This decision of Slattery J considers the legislative provisions on how a claim for executor's commission is determined. Section 86(1) of Probate Administration Act 1898 ("PAA") relevantly provides:
"The Court may allow out of the assets of any deceased person to the deceased person's executor, ... in passing the accounts relating to the estate of the deceased person, such commission or percentage for the executor's, ... pains and trouble as is just and reasonable, ...."
This case is a review of the Registrar's decision to allow commission to be awarded from the estate of the late Rhonda Brenda Farrell to Mr Hawkins (a retired Anglican minister and a longstanding friend of the deceased) for his executorial duties. Ms Barkley-Brown (a niece of the deceased) was the co-executor and one of the residuary beneficiaries in the Will.
There were no express provisions in the Will stipulating that the executor be awarded commission or any legacy for the executor in lieu of commission. Accordingly Mr Hawkins made a claim for commission and requested for the estate accounts to be passed.
The Registrar passed the accounts for the period 17 December 2005 to 1 August 2007 and allowed for the award of commission to be paid from the estate to Mr Hawkins for his executorial functions at the rate of:
- 1% on the capital realisations of the estate
- 2% on the income of the estate
- 0.5% on assets transferred in specie.
plus $3,250 legal costs of filing and passing the accounts "plus fees" to be assessed. The estate was worth approximately $8.4 million of which comprise a house property, a substantial share portfolio and other investments together with cash at bank and a small amount of cash on hand.
The award of commission to Mr Hawkins as determined by the Registrar was calculated approximately $61,000.
The Will provided for the residuary estate to be divided between such of the following persons:
- 40% to Ms Barkley-Brown, who was the niece of the deceased
- 20% to the each of Ms Barkley-Brown's two minor sons
- 20% to the oldest son of Mrs Barkley-Brown.
In the review of the Registrar's decision, Slattery J considered the following issues and the principles of section 86 of PAA:
- What kind of activity on the part of an executor will attract an award of commission;
- Whether or not Mr Hawkins had engaged in that kind of activity; and
- What is the appropriate quantum of commission for that activity?
Ms Barkley-Brown made three arguments against the Registrar's award for commission to Mr Hawkins, as follows:
- The award of commission to an executor administrating a large estate should not be calculated as a percentage of the estate ("the large estate argument") because it tends to over compensate the executor. This argument was rejected as the Court determined the purpose of section 86 of PAA is to provide the Court the discretion to "allow such commission or percentage for the executor's pains and trouble as is just and reasonable." The Court may also adjust the percentage allowed downwards to reflect the kind of "pains and troubles".
- The commission awarded to Mr Hawkins should be reduced because of the particular functions that Mr Hawkins was performing in the administration of the estate. Ms Barkley-Brown argued the executor functions exercised by Mr Hawkins were generally much reduced as the other professionals were conducting litigation and general estate administration on his behalf ("the executors work argument"). This argument was rejected as the functions exercised by Mr Hawkins could be distinguished from the work being done by other professionals as he had no comparable professional expertise so there was no double compensation. Slattery J considered the stress suffered by Mr Hawkins in his involvement in the estate litigation (with respect to the account proceedings) in order to discharge his executorial duties (i.e. his pains) and the actual work undertaken such as appearing as a witness in the estate litigation (i.e. his troubles) as one of the important considerations when determining whether to award commission to be made from the estate.
- The quantum of commission awarded to Mr Hawkins was too high measured by number of standards ("the quantum argument"). Slattery J affirmed the decision of the Registrar but also undertook a fresh review of the award of commission to be made from the estate. Slattery J took into account the stress involved in the estate litigation and also the amount of contact Mr Hawkins had with the beneficiaries and their legal representatives. Slattery J also took into account of the ranges of commission referred to in Keith Mason, Leslie G. Handler, Succession Law and Practice NSW (1985) Butterworths at [14126.96.36.199]. The ranges of commission awarded in practice are as follows:
- 0.25% to 2% on capital realisations
- 2% to 4% on income collections
- 1% to 2% on assets transferred in specie.
It was determined that the ranges of commission as originally awarded by the Registrar were at the bottom of the usual range in practice and overall did not appear to be excessive.
This case provides guidance to the practitioners and the court in the award of commission pursuant to section 86 of PAA It is important to consider the kind of activities exercised by the executor while discharging the executorial duties and also to consider whether these kinds of activities would constitute "the pains and troubles" that would attract an award for commission.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.