IN
THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20101028

Docket: P072901

Registry:
Vancouver

RE: THE
ESTATE OF GORDON ANDERSON HALL, DECEASED

Before:
Master Baker

As
Registrar

Reasons for Decision

ISSUE

[1]            
Mr. John M. Sims, past committee and current executor of the estate of
Gordon Anderson Hall, applies for two heads of relief (to quote the
application):

to pass his accounts for the period February 28th, 2005
through May 19th, 2009 and

to recommend a fair and reasonable allowance for Mr. Sims for
his care, pain, trouble, and time expended in and about the estate in
administering, disposing of, arranging, and settling the affairs of the estate
during the same period.

[2]            
The Salvation Army, as beneficiary of one half of Mr. Hall’s estate, questions
one expense and challenges the remuneration for Mr. Sims.

BACKGROUND

[3]            
Mr. Hall died May 19th, 2007 leaving a will appointing Mr. Sims as his
sole executor.  The two gentlemen had an interesting history prior to that,
however.  Mr. Sims is a chartered accountant and first met Mr. Hall in 1972
when Mr. Hall consulted him in his professional capacity.  Over the years Mr.
Sims advised him on financial matters and gave him accounting and tax
services.  As such he became familiar with Mr. Hall’s personal circumstances. 
He knew, for example, that Mr. Hall was a firefighter, that he was seriously
injured in the line of duty in the late 1980s, that he was married with no
children, and that he was predeceased by his wife.

[4]            
In 2001 Mr. Hall was found wandering in West Vancouver, confused.  The
authorities contacted Mr. Sims, as Mr. Sims’ business card was in Mr. Hall’s
wallet.  Apparently it was the only hint at anyone to contact, as Mr. Hall was
not close to his extended family.

[5]            
As neither members of Mr. Hall’s extended family nor the Public Guardian
and Trustee (“PGT”) were inclined to apply for committeeship of Mr. Hall, Mr.
Sims was appointed committee February 28th, 2002.  At the time Mr. Hall’s
estate was worth approximately $970,000.00, his income was about $84,000.00 per
year, and his debts totalled a little over $12,000.00.  It is worth noting that
the order included a term that Mr. Hall’s home be sold, as well as other terms
typical of an order for committeeship.  These latter terms restricted any
investments to those forms permitted by the Trustee Act[1]
as well as specifically directing that the committee, in lieu of posting a
bond, be restricted from any access to the capital of Mr. Hall’s estate save
and except for re-investment purposes, or with the consent of the PGT.

[6]            
Mr. Sims took matters in hand, sold the home, arranged for Mr. Hall’s
residence and care, and generally arranged his affairs and financial matters. 
Broadly speaking this meant receiving and depositing his pension (WCB, BC
Pension, CPP, and OAP) and investment income.  The latter included proceeds of
a private mortgage he had lent as well as various investment accounts and
instruments Mr. Sims arranged with the sale proceeds of Mr. Hall’s home.  He
then paid Mr. Hall’s personal expenses, including residential care and home
support, medication, taxes, and pocket expenses (through a Kiwanis comfort
fund, I understand).

[7]            
Mr. Sims presented his accounts for the period up to February 27th, 2005
to the PGT and the accounts were approved March 3, 2006.  The PGT also approved
remuneration for Mr. Sims for both income management ($9,623.57) and asset
management ($8,104.54).  The approval letter specifically directed that Mr.
Sims’ next set of accounts “…will be due by March 27, 2007.”  These accounts
had not been submitted, however, by Mr. Hall’s death May 19^th, 2007,
and when Mr. Hall advised the PGT of the death the PGT, by its letter June 21,
2007, relied on s. 24(2) of the Patients Property Act (“PPA”)[2],
waived the passing of accounts, and instructed Mr. Hall, instead, to submit
those accounts either to Mr. Hall’s executor or administrator or, if he (Mr.
Sims) was also the executor, to the beneficiaries of Mr. Hall’s estate.

[8]            
At this application’s first hearing date, therefore, Mr. Sims presented
a form of blended or continuous accounting, beginning with the end-point of the
first accounting (i.e. February 27, 2005), running through the date of Mr.
Hall’s death, and ending May 19, 2009.  This hearing therefore included
accounts and remuneration for both the last two years of Mr. Hall’s life (as
his committee) as well as the time since his death (as executor).

[9]            
This form of accounts presented two preliminary problems, but I did not
appreciate or consider them until after the first hearing date.  It seemed to
me that separate accounts should be prepared and presented for the two separate
periods, as Mr. Sims was serving in two roles or capacities.  Secondly, I
wondered if the Salvation Army had standing to address Mr. Sims’ accounts as
committee.  I therefore requested that counsel argue those aspects.

[10]        
Mr. Sims addressed the first concern by returning to court with two
separate accounts, one for his period as committee and one for his period
(until May 19, 2009) as executor, thus eliminating my concern on that score. 
There remained the issue of the Salvation Army’s standing, however.

[11]        
Mr. Macaulay argued that as the Salvation Army has no entitlement
whatever to any of Mr. Hall’s estate until his death, it was not concerned with
his committeeship and the stewardship of his estate.  I am persuaded, however,
of Mr. Dolan’s view i.e. that the Salvation Army does have standing owing to
the unusual circumstances wherein a committee, by virtue of the patient’s
death, becomes his or her executor or administrator.  I cannot see how it could
be otherwise by the application of s. 24(3) of the PPA:

24  …

(3) After the death of the patient, the committee must
provide the committee’s accounts to

…

(b) if the committee and the executor or administrator
of the patient’s estate are the same person, the beneficiaries of the patient’s
estate.

(4) The executor, administrator or beneficiaries of the
patient’s estate may provide to the committee written approval of, and consent
to, the accounts received under subsection (3).

(5) If a committee fails to provide its accounts as
required under subsection (3), or if the accounts are incomplete or inaccurate,
a person entitled to the accounts may require the committee to attend before
the court to explain the committee’s failure to provide the accounts or to
provide a satisfactory accounting, and the court may give the direction it
considers proper.

It seems obvious to me, therefore, that this provision gives
the Salvation Army standing for the passing of Mr. Hall’s accounts not only as
executor but as committee as well.

[12]        
The Salvation Army does not question the accounts per se, other than
those portions that assume remuneration for Mr. Sims and the cost of accounting
services.

[13]        
Mr. Hall’s will is interesting.  As I have said, his wife predeceased
him and they had no children.  He was not close to (in fact, may have even been
a bit estranged from) his extended family.  He therefore left his estate
entirely to charity.  He directed that his estate be divided into two equal
shares, and that one share be given to the Salvation Army.  The other share was
to be distributed to such registered British Columbian charities as his
executor might choose, each charity to receive “…up to the sum of ten
thousand ($10,000.00) dollars…”.  In some respects the administration of the
estate was not too complex; at Mr. Hall’s death it was reasonably liquid and
ascertained.  The real work lay in the choice of the numerous charities that
would receive the second half (after the Salvation Army).  The estate’s net
value was approximately $1,100,000.00 which meant finding, of course, over 50
eligible charities.  Mr. Sims’ evidence was that he has processed bequests to
about 40 charities, but that the estate has $295,000.00 remaining, so that his
work continues.  He has not kept time records, but estimates the time spent on
choosing charities alone to be well in excess of 100 hours.

ANALYSIS

[14]        
I will consider first the passing of the accounts and secondly appropriate
remuneration for Mr. Sims.

Accounts

[15]        
Mr. Sims’ accounts cannot be faulted; they are thorough, detailed, and
complete.  The only concern raised by Mr. Dolan and the only expenditure that,
in my view, requires review, is the cost of accounting services.  During the
final two (approximately) years of Mr. Hall’s committeeship, accounting fees of
$40,837.65 were paid; $1016.50 to Ellis Foster (Mr. Sims’ previous firm) and
the balance to Ernst & Young (Mr. Sims’ current firm).  The fees, all to
Ernst & Young, for the probate period up to May 19, 2009, total $55,150.50
(of that $6,693.00 is reported as ‘accrued’, as opposed to paid).  The total
accounting costs, therefore, for roughly four years, are $95,988.15. 
Strangely, before Mr. Sims broke the accounts down into the pre- and 
post-death periods, the fees listed totalled $98,028.19.

[16]        
The evidence in respect of that expense has been minimal, almost
negligible.  Mr. Sims confirmed that the fees (with the exception, perhaps, of
the accrued portion, above) have been paid.  There were no exhibits filed to
confirm the accounts or details of them.  Three Ernst and Young accounts (May
25, 2007, August 21, 2007, and January 15, 2008, for $4,850.00, $13,600.00, and
$9,000.00, respectively) found their way into the court file, attached to a
copy of Exhibit 3, the PGT’s letter of March 3, 2006, although the invoices
clearly had nothing to do with the letter.  The invoice of August 21, 2007, as
an example, is brief in the extreme.  I can quote it in full:  “To accounting
and income tax services for the period May 19, 2007 (date of death) to August
17, 2007 and all other services as required – 13,600.00.”  There is a
handwritten notation on the invoice: “3 months x $4000/mo.”  I have no idea who
wrote the notation or why.  I infer, however, that the invoices may well be
typical of the accounting invoices paid.  If so, there is a significant dearth
of detail and information upon which one can base an assessment of the
reasonableness of the accounts.  I doubt, for example, that were the accounts
for legal services, they would meet the requirements of s. 69(4) of the Legal
Profession Act[3]:

A bill under subsection (1) is sufficient in form if it
contains a reasonably descriptive statement of the services with a lump sum
charge and a detailed statement of disbursements.

I assume that there are time records that would relate to
and possibly explain these accounts but if they exist I haven’t seen them.

[17]        
One of the accounts concerns me for other reasons.  The invoice of May
25^th, 2007 states that the accounting fees are for services:  “…including
payment of accounts, investment of funds and all other services in regard to
the affairs for the period ended May 18, 2007”.

[18]        
This concerns me because Mr. Sims seeks a fee, as committee, for, in
part at least, those very services i.e. the payment of accounts and investment
of funds.  How can it be that both he, as committee, and the firm, as
accountants, should be remunerated for the same services?

[19]        
Moreover there is the broader concern: the total accounting fees,
whether they total $95,988.15 or $98,028.19 seem disproportionate given the
entire estate was valued at $1,100,000.00, and given that after two years’
committeeship and the investment restriction imposed by the committeeship order
(para. 4, above) the estate could not have been a complex one.  The estate
summary for February 28, 2005 to May 19, 2007, in fact, lists only two chequing
accounts, a treasury bill, a RRIF, four GICs, the mortgage Mr. Hall held, a
small account for his comfort money, and three other accounts (Genus and two
Vancity accounts, one for cash and one for securities).  Some of these, I
understand, were essentially replacements for the others as funds were changed
from one institution to the other, or re-invested.  So, while Mr. Hall’s funds
may have been greater than the average person’s I cannot see how their
management, including tax reporting and arrangements, could justify these
fees.

[20]        
It would also seem to me that given that the fees were charged in all
instances by firms to which Mr. Sims belonged, it is incumbent on him to be
explicit and thorough in justifying them.

[21]        
As I have said, the documentary evidence relating to the accounting
costs is minimal to the point, almost, of non-existent.  Nor was Mr. Sims
cross-examined in any real depth on the subject.  To be sure, Mr. Dolan, for
the Salvation Army, was clear both in his cross-examination and in his
submissions that he felt accounting costs were unrestrained and, generally, too
high.  But no evidence was offered, for example, from the beneficiaries’
perspective of what reasonable accounting expense might have been.

[22]        
I have referred to the Salvation Army in these reasons, but the court
also must take note of the interests of many other unnamed beneficiaries.  Mr.
Hall’s will directed that one-half (roughly $500,000.00) of his estate should
go in gifts to charities, each gift to be less than $10,000.00.  Mr. Sims is
tasked with finding these charities, assessing their goals and operations, and
making the gifts.  This, of course, creates a class that will, ultimately,
include 60 or more beneficiaries.

[23]        
The consequence is that I am not prepared to approve accounts that
include these charges for accounting services without further and better
explanation and justification.

Remuneration

[24]        
I will move on to remuneration.  Before I consider the means by which
remuneration, if any, should be considered, I have concluded that, given my decision
above re: accounting costs, it is premature to fix a figure for remuneration. 
This applies to both the period of committeeship in issue and the probate
period, as my concerns about the cost of accounting services span both of these
periods.  There is a preliminary issue regarding remuneration, however, that I
can decide.

[25]        
Mr. Sims proposes that he be remunerated for both the final period of
committeeship and for his work as executor on the bases provided for by s. 88
of the Trustee Act:

(1) A trustee under a deed, settlement
or will, an executor or administrator, a guardian appointed by any court, a
testamentary guardian, or any other trustee, however the trust is created, is
entitled to, and it is lawful for the Supreme Court, or a registrar of that
court if so directed by the court, to allow him or her a fair and reasonable
allowance, not exceeding 5% on the gross aggregate value, including capital and
income, of all the assets of the estate by way of remuneration for his or her
care, pains and trouble and his or her time spent in and about the trusteeship,
executorship, guardianship or administration of the estate and effects vested
in him or her under any will or letters of administration, and in
administering, disposing of and arranging and settling the same, and generally
in arranging and settling the affairs of the estate as the court, or a
registrar of the court if so directed by the court thinks proper.

(2) The court or a registrar of the court if so directed
by the court, may make an order under subsection (1) from time to time,
and the amount of remuneration must be allowed to an executor, trustee,
guardian or administrator, in passing his or her accounts, in addition to any
other allowances for expenses actually incurred to which the trustee, executor,
guardian or administrator may by law be entitled.

(3) A person entitled to an allowance under
subsection (1) may apply annually to the Supreme Court for a care and
management fee and the court may allow a fee not exceeding 0.4% of the average
market value of the assets.

Indeed, I expect that when he submitted his accounts in 2005-06
to the PGT respecting the first two years of committeeship he calculated his
proposed fee by the terms of s. 88.  Moreover, I assume that the PGT found this
acceptable; this is implicit in the PGT’s approval of his accounts and fee.  With
respect, I conclude that this provision does not apply to Mr. Sims’ tenure as
committee of Mr. Hall.  Nor is the court bound by any precedent in the PGT
approving Mr. Sims’ earlier fee.

[26]        
Mr. Dolan argued that the Court of Appeal decision in Re: Pearce[4]
applies and that for remuneration purposes the decision draws a clear
distinction between committees and trustees.  I agree with that view.  The case
is clear in its finding that then — s. 90 (now s. 88) of the Trustee Act
does not apply to committees’ remuneration.

[27]        
A committee, by the terms of s. 14 of the PPA, clearly
is entitled to seek remuneration:

(1) A person may be allowed reasonable compensation from
the estate of a patient or from the estate of a person who has ceased to be a
patient for services rendered as committee of the patient or of the person who
has ceased to be a patient.

(2) The compensation, if any, to be paid to a person
other than the Public Guardian and Trustee must be fixed on the passing of
accounts.

The Court approved the decision
of Hinds J. in Re Pedlar[5]
and the factors as listed by him:

Each application must be decided upon its own facts. Some of
the important factors to be taken into consideration in determining whether any
care and management fee should be allowed and, if allowed, the extent of such
care and management fee (not exceeding 0.4% of the average market value of the
assets of the estate), include the following:

(a)  the value of the estate assets being administered;

(b)  the nature of the estate assets being administered
— such as an active business, a farm, real property held for investment or
appreciation, a portfolio of investments and the type of such investments;

(c)  the degree of responsibility imposed upon the
trustee by the terms of the will or other instrument, including the length or
duration of the trust;

(d)  the time expended by the trustee in the care and
management of the estate;

(e)  the degree of ability exhibited by the trustee in
the care and management of the estate;

(f) the success or failure of the trustee in the care
and management of the estate;

(g)  whether or not some extraordinary service has been
rendered by the trustee in the care and management of the estate.

It is interesting that the Court of Appeal’s approval of Pedlar,
in Pearce, made no reference to Hinds J.’s parenthetical limit of 0.4%,
above.  It is as if the courts have intended to, on the one hand, remove
committeeship fee assessments from s. 88 of the Trustee Act, but at the
same time invoke part of that section’s limitation (s. 88(3), above).

[28]        
These, then, are the factors that will be considered eventually in the
assessment of the fee, if any, that Mr. Simms will receive as committee. His
fee (again, if any) as executor would be assessed, of course, by the terms of
s. 88 of the Trustee Act and cases reported under that section.

Summary

[29]        
In sum, therefore

 –         I decline to pass or approve the
accounts as presented;

 –         the accounts may be re-submitted and the
accounting expense revisited, in which case either or both parties may lead
evidence on the point;

 –         any fee permitted for Mr. Hall’s
committeeship will be decided under s. 14 of the PPA and cases referenced to
that section and any fee permitted for Mr. Sims’ service as executor will be
decided under s. 88 of the Trustee Act and cases relating to that section.

[30]        
In the circumstances no costs will be allowed for these proceedings.

“Master
Baker”