PWJ
[2013] QCAT 368
| CITATION: | PWJ [2013] QCAT 368 |
| PARTIES: | PWJ |
| APPLICATION NUMBER: | GAA3834-11 & GAA10526-12 |
| MATTER TYPE: | Guardianship and administration matters for adults |
| HEARING DATE: | 11 December 2012 |
| HEARD AT: | Brisbane |
| DECISION OF: | Judge Alexander Horneman-Wren SC, Deputy President Clare Endicott, Senior Member Les Clarkson, Member |
| DELIVERED ON: | 20 August 2013 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | THE TRIBUNAL DIRECTS THAT: 1. The Perpetual Trustee Company limited must file in the Tribunal and serve upon the Public Trustee of Queensland and PWS and PJL a draft order in accordance with these reasons. 2. The application is listed for a directions hearing at 12.00 pm on 13 September 2013. |
| CATCHWORDS: | GUARDIANSHIP – where Perpetual Trustee Company Limited made an agreement with the adult’s litigation for remuneration – where that agreement was found to be not enforceable – where Perpetual Trustee Company Limited filed an application in the Tribunal seeking an order authorising fees already charged – whether s 48 of the Guardianship and Administration Act 2000 applies to remuneration of a trustee company – whether s 41 of the Trustee Companies Act 1968 applies to remuneration of trustee companies – whether s 41(1) of the Trustee Companies Act 1968 imposes limits on fees charged by Trustee companies GUARDIANSHIP – where Perpetual Trustee Company Limited made an agreement with the adult’s litigation for remuneration – where that agreement was found to be not enforceable – where Perpetual Trustee Company Limited filed an application in the Tribunal seeking an order authorising the charging of future fees – whether s 48 of the Guardianship and Administration Act 2000 applies to the remuneration of trustee companies – whether s 601TBA of the Corporations Act 2001 (Cth) applies to the remuneration of trustee companies GUARDIANSHIP – where Perpetual Trustee Company Limited made an agreement with the adult’s litigation for remuneration – where that agreement was found to be not enforceable – where Perpetual Trustee Company Limited filed an application in the Tribunal seeking an order authorising past and future remuneration – where s 48 of the Guardianship and Administration Act 2000 applies to remuneration of trustee companies – whether the Tribunal can make a prospective order for the applicant’s remuneration – whether the Tribunal can retrospectively order the applicant’s remuneration – whether the Tribunal can retrospectively order the applicant’s remuneration under s 48 of the Guardianship and Administration Act 2000 for the time when the Trustee Companies Act 1968 would have governed the remuneration of trustee companies GUARDIANSHIP – where Perpetual Trustee Company Limited made an agreement with the adult’s litigation for remuneration – where that agreement was found to be not enforceable – where Perpetual Trustee Company Limited filed an application in the Tribunal seeking an order authorising past and future remuneration – where Perpetual Trustee Company Limited submitted that the Tribunal should make an order under the Guardianship and Administration Act 2000 changing the terms of the applicant’s appointment as guardian – whether the Tribunal should make an order for future remuneration in the terms of the agreement between the applicant and the adult’s litigation guardian GUARDIANSHIP – where Perpetual Trustee Company Limited made an agreement with the adult’s litigation for remuneration – where that agreement was found to be not enforceable – where Perpetual Trustee Company Limited filed an application in the Tribunal seeking an order authorising fees already charged – the applicant submitted that the fees charged were conflict transactions that the Tribunal could authorise retrospectively – whether the charging of fees is a conflict transaction GUARDIANSHIP – where Perpetual Trustee Company Limited made an agreement with the adult’s litigation for remuneration – where that agreement was found to be not enforceable – where Perpetual Trustee Company Limited filed an application in the Tribunal seeking an order authorising the investment of funds in superannuation – where the investment was made in an associated entity – whether the investment was a conflict transaction – whether the Tribunal should make an order authorising the transaction Acts Interpretation Act 1954 (Qld), s 14A, Guardianship and Administrative Tribunal v Perpetual Trustees Queensland Limited [2008] Qd R 323, cited |
APPEARANCES and REPRESENTATION (if any):
| Mr M Stewart QC and Mr M Liddy for the applicant Perpetual Trustee Company Limited |
| Mr D B Fraser QC for the Public Trustee of Queensland Ms Jodie Cook the Public Advocate PSW and PJL (by telephone) parents of the adult PWJ |
REASONS FOR DECISION
Background to the proceedings
On 25 September 1996 PWJ suffered catastrophic injuries, including head injuries, in a motor vehicle accident. Through his wife as litigation guardian he commenced proceedings in the Supreme Court of Queensland for damages in respect of his injuries. On 11 March 2002, Holmes J (as her Honour then was) made orders pursuant to s 59 of the Public Trustee Act 1978 (Qld) in sanction of a compromise which had been reached in those proceedings.
The orders included judgment for PWJ in the sum of $3,118,896.00. From that judgment sum certain amounts were to be paid. The balance was to be paid to Perpetual Trustee Company Limited[1] (‘Perpetual’) to be held on trust for PWJ. The income on the funds was to be applied as the administrators for his financial matters saw fit for his maintenance and benefit. The total capital initially paid to Perpetual and held on trust for PWJ was $2,811,434.40.
[1]The order made on 11 March 2002 stated the balance was to be paid to Perpetual Trustees Queensland Ltd. On 31 January 2013 all estate assets and liabilities were transferred from Perpetual Trustees Queensland Limited to Perpetual Trustee Company Limited.
Perpetual and PWJ’s then wife were appointed joint administrators for his financial matters. The orders permitted the deduction from the funds of ‘any proper fees and charges’.
This application is about what fees Perpetual are, or should be, permitted to charge for administration services which it has rendered to date, and will render in the future.
In concluding that Perpetual was appropriate to be appointed as an administrator for financial matters within the terms of the Guardianship and Administration Act 2000 (Qld) (‘GAA’), Holmes J relied heavily on an opinion provided by Mr Geoff Doyle, a certified financial planner.[2]
[2]Transcript of proceedings, PWJ v Nominal Defendant, 11 March 2002 at p 5. Exhibit DNL-10 to the Affidavit of Dermot Noel Lindsay sworn 30 November 2012.
Mr Doyle had expressed the opinion that of the two financial plans which he had been asked to consider ‘the Perpetual financial plan would be in Joel’s best interests’.[3] The other financial plan considered by Mr Doyle was prepared by ABN–AMRO Morgans on behalf of the Public Trustee of Queensland.
[3]Advice of Geoff Doyle, 9 March 2002, exhibited to the Affidavit of PEG sworn 11 March 2002; exhibit DNL-2 to the Affidavit of Dermot Noel Lindsay sworn in these proceedings on 18 October 2012.
The disclosed fees and charges
The Perpetual financial plan included, as Part 2, section 6, the fees and charges proposed to be charged by Perpetual as administrators. The fees were in respect of what was termed its Discretionary Portfolio Management System. The fees comprised an initial establishment fee calculated as a percentage of the value of the initial portfolio. 1.1 per cent was to be charged on the first $300,000.00 of the portfolio. 0.825 per cent was to be charged on the next $700,000.00. The balance was to be charged at a rate of 0.55 per cent. On the initial capital sum this amounted to a fee of $19,038.00.[4]
[4]In the event, Perpetual only charged $17,498.00 as an establishment fee; exhibit DNL-8 to the Affidavit of Dermot Noel Lindsay sworn 18 October 2012.
The fees also included an ongoing management fee based upon the daily value of the portfolio and payable quarterly. This fee comprised two distinct parts; the cost for discretionary decision making on behalf of PWJ, and the cost of making and managing a portfolio of investments within Perpetual’s portfolio management service. The total of the fees which would have been payable as ongoing management fees up until 18 October 2012 was $273,620.28. In addition, a further $8,861.00 would have been payable under the financial management plan for the preparation of tax returns.[5]
[5]Exhibit DNL-8 to the Affidavit of Dermot Noel Lindsay sworn 18 October 2012.
The total amount which would have been payable under the financial management plan to 18 October 2012 was $301,519.07.
The amount which had actually been charged to 18 October 2012 was $241,878.00. This comprised $17,498.00 for the initial fees;[6] $209,516.00 for ongoing management fees and $14,864.00 for sums for other services provided.[7] The difference between the ongoing management fees payable to 18 October 2012 under the financial management plan and those actually charged is explained by Perpetual having voluntarily stopped receiving fees in respect of its administration of PWJ’s financial matters until the issues the subject of this application are resolved.
“Mistaken” basis upon which Perpetual had charged its fees – s 41(1) and s 41(7) Trustee Companies Act 1968 (Qld)
[6]The reasons why the initial fees charged were some $1,540.00 less than under the financial management plan is not immediately apparent on the material.
[7]Of this amount, Perpetual identifies $12,978.00 as amounts which would have been payable to it under s 45 of the TCA and $1,886.00 as being in addition to s 45 remuneration.
Central to this matter are two issues concerning the ability of Perpetual to charge fees in respect of its administration of PWJ’s affairs pursuant to s 41 of the Trustee Companies Act 1968 (Qld) (‘TCA’). First, is Perpetual’s mistaken belief that in having been appointed by the Court as joint administrator for PWJ’s financial matters it was able to charge fees pursuant to s 41(7) of the TCA. Secondly, is Perpetual’s assertion that it was not entitled to charge fees under s 41 of the TCA.
Section 41(1) of the TCA conferred[8] upon a trustee company to whom the administration of an estate was committed, an entitlement to receive a commission. Section 41(1) also imposed limits upon the commissions which may be charged. The entitlement was to charge a commission ‘at a rate to be fixed from time to time by the board of directors of the trustee company but not in any case exceeding, after discounting for any GST payable on any supply the commission relates to’ five percent of the capital value of the estate and six per cent on income received. These limits are commonly referred to as the statutory caps.
[8]Part 4 of the TCA in which s 41 was located was repealed by s 86 of the Fair Work (Commonwealth Powers) and Other Provisions Act 2009 (Qld) with effect from 6 May 2010.
Section 41(7) of the TCA permitted a trustee company to charge commissions or fees in excess of the statutory caps if those additional commissions or fees had been agreed upon between the trustee company ‘and the parties interested therein’.
When Perpetual accepted appointment as administrator of PWJ’s estate (or indeed when it accepted any appointment by a court as an administrator under the GAA) it did so on the belief that it had an agreement as to its fees to which s 41(7) of the TCA applied.[9] The person with whom it believed it had made such an agreement was, in each such case, the litigation guardian of the person under the legal incapacity.
[9]Affidavit of Andrew Douglas Thomas sworn 18 October 2012 at [20]; and Affidavit of Dermot Noel Lindsay sworn 18 October 2012 at [9(b)].
However, in Guardianship and Administrative Tribunal v Perpetual Trustees Queensland Limited[10] (‘GAAT v Perpetual’) Mullins J held that because any such agreement relates to services to be provided after the court sanction of the settlement and the conclusion of the proceedings, it was beyond the scope of a litigation guardian’s authority to enter into such an agreement.[11]
[10][2008] 2 Qd R 323.
[11]Ibid, at 339 [68].
Her Honour also concluded that s 48 of the GAA, in the terms in which it then was, did not apply to the remuneration of a trustee company where it was acting as the administrator of an adult under that act. Her Honour held that this was because s 48(3) of the GAA expressly recognised that the remuneration of a trustee company that acts as an administrator under the GAA was regulated by another act. That other act was to be taken to be the TCA.[12]
[12]Ibid, at 337 – 338, [62] – [65].
At the time of the judgment in GAAT v Perpetual, s 48 of the GAA was in these terms:
48 Remuneration of professional administrators
(1) If an administrator for an adult carries on a business of or including administrations under this Act, the administrator is entitled to remuneration from the adult if the tribunal so orders.
(2) The remuneration may not be more than the commission payable to a trustee company under the Trustee Companies Act 1968 if the trustee company were administrator for the adult.
(3) Nothing in this section affects the right of the public trustee or a trustee company to remuneration or commission under another Act.
The consequence of her Honour’s decision was that the Tribunal could not make an order entitling a trustee company acting as an administrator to remuneration.
Perpetual contends that as a result of this construction of s 48 of the GAA and s 41(7) of the TCA, it could only be remunerated, under the legislation as it then stood, pursuant to s 41(1) of the TCA and subject to the statutory caps. Clearly, it had no entitlement to remuneration under s 41(7) of the TCA.
Furthermore, it submits that it could only have an entitlement to remuneration under s 41(1) if its board of directors had fixed a rate of commission. It says that no such rate had been fixed, because the need to do so was unappreciated, it being believed that commissions had been set by agreement as contemplated by s 41(7).
Whether Perpetual is correct in its contention requires consideration of whether it did, or may, have an entitlement to commission under s 41(1) notwithstanding what is said to have been the failure of its board of directors to fix commissions from time to time.
In the course of the hearing, the Tribunal raised with the parties whether s 41(1) of the TCA could be construed as, first, conferring an entitlement on a trustee company to charge commissions, and, secondly, as restricting the rate at which those commissions might be charged to that which the board fixed or the statutory cap, whichever was lower. If s 41(1) were to be construed in that way, then a company whose board of directors failed to fix rates of commission would nonetheless have an entitlement to commissions charged at the rates of the statutory caps. The Tribunal invited submissions on this issue.
Perpetual submits, in short, that such a construction of s 41(1) of the TCA is not open. It submits that: ‘[s]uch an interpretation strains too much at the language of the section’. Thus it maintains its original submission that it had no entitlement to remuneration under s 41, or at all.
The Public Trustee, on the other hand, submits that such a construction of s 41(1) of the TCA is open. It submits that giving s 41(1) a purposive construction,[13] ‘s 41(1) must be seen as an enabling or entitling provision to cater for the situation where s 41(7) is not applicable’.[14] It submits that s 41(5) and (5A) impose further limitations by reference to the trustee company’s published rates with power of review by the court created by s 41(4). It submits as to the overall effect of s 41:
Thus the overall context is designed to result that the trustee company can charge to the level of the default rate subject to not having advertised lower rates of commission and further subject to the power of the court to reduce the rate of commission charge (sic).[15]
[13]Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at [69] per McHugh, Gummow, Kirby and Hayne JJ; s 14A Acts Interpretation Act 1954 (Qld).
[14]Supplementary submission of the Public Trustee dated 19 December 2012, at [7].
[15]Ibid, at [7].
The Public Trustee submits that the requirement to fix a rate is ‘not a critical indenture of the entitlement of a trustee company to lawfully receive commission up to the level of the default rate’.[16] This, it submits, is indicated by the lack of a requirement for a formal resolution of the board of directors to fix the rates; any action being taken by the board to set the rate being sufficient.
[16]Ibid, at [8].
The Public Trustee also submits that the provision contains no requirement that there be a rate fixed from time to time for each estate. Rather, it says that the entitlement to receive a commission is in respect of each and every estate and that, accordingly, if for one administration it was apparent that a trustee company had adopted a rate, that may suffice as a rate fixed from time to time.[17] The Public Trustee further submits that s 41(1) is a limit on the entitlement to receive the commission; it does not concern or create the power to charge commission.[18] The Public Trustee concludes:
Thus, it is submitted that where it becomes apparent that the board of [Perpetual] has fixed a rate for any estate under administration there is no impediment to [Perpetual] receiving remuneration in the form of commission which, when calculated, is not greater than the amounts which apply where the default rate is adopted.[19]
[17]Ibid, at [10].
[18]Ibid, at [11].
[19]Ibid, at [13].
The Tribunal does not agree that s 41 can be construed in the manner which the Public Trustee submits. Such a construction renders the fixing of rates by the board, should it occur, as a mere qualification to the right to charge commission to the extent of the default rates (the rates of the statutory caps) which otherwise exists. The Tribunal does not consider that this was the intention of the legislature. The requirement to fix a rate from time to time is not, textually, worded as a qualification to a right to charge at the rate of the caps. To the contrary, textually, the statutory caps are expressed as a qualification to the right to charge commission at the rates fixed from time to time by the board. That is the work performed by the words ‘but not in any case exceeding’ as used in s 41(1).
Further, authority suggests, contrary to the Public Trustee’s submissions, that the fixing of rates under s 41(1) is in respect of each individual estate committed to a corporate trustee for administration. It is not some general rate, or some rate fixed for another estate. Such construction was rejected in MacBean v The Trustees Executors and Agency Company Limited.[20]
[20][1916] VLR 425, at 429 – 430.
At first instance, Madden CJ had found in respect of an analogous provision[21] that:
I do not think it is lawful for the defendant to apply a sweeping rule for the whole body of cases in which it becomes a trustee, which, disregarding the variations of the several cases as to the extent of work to be done in each or the difficulty or simplicity of that work, merely charges a flat rate which is based not on the peculiar features of each case but on the necessities of the defendant’s business. No such position would be admitted in the case of a personal trustee and it cannot, I think, be admitted in the case of the defendant. Moreover, such a contention is apparently precluded by the words of sec. 7 of Act No. 842, which declares that the commission to be fixed ‘in any case’ shall not exceed the amount indicated. And later on, in the proviso,[22] it declares that the commission to be charged, etc., shall not exceed ‘in each estate’ the amount of the published scale, etc., and again, if in any case the Supreme Court or a Judge thereof shall be of the opinion that it is excessive, there is power to review and reduce the rate.[23]
This seems to insist that each estate will be considered as to its own circumstances and not as a mere proportionate item of a heterogeneous body of widely differing estates, which would be a means of making commissions unnecessarily large in simple cases, pay for the shortcomings of commissions which hardly suffice, or fail to suffice, for the labour involved in the realisation and management of difficult ones – which on the face of it is unjust.
[21]Section 7, Executors Company’s Amendment Act 1885 (No 842).
[22]The proviso to which his Honour was there referring was the equivalent of s 41(5) and (5A) of the TCA.
[23]This was the equivalent power to that conferred by s 41(4) of the TCA.
On appeal in the full court, Hood J, with whom Cussen J agreed, in upholding the construction found by Madden CJ, described the scheme of the legislation as follows:
This legislation, in my opinion, results simply in placing the company in the same position as the individual in regard to properties entrusted to it. It enables a trading company to carry on the business of executors and trustees for reward, but it does not in any way material to this case place it in a superior position to an individual, with this exception: An individual must apply to the Court to fix his remuneration. The company within the prescribed limits fixes its commission and pays itself, subject to an application ‘in any case’, to the Court to review and reduce; and this power to fix its remuneration is restrained within two limits, beyond which the company cannot go, no matter how difficult the management of the estate may be. The company, therefore, in respect to its rate of remuneration is, within those limits, in the same position as any individual who undertakes as a matter of business to act as trustee in numerous estates. In that case the individual would receive such remuneration as the Court considered just, computed on each estate separately, and he would not be allowed to charge an average rate covering the whole of the estates in his hands. This latter mode is what the company claims, and I can find nothing to justify it. Each estate is, in my opinion, to be judged by its own circumstances, and the commissions may be fixed from ‘time to time’ in regard to each estate, subject to review by the Court.[24]
[24][1916] VLR 425, at 436 – 437.
The ‘two limits’ referred to by Hood J were the statutory maxima and the scale of charges published by the company at the time at which the estate was committed to the company. His Honour described the former as the maximum fixed by the legislature as a fair reward in complicated trusts.[25]
[25]Ibid, at 439.
His Honour opined that ‘there can be no fixed practice as to the rate to be paid for work which necessarily varies in each case’. In that regard he said the company should wait until the work is done, or at least should fix the commission ‘from time to time’.[26]
[26]Ibid, at 439.
Understood in this way, the fixing of the commission from time to time is an action performed in respect of each estate to remunerate the trustee for the particular work done in respect of the administration of that particular estate. The two limits imposed are that commissions must be no more than the statutory maxima in place at the time at which the particular commission is being fixed, and nor must they exceed whatever were the scale of charges published at the time at which the estate was committed to the trustee. This second limitation has the effect of providing an upper limit to the charges which continues throughout the entire period during which the estate is administered by the trustee. If, for example, over that time, the statutory maxima in s 41(1) were increased beyond the scale of charges published at the time at which the estate was first committed to the trustee, the trustee could not fix its remuneration up to the statutory maxima. It would still be constrained by the earlier published scale rates.
However, rejection of that alternative construction of s 41(1) as raised by the Tribunal does not result in Perpetual being correct in the contention that it had no entitlement to charge remuneration under s 41(1) of the TCA.[27] The Tribunal considers that, to the contrary, s 41(1) did confer upon Perpetual an entitlement at law to charge remuneration. The entitlement was to remuneration at a rate to be fixed from time to time subject to the statutory caps. The act of fixing the rate did not create the entitlement to charge or receive remuneration, it was pursuant to the entitlement to charge.
[27]Submissions on behalf of Perpetual dated 30 November 2012, at [6.1]; [6.7]; [6.15], [6.19]; [6.29].
Section 41(1) conferred upon Perpetual a singular entitlement to receive remuneration for the administration of the estate. That right was exercisable on multiple occasions by the fixing of rates from time to time.
It may be that Perpetual did fix rates in exercise of its right to receive commission on each occasion on which it levied a commission charge. As the Public Trustee submits, there is no particular formality required by s 41(1) in fixing the rates and it might be done by the board by ratification, delegation or otherwise.[28]
[28]Supplementary submission of the Public Trustee dated 19 December 2012, at [9].
However, for the purposes of these proceedings, that need not be resolved. All that is necessary for the resolution of the proceedings is the recognition that s 41(1) did confer upon Perpetual the right to charge a commission. Once that is recognised the basis for Perpetual’s submissions is removed.
Perpetual’s submissions that it was not entitled to remuneration under s 41 of the TCA[29] must be rejected.
[29]Submissions on behalf of Perpetual dated 30 November 2012, at [6.1].
Entitlement to charge fees under the Corporations Act
That alleged lack of entitlement to charge a fee under the TCA is central to Perpetual’s further submissions that r 4 of the Corporations Amendment Regulations 2010 (No 3) (Cth) does not operate to limit fees which it can charge under s 601TBA(1) of the Corporations Act 2001 (Cth).[30]
[30]Ibid, at [6.15].
Perpetual identifies that since the repeal of s 41 of the TCA with effect from 6 May 2010, the regulation and general right of a trustee company to remuneration is governed by Chapter 5D of the Corporations Act.[31] However, whilst Perpetual recognises the Corporations Act as a source of legislative power enabling it to charge remuneration, it submits that this is not so in this case.[32] This, it says, is because it had no entitlement to charge a fee under the TCA. Perpetual reasoning is as follows.
[31]Ibid, at [6.1].
[32]Ibid, at [6.2].
i) Section 601TBA(1) of the Corporations Act creates a general right in a trustee company to remuneration or commission. Section 601TBA(1) provides:
Subject to this Part, a licensed trustee company may charge fees for the provision of traditional trustee company services.
ii) The services provided to PWJ by Perpetual fall within the definition of ‘traditional trustee company services’: ss 601RAA, 601RAC(1)(a) and (2)(e) Corporations Act.
iii) Whilst s 601TCA(2) provides that the fees that may be charged by a trustee company may not exceed those fees most recently published by the trustee company before it started to provide the service,[33] that restriction does not apply if the provision of the particular service started before the commencement of s 601TCA. As the provision of services to PWJ commenced before s 601TCA commenced, the restriction does not apply.[34]
iv) Regulation 4 of the Corporations Amendment Regulations 2010 (No 3) is a regulation dealing with transitional matters authorised by s 1496 of the Corporations Act.
v) Regulation 4(1) provides:
For section 1496 of the Act, Part 5D.3 (other than Division 4) of the Act applies to a licensed trustee company as set out in this regulation.
vi) Regulation 4(2) provides:
If a licensed trustee company had an existing client at the commencement of Schedule 1 to these regulations, the fee the company was entitled to charge under the relevant State law for traditional trustee company services to the client continues to apply to those services whether or not the relevant State law has since been repealed.
vii) The effect of this regulation, if it applies in a particular case, is to limit the remuneration that can be charged by a trustee company under the new national scheme to that which it could have charged under the repealed State legislation.[35] That is, r 4 ‘is meant to effectively transfer the pre-existing right [to remuneration] to the new regime’.[36]
[33]Section 601TAA requires a trustee company to ensure that an up-to-date schedule of the fees that it generally charges for traditional trustee company services is published on a website maintained by it or on its behalf and is available free of charge at its offices.
[34]Submissions on behalf of Perpetual dated 30 November 2012, at [6.5].
[35]Ibid, at [6.14].
[36]Ibid, at [6.15].
However, Perpetual submits that, for the reasons addressed above concerning s 41 of the TCA, it had no right to remuneration in respect of its administration of PWJ’s estate. Therefore, it submits that there was no right to be transferred under r 4 and, as a consequence, its right to charge fees under s 601TBA(1) is not limited by r 4(2).[37]
[37]Ibid, at [6.15].
Two things need to be said about these submissions of Perpetual in relation to the application of the Corporations Act provisions.
First, the analysis advanced by Perpetual, contrary to its submissions, does not result in it having ‘no right to remuneration under the Corporations Act’. Rather, that analysis would result, if correct, in Perpetual having the right to remuneration established by s 601TBA of the Corporations Act unencumbered by the limits imposed by r 4 of the Corporations Amendment Regulations 2010(No 3). This is recognised by Perpetual in paragraph 6.15 of its submissions.[38]
[38]On this analysis, the submissions made by Perpetual at [6.7] of its submissions are inconsistent with those made by at [6.15].
Secondly, for the reasons set out above, Perpetual is incorrect in its conclusions that it had no right to remuneration under s 41(1) of the TCA and thus no right to be transferred by operation of r 4. That being so, Perpetual’s right to remuneration under s 41(1) of the TCA applies to limit the remuneration which it is entitled to charge under s 601TBA(1) of the Corporations Law.
Section 48 of the GAA
Perpetual identifies s 48 of the GAA as the statutory source of the Tribunal’s jurisdiction to grant the relief it seeks in this case.
In GAAT v Perpetual, Mullins J considered that s 48 of the GAA, as it then provided, did not apply to the remuneration of a trustee company where it was acting as an administrator for an adult under the GAA. At the time of her Honour’s judgment, s 48 of the GAA provided:
48 Remuneration of professional administrators
(1)If an administrator for an adult carries on a business of or including administrations under this Act, the administrator is entitled to remuneration from the adult if the tribunal so orders.
(2) The remuneration may not be more than the commission payable to a trustee company under the Trustee Companies Act 1968 if the trustee company were administrator for the adult.
(3) Nothing in this section affects the right of the public trustee or a trustee company to remuneration or commission under another Act.
Her Honour concluded that the reservation in s 48(3) excluded the operation of ss 48(1) and (2) when a trustee company had been appointed an administrator under the GAA.
Section 48 of the GAA was amended by the Fair Work (Commonwealth Powers) and Other Provisions Act 2009. In its present form, s 48 provides:
48 Remuneration of professional administrators
(1)If an administrator for an adult carries on a business of or including administrations under this Act, the administrator is entitled to remuneration from the adult if the tribunal so orders.
(2) The remuneration may not be more than the amount the tribunal considers fair and reasonable, having regard to –
(a)the nature and complexity of the service; and
(b)the care, skill and specialised knowledge required to provide the service; and
(c)the responsibility displayed in providing the service; and
(d)the time within which the service was provided; and
(e)the place where, and the circumstances in which, the service was provided.
(3) Nothing in this section affects the right of the public trustee or a trustee company to remuneration or commission under another Act or the Corporations Act.
The reservation to which Mullins J referred in GAAT v Perpetual remains in s 48(3). The only amendment affected to s 48(3) has been the addition of the words ‘or the Corporations Act’. The addition of those words is readily understandable. The Corporations Act is a Commonwealth Act. Provisions of the Corporations Act dealing with corporate trustee remuneration would not otherwise be included within the expression ‘another act’ in s 48(3) as that expression would only extend to acts of the Queensland Parliament.[39]
[39]Section 6(1), Acts Interpretation Act 1954 (Qld).
It is, perhaps, with that limited nature of the amendment to s 48(3) in mind that Perpetual submits that if it had a right to remuneration under the Corporations Act, it might be said that s 48(1) of the GAA does not apply in this case by extension of the reasoning of Mullins J as to the effect of s 48(3); and that it was arguable that the Corporations Act was intended to cover the field in circumstances where it applied.[40] However, Perpetual further submits that it is unnecessary to decide these issues in this case because of what it asserts to be a lack of any right to remuneration under the Corporations Act.
[40]Submissions on behalf of Perpetual dated 30 November 2012, at [6.7].
For reasons set out earlier, this assertion of Perpetual is not correct. It does have a right to charge remuneration under the Corporations Act. Therefore, it is necessary to determine whether the reservation in s 48(3), in its present form, does operate so as to preclude the application of ss 48(1) and (2) to the remuneration of trustee companies appointed as administrators under the GAA.
The issue was addressed by Martin J in Perpetual Trustees Queensland Ltd v Thompson.[41] After reciting the reasons of Mullins J in GAAT v Perpetual, his Honour found:
[51]The recent amendment to s 48 means, with respect, that that conclusion can no longer stand.
[52]The explanatory note which accompanied the Fair Work (Commonwealth Powers) and Other Provisions Bill 2009 provided, with respect to this amendment:
“Clause 102 amends section 48(2) of the Act which applies a provision of the Trustee Companies Act 1968 (which is to be repealed) to the remuneration of certain administrators. The remuneration will instead be not more than the Guardianship and Administration Tribunal considers fair and reasonable having regard to stated factors.”
[53]With the repeal of parts of the TCA the provisions of s 48(3) should not now be construed as limiting the power of the tribunal with respect to administrators. Section 48(3) relates to trustee companies and not necessarily to a trustee company acting as an administrator under the GAA. The distinction can be drawn between s 48(1) which refers to an administrator (which can include a trustee company acting as such) and s 48(3) which also deals with a trustee company when it is not acting as an administrator. Section 48(3) does not restrict the provisions of s 48. It serves to make plain that a trustee company, when acting in a capacity other than as an administrator, is not restricted by s 48 but can earn commission or remuneration under other statutes. Such activities can include, for example, acting as the executor of a deceased estate or holding scheme property for a managed investment scheme. The latter will now be regulated under the Corporations Act 2001 (Cth) following the amendments made by the Fair Work (Commonwealth Powers) and Other Provisions Act 2009 which are referred to above. The TCA no longer has a part to play in the remuneration of administrators under the GAA and the basis for Mullins J’s reasoning has been withdrawn by the amendment.
[54]It follows, then, that QCAT does have jurisdiction to make an order that the applicant is entitled to remuneration in respect of its functions as administrator of the fund of the Respondent to which office it was appointed pursuant to the order of the Honourable Justice Byrne on 5 December 2001.
[41][2012] 2 Qd R 266.
His Honour’s reasons do not, with respect, directly address the issue identified by Mullins J as being the reason why s 48 of the GAA does not have application to trustee companies. That reason was that s 48(3) contained a reservation of the remuneration of trustee companies to some other legislation, which her Honour identified as necessarily being the TCA. Her Honour excluded ss 48(1) and (2) from playing any role in the remuneration of trustee companies acting as administrators solely upon the terms of s 48(3); not upon the terms of s 48(2), nor upon any interrelationship between those two subsections.
Nor do his Honour’s reasons address the fact that a trustee company may now charge remuneration for traditional trustee company services, including acting as the administrator of the estate of an individual, under the Corporations Act.
Having made those observations about his Honour’s reasons, Thompson nonetheless clearly states that s 48(3) of the GAA, in its present terms, is not to be given the restrictive meaning which Mullins J found the former provision to have.
Therefore, in accordance with his Honour’s judgment, the Tribunal finds that s 48 does apply to trustee companies and the Tribunal is able to make an order under that section entitling Perpetual to remuneration.
Does s 48 operate retrospectively and/or prospectively?
Having found that the Tribunal does have jurisdiction to make such an order under s 48, it remains to be determined whether that jurisdiction can be exercised both retrospectively (and, if so, from what date) and prospectively. If either, or both, of those issues are determined in the affirmative, the further issue arises as to whether the Tribunal should exercise that discretion in this case.
Dealing first with the question of prospective operation, Perpetual sets out, at [6.35] of its submissions, paragraph 1(d) of the order made by Martin J in Thompson. In that order his Honour clearly stated that Perpetual were entitled to apply to the Tribunal for an order pursuant to s 48(2) of the GAA ‘to be remunerated retrospectively and prospectively for acting as administrator of the proceeds of settlement sanctioned by Byrne J’s order’.
The Public Trustee, in his submissions, although noting that the language of s 48(2) in specifying the matters to which regard must be had by the Tribunal in fixing remuneration of an administrator is expressed in the past tense, accepts that Martin J’s decision in Thompson provides clear authority for the Tribunal to authorise future remuneration.[42]
[42]Submissions on behalf of the Public Trustee dated 10 December 2012, at [7.30].
The Tribunal is satisfied that s 48 of the GAA permits an order to be made entitling an administrator to future remuneration for work yet to be performed.
There are two issues which must be resolved in respect of the retrospective operation of s 48 of the GAA. The first, more general, question is whether the Tribunal is able to make an order enabling an administrator to be remunerated for work performed in the past. This should be answered in the affirmative. Neither Perpetual nor the Public Trustee contends to the contrary. Some of the language in s 48(2) is expressed in the past tense indicating that the Tribunal is able to determine at some future date remuneration for services provided in the past.
Furthermore, the decision and order of Martin J in Thompson clearly establishes that an order is able to be made retrospectively for having acted as an administrator.
The second, more controversial, issue is whether the application of s 48 of the GAA to services provided by a trustee company as found by Martin J extends back to a time prior to the commencement of s 48, in its present form, in May 2010.
Perpetual submits that if one effect of the amendments to s 48 of the GAA was that the new s 48 did not apply to entitle remuneration for work performed before May 2010, then that would have one of two consequences. It submits that either there would be no power in the Tribunal to entitle remuneration for that work, or the now repealed s 48 would continue to apply so as to limit the remuneration which could be allowed to the statutory caps. Perpetual submits that it could not be seriously argued that the amendment of s 48 creates a gap such that the Tribunal has no authority to order an entitlement to remuneration for the period prior to May 2010.[43]
[43]Submissions on behalf of Perpetual dated 30 November 2012, at [6.29].
Perpetual further submits that it is not necessary to consider whether the repealed s 41 of the TCA could still have an effect so as to authorise remuneration, notwithstanding its repeal, because that provision did not give it any right to remuneration in this (and other) matters.
However, this argument is, again, based on a false premise. When it is understood that Perpetual did have a right to remuneration under s 41 of the TCA, then the question of whether that provision could still authorise the remuneration does need to be resolved. The answer lies in the transitional arrangements in r 4 of the Corporations Amendment Regulations 2010 (No 3). Part 5D.3 of the Corporations Act applies to Perpetual in accordance with r 4. Regulation 4 continues to apply the fees which Perpetual was entitled to charge under s 41 of the TCA notwithstanding the repeal of that provision.
The reasons and order of Martin J in Thompson do not directly address the issue of whether the Tribunal’s power to make an order entitling a trustee company acting as an administrator to remuneration extends back beyond the enactment of the amendments to s 48 of the GAA. The context in which the reasons were given, and the order made, would suggest that the Tribunal’s ability to make such an order is truly retrospective, and permits an order for remuneration to be made in respect of a period of administration prior to May 2010.
His Honour was dealing with an originating application seeking an order that the applicant be remunerated for acting as administrator of the proceeds of a settlement sanctioned by order of Byrne J on 5 December 2001. The factual circumstances, as with this case, involved the applicant having disclosed to the court the fees which it proposed to charge if the settlement was sanctioned. Fees had been charged in accordance with the proposal, although without the authority of an order to do so.
Relevantly, one question for determination was:
Does the Queensland Civil and Administrative Tribunal have jurisdiction to make an order that the applicant is entitled to remuneration in respect of its functions as administrator of the fund of the Respondent to which office it was appointed pursuant to the order of the Honourable Justice Byrne on 5 December 2001?
In stating the question in that way, no distinction was made between the period between December 2001 and May 2010, before s 48 was amended, and the period thereafter. So too, in answering the question in the affirmative, Martin J did not distinguish between any period of the administration. His Honour did not limit his decision that QCAT did have jurisdiction to make an order that the applicant was entitled to remuneration to the period after the amendment of s 48 in May 2010.
However, his Honour did not undertake any analysis of the transitional provisions.
Section 268 was inserted as a transitional provision within the GAA by s 103 of the Fair Work (Commonwealth Powers) and Other Provisions Act 2009. Section 268 provides:
268 Remuneration of professional administrators
(1)This section applies if the tribunal orders, before the commencement, that an administrator for an adult as mentioned in section 48(1) is entitled to remuneration from the adult.
(2)Repealed section 48(2) continues to apply, despite its repeal, in relation to the remuneration, until the tribunal makes a further order about the administrator’s remuneration.
(3)In this section –
commencement means the commencement of this section.
Repealed section 48(2) means section 48(2) as it existed before its repeal by the Fair Work (Commonwealth Powers) and Other Provisions Act 2009.
The explanatory note to s 103 stated:
Clause 103 inserts a new part heading and a transitional provision. It preserves the operation of repealed s 48(2) of the Guardianship and Administration Act2000 for tribunal orders made before the commencement entitling an administrator to remuneration, until the tribunal makes a further order about the administrator’s remuneration.
The effect of s 268 is that it preserves the operation of the former s 48(2) only in respect of orders made by the Tribunal before 6 May 2010. The repealed s 48(2) would not apply, for example, to any order made by the Tribunal after the repeal date in respect of past remuneration of any administrator for an adult[44] for work performed before the repeal date. If, immediately following the amendment of s 48(2), an application had been made by an administrator to whom s 48(1) applied before the amendment, in respect of past work performed before the amendment, the Tribunal would have been required to apply the amended s 48(2), not the repealed provisions.
[44]Not just trustee companies and the Public Trustee.
In the Tribunal’s view, this indicates that the amendments to s 48 of the GAA were intended to have retrospective effect. This is consistent with the conclusion which seems to have been reached by Martin J in Thompson as reflected in his Honour’s decision and order in that case.
How should the Tribunal exercise its powers?
Having determined that s 48 of the GAA permits the Tribunal to make an order entitling Perpetual to remuneration in respect of its administration of PWJ’s estate both retrospectively from the date of its appointment and prospectively, it remains to be determined how the Tribunal should exercise its discretion in this case.
Before addressing that issue, however, a further submission of Perpetual must first be addressed. Perpetual submits that insofar as these proceedings relate to amounts already deducted by it, the true nature of the proceedings is an application for approval of a past conflict transaction under s 37 of the GAA, rather than for an order for payment of remuneration under s 48.
The Tribunal does not accept that submission. The unauthorised deduction of remuneration by Perpetual cannot be characterised as a conflict transaction within the meaning of that expression in s 37(2). There is no relevant conflict between a duty owed by Perpetual to PWJ on the one hand, and interests of Perpetual (or a person in close relationship with it) on the other hand. Nor is there a conflict between a duty owed by Perpetual to PWJ and some other duty of Perpetual.
Application of s 48 of the GAA
Perpetual submits that the list of matters set out in s 48(2) of the GAA to which the Tribunal is to have regard in determining the fair and reasonable remuneration to which an administrator is entitled is non exhaustive. The Tribunal does not understand the Public Trustee to submit to the contrary.[45] The Tribunal considers that in determining what is fair and reasonable remuneration in a case such as this, the fact that other legislation provides for, or provided for at the time of the provision of the services, a maximum remuneration is a relevant consideration under s 48(2). It falls within what is fair and reasonable having regard to both the time within which, and the circumstances in which, the services were provided.[46]
[45]See Submissions on behalf of Perpetual dated 30 November 2012, at [6.26] and [7.2] and the Public Trustee’s submissions.
[46]Section 48(2)(b) and (e).
In this case, Perpetual concedes that even upon its own analysis of the TCA, had it acted to fix the rates under s 41(1), it would have been restricted in its remuneration to the statutory caps. It did not have, and was unable to reach, an agreement under s 41(7). Any action taken by it to fix rates under s 41(1) or which it might, even now, take in that regard, would have been constrained by the caps.
Similarly, upon its own analysis of the Corporations Act, it likewise would have been constrained by the same caps by operation of r 4 of the Corporations Amendment Regulations 2010 (No 3) if it had a right to charge remuneration under the TCA.
We have reached a different conclusion to that reached by Perpetual as to its rights to charge remuneration under s 41(1) of the TCA and the Corporations Act. Even if the Tribunal was incorrect in that regard, as a matter of discretion, it would not be inclined to allow Perpetual the benefit of its failure to secure a right to remuneration so as now to permit it to charge fees beyond the limits by which it otherwise would have been constrained.
Perpetual identifies the evidence of Mr Lindsay at paragraphs [19] and [20] of his affidavit as being that which demonstrates that the fees which it proposed to charge at the time of the Court sanction of the settlement (and that it did in fact charge until it ceased doing so) are fair and reasonable when considered against the criteria in s 48(2).[47] Mr Lindsay catalogues the services provided by Perpetual.
[47]Submissions on behalf of Perpetual dated 30 November 2012, at [7.3].
However, that evidence does not demonstrate why those services, assessed against the criteria in s 48(2), would have made the administration of PWJ’s affairs any more complex or difficult than other estates to which the statutory maximum caps would have applied. Had Perpetual taken the necessary steps to secure remuneration to which it was entitled under s 41(1) of the TCA, it would have been constrained by those caps in respect of the remuneration for the work which it identifies.
Furthermore, whilst the basis for remuneration was fully disclosed to the Court in the proceedings which led to the sanction of the settlement, no consideration was given to the question of whether that disclosed remuneration should be ordered to be paid in circumstances in which an agreement was unable to be reached with the litigation guardian under s 41(7), and that the fees would otherwise be capped under s 41(1). It is entirely understandable why no consideration was given to those issues. They simply did not arise as issues until Mullins J’s decision in GAAT v Perpetual some six years later.
The Tribunal does not consider that it should be assumed that, had the statutory limits to the remuneration which otherwise would have applied been considered, the Court would have ordered that the rates disclosed be paid.
Nor does the Tribunal consider that the finding by Martin J in Thompson that an order that the administrator be ‘appropriately remunerated’ ‘would have been made had the issue been raised at the time [of sanction]’[48] should necessarily be taken to mean that the disclosed remuneration would have been that which was found to be appropriate. His Honour went on to refer to the fact that at the time at which the sanction order was made the limitations on administrator remuneration imposed by s 48 of the GAA and s 41 of the TCA applied.[49] His Honour also referred[50] to the observations of the High Court in Willett v Futcher[51] in respect of the operation of those provisions.
[48]Thompson, at [38].
[49]Ibid, at [41] – [42].
[50]Ibid, at [43] – [44].
[51](2005) 221 CLR 627, at [25] and [31].
In light of its findings, the Tribunal considers that the remuneration which it orders that Perpetual is entitled to charge should be limited to the amounts prescribed as statutory caps by the now repealed s 41(1) of the TCA and as preserved by r 4 of the Corporations Amendment Regulations 2010 (No 3). The Tribunal considers that to be the fair and reasonable remuneration.
That is so whether or not Perpetual had (or has) an entitlement at law under either of those acts to charge remuneration at those rates. In the exercise of its discretion, the Tribunal considers those amounts to be fair and reasonable having regard to the matters set out in s 48(2) of the GAA.
The Tribunal has reached this conclusion having considered the evidence of Mr Lindsay at [19] and [20] of his affidavit.[52] In his submissions, the Public Trustee submits that the appropriate quantum of remuneration is unable to be assessed at this time as there is an absence of appropriate evidence. The Tribunal proposes to permit Perpetual to adduce further evidence and make further submissions, should it wish to do so, as to the remuneration which the Tribunal would order it to be entitled to for future services provided in the administration of PWJ’s affairs in light of the Tribunal’s reasons. The ‘future remuneration’ would be for the period from 1 January 2013.
[52]These were the relevant passages of evidence on the issue identified in the Submissions on behalf of Perpetual dated 30 November 2012 at [7.3].
Review under s 31 of the GAA
Perpetual submits that this matter (and others) ‘has also been entertained as a review of the appointment of [Perpetual]’. So much may be accepted.
Perpetual further submits that at the time of its original appointment by the Supreme Court, the Court could have authorised charging by Perpetual of remuneration at its disclosed rates, because under s 245 of the GAA the Court had the Tribunal’s powers under Chapter 3 of that Act which included, under s 12(2), the power to appoint ‘on terms considered appropriate by the tribunal’. This too may be accepted. It is the plain interpretation to be given to the relevant provisions and is supported by authority.[53]
[53]Thompson, at [56] applying Willett v Futcher.
So too it is to be accepted that Perpetual had liberty to apply to the Court in respect of the order appointing it administrator. In Thompson, Martin J found that the granting of liberty to apply would extend to allowing an order that the administrator ‘be appropriately remunerated’.[54]
[54]Thompson, at [35] and [38].
On this basis, Perpetual submits that the Tribunal may now do under s 31(3)(b)(i) that which the Court could have done in setting remuneration either at the time of appointment or under the liberty to apply. As a matter of jurisdiction, that too may be accepted.
However, the Tribunal does not consider that Martin J’s judgment in Thompson goes so far as supporting the proposition that the order which would have been made by the Court at the time of appointment, or which would be made upon application under the liberty to apply, would have been an order for remuneration at the disclosed rates. This is particularly so when, for the reasons set out above, there had been no consideration given to the inapplicability of s 41(7), or the statutory caps otherwise imposed by s 41(1) of the TCA.
Indeed, a reading of his Honour’s judgment as a whole does not support the conclusion that the remuneration would have been in the terms disclosed. At [5] of his reasons, Martin J identifies that ‘[t]he proposal for the fees to be charged were set out in an affidavit and, after appointment, the applicant charged the respondent in accordance with that proposal’.
In the proceedings before Martin J, the applicant had originally sought an order setting the rate at which any such remuneration should be paid. In the event, that order was not pursued.[55]
[55]Ibid at [3] and [55].
Notwithstanding that his Honour determined that an order for appropriate remuneration could be made under the liberty to apply, having found that the Tribunal also had jurisdiction to order the remuneration, he referred the matter back to the Tribunal ‘to hear and determine the issue of appropriate remuneration’. He did so, in part, in recognition of the specialist nature of the Tribunal in dealing with such matters.[56]
[56]Ibid at [56] – [57].
It is thus clear from the manner in which the application was conducted, and his Honour’s reasons, that it was not considered that the determination of what was ‘appropriate remuneration’ would be merely ordering remuneration at the rates disclosed in the sanction proceedings.
Perpetual’s submissions on the manner in which the Tribunal would exercise its jurisdiction under s 31(3)(b)(i) proceed on the same false premise as do its other submissions; that Perpetual had no entitlement to remuneration under s 41(1) of the TCA, and has no right to remuneration under the Corporations Act. This is evident from [8.15] of its submissions. There, it says:
It is not necessary to decide how the power in s 31(3)(b)(i) would sit in a case where the trustee company had been appointed after 6 May 2010 and therefore had a right to charge remuneration pursuant to the provisions of the Corporations Act. Potentially the Corporations Act provisions would cover the field if they applied. Nor is it necessary to decide how the section 31(3)(b)(i) power would be exercised if the trustee company had a right to charge remuneration pursuant to either s 41 of the TCA or the now repealed version of section 48 of the [GAA].
For the reasons developed above, the Tribunal does not accept Perpetual’s essential submission as to its lack of any right to remuneration under either the TCA or the Corporations Act. The Tribunal does not, therefore, agree that those matters can be put to one side in considering the exercise of its jurisdiction under s 31(3)(b)(i), just as it does not agree that those matters can be ignored in the exercise of its jurisdiction under s 48 of the GAA.
For the same reasons as expressed in respect of s 48, the Tribunal would decline to exercise its jurisdiction under s 31(3)(b)(i) in the manner sought by Perpetual. The Tribunal would reach the same conclusion as to what is the appropriate, fair and reasonable remuneration as it did in respect of s 48.
Superannuation
Two issues arise for consideration concerning superannuation investments by Perpetual. The first is whether investment of the funds in superannuation by an administrator such as Perpetual is permissible.
Perpetual submits that such an investment is authorised by s 33(2) of the GAA which, relevantly, provides that, unless the Tribunal orders otherwise, an administrator is authorised to do anything in relation to a financial matter that the adult could have done if the adult had capacity for the matter when the power was exercised.
The Tribunal concurs that the investment of funds in superannuation is permissible. Indeed, in many cases, it will be desirable.
The second issue which arises concerning superannuation is that the superannuation investments which have been made in this case have resulted in money being placed in an entity associated with Perpetual. That associated entity derives a financial benefit from the funds having been placed with it. There is, therefore, in terms of s 37 of the GAA, a conflict transaction. Perpetual seeks retrospective approval of that conflict transaction.
In GAAT v Perpetual, Mullins J found that authorisation for a conflict transaction could be granted retrospectively by the Tribunal. In the circumstances of this case, the Tribunal considers that the granting of retrospective approval of the conflict transaction concerning the superannuation investment is appropriate. The investment is demonstrably beneficial to PWJ.
Perpetual will be directed to file in the Tribunal and serve upon the Public Trustee and PWS and PJL a draft order in accordance with these reasons.
The application will be listed for a directions hearing on 13 September 2013.
2
3
0