the rates they have charged. The application was in effect a test case to determine the appropriate basis of remuneration of private managers appointed pursuant to s.10 of the Act. The application was heard by the judge who had made the protection order. It should be emphasised that there was no issue as to the reasonableness of the fees charged by the respondents and Public Trustee did not oppose the making of an order retrospectively authorising the deduction of proper remuneration. Nor did Public Trustee call into question the fact that the respondents had been appointed managers. The central issue before the judge was the basis on which managers should be remunerated. Public Trustee contended that the position of a manager is analogous that of a trustee so that the rate of remuneration should be calculated by reference to trustee's commission and not determined by reference to a scale of professional fees. 6. Section 31 of the Act authorises the Court to order remuneration of a manager by commission or on such other basis as the Court thought was required by the particular circumstances of the case. It provides:
    "(1) All expenses properly incurred by the manager in
    respect of the maintenance of the protected person, or the
    administration of the protected estate, shall be charged against
    and payable out of that estate; and in addition, there shall be
    payable in respect of all moneys forming part of the protected
    estate, and coming under the control of the manager, such
    remuneration by commission or otherwise to the manager, and such
    other charges, as are allowed by the court in any manner thought
    fit by the court.
     (2) If the Public Trustee is the manager, there shall be
    payable in respect of all moneys forming part of the protected
    estate and coming under the control of the Public Trustee, a
    commission and fees determined in accordance with regulations
    made pursuant to section 112 of the Administration and Probate
    Act, 1919-1937, or as is otherwise allowed by the court, and such
    other charges as may be allowed by the court." 7. The trial judge thought it appropriate to order that the fees in this case be fixed by reference to the scale of professional fees used by the respondents in the ordinary course of their accounting practice. As there was no dispute as to the reasonableness of the fees charged by the applicants, he made orders authorising the respondents to charge for their services at a rate calculated according to the scale of professional fees used by them in the ordinary course of their accounting practice. The learned judge also approved the fees which had been already charged by the applicants. 8. Public Trustee appealed from that decision. The Solicitor-General, who appeared for Public Trustee, informed the Court that Public Trustee did not seek to re-open the accounts of past years in relation to this estate. Instead, Public Trustee was seeking a decision which would provide guidance as to terms of remuneration on future occasions when the Court was considering whether it should appoint a private manager and at the same time determine the basis upon which the respondents should be remunerated in the future for the services concerning this estate. 9. At the outset, it is necessary to determine whether the duties of managers appointed under the Act are analogous to those of a trustee. I think they are. There is little profit in seeking to make a detailed comparison between the duties and obligations respectively of a trustee or manager because, at the end of the day, both are in a fiduciary relationship to the beneficiaries of the estate being administered. Both are required to administer and manage the estate entrusted to them and advance the interests of the estate. Both are subject to like duties in the administration and management of the estate. Both are required to account for that administration. In some cases a trustee or manager will have little more to do than manage an existing fund so that a highly skilled investment manager will not be required: cf Campbell v Nangle
(1985) 40 SASR 161 per King CJ at 192-193. In other cases, a trustee or manager will be required to undertake duties akin to those of a parent. Such is the variety of estates administered by both trustees and managers that in some cases their duties will be similar while in others they will differ to a greater or lesser degree. Just as the duties of trustees will vary from estate to estate so the tasks for managers will vary according to the particular requirements of each estate. A manager has the duties and obligations of a trustee and must account in the same way as a trustee. It is, therefore, correct to conclude that trustees and managers have analogous duties and obligations. Furthermore, although s.18 of the Aged and Infirm Persons Property Act is careful not to state that a manager is a trustee, it implicitly acknowledges that a manager should be regarded as a trustee. With respect, I cannot agree with the reasons of Olsson J, which I have had the advantage of reading, that the nature of the work to be done and the discretion that is to be exercised respectively by trustees and managers are fundamentally different. 10. The general rule is that a trustee is not entitled to payment for his services in the absence of an express or implied provision in the instrument creating the trust: Re Gambling (1966) SASR 134 and see generally Ford and Lee, Principles of the Law of Trusts (2nd ed), paras 1305-1307. Section 31 picks up this general rule so that, in the absence of an express provision in the order appointing a manager, a manager is not entitled to be paid for his services. Section 31 expressly requires the Court to determine the terms on which a manager other than Public Trustee is to be remunerated. Section 31 also requires the Court to specify the basis of remuneration. The Court is to determine "such remuneration by commission or otherwise to the manager, and such other charges" as it thinks fit. Thus, in the absence of an order authorising his remuneration, the manager is not entitled to be paid for his services and will be entitled only to recover his out of pocket expenses. It is essential, therefore, that when an order has been made appointing a manager, the order should expressly provide that the manager is to be remunerated and for the basis of that remuneration. I note that the common form of the order appointing a manager does not expressly provide for the terms and conditions of remuneration and it is desirable that it should be amended to do so. 11. The Solicitor-General submitted that, because the duties of a manager were analogous to those of a trustee, it followed that, generally speaking, a manager should be remunerated by a commission and that there should not be a departure from that rule unless good reason is shown. A further reason for the rule, he said, was that it would enable Public Trustee the more accurately and the more readily to conduct the annual audit of the administration of the estate including the fees charged by the managers, pursuant to s.19 of the Act. 12. The Solicitor-General put the case on the basis of general principle. He did not advance any comparison between the fees charged by the respondents and the fees which would have been recoverable if they had been remunerated by commission. Nor was there any evidence by which such a comparison could be fairly made. This led to an immediate difficulty. At the end of the day, the question is what is a fair and reasonable rate of remuneration having regard to the work properly undertaken by the respondents. If the fees charged by the respondents were less than what would have been recoverable by way of commission, the Solicitor-General could scarcely expect to sustain his submission that, in this estate at least, the proper basis for remuneration was by way of commission. If the fees charged in each year were significantly higher than what would have been recoverable on an appropriate rate of commission, there might have been a case for requiring the respondent to submit to an order that future remuneration be on a commission basis. Given the concession that the fees already charged and paid were fair and reasonable, it is very difficult for this Court to interfere with the present arrangements as to remuneration. In the absence of any evidence which demonstrates that a commission would be less expensive to this estate as well as providing a fair level of remuneration to the manager, this Court could only justify disturbing the present arrangements if it were satisfied that general principle clearly required it to do so. 13. Where a trustee is entitled to be paid for his services, remuneration by commission is the usual, if not traditional, method of payment. It is not, however, the only method of payment. Thus, s.70(1) of the Administration of Probate Act, 1919 provides: "The Court may allow to any executor, administrator, or trustee, whether of the estate of a deceased person or otherwise, such commission or other remuneration out of the estate or trust property, and either periodically or otherwise, as is just and reasonable." 14. Payment by commission is the usual method of rewarding trustee companies and Public Trustee for their services. Trustee companies are empowered to charge the estate a commission at a maximum rate fixed by s.9 of the TrusteeCompanies Act 1988. They may also recover disbursements and other fees allowed pursuant to s.11 of that Act. The Court has power to review a trustee company's charges and may reduce the commission or other fees charged if they are excessive: see s.12 of the Trustee Companies Act. Public Trustee is entitled to remuneration by commission on rates prescribed by regulation, see Administration and Probate Act, 1919 and the regulations thereunder. The Court also has inherent jurisdiction to order remuneration of the trustees: Re Duke of Norfolk's Settlement Trusts (1982) Ch 61; Strauss v Wykes (1916) VLR
200. 15. There are a number of advantages in remunerating a manager by commission. First, it enables a ready calculation of commission. Secondly, there is no fixed rate for a commission regardless of the amount of work involved; the rate of commission can be fixed to reflect the amount of work involved, the difficulty in administering the estate or the level of responsibility required: MacBean v Trustees Executors and Agency Co Limited (1916) VLR 425 at 439-440; in re Barr Smith (1920) SALR 380 at 387-388. In the case of trustee companies and Public Trustee, the rate of commission prescribed respectively by s.9 of the Trustee Companies Act and by the regulations under the Administration and Probate Act is the maximum rate chargeable and is, therefore, the appropriate rate for the administration of estates with complicating factors so that a lesser rate is applicable where the administration is less complex: Roman Catholic Trusts Corporation for the Diocese of Melbourne v National Trustees, Executors and Agency Co of Australasia Limited (Kaye J, Supreme Court of Victoria, 26 June 1981, unreported) cited and approved in Allen v Union Fidelity Co of Australia
(1986) 6 NSWLR 341. Thus if a manager is to be remunerated by a commission, the Court can fix the rate of commission taking into account the degree of responsibility undertaken by the manager, the degree of skill and specialised knowledge required and applied by him, the complexity of the estate, and the amount of work to be done in the performance of the duties of manager: cf Allen v Union Fidelity Co of Australia (supra) at 345. 16. A third advantage of adopting commission as the basis for remuneration is that it is always open to the Court to vary the rate to reflect any change in the complexity of the administration of the estate: re Duke of Norfolk's Settlement Trusts (supra); re Stratton (1981) WAR 58. The rate of commission can be increased or lowered according to whether the estate has become more or less complex to administer. Care should be taken to ensure that the rate of commission does not yield an unfairly high return to the manager, for example, where the estate is large but the administration is relatively straightforward. Should that problem occur, the estate can apply to reduce the rate of commission and to recover part of the excessive commission already paid: see Allen v Union Fidelity Trustee Co of Australia Ltd (supra). The power to increase or reduce the rate of commission as circumstance requires is, I think, a significant advantage. It enables the Court to vary the rate to reflect changing circumstances. Finally, remuneration by a commission is capable of being more readily ascertained and audited by Public Trustee as part of the audit required of the annual returns of the manager under s.19 of the Aged and Infirm Persons Property Act. By contrast, in the absence of an exhaustive and perhaps expensive enquiry, it will be very difficult for Public Trustee to determine the fairness and reasonableness of fees for service. It can sometimes be difficult to determine the reasonableness of the time spent and the fairness of the fees charged. Some of the reasons for those difficulties include the difficulty in determining whether all the work done was reasonably necessary, whether it was necessary or appropriate for the work to be done by the manager or some other person on a lower level of salary, or whether the work involved was handled efficiently and expeditiously. Moreover, the cost of a properly conducted audit might be altogether out of proportion to the benefits that are likely to be achieved if a full enquiry were conducted. 17. On its face, remuneration in the form of a fee for service should be a fair and reasonable method of remuneration. A fee for service should be a fair fee charged for doing only what is required in the proper discharge of the duties of a manager. It should provide proper remuneration for a manager at a rate which is fair to the estate. It has the advantage of avoiding the difficulties inherent in attempting to fix a rate of commission which will yield an appropriate level of remuneration: cf in re Barr Smith (supra). A fee for service has the additional advantage that it can provide a fair level of remuneration to a manager who is required to devote a considerable degree of personal care and attention to the affairs of the person whose property is protected and to the protected person himself. 18. There are, however, some features of this method of remuneration which make it less desirable than remuneration by commission. I have already referred to the difficulties confronting Public Trustee in endeavouring to determine whether fees for service are fair and reasonable. If care is not taken, a fee for service can result in rewards for inefficiency. Should the fees charged by a manager on a fee for service basis exceed what would have been payable had a commission been payable at the maximum rate chargeable by Public Trustee, there might be grounds for believing that the fees were excessive. 19. A fee for service will usually result in a charge for all services rendered. From time to time the manager might be required to give advice on matters other than investments or on matters which call for a payment of some kind from the fund he is administering. A commission, therefore, has the further advantage that it would cover all services provided by the manager except the services of, say, other necessary professional advisers. 20. At the end of the day the task for the Court is to balance two competing considerations; first, the need to protect the interests of the protected person and, secondly, the fact that it is of great importance to the protected person that the estate should be well administered: cf Re Duke of Norfolk's Settlement Trusts (supra) at 79. Thus, the remuneration to the manager must be fair and reasonable while at the same time not result in an unfair impost to the estate. The paramount consideration must at all times be the interests of the protected person. 21. If a private manager is appointed, he must expect that the level of fees charged will be competitive with those charged by Public Trustee or a private trustee company, who are both remunerated by commission at a prescribed rate. There is no justification for charging on a fee for service basis if that were to result in higher fees to the estate. A court might be slow to permit a manager to charge the estate on a fee for service basis unless it can be demonstrated that the fees charged will result in a lower cost to the estate than a commission. It is always difficult prospectively to fix a fair basis for remuneration. It is not possible to determine with any precision what the expenses of administering the estate will be particularly as it will in all likelihood be subject to a number of contingencies. The Court should, therefore, be alert to provide for the fact that the duties required of the manager might vary in the course of his administration of the estate. For example, where the protected person is a minor, the administration could last for many years and the duties and responsibilities of the manager could vary considerably in that time. Prudence dictates an order fixing the terms of the manager's remuneration should provide that the Court be able to vary the terms or conditions of remuneration on the application of either the manager or the protected person. The Court is, of course, vested with power to vary the remuneration by s.11 of the Act but it is helpful to the parties to have the provision clearly drawn to their attention by the terms of the order. It cannot be assumed, for example, that all protected persons are familiar with all of the provisions in the Aged and Infirm Persons Property Act. 22. There may well be other factors bearing upon the desirability of a commission vis a vis a fee for service. As at present advised, I am inclined to the view that, as a general rule, a commission will be the more appropriate basis for remuneration. It has the advantages of certainty and of ready calculation and verification. The estate, therefore, can gain a fair idea of what the fees in the future will be. It can be readily varied to meet changing circumstances. It avoids the disadvantage of determining whether fees rendered for services are fair and reasonable. When making an order that a manager should be remunerated, the Court will determine the appropriate rate of commission. For reasons given in Campbell v Nangle (supra), the rate of commission charged by Public Trustee will be a convenient benchmark. 23. A commission has been and still is the usual means of remunerating trustees and other fiduciaries such as executors and administrators. The fact that a manager appointed under the Aged and Infirm Persons Property Act is a fiduciary with duties analogous to those of a trustee, is a further reason why a manager should be remunerated by a commission. I think that s.31 also indicates an intention that remuneration by commission should be the general rule. If that were not so, s.31(1) would have been differently expressed, for example, by deleting the words "by commission or otherwise". Furthermore, a private manager must be able to compete with Public Trustee who is paid by commission: s.31(2). Remuneration by commission should, therefore, be the general rule unless the private manager can demonstrate that some other basis of remuneration is justified either because it will result in a lower cost to the estate, or because of the particular difficulties inherent in the administration of the estate, or for some other reason. However, each case must be considered on its own facts and circumstances. In some cases it might be appropriate to approve an annual lump sum, a basis which has been adopted by this Court in at least two cases. Or it might be appropriate to order a commission and a lump sum: see re Gambling (supra). 24. The learned trial judge has concluded that in the particular circumstances of this case, it was proper to appoint a private manager who was a chartered accountant and that he should be remunerated on a fee for service basis. He has found that the fees charged were appropriate for the work which was done. There is no challenge to those findings. Instead, Public Trustee has asked this Court to determine that there is a general rule that managers should be remunerated by commission and that the respondents fall within that general rule. While such a rule should generally speaking be applied, Public Trustee has not shown that these issues were not considered by the trial judge and that the general rule should apply in this case. The trial judge has twice considered how the respondents should be paid for their services and Public Trustee was not able to show that in this particular case, a fee for service was inappropriate. It follows that there is no ground which would justify this Court in disturbing the decision made by the trial judge. 25. For these reasons I would dismiss the appeal. The respondents objected to the competency of this appeal submitting that the order was interlocutory in nature. Public Trustee submitted that the order was final in that it finally dealt with the fees rendered by the respondents for the full financial year ending 30 June 1991. The respondents' objection was faintly argued, the respondents being concerned to obtain the ruling of this Court on the issues raised by Public Trustee. I do not think it is necessary to resolve the question whether this is an appeal from an interlocutory or final judgment. Both parties are anxious to have the ruling of this Court on issues which are of general importance in the administration of estates under the Act as well as being important to them both, applying as they do to a number of estates which the respondents administer as managers. Given the conclusion I have reached, it is not necessary to determine whether the appeal was from an interlocutory or final judgment. 26. The question of the costs of this appeal has already been argued. There is no appeal from the order as to the costs of the initial application. Public Trustee has failed on this appeal and would in any event have to bear the costs of the appeal on a party and party basis. However, this particular estate should not be required to incur cost because of the desire of Public Trustee to seek a determination of a question of general principle in respect of all estates administered pursuant to the Aged and Infirm Persons Property Act. In my view, Public Trustee should be required to pay the costs of the respondents of the appeal on a solicitor and client basis as taxed or agreed.