Tuesday, April 15, 2008

British Columbia Public Guardian and Trustee Management Fees

[Since I wrote this post, the British Columbia Court of Appeal has overturned the Supreme Court of British Columbia decision discussed below. See my more recent post here.]

One of the roles of the British Columbia Public Guardian and Trustee is to manage funds for persons who do not have the legal capacity to manage their own funds. This includes adults who are found to be incapable of managing their affairs, and who do not have a family member or friend willing and able to act as a guardian, and children who receive financial settlements.

The fees that the Public Guardian and Trustee charges for his services are set by the Government of British Columbia by Regulation.

Are these fees too high?

Mr. Justice Burnyeat in British Columbia (Public Guardian and Trustee) v. Strand, 2008 BCSC 441, found that the fees charged by the Public Guardian and Trustee to set up an manage an account for two infant children would be too high.

The court was asked to approve a settlement of a claim brought on behalf of two children as a result of a car accident in which their mother died. In his decision released yesterday, Mr. Justice Burnyeat approved the amount of the settlement and the proposed legal fees.

But the Court refused to order that the settlement proceeds be held by the Public Guardian and Trustees. Mr. Justice Burnyeat found the fees that would be charged by the Public Guardian and Trustee to be higher than those charged by private sector financial institutions. He wrote,

After subtracting the approved fees and disbursements, the approximate amounts available in trust would be $135,000.00 for April Beaurivage and $115,000.00 for Natalie Beaurivage. If those amounts were received, the 5% “capital commission charge on the value of each Deposit” would be approximately $6,750.00 and $5,750.00 respectively.

I am of the opinion that the imposition of a “capital commission charge” of $6,750.00 and $5,750.00 is excessive and unwarranted as a “Set-Up Fee” and in no way in keeping with the actual costs of creating such an investment file to facilitate the undertaking of the obligations that a trustee owes to a beneficiary. For instance, if the counsel retained by the Public Trustee had purported to charge such a set-up fee in order to establish a trust account, that fee would not be allowed by the Court and might well be the subject matter of an inquiry by the Law Society of British Columbia. The question which arises is whether the “capital commission charge” is reasonable in the circumstances. I have concluded that it is not. In this regard, the material in evidence would indicate that private investment companies charge considerably less. For instance, the “Set Up Fee” charged by Scotia Trust (“to cover the time taken to review documents, receive assets and set up the trust”) and TD Canada Trust Private Trust Department (“an acceptance/set-up fee”) would be $1,000.00. In the case of TD Canada Trust, the Set-Up Fee would be a minimum of $1,000.00 and a maximum of $5,000.00.
Mr. Justice Burnyeat expressed his view in no uncertain terms that in enacting the Regulation setting out the applicable fees, the government had not acted in the best interest of infants as the government had claimed. After quoting a former Attorney General's speech in the Legislative Assembly, Mr. Justice Burnyeat wrote,

It can hardly be said that the Public Trustee is “protecting the financial interests of young people by holding funds in trust” for them when the financial interests are not protected by the levying of fees which are in excess of what would be charged by the private sector. Similarly, it can hardly be said that the Public Trustee is “protecting the legal interests of young people by acting as litigation guardian” when the Public Trustee also recommends that it rather than other potential trustees should receive trust funds for investment. It is not presently correct to say that: “historically the public trustee has charged fees for trustee services consistent with those charged by private trustees” when the proposed fees charged appear to be in excess of what would be available if private trustees were retained.

Mr. Justice Burnyeat ordered that the funds be held in a lawyer's trust account until alternative arrangements for the management and investment of the funds were made and approved by the court.

1 comment:

Anonymous said...

it would be interesting to know what the ongoing fees r in addition; also the review of the public trustee's success rate in managing money e.g. keeping up with inflation and positive return thereafter - as compared to the management at Scotia or TD.