Property & Environmental Law Section. Property & Environmental Law Section & Costs Policy Committee
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- Evangeline Mathews
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1 page 1 & Costs Policy Committee To: The Supreme Court Rules Committee Amendment to Supreme Court Chapter III Probate and Administration Rules Order 9 and Appendix 3-A A submission from: The Probate Wills & Administration Committee (a sub-committee of the ) and Costs Policy Committee (a committee of the Law Institute of Victoria Council) Date: 22 June 2004 Queries regarding this submission should be directed to: Mia Johnson (03) mjohnson@liv.asn.au ww.liv.asn.au
2 page 2 ORDER 9 An amended Order 9 is put forward for the committee s consideration. The underlined words are new to Order (a) Subject to this Order, where no contention has arisen, the professional charges which may be paid and allowed out of the estate of a deceased person to a solicitor in obtaining: (i) (ii) a grant of representation shall be as set out in Appendix 3-A.; or the re-sealing in Victoria of a grant made in another jurisdiction shall be as set out in Appendix 3-A. (b) The charges in Appendix 3-A are in respect of: Instructions including perusing Will and making copy (but not including searching for nor investigation, verification nor valuation of any assets of the estate); advertising intention to apply; preparing Originating Motion, affidavit of applicant (including inventory and marking exhibits), affidavit of searches and publication of advertisement and exhibit, Registrar s Order and Probate; necessary perusals; correspondence; and attendances in connection therewith. (c) Where a grant of representation is not obtained or resealed in Victoria but a portion of the work described in rule 9.01(b) is completed a charge as set out in Appendix 3-A rateable to the work completed may be made. (d) The costs of investigation of assets and liabilities are not included in the charges prescribed by Appendix 3-A and may be charged additionally in accordance with the Practitioner Remuneration Order A solicitor may also charge (a) any fees, charges or expenses reasonably incurred; (b) for special or unusual work in accordance with Appendix A to Chapter I of the Rules of the Supreme Court. The underlined words in 9.01(a) where no contention has arisen were in the previous rule but were omitted in the 1994 amended rule. The omission has made no alteration to the scope of Appendix 3-A but for clarity s sake it is preferable the words be returned. The underlined words in 9.01(a)(ii) are requested to be included to ensure that charges for a reseal are based only on the gross value of the estate in Victoria. The sub rules 9.01 (b), (c) and (d) are requested to be inserted to clarify the work done and to avoid doubt.
3 page 3 The underlined words in 9.03 are requested to be included as many practitioners are unclear that the Supreme Court scale applies to this work. APPENDIX 3-A The Law Institute of Victoria would be grateful if consideration could be given to increasing the scale of costs in Appendix 3-A of the Supreme Court (Administration and Probate) Rules Hereunder is a submission for consideration by the Court. Historical The format of the Supreme Court (ad valorem) Probate scale was introduced early in the last century. The scale was reviewed in 1974 i when the remuneration was increased and the minimum gross value of estate commenced at $10,000 rather than $2,500. The scale was also reviewed in 1977 ii when the remuneration was further increased. On 1 January 2002 the scale was increased by 9% to take into account the Goods and Services Tax which the legal practitioner pays at 10%. A copy of the following statutory rules are annexed: SR 121 of 1970 SR 488 of 1974 SR 395 of 1976 SR 129 of 2001 The Probate scale has not been increased rateably with the value of estates and has not kept pace with inflation. Also there is additional court requirements in an application, eg inter alia, providing particulars of estate assets outside Victoria as well as liabilities and the provision of a death certificate. Comparative Scales The Probate Scale, which applies to either an application for a Grant of Probate or Letters of Administration, originally was intended to represent a parabolic progression, unlike the Supreme Court Appendix A which is an item remuneration scale based upon the arithmetic calculations of time and movement studies to represent a fee for service. In the event that an application for Probate or Letters of Administration was contested, the ad valorem scale does not apply to the evaluation of services provided by the legal practitioner. The appropriate scale applicable would be Appendix A. In the circumstances, it would appear to be a matter of common sense to consider and compare the remuneration to which a legal practitioner would be entitled in the application of Appendix A with the ad valorem Probate scale. Annexed hereto is a pro forma bill of costs based upon Appendix A for a simple, straightforward and uncomplicated application for a grant of Probate. The costs of an application for Letters of Administration would be substantially higher as more work including documentation is involved in such an application. The annexed bill of costs does not include any loadings for discretionary entitlements and represents the minimum costs of a simple application. It totals $1,317.30, clearly indicating the inadequacy of the remuneration provided by the Probate scale.
4 page 4 Although the Probate scale has not been increased since 1977, the Supreme Court Appendix A since that time has been increased by more than 152%. In fact since 1974 some items in that scale were increased in the course of redrafting and re-evaluating the scale, by a range from 650% to 1,900%. It is unquestionable that scales, prior to that time did not represent the true value of services provided and the Probate scale both then and now still does not provide adequate remuneration for legal practitioner s work. Overhead expenses It has been well established since 1946 that overhead expenses in running a law office have been not less than 70% of gross remuneration or billings raised by the application of the statutory scales. In recent years Office Overhead Expenses have substantially increased and eroded income. More recently the Costs Co-ordination Committee (a judicial committee under the chairmanship of the Chief Justice or his nominee) which recommends increases in the Practitioner Remuneration Order and the scales of costs in the Supreme Court, County Court and the Magistrates Courts has acknowledged that the legal practitioners Office Overhead Expenses now comprise 82.5% of gross fees recovered. Accordingly the overhead content of the attached Probate bill is $1, Therefore a legal practitioner would not recover the equivalent of Office Overhead Expenses unless the application for Probate, on the current scale, was in respect of an estate of the gross value of at least $700,000. It is patently clear that the Probate scale has not kept pace with inflation and having regard to the principles underlying estate planning generally, the gross values of deceased estates have financially and materially decreased, thereby causing Probate applications to become, in most instances, unprofitable. Basic ad valorem principles The legal profession has always recognised the desirability of an ad valorem scale for Probate applications, thereby providing a social commitment to the community. However, no legal practitioner should be expected to provide any service without the recovery of basic cost, that is Office Overhead Expenses. In fact in 1963 the Statutory Committee constituted under the Supreme Court Act section 83 declared that basic fees in an ad valorem scale should be 10% more than applicable Office Overhead Expenses. The principle accordingly was adopted by the Law Institute in all ad valorem scales of costs. Construction of a scale It appears to be logical to commence a probate scale with an estate of equal value to the limit of a small estate and that item should attract a fee which is not less than the applicable Office Overhead Expenses. The Law Institute is conscious of the legal profession s desire to provide adequate service at reasonable cost, even subsidised cost when appropriate, as a community service, particularly for those in need. In all the circumstances, it proposes the substantially reduced fee of $750 as the basic fee, which is of course, considerably less than half the Office Overhead Expenses of an application. As the increase in fees above $1,110 in the current tabular scale is based upon an arithmetic progression, it seems logical also to compare and apply a like progression of no lesser value to this proposal.
5 page 5 Such a scale constructed on the Law Institute s proposal is as follows: Where gross value of estate does not exceed Remuneration chargeable $ $ 50, ,000 1, ,000 1, ,000 1, ,000 1, ,000 1, ,000 1, ,000 1, ,000 1, ,000 1, ,000 1,425 Where estate left exceeds $500,000 1,425 plus $35 for every $50,000 or part thereof by which the estate exceeds $500,000 NB (i) Small Estates have been raised to a limit of $50,000. (ii) $1, represents only the Office Overhead Expenses and does not include out-of-pockets eg Court fees, valuation fees etc. (iii) The increases of $35 for each $50,000 are equal steps to the current scale. Should the Chief Justice or his advisory committee wish to discuss this proposal or require any further submissions or explanations the Law Institute s representatives are available at your Honour s convenience.
6 page 6 Unopposed Probate Application to Supreme Court Perusing Will 6 folios Copy to retain 3 pages 4.50 Instructions to apply for Probate Drawing and engrossing Notice of Intention to apply 2 folios Attending to publish advertisement (or transmission by facsimile) Paid advertising Receiving and examining (scanning) publication for accuracy 1.80 Bespeaking Death Certificate (including form of application) Paid fee Perusing (scanning) Certificate 2 folios 3.60 Copy to file (or exhibit) 1.50 Drawing and engrossing certification28.30 Attending to certify Preparation of Originating Motion and issuing Instructions for Inventory of Assets & Liabilities Drawing and engrossing Inventory 3 folios Instructions for Affidavit of Executor Drawing and engrossing Affidavit 6 folios Marking exhibits (3) Letter to executor to arrange execution of documents Attending deponent going over Inventory and on being sworn Drawing and engrossing affidavit of publication & searches 2 folios Attending to be sworn Drawing and engrossing Order 2 folios Copy order 1 page 1.50 Drawing and engrossing Probate parchment 2 folios Copy to file 1 page 1.50 Attending Probate Office making necessary searches for prior will, prior application and caveats, attending to swear Affidavit of Searches and issuing Originating Motion Paid fee Attending to search for approval of Application Letter to Executor informing of issue of Grant $1, including GST i SR number 488 of 1974 commenced 1 December ii SR number 395 of 1976 commenced 1 January 1977.
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