Re The Estate of D A Lindsay [2004] NSWSC 578

New South Wales Supreme Court

CITATION : Re The Estate of D A Lindsay [2004] NSWSC 578 HEARING DATE(S) : 28 June 2004 JUDGMENT DATE : 28 June 2004

JURISDICTION: Equity Probate List JUDGMENT OF : Campbell J DECISION : Special commission allowed. General commission allowed. Costs of review allowed, but fixed at a lump sum.

CATCHWORDS : SUCCESSION - EXECUTORS AND ADMINISTRATORS - commission - special commission allowed for professional work - effect of solicitor's charging clause being invalidated by executor being a witness to the Will - general commission for executorial work - approach to award to costs on application to the Court to review Registrar's decision concerning quantum of commission LEGISLATION CITED : Supreme Court Rules 1970 Wills, Probate and Administration Act 1898 PARTIES : David Stretford Michael Austin as Executor of the Estate of Donald Alexander Lindsay - Plaintiff FILE NUMBER(S) : SC 112250/03 COUNSEL : G Mackey, solicitor - Plaintiff SOLICITORS : Packer & Austin - Plaintiff

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

CAMPBELL J

MONDAY 28 JUNE 2004

112250/03 DAVID STRETFORD MICHAEL AUSTIN AS EXECUTOR OF THE ESTATE OF DONALD ALEXANDER LINDSAY JUDGMENT – Ex Tempore (revised and expanded 28 June 2004) 1 HIS HONOUR: This is an application for review of a decision of the Deputy Registrar concerning commission allowed on the estate of the late Donald Alexander Lindsay deceased: Supreme Court Rules 1970 Part 78 rule 6(b), Part 61 rule 3. Mr Lindsay died on 21 October 2002 leaving a Will whereby he appointed David Austin as executor and trustee. Mr Austin is a solicitor. 2 The Will made provision for the deceased's residence to be given to a Buddhist charitable organisation, the Bajrayana Institute, and for the residue of the estate to be divided amongst five charitable or altruistic entities as tenants in common in equal shares. The residuary beneficiaries were the Wat Dhamma Foundation Limited, a trustee for the Bajrayana Institute, Animal Liberation New South Wales, Good Samaritan Donkey Supporters Incorporated, and the Cat Protection Society of New South Wales. 3 The Will contained a solicitor's charging clause. Mr Austin witnessed the Will himself, however, so that clause cannot be given effect to, as it amounted to a legacy to a beneficiary, and hence is ineffective pursuant to s 13 of the Wills, Probate and Administration Act 1898. 4 The estate of the deceased was a particularly simple one. He had a house, which appears to have been unencumbered, some household furniture and belongings, and bank accounts. The house was sold, at the request of the beneficiary to whom it was left. 5 There were only minor debts, of a domestic nature. Some work needed to be done to get the house into a saleable condition, including throwing out papers of the deceased. Because the deceased was a Buddhist, and had been involved with the RSL, ceremonies involving both Buddhist and RSL elements needed to be organised. The executor organised the cleaning of the house and its preparation for sale, negotiated with the agent for sale of the house, arranged for a headstone to be erected, and also carried out various negotiations with beneficiaries concerning payment of executor's commission. 6 There were various items of work which the executor did which were of a professional nature. There is an amount of $8,060.50 which are costs and disbursements charged, on an ordinary basis, in connection with the obtaining of probate. There is a further amount of $1,406.50, which is concerned with the conveyancing costs and disbursements, in connection with the sale of the house. There is a further amount of $275, involved in dealing with and lodging a land tax return. Additional amounts of $451 and $2,457.60 were contained in tax invoices which had been prepared. 7 The conveyancing costs and disbursements were ones which were not necessary for the administration of the estate, in accordance with the Will. They were, rather, brought about by the wish of the beneficiary of that legacy to have the house sold, rather than distributed to it in specie. In my view, it would not be right that those conveyancing costs and disbursements should be thrown upon the residuary estate. However, when those conveyancing costs and disbursements are ones which were incurred at the request of the specific legatee, and for its benefit, and required work not needed for the administration of the estate in the ordinary course of things the solicitor would recover them from the specific legatee. While I do not propose to make any order which allows a specific amount in relation to those conveyancing costs, this does not preclude the executor seeking to recover them from the legatee of the house. 8 Concerning the other tax invoices which the executor rendered, it seems to me that both the probate costs, and the amount for the land tax return, are amounts which ought be allowable as special commission. If the executor of the estate had not been a solicitor, the executor would have had to obtain professional assistance, and would have paid amounts like those contained in the two tax invoices. For that reason, it is proper to allow them as special commission. Further, it is proper to allow them even though the executor's charging clause was invalidated. The special commission is allowed after the Court has considered the factors relevant to allowing it, and because of the benefit the estate has derived from the work to which it relates. The fact that the charging clause in the Will is ineffective does not stop the Court from itself allowing the special commission for those reasons. 9 I am not persuaded that the other two amounts which were included in tax invoices, are amounts which relate to solicitor's functions, as opposed to executorial functions. At least a large part of those amounts involved negotiations with the beneficiaries concerning the quantum of the commission of the executors. There is another amount which relates to an inscription to be placed near the deceased's remains at Rookwood. Generally the narrations in the tax invoices which have been presented do not make clear that what is being charged for is true solicitor's professional work, rather than executorial work. In these circumstances, I would allow the amount of $8,335.50 as special commission. 10 The capital realisations in the estate are $1,115,923. The income collections amount to $5,268. The basis upon which commission for ordinary executorial work was sought included that there were multiple beneficiaries which were charitable, and that there were cultural factors which had to be attended to concerning the deceased's funeral and in dealing with the various Buddhist beneficiaries, who are (it was submitted) "not in the cultural mainstream". 11 I decline to base any decision on whether there is or is not a "cultural mainstream", or if there is such a thing, on what is in or out of it. I recognise that Buddhists are a minority group in the population, and that the executor was not a Buddhist. However, I do not regard this last-mentioned matter as one which takes the executor's claim for commission outside the ordinary run of claims. It will frequently happen that a deceased has specific wishes, concerning what is to happen concerning any funeral ceremonies and disposal of his or her remains, which an executor will need to take care to observe. I am not persuaded that the fact that the deceased was a Buddhist, or that some of the beneficiaries had Buddhist connections, imposed any unusual extent of obligations or duties on the executor. 12 That there were multiple beneficiaries is not a factor showing that this administration involved particular difficulties – there were five beneficiaries in all, and that is not a large number. The beneficiaries are all legal entities in their own right – it is not as though the executor was involved in making any decisions which involved questions of the law of charitable trusts – so the fact that the beneficiaries themselves had charitable or alternative objectives did not complicate the administration. 13 The executor endeavoured to negotiate with the various beneficiaries, concerning the amount of commission which he would receive. He proposed that he receive a commission of 2.5 percent, including GST, on the estate, which would give him a commission of $28,535.29. This was a proposal which was for commission in addition to payment of all legal fees and disbursements. The executor received affirmative responses from Good Samaritan Donkey Supporters Incorporated, from Animal Liberation New South Wales, from the Bajrayana Institute, and from the Cat Protection Society of New South Wales. However, Wat Dhamma Foundation Limited was not prepared to agree. When this attitude of Wat Dhamma Foundation Limited was made known, the Cat Protection Society changed its mind about consenting. Hence, the application to the Court. The solicitor representing the executor submits the fact that the major beneficiary, and two of the other four residuary beneficiaries, agreed to the commission rate of 2.5 percent including GST is a matter which I should take into account. 14 I am not prepared to do this. While, if there had been complete agreement amongst all beneficiaries, about the amount of commission which should be allowed, that may have removed the need for the matter to come to Court. Once it is in Court, it is for the Court to exercise its own discretion about the appropriate rate of commission. 15 The work involved in the carrying through of the executorial tasks was, it seems to me, at the simple end of estate administration. It seems to me that, given the size of the estate, the appropriate benchmark for commission is around one percent of the distributable estate, which would result in a figure of $11,159. In all the circumstances, I think it is appropriate to round this up to $11,250. Taking the ordinary commission and the special commission together, and ignoring the cents, the total commission which I allow is therefore in the sum of $19,585. 16 The registrar has allowed an amount of $2,500 for costs in connection with the application before her, and that order will stand. 17 The executor claims costs of the present application. Because this hearing is a review of the Deputy Registrar's decision, and is not in the nature of an appeal, I have approached the matter by exercising a discretion afresh, rather than by looking at the question of whether the Deputy Registrar's decision shows any error. I have adopted this approach also because there was evidence before me which had not been before the Deputy Registrar, explaining in more detail the work which the executor did. The commissions which the Deputy Registrar had allowed were a lump sum commission of $10,000, and a special commission of $8,900, giving a total of $18,900. As a result of my exercising the discretion afresh, the executor is $685 better off, and also has the opportunity of claiming $1,406.50 conveyancing costs and disbursements from the beneficiary who requested that conveyancing work to be done. Thus, in all, the executor may be about $2,000 better off. 18 The executor seeks costs in the sum of $1,650, on the basis that there had been two hours spent in Court, and three hours preparation, at $350 per hour. In my view, that is not an appropriate way of calculating costs in a matter such as this. It would be wrong for the costs of an application for review to be disproportionately large by reference to the amount which had been recovered by means of the review. I allow costs of the present application in the sum of $1,000. **********