Spence v Spence [2003] NSWSC 1232

New South Wales Supreme Court

CITATION : Spence v Spence [2003] NSWSC 1232 HEARING DATE(S) : 8 December 2003 JUDGMENT DATE : 8 December 2003

JURISDICTION: Equity Division Probate List JUDGMENT OF : Windeyer J at 1 DECISION : Decision of Deputy Registrar confirmed.

CATCHWORDS : PROBATE - executors - commission - percentage rate as opposed to lump sum - Wills Probate and Administration Act 1898 LEGISLATION CITED : Wills Probate and Administration Act 1898, s86(1) CASES CITED : In the will of Sheppard [1972] 2 NSWLR 714 Hilary Beryl Spence (First Plaintiff) PARTIES : Hugh Rostrevor Norton (Second Plaintiff) Re the Estate of Gordon Spence FILE NUMBER(S) : SC 118391/02 COUNSEL : Mr J Wilson SC (Plaintiffs) SOLICITORS : Bennett Stewart & Shirvington (Plaintiffs)

- 3 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION PROBATE LIST

WINDEYER J

MONDAY 8 DECEMBER 2003

118319/02 HILARY BERYL SPENCE & ORS v THE ESTATE OF GORDON SPENCE

JUDGMENT

1 HIS HONOUR: This is an application by Mr Norton, one of the executors of the will of Gordon Alexander Spence, to review a decision of a Deputy Registrar under which he was allowed commission, in respect of his time and trouble as executor at the rate of 8 per cent on income collections during the period of fifth accounts, namely, for the year ending 30 June 2002. The estate, so far as this trust is concerned, is held for two grandchildren of the deceased, now, I think, aged 16 and 13 years, who will not take their interests until they attain the age of 25 years. 2 The will provides in Clause 11 the usual charging entitlement of a solicitor executor, but I point out that that clause has nothing to do with an application under the Wills, Probate & Administration Act 1898 for allowance of commission. What it does, is to allow an executor, who is a professional person, to charge for professional work done by him or his firm. 3 Mr Norton is a retired solicitor. There is no doubt he is qualified and well qualified to be an executor. The evidence shows that his co-trustee has left the administration of the trust to him and has been entirely happy with his work. The evidence also shows that Mr Norton has given careful attention to the trust fund and to the terms of the trust and has had to deal with applications for advances for expenses on behalf of the infant beneficiaries, particularly one application for boarding school support. 4 The Registrar allowed commission at the rate of 8 per cent on income. That was the rate which had been allowed on the fourth set of accounts. For the first, second, and third sets of accounts the Registrar allowed a lump sum of $25,000. Mr Norton says in his affidavit that he has spent 160 hours on the affairs of the trust during the year in question. In these matters one takes such statements at their face value and accepts them, but it must be remembered that this is one trust and that amount of time is four weeks of work for a person who works 40 hours per week. That seems to me to be a vast amount of time to be spending on this trust when the trust fund in modern terms while significant is not particularly large. 5 The practice of the court has nearly always been in estates with continuing accounts to allow commission on a percentage rate on income and on original corpus realizations; it has never been to allow lump sums on continuing accounts. The practice of allowing lump sums has nearly always been an allowance where there will be one set of accounts or where there is a final account. There is I think a particular reason to allow a lump sum where there is a final account because not only must distribution be taken into account, but some attention can then be given to the overall administration over the period of the trust. It would not, for instance, be appropriate to allow some lump sum based on the fact that in a particular year the corpus fund had increased. The reason for that is, firstly, that commission on the corpus at its original value has been allowed; secondly, there might have been inflation in that anyway, and, thirdly, the next accounts might show a diminution in the corpus, and it would not be appropriate to take this into account each year. 6 I am well aware that trustee companies charge annual fees on the basis of a percentage of corpus each year. They are entitled to do that and make their charges under statute. I do not consider, and the court has never considered, it appropriate to bring that entitlement across to applications involving private trustees even where the private trustees are professional persons. Thus, it seems to me that the only basis upon which the court should consider a different approach would be that the decision of Helsham J in In the will of Sheppard [1972] 2 NSWLR 714 should be brought to bear on that matter where he said at 721: It seems to me that the proper approach is to put a value upon the pains and troubles of the executor with reference to the particular accounts. 7 That was a case where the then Probate Judge increased the amount of corpus commission which was allowed in a particular estate. It was not a case where there was some lump sum allowance made. 8 Counsel for the plaintiff has drawn attention to the particular words of s86(1) namely that the court may allow such commission or percentage for the executor's or trustee's pains and trouble as is just in the circumstances. Thus he agrees it is within the discretion of the court to order some lump sum if a percentage would not appear to be reasonable in the circumstances. While I accept that to be the general position in accordance with the Act, it is very difficult to put some particular lump sum value on the work and pains and trouble of an executor or a trustee. For instance, although no amount was put forward as an appropriate amount, when I suggested that if an amount of $100 per hour were appropriate, that would bring in a figure of $16,000, which if added to the professional fees which have been paid to solicitors and to stockbrokers, and if one then took account of accountant's fees which will be charged in due course, then even without taking into account income tax, that would mean that over 50 per cent of the income of the trust fund would be paid out in fees or commission. It was then stated that the plaintiff would be happy with $50 per hour, and while on its face that might seem to be entirely reasonable, having regard to the work done, I do not consider that this is a case which justifies a departure from the usual course. I consider that an allowance of lump sum commissions in continuing estates is likely to bring about a burden on the beneficiaries which may not be justified. 9 I reiterate that where lump sums are allowed, they have always been allowed by working out what might be the likely commission allowed as a percentage on corpus and a percentage of income, then, coming to a conclusion, bearing those amounts in mind, as to what is a reasonable lump sum. This course has been of value when it is desired to bring accounts to an end when it is known that the executor will have some further work in winding up the estate or trust and making a final distribution, and in those circumstances an undertaking is usually taken from the executor but no further application or claim for commission will be made, either by order or agreement although it is understood that some additional work will be necessary. 10 I should add that I am well aware that the practice which I consider is the correct practice may seem to operate to the detriment of professional persons; that is because executorial work is different from the professional work. One does not need to be a professional to be an executor and if a professional person is prepared to take on executorial work, then I do not think that particular person can expect to be paid a similar hourly rate as would have been charged or allowed for professional work. The two items of work have always been considered to be different and in my view it is necessary that they remain so. 11 I consider that the decision under review should be confirmed. I order that the notice of motion be dismissed. No order as to costs. The exhibits can be returned. **********