The Estate of Arthur Michael Falco; Falco v Lambert (No 3)

[2015] NSWSC 1343

Supreme Court

New South Wales

Medium Neutral Citation:	The Estate of Arthur Michael Falco; Falco v Lambert (No 3) [2015] NSWSC 1343
Hearing dates:	24 February, 13 October 2014; 2 February 2015
Decision date:	14 September 2015
Jurisdiction:	Equity - Probate List
Before:	Kunc J
Decision:	See paragraphs [6] and [7]
Catchwords:	WILLS, PROBATE AND ADMINISTRATION – Executors – Review of Registrar’s moderation of fees executor paid to his solicitor out of estate – UCPR Pt 49 r 49.19 EQUITY – Whether arguable Barnes v Addy claim by beneficiaries against solicitor for fees paid by executor out of estate but subsequently disallowed on moderation – Whether proceedings against solicitor should be dismissed or stayed
Legislation Cited:	Civil Procedure Act 2005 (NSW) Probate and Administration Act 1898 (NSW) Trustee Act 1925 (NSW) Supreme Court Rules 1970 (NSW) Uniform Civil Procedure Rules
Cases Cited:	Barnes v Addy (1874) LR 9 Ch App 244 Chick & Anor v Grosfeld (No 3) [2012] NSWSC 1536 Falco & Ors v Lambert & Ors (No 2) [2014] NSWSC 125 Farah Constructions Pty Limited v Say-dee Pty Limited [2007] HCA 22; (2007) 230 CLR 89 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Hasler v Singtel Optus Pty Ltd [2013] NSWCA 266; (2014) 87 NSWLR 609 House v The King (1936) 55 CLR 499 In the Estate of Purton (1936) 53 WN (NSW) 148 In the Will of Sherriff [1971] 2 NSWLR 438 Noble Earth Technologies Pty Ltd v Hampic Pty Ltd trading as Cyndan Chemicals [2012] NSWSC 935 Re Estate Gowing; application for Executor’s Commission [2014] NSWSC 247 The Estate of Arthur Michael Falco; Falco v Lambert (No 1) [2013] NSWSC 1653 The Estate of Barbara Dawn Orre (NSWSC; Powell J; unreported; 19 December 1991) Tomko v Palasty (No 2) [2007] NSWCA 369; (2008) 71 NSWLR 61
Category:	Procedural and other rulings
Parties:	Joseph Peter Falco, Tanya Maree Falco, Mark James Falco (Plaintiffs) Peter John Lambert (First Defendant) Peter Kenneth White (Second Defendant)
Representation:	Counsel: Mr A.J. Bulley (Plaintiff) Mr C.F. Hodgson (First Defendant) Mr M. Gorrick (Second Defendant)   Solicitors: Glasson, Gemmell & McGill (Plaintiffs) Armstrong Legal (First Defendant) Teece Hodgson & Ward (Second Defendant)
File Number(s):	2010/26928
Publication restriction:	No

Judgment

Summary

1. Arthur Michael Falco (the “Deceased”) died in December 2009 leaving a two page handwritten will dated 18 July 2007 (the “Will”). The principal beneficiaries under the Will are the Deceased’s adult children, three of whom are the Plaintiffs. The Deceased’s fourth child is not a party to these proceedings.

2. Probate of the Will was granted to the First Defendant (“Mr Lambert”) on 17 February 2010. Mr Lambert was the Deceased’s accountant. The Second Defendant (“Mr White”) is a solicitor who was retained by Mr Lambert in connection with the latter’s administration of the Deceased’s estate (the “Estate”). The net sworn value of the Estate for probate was just under $7,000,000.

3. The only operative provisions of the Will are the dispositive clauses and the appointment of Mr Lambert as executor. The Plaintiffs place great emphasis on the fact that the Will does not contain a “charging clause”.

4. The Plaintiffs want Mr Lambert removed as executor of the Will. These proceedings were commenced by statement of claim filed on 27 September 2012. What then followed is set out in more detail below.

5. This judgment resolves two notices of motion:

1. The Plaintiffs’ notice of motion filed on 3 September 2014 seeking a review of a decision of Senior Deputy Registrar Studdert dated 15 July 2014 (the “Decision”) moderating the Estate’s accounts;

2. Mr White’s amended notice of motion filed on 15 August 2014 for the proceedings against him to be dismissed or struck out with the consequence that he be removed as a party to the proceedings or, alternatively for a stay or determination of a separate question.

6. As to the Plaintiffs’ notice of motion the Court:

1. Varies the amount which the Senior Deputy Registrar ordered Mr Lambert to refund to the Estate by $3,585.10 plus GST from $25,785.90 plus GST to $29,371.00 plus GST but notes this is the result of concessions by Mr Lambert. But for those concessions, the Court would not have varied the Decision.

2. Declines to vary the Senior Deputy Registrar’s order so as to make Mr White also liable to refund the Estate.

7. As to Mr White's amended notice of motion:

1. The availability of an arguable Barnes v Addy claim means that the proceedings against Mr White should not be dismissed summarily.

2. The claim against Mr White is inadequately pleaded (not least by reason of repeated reliance on the absence of a charging clause, which is completely irrelevant to any cause of action, and the failure to plead properly the type of Barnes v Addy claim alleged) so that it will be struck out with leave to replead.

3. Upon the filing of an amended claim against Mr White (if any), the proceedings against him will be stayed until the balance of the Accounts Summons (see paragraph [11] below) is determined or further order.

4. The separate question sought by Mr White will not be ordered.

Procedural history

8. The Plaintiffs filed their statement of claim on 27 September 2012. The primary relief sought was (and remains) that the grant of probate to Mr Lambert be revoked and that probate of the Will be granted to Patricia Jean Falco, the Deceased’s ex-wife and the Plaintiffs’ mother. However, the consequential and alternative relief sought by the Plaintiffs included these prayers:

7.   Order that within 28 days the Defendant verify and file accounts in respect of his administration of the said Estate.

8.   Further and in the alternative, order that within 28 days the Defendant verify and file accounts and institute proceedings to pass such accounts in the Probate Office of the Registry in respect of his administration of the said Estate.

9. In November 2012 Mr Lambert filed a defence and cross claim, the latter being for orders that he be relieved from any breach of trust pursuant to s 85 of the Trustee Act 1995 (NSW) (the “TA”).

10. On 19 February 2013 the Plaintiffs filed a notice of intended objection to commission in respect of the Estate.

11. On 1 March 2013 Mr Lambert filed a summons (the “Accounts Summons”) claiming these orders:

1.   An order passing the first accounts of the Administration of the Estate of the Late Arthur Michael Falco Deceased covering the period from 17 February 2010 to 30 June 2012.

2.   An order allowing commission.

3.   An order allowing further time to file the next accounts.

4.   The costs of and incidental to filing and passing of accounts and of the application for commission.

12. On 13 May 2013 the Plaintiffs filed a notice of motion for an order that Mr White cease to act as Mr Lambert’s solicitor in the proceedings. That motion came before me on 27 June 2013. At the conclusion of the Plaintiffs’ submissions the parties agreed that the Plaintiffs should have leave to serve an amended statement of claim joining Mr White. The further hearing of the Plaintiffs’ notice of motion was adjourned to 27 November 2013.

13. On 12 August 2013 the Plaintiffs filed an amended statement of claim which joined Mr White. The relief sought against Mr White is:

8D   A Declaration that the Second Defendant is a Constructive Trustee of the Estate moneys received by him.

8E   An order that the Second Defendant repay the said moneys to the Estate.

8F   An order that the Second Defendant pay Equitable Compensation to the Estate.

8G   An order that the Second Defendant pay Damages to the Estate.

8H   As against both the First Defendant and the Second Defendant, an order that they pay interest in respect of any moneys, damages or Equitable Compensation to be paid by either or both of them to the estate.

14. The case pleaded against Mr White is:

9G   The Second Defendant is, and was at all material times, a solicitor of the Supreme Court of New South Wales.

9H   On or about 14 December 2009 the First Defendant retained the Second Defendant to provide legal services on his behalf.

Particulars

Costs agreement entered into between the First Defendant and the Second Defendant on 14 December 2009.

9I   At all material times the First Defendant, as Executor of the Estate, owed fiduciary duties to the beneficiaries of the Estate as particularised under paragraph 9A above.

9J   The Second Defendant, being a qualified solicitor, knew, or ought to have known, that the First Defendant owed the said duties to the beneficiaries of the Estate.

9K   The Second Defendant failed to advise the First Defendant that he was in breach of his said duties.

9L   Between 17 February 2010 and 25 February 2013 the Second Defendant rendered tax invoices to the First Defendant in respect of the services he had provided to the First Defendant which included work of a legal, but predominantly of an executorial or non-legal nature.

9M   In breach of his fiduciary duties the First Defendant did not personally pay the Second Defendant for the legal services provided, rather, the First Defendant authorised payment to the Second Defendant out of Estate monies in respect of the tax invoices rendered by the Second Defendant.

9N   The Second Defendant received the said monies in payment of his tax invoices where he knew or ought to have known that:

(a)   the Will did not contain a charging clause;

(b)   payment of his tax invoices was not made personally by the First Defendant as Executor of the Estate;

(c)   payment of his tax invoices was improperly made with Estate monies;

(d)   Estate monies were used to pay tax invoices rendered by the Second Defendant which were not correct.

9O   By reason of the Second Defendant’s knowledge and furtherance of, and participation in, the First Defendant’s breach of fiduciary duties the Second Defendant is liable to the beneficiaries of the Estate:

(a)   as a Constructive Trustee of the monies received from the Estate;

(b)   to repay the said monies to the Estate;

(c)   in the alternative, to pay Equitable Compensation to the Estate;

(d)   to pay interest on the monies received to the Estate.

9P   In the circumstances, the Second Defendant owed the following duties to the Estate:

(a)   a duty to ensure that the First Defendant complied with his duties as executor;

(b)   a duty to ensure that the First Defendant administered the Estate properly;

(c)   a duty to ensure that the First Defendant administered the Estate in a timely manner;

(d)   a duty to ensure that Estate monies were paid with proper authorisation; and

(e)   a duty to ensure that Estate monies were paid in accordance with the law.

9Q   The Second Defendant is in breach of the said duties:

Particulars

(a)   The Second Defendant sought improper authorisation from the First Defendant to pay his tax invoices out of Estate monies held in his trust account.

(b)   The Second Defendant advised the First Defendant that the First Defendant was capable of authorising the payment of tax invoices out of Estate monies.

(c)   The Second Defendant paid his tax invoices out of Estate monies held in his trust account.

(d)   The Second Defendant paid himself out of Estate monies held in his trust account in circumstances where there was no charging clause in the will of the Deceased.

9R   The breach of duties by the Second Defendant, as alleged, has resulted in loss being suffered by the Estate.

Particulars

(a)   The payment of the Second Defendant’s tax invoices out of Estate monies.

(b)   Further particulars will be provided in due course.

15. Mr Lambert’s defence to the amended statement of claim includes:

7.   Further, and in the alternative, to the claims made by the Plaintiffs regarding the payment of the fees of the Second Defendant, the First Defendant says that those are matters to be dealt with on moderation of the fees of the Second Defendant, and the First Defendant will abide by the final determination of this Court in that regard.

16. Mr White’s defence to the amended statement of claim (filed without admission that the claims against him were maintainable) admits that he rendered invoices to Mr Lambert for services he provided pursuant to a “Standard Costs Disclosure” dated 14 December 2009. More precisely, there were two documents of that date:

1. A “Standard Costs Agreement” specifying Mr White’s retainer from Mr Lambert to “act on your behalf to obtain grant of probate and thereafter to administer the estate and to do all ancillary work relating thereto.”

2. A “Standard Costs Disclosure” specifying Mr White’s fees of $300 per hour (plus GST).

17. The defence also pleads:

13.   In so far as the Amended Statement of Claim makes claims and seeks relief against the Second Defendant he further says:

(a)   The first defendant may, instead of acting personally, have employed an agent including an Australian legal practitioner, to transact any business or to do any act required to be transacted or done in the administration of the estate of the deceased;

(b)   The first defendant was entitled to be allowed and paid all charges and expenses so incurred from the funds of the estate of the deceased.

Particulars

Section 53 of the Trustee Act 1925 (NSW)

(c)   At all material times the first defendant had a right of recoupment or indemnity for his proper expenses in administering the estate of the deceased from the estate, including costs properly incurred in obtaining probate.

(d)   whether the Will of the deceased did or did not contain a charging clause is immaterial to the right of the first defendant to an indemnity from the estate of the deceased for costs properly incurred by the first defendant in the administration of the estate.

(e)   the correct procedure for determining whether costs and expenses incurred by the first defendant, including invoices rendered by the second defendant, were properly incurred or improperly incurred is by applying for orders for the passing of the accounts of the estate of the deceased by a Registrar of this Honourable Court.

(f) the proper procedure for determination of whether legal costs charged to an Estate should be reduced is through moderation by the Registrar pursuant to s85(4) of the Probate and Administration Act 1898.

(g)   the second defendant says that the claims made against him in these proceedings have a tendency to cause prejudice, embarrassment and delay and further says that he is filing this Defence pursuant to orders made by this Honourable Court but does so without admission that the claims and relief sought against him are properly maintainable and without prejudice to his rights to apply to the Court for summary dismissal of the claims against him.

18. Having been joined to the proceedings, Mr White quite properly ceased to act for Mr Lambert. This rendered otiose the Plaintiffs’ notice of motion of 13 May 2013. I dismissed that motion and made orders as to costs: The Estate of Arthur Michael Falco; Falco v Lambert (No 1) [2013] NSWSC 1653. Further interlocutory orders were made relating to production of documents and other matters.

19. The next relevant directions hearing was on 13 February 2014. On that day Mr White filed a notice of motion which included:

1. Order pursuant to UCPR 28.2 that the Court decide the answer to the following question before any other questions in these proceedings and before the hearing of the substantive claims for relief in the proceedings:

Whether the absence of a solicitors’ charging clause in the last will of the deceased prevented the first defendant from:

(a)   retaining the second defendant to transact business and to do any act required to be transacted or done in the administration of the estate of the deceased;

(b)   paying for all charges and expenses and fees of the second defendant in the performance of such retainer from the funds of the estate of the deceased.

I fixed 24 February 2014 for the hearing of that prayer for relief.

20. In the course of argument on 24 February 2014 the parties’ focus shifted from the terms of a possible separate question to the utility of a Registrar determining the Accounts Summons before any further steps were taken in the proceedings. As explained in my reasons of that date, I decided that was what should occur (Falco & Ors v Lambert & Ors (No 2) [2014] NSWSC 125):

8.   After hearing the parties in relation to that question and considering the matter over the morning tea adjournment, I have come to the view that allowing the Summons for accounts and commission to go forward is the best way to assist the parties in the just, quick and cheap resolution of all of the proceedings. My reasons for reaching that conclusion are, first, that it will assist the parties in ascertaining precisely how much money they are really arguing about. That will enable a useful mediation in due course. Second, it will assist in the identification of what, if any, precise legal questions may need to be resolved, for the disposal of the issues raised in both the Summons and in the Amended Statement of Claim.

21. Pending a Registrar’s determination of the Accounts Summons, the parties continued to have a number of disputes about the production of documents. Senior Deputy Registrar Studdert delivered the Decision on 15 July 2014. In the course of a subsequent directions hearing, the Plaintiffs informed me that they wished to exercise their right to have the Decision reviewed.

22. On 13 August 2014 the Court made orders for the Plaintiffs to file their motion to review the Decision and for Mr White to amend his motion of 13 February 2014 (see paragraph [19] above) to include prayers that the claim in the amended statement of claim against him be struck out. I fixed both motions for hearing before me on 13 October 2014 for one day.

23. On 15 August 2014 Mr White filed his amended notice of motion, including:

1. Order pursuant to UCPR 28.2 that the Court decide the answer to the following question before any other questions in these proceedings and before the hearing of the substantive claims for relief in the proceedings:

Whether the absence of a solicitors’ charging clause in the last will of the deceased prevented the first defendant from:

a)   retaining the second defendant to transact business and to do any act required to be transacted or done in the administration of the estate of the deceased;

b)   paying for all charges and expenses and fees of the second defendant in the performance of such retainer from the funds of the estate of the deceased.

…

3.   Order that the claims for relief made against the Second Defendant in the Amended Statement of Claim be dismissed or, alternatively, struck out.

4.   Order, consequent upon the previous order, that the Second Defendant be removed as a party to these proceedings.

…

6. Order pursuant to UCPR 28.5 that these proceedings, other than the determination of the relief sought or otherwise arising out of this Motion, be stayed pending determination of the Summons for Passing Accounts and for Commission filed by the first defendant on 1 March 2013 and also having plaint number 2010/26928.

24. On 3 September 2014 the Plaintiffs filed their motion for review, including:

1. Pursuant to UCPR Rule 49.19 the decision of Registrar Studdert set out in the document headed “Requisition” dated 15 July 2014 be reviewed in the following respects:

(a)   That the amount disallowed on moderation of the Second Defendant’s legal costs in the sum of $28,363.59 including GST be varied to the amount of $65,415.00 including GST;

(b)   The Court order that the amount of monies overpaid by the estate to the Second Defendant in respect of his legal costs be refunded to the estate by the Second Defendant;

(c)   That the decision of the Registrar that the First Defendant not be required to redraw the purported accounts of the estate forming part of the First Defendant’s affidavit affirmed on 28 February 2013 be discharged;

(d)   That the Court order the First Defendant prepare full and proper accounts of the estate of the late Arthur Michael Falco within twenty-eight (28) days of the making of these orders.

25. I commenced hearing the two motions on 13 October 2014. The hearing was unable to be completed on that day and was stood over to 16 December 2014, being the next date available for the parties and the Court. Unfortunately, the Court’s sittings on that day had to be vacated as a consequence of the tragic Lindt Café siege. The hearing of the motions was concluded on 2 February 2015.

The Senior Deputy Registrar’s decision

26. The Decision is set out in a letter to Mr White dated 15 July 2015. It contains the following steps.

27. First, after noting that an executor and any firm of which he or she is a member may only charge for his or her services if there is an authority to charge, i.e. if there is a charging clause in the will, the Senior Deputy Registrar goes on to say (pp 1-2):

Separately from the duty to act gratuitously an executor is under a duty to perform his or her duties as executor personally and not delegate the task to others. However, there is a general power to engage agents and a duty not to delegate duties or powers is discussed in [Jacobs’ Law of Trusts in Australia (Lexisnexis Butterworths) 7th Edition] (2006) at 1723-1734 – the discussion includes engagement of agents. Accordingly, I do not accept the proposition that because there is no charging clause in the will the executor was not entitled to engage White & Associates to do work for him or on behalf of the estate. In my opinion, the executor was entitled to engage White & Associates as his agent and is entitled to indemnity out of the estate for their costs in respect of work for which it was appropriate to engage them to perform.

28. There can be no doubt that this conclusion is correct.

29. Second, the Senior Deputy Registrar goes on to consider how allowance can be made where an executor who practices a profession has no power to charge for professional work but nevertheless does professional work in respect of the estate. In that regard, the Senior Deputy Registrar observes (correctly) that the Court may allow commission for the professional work for which the executor would have charged had he or she had the power to do so.

30. In the present case the affidavit filed by Mr White in support of commission includes reference to his duties as an accountant. However, the Senior Deputy Registrar notes that the references appear to relate to entities other than the Estate. Therefore he did not take them into account because s 86 of the Probate and Administration Act 1898 (NSW) (the “PAA”) provides for pains and troubles as executor so that any allowance of a special commission is limited to work done for the estate, not work done for a separate entity.

31. Third, the Senior Deputy Registrar goes on to consider the bills which had been submitted for moderation. He allowed all of those bills in part or whole. He then goes on to make the following comments about the bills and the approach that he took:

1. “It would appear that the plaintiffs had their own legal representation right from the start. That being the case, I think that it must follow that it would be reasonable for the executor likewise to consult a solicitor to deal with the issues raised by the representatives of the beneficiaries. Accordingly, I have allowed in general the costs of the solicitors for the executor in dealing with the issues raised by the solicitors for the plaintiffs and in dealing with the solicitors for the plaintiffs …” (p 2).

2. He notes that there appeared to be considerable problems in the realisation of the estate which required the involvement of a solicitor: “such issues lead me to the conclusion that the executor was entitled to instruct solicitors in respect of the work carried out and the work and issues were such that he should have indemnity out of the estate in respect of those costs subject to what is said later about executorial work” (p 3).

3. He explains why he has not allowed the costs relating to the executor’s accounts and relating to commission. In doing so, the learned Senior Deputy Registrar notes that in the circumstances of the Estate, the executor was not under a duty to file accounts with the Court. The accounts had been filed because in the Accounts Summons Mr White had applied for commission.

4. The Senior Deputy Registrar then goes on to consider the question of executorial work, which lies at the heart of the present review (p 4):

Executorial work. Notwithstanding that an executor may engage an agent, the executor is still under a duty to perform his or her duties as executor personally and where an executor has engaged agents to do executorial work such work will be disallowed and ordered to be refunded to the estate: see [Geddes Rowland & Studdert, Wills, Probate and Administration Law in New South Wales, LBC Information Services, 1996] 564-5. In NSW the practice is to order that any costs disallowed on moderation be refunded to the estate, unlike in Victoria where the practice is to, in effect, set off against commission any charges for non-professional work. In practice, it is very common for costs for non-professional work to be charged against the estate and if the executor is not applying for commission there is statutory protection for the executor; s 86(3) Probate & Administration Act. The items which are disallowed as executorial in nature are marked “E” on the bills. As stated in the requisitions of 4 March 2014, costs paid out of the estate in respect of a separate legal personality may be allowed if it was reasonable to pay them out of the estate.

5. The Senior Deputy Registrar then considers the application of the probate scale fee to the Estate.

32. Fourth, the Senior Deputy Registrar deals with the question of the accounts and disputes as to receipts. He says (p 4):

In the requisitions of 3 March 2014 I indicated what should be included in the accounts and indicated that I would not require that the accounts be redrawn. Having regard to the terms of the will, the assets that comprise the estate and the ages of the beneficiaries, this should not be an estate in which subsidiary accounts should be required. There is no prescribed form of accounts and accounts vary widely in their format, particularly those drawn by accountants. As stated in the original requisitions, the accounts should have been restricted to the receipts and outgoings of the estate only.

33. Having regard to the nature of the dispute between the parties in these proceedings, the next part of the Senior Deputy Registrar’s reasoning is important (pp 4-5):

As to disputes relating to receipts under the Probate & Administration Act are not administration suits (see e.g. Gonzales v Claridades (2003) NSWSC 508) and accordingly disputes over matters such as receipts, disputes concerning matters outside the estate (such as in respect of a corporation or trust) and whether property forms part of an estate are not matters that can be determined in proceedings under s 85 Probate & Administration Act (see e.g. Will of Sarina (1925) 42 WN (NSW) 186) – they are matters appropriate for proceedings in Equity, not Probate). The issue of what can and can’t be dealt with in proceedings under s 85 Probate & Administration Act is dealt with in Geddes et al 824.

It follows that I adhere to my original view that I would not require that the accounts be redrawn for no greater reason than that I doubt that such a course would achieve any great purpose.

34. Fifth, the Senior Deputy Registrar declined to consider the question of commission and the formal passing of the accounts until the outcome of the plaintiffs’ application for the revocation of probate in these proceedings had been determined (see further paragraph [125] below).

35. Sixth, the Senior Deputy Registrar’ order concerning moderation was:

The amounts that I have disallowed on moderation total $25,785.90 plus GST of $2,578.59 – a total of $28,363.59. Accordingly, that amount should be refunded to the estate and evidence of deposit should be produced.

36. Finally, the Senior Deputy Registrar concludes his reasons by making findings as to amounts upon which the Court may allow commission (see further paragraph [129] below).

The statutory framework

37. The statutory framework governing the passing of accounts is to be found in the PAA:

85 Executor, administrator or trustee to pass accounts

(1) In respect of the estate of a person who died before 31 December 1981 every person to whom probate or administration has been or is granted shall file an inventory of the estate of the deceased and file or file and pass the person’s accounts relating thereto within such time, and from time to time, and in such manner as may be fixed by the rules, or as the Court may order.

(1AA) In respect of the estate of a person who dies on or after 31 December 1981 every person to whom probate or administration has been or is granted and who is:

(a) a creditor of the estate of the deceased,

(b) the guardian of a minor who is a beneficiary of the estate of the deceased,

(c) the executor or administrator of the estate where the whole, or a part which, in the opinion of the Court, is a substantial part, of the estate passes to one or more charities or public benevolent institutions,

(d) a person, not being a beneficiary, or, in the opinion of the Court, a substantial beneficiary, of the estate, selected at random by the Court, or

(e) a person otherwise required to do so by the Court,

shall verify and file or verify, file and pass the person’s accounts relating to the estate within such time, and from time to time, and in such manner as may be fixed by the rules, or as the Court may order.

(1A) Every trustee of the estate of a deceased person shall verify and file or verify, file and pass the trustee’s accounts relating thereto within such time, and from time to time, and in such manner as may be fixed by the rules, or as the Court may order. 

Nothing in this subsection affects the operation of section 32 of the NSW Trustee and Guardian Act2009.

(1B) In respect of the estate of a person who dies on or after 31 December 1981 every person to whom probate or administration has been or is granted and who is not a person to whom subsection (1AA) applies may verify and file or verify, file and pass the person’s accounts relating to the estate within such time, and from time to time, and in such manner as may be fixed by the rules, or as the Court may order.

(2) Every such person shall be subject to any order that the Court may on the application of any person interested make as to the production and verification of the accounts concerned.

(3) The order of the Court allowing any such account shall be prima facie evidence of the correctness of the same, and shall, after the expiration of three years from the date of such order, operate as a release to the person filing the same, excepting so far as it is shown by some person interested therein that an error or omission or fraudulent entry has been made in such account.

(4) Where the Court, in passing any such accounts, disallows in whole or in part the amount of any disbursement, the Court may order the executor, administrator or trustee to refund the amount disallowed to the estate of the deceased. 

Nothing in this subsection alters or diminishes the right of any person to proceed in equity in the same way as if this subsection had not been enacted.

(5) Every executor, administrator or trustee of the estate of a deceased person shall verify and file an inventory of the estate of the deceased within such time, and from time to time, and in such manner as may be fixed by the rules, or as the Court may order.

86 Executors etc may be allowed commission

(1) The Court may allow out of the assets of any deceased person to the deceased person’s executor, administrator, or trustee for the time being, in passing the accounts relating to the estate of the deceased person, such commission or percentage for the executor’s, administrator’s or trustee’s pains and trouble as is just and reasonable, and subject to such notices (if any) as the Court may direct.

(2) No such allowance shall be made to any executor, administrator, or trustee who neglects or omits without good reason to pass the accounts relating to the estate of the deceased person pursuant to the rules or an order of the Court.

(3) Where any executor, administrator or trustee renounces the executor’s, administrator’s or trustee’s right to such commission in respect of any particular year, the executor, administrator or trustee shall be entitled to indemnity out of the said assets for the amount of the executor’s, administrator’s or trustee’s Australian legal practitioner’s charges and disbursements, as moderated in accordance with the relevant professional scale, for non-professional work performed in that year, to an amount not exceeding that which the executor, administrator or trustee would have been in the opinion of the Court allowed by way of such commission for that year had the executor, administrator or trustee not so renounced but had applied therefor.

86A Reduction of excessive commission etc

Where the Court is of the opinion that a commission or amount charged or proposed to be charged in respect of any estate, or any part of any such commission or amount, is excessive, the Court may, of its own motion, or on the motion of any person interested in the estate, review the commission, amount or part and may, on that review, notwithstanding any provision contained in a will authorising the charging of the commission, amount or part, reduce that commission, amount or part.

87 Effect of neglect to file etc inventory or accounts

(1) Where an executor, administrator or trustee neglects to file, or verify and file, an inventory of the estate of the deceased or to file, or file and pass, or verify and file, or verify, file and pass, the accounts relating to the estate in accordance with a requirement made by or under section 85 within one month after the expiration of the time fixed for compliance, the Registrar shall cause the executor, administrator or trustee to be notified of the executor’s, administrator’s or trustee’s neglect.

(2) Where, on the expiration of one month after having been so notified, an executor, administrator or trustee further neglects to comply with the requirement in respect of which the notification under that subsection was given, the Court may, of its own motion, order the executor, administrator or trustee to show cause before the Court why the executor, administrator or trustee should not be ordered to file, or verify and file, an inventory of the estate of the deceased or to file, or file and pass, or verify and file, or verify, file and pass, the accounts relating to the estate, as the case may require, in the Court forthwith.

(3) Where an executor, administrator or trustee to whom subsection (2) applies fails to show cause as referred to in that subsection, the executor, administrator or trustee shall be liable to punishment for contempt of court or to the payment of a fine not exceeding 20 penalty units.

(4) An executor, administrator or trustee to whom subsection (2) applies shall, unless the Court otherwise orders, be personally liable for the cost and expenses of any proceedings pursuant to this section.

38. Division 11 of Part 78 of the Supreme Court Rules 1970 (NSW) (the “SCR”) deals with accounts and commission. In particular:

78.82 Vouching

Unless the Court otherwise directs, accounts are to be vouched:

(a) in the absence of the public, and

(b) without the appearance before the Court of any person, and

(c) without an appointment being obtained for the vouching.

78.83 Court may require further evidence, documents and notices

In any proceedings for the passing of accounts, the Court:

(a) may require further evidence to be furnished, further documents to be filed and further notices to be given, and

(b) if satisfied that the accounts are correct, may make an order passing the accounts, and

(c) if satisfied that any commission that is sought is appropriate, may make an order allowing commission.

78.84 Certificate as to passing of accounts

(1) If the Court makes an order passing accounts, the registrar is to issue the applicant with a certificate as to the balance of the accounts.

(2) If the Court makes an order allowing commission, the certificate must also certify as to:

(a) the amount of capital realised, and

(b) the amount of income collected, and

(c) the value of any assets transferred to beneficiaries, and

(d) where a business was carried on, the gross receipts and net profit earned or loss incurred,

during the period to which the accounts relate.

39. Finally, given that the subject matter of the review ultimately came to focus on what expenses incurred by Mr Lambert and paid to Mr White were properly to be paid from the Estate, it is helpful to set out what was said by Powell J (as his Honour then was) in The Estate of Barbara Dawn Orre (NSWSC; unreported; 19 December 1991) at pp 5-6 (“The Estate of Orre”):

In relation to disbursements sought to be claimed, it should be noted that, as a general rule, and subject to any provision to the contrary in his testator's Will, (see, for example, Re Smith (1916) 16 SR 422) an executor is bound to keep accounts, and attend to his duties personally - it is for this that he is allowed commission - and that, except in the situations to which I will next refer, if he chooses to employ some other person to do the work which he should have done, he must pay such person himself, and cannot seek to charge the estate with the cost (see, for example, In the Estate of Purton (1935) 53 WN 148); where, however, the nature of what was to be done was particularly onerous, or was such as to make it prudent to do so, the cost incurred by an executor in having the work done by another may be allowed (see, for example, In re Corsellis; Lawton v Elwes (1887) LR 34 Ch D 675; Macartney v Macartney (1909) VLR 183, 191-2).

…

It is perhaps as well to point out, here, that, strictly, taxation involves a determination of what amount is properly payable by the executor to his solicitor, while moderation involves a determination of what amount it is proper to allow to the executor as an outgoing from the estate (see Brown v Burdett (1888) LR 40 Ch D 244, 254-255 per Kay J.; 265 per Cotton LJ, 267 per Lindle LJ; In the Estate of Purton (supra); In the Will of Kerrigan (1935) 35 SR 242, 251) it following that the amount allowed to a solicitor on a taxation of his bill against an executor will not necessarily be allowed to the executor as a proper outgoing on a moderation against the estate. Although, strictly, moderation involves the preparation of a detailed bill of costs and a process akin to taxation (Supreme Court Rules 1970 Pt52 r68), in an endeavour to avoid the delay and expense involved in formal moderations, there has been instituted in the Registry a practice pursuant to which solicitors produce bills in narrative form, which bills are then informally assessed by the Registrar; the course which will need to be followed if, the Registrar's assessment is not accepted by the executor or his solicitors is a matter to which I will return later in these reasons.

Review of the Decision – legal principles

40. The plaintiffs’ motion for review is brought under UCPR Part 49 r 19:

49.19 Review of registrar’s directions, certificates, orders, decisions and other acts

If in any proceedings a registrar gives a direction or certificate, makes an order or decision or does any other act, the court may, on application by any party, review the direction, certificate, order, decision or other act and make such order, by way of confirmation, variation, discharge or otherwise, as the court thinks fit.

41. The leading appellate authority is Tomko v Palasty (No 2) [2007] NSWCA 369; (2008) 71 NSWLR 61. Basten JA (with whom Ipp JA agreed, subject to the additional remarks of Hodgson JA (with whom Ipp JA also agreed)):

52 It follows that the proper approach to an application in relation to a decision of the Registrar is as follows:

(1) the application should be treated as a “review”, pursuant to s 121(3) of the Supreme Court Actand UCPR r 49.19;

(2) a review, unlike an appeal, does not require demonstration of error, nor is it restricted to a reconsideration of the material before the primary decision-maker;

(3) authorities with respect to the conduct of appeals against the exercise of discretionary powers, such as House v The King, do not in terms apply to a review;

(4) nevertheless, similar policy considerations may arise in relation to a review, including:

(a) a court may be less inclined to intervene in relation to a decision concerned with the management of an on-going proceeding, as opposed to one which terminates the proceeding or prevents its commencement;

(b) different factors may need to be addressed in relation to breach of time limits in relation to the commencement of proceedings, as compared with breach of time limits for steps to be taken in the course of proceedings properly commenced, and

(c) a court may be more inclined to intervene on a review based on fresh evidence, changed circumstances or where error is demonstrated in the decision under review.

42. Hodgson JA said:

5    I agree that the view expressed by Basten JA in Pioneer Park Pty. Limited (In Liquidation) v. Australia & New Zealand Banking Group Limited[2007] NSWCA 344, on the basis of limited argument, that the review of a registrar’s decision with respect to an order for security for costs is constrained by the principles stated in House v. The King [1936] HCA 40; (1936) 55 CLR 499, is not strictly correct.

6 I agree that a review of a decision of a registrar is not an appeal, subject to s.75A of the Supreme Court Act; and that in such a review a court must exercise its own discretion.

7    In my opinion, this discretion extends to a discretion as to whether, and if so how, to intervene; and in my opinion, there is an onus on a person seeking to have a court set aside or vary a registrar’s decision to make out a case that the court, in the interests of justice, should exercise its discretion to do so.

8    In the case of a decision on practice or procedure, this will normally require at least demonstration of an error of law, or a House v. The King error, or a material change of circumstances, or evidence satisfying the strict requirements for fresh evidence. Even then, a court may not think that the interests of justice require intervention. This could be so, for example, if the error of law is a deficiency of reasons and the result is on its face not an unreasonable one.

9    In the case of a decision which finally determines a party’s rights, or which (albeit one of practice or procedure) has a decisive impact on those rights, a court may be more willing to intervene. It may permit further evidence to be led which does not satisfy the strict requirements for fresh evidence, if it is satisfied that the interests of justice require this. It may decide to substitute its own discretionary decision for that of the registrar, even though no House v. The King error is shown, again if it is satisfied that the interests of justice require this. To that extent, the review may be considered a de novo hearing.

10    In my opinion, this approach is consistent with the position that such reviews are not appeals and involve the exercise of discretion by the reviewing body; and with the policy considerations referred to by Jordan CJ in In Re the Will of Gilbert [1946] NSWStRp 24;(1946) 46 SR(NSW) 318 at 323. It is also consistent with the general principles concerning interlocutory applications: they do not finally decide matters, and successive applications can be brought for the same orders; but generally, a later application for orders that have previously been refused will be summarily dismissed unless a change of circumstances is shown or there is evidence satisfying the strict requirements for fresh evidence.

43. A compendious summary of the legal principles applicable to the review of a Registrar’s decision was set out by Hallen J in Noble Earth Technologies Pty Ltd v Hampic Pty Ltd trading as Cyndan Chemicals [2012] NSWSC 935, which I respectfully adopt:

39.   Relevant principles drawn from authorities relating to the nature of a review are:

(a) The review power conferred is not an appeal and, accordingly, is not subject to the limitations that apply to proceedings by way of appeal: Tomko v Palasty (No 2) [2007] NSWCA 369; (2007) 71 NSWLR 61 at [6], [10], [50], [52]; Al-Shennag v Statewide Roads Pty Limited [2009] NSWSC 210 per Hall J at [44]-[46]; it is "not restricted" to a reconsideration of the primary material before the Registrar: Lollback v Brakepower Pty Ltd[2010] NSWSC 1457 at [10].

(b) It is unnecessary for the applicant for review to demonstrate any material error of fact, or principle, in the order under review. On the review, the court may exercise its powers regardless of error. However, review, in the relevant sense, involves discretionary intervention: Tomko v Palasty (No 2) at [52]; Lollback v Brakepower Pty Ltd at [13]; the discretion extends to a discretion whether, and if so, how, to intervene.

(c) The conduct of the review is at large and in the discretion of the Court. Notwithstanding the foregoing, the review is not accurately described as a hearing de novo: Perpetual Ltd v Barghachoun[2010] NSWSC 108 at [3], although it involves many of the features of a hearing de novo.

(d) There is an onus on a person seeking to have a court set aside, or vary, a registrar's decision to make out a case that the court conducting the review, in the interests of justice, should exercise its discretion to do so: Tomko v Palasty (No 2) per Hodgson JA at [7]. In other words, there must be a basis shown for setting aside, or varying, the decision or orders of the registrar.

(e) Although on review, the Court should consider the matter afresh, it does not follow that the reasoning of the registrar should be ignored, or that variations in the material presented to her, or him, and the evidence that was adduced are irrelevant. The starting point is, therefore, the decision that is to be reviewed. The court does not merely cast that decision to one side and proceed as if it had never been made. The court will have regard to the basis on which the decision was made and the material placed before the court itself on the application for review: Wily re LED (South Coast) Pty Ltd [2009] NSWSC 946 at [24] - [26].

The real question is whether there are any grounds, or any reasons, which would warrant a review of the orders that have been made by the registrar: Al-Shennag v Statewide Roads Pty Limited at [47].

(f) What will be required to make out a case for intervention will vary depending upon the nature of the registrar's decision under review: Groeneveld v Wollongong City Council [2009] NSWLEC 149; (2009) 168 LGERA 260, per Preston CJ at [12]. However, the court should inform itself of the material before the registrar at the time when he, or she, made the decision, should consider the reasons for the decision, and then should make its own decision based on the material before it after having the benefit of the submissions of each party.

(g) It is proper for the Court to exhibit a natural inhibition against the unrestrained substitution of the reviewing Court's views for those of the registrar: Westpac Banking Corp v Abemond Pty Ltd; Westpac Banking Corp v Cameron (NSWSC, 3 November 1994, unreported).

(h) When it comes to matters of practice and procedure, there should be a natural inhibition against overturning a registrar's decision: Wentworth v Graham[2002] NSWSC 397; (2002) 55 NSWLR 638 at 640-641. However, where substantive error is established, then the Court would consider reviewing the registrar's decision and would make such other order as it is authorised to make: Al-Shennag v Statewide Roads Pty Limited at [46].

(i) In the case of a decision which finally determines a party's rights, or which (albeit one of practice or procedure) has a decisive impact on those rights, a Court may be more willing to intervene. It may permit further evidence to be led that does not satisfy the strict requirements for fresh evidence, if it is satisfied that the interests of justice require this. It may decide to substitute its own discretionary decision for that of the registrar, even though no House v R [1936] HCA 40; (1936) 55 CLR 499 error is shown, again if it is satisfied that the interests of justice require this: Tomko v Palasty (No 2) at [5]-[9], [50], and [52].

(j) If fresh, or additional, evidence, is produced, it may be received by the court and taken into account (Fenwick v Wambo Coal Pty Limited [2011] NSWSC 176, per White J, at [46]), or the court may refer the matter back to the Registrar for consideration as a fresh application: Portal Software v Bodsworth [2005] NSWSC 1115 at [17]. The court may be more inclined to intervene on a review based on fresh evidence, changed circumstances, or where error is demonstrated in the decision under review: Tomko v Palasty (No 2)at [52].

(k) The decision of the registrar stands until it is set aside: Lawteal Pty Limited v Ofo[2005] NSWSC 984, per Malpass AsJ at [19].

(l) The registrar must give sufficient reasons for his, or her, decision: Thompson v New South Wales Land and Housing Corporation [2008] NSWSC 74 per Malpass AsJ at [9] - [16].

44. To these statements of law I add the observation that, because the review of a Registrar’s decision is the exercise of a power under the Uniform Civil Procedure Rules, it is subject to s 56 of the Civil Procedure Act 2005 (NSW) (“CPA”):

56 Overriding purpose

(1) The overriding purpose of this Act and of rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

(2) The court must seek to give effect to the overriding purpose when it exercises any power given to it by this Act or by rules of court and when it interprets any provision of this Act or of any such rule. …

45. Having regard to these various statements of principle, it is appropriate for the Court to identify with precision the approach it intends to adopt to the Plaintiffs’ motion for review. It is significant that the Decision under review is that of a highly experienced Registrar in a specialist jurisdiction. To say that is not to suggest that experience excludes the possibility of error. It does not. Nevertheless, it bespeaks that a higher degree of deference should be applied where a Registrar makes a decision in an area such as probate practice where, in the ordinary course of his or her duties, that Registrar will be familiar with the current practice of the profession, both as a matter of law and lore, in a way that the Court may not be.

46. That deference is also warranted by s 56 of the CPA. The overriding purpose will not be satisfied if the Court sets the bar too low for reviews in a specialist area such as probate. Even before the introduction of the CPA, the Court was conscious of the need to minimise costs and many procedures were introduced in the area of probate, in particular in relation to what might be called the administrative aspects of probate work, for it to be dealt with as informally and inexpensively as possible. This is one of the main reasons why the rules provide for the default position to be that the passing and moderation of accounts is dealt with by a Registrar on the papers and without the attendance of the parties (see paragraph [38] above).

47. The review has been conducted on the basis of the material that was before Senior Deputy Registrar Studdert. Accordingly, mindful of the considerations set out in the preceding paragraphs, the Court’s approach is that it will not interfere with the Decision unless it is satisfied that as to a significant matter it is obviously wrong or was not reasonably open on the material before him or the Plaintiffs have satisfied the Court that, for some other reason, it is in the interests of justice to exercise the Court’s discretion to interfere with the Decision. While this approach may be redolent of the test in House v The King (1936) 55 CLR 499 (“House v The King”), I have not overlooked that, on the authorities, the question of review is not to be determined by the application of House v The King simpliciter.

48. As will be apparent from the form of the Plaintiffs’ motion for review, the application falls into two parts: a challenge to the moderation of Mr White’s costs properly payable from the Estate and a challenge to the decision not to require Mr Lambert to redraw the Estate’s accounts. Each of these will be considered in turn.

Review of the moderation of accounts

49. The material before the Senior Deputy Registrar was:

1. An affidavit of Mr Lambert sworn 28 February 2013 enclosing the estate accounts.

2. An affidavit of Mr White affirmed on 25 February 2013 (although it also bears a date of 26 February 2013) (“Mr White’s affidavit”).

3. The Plaintiffs’ submissions and objections dated 24 March 2014.

4. Mr Lambert’s submissions dated 5 May 2014.

50. Mr White’s affidavit attached sixteen invoices from Mr White to Mr Lambert. All but two of the invoices form part of this review. The parties’ submissions before the Senior Deputy Registrar also cross-referred to other affidavits filed in the proceedings.

51. The Plaintiffs’ challenge in relation to each tax invoice was helpfully set out in detail in their written outline dated 3 September 2014. That outline also set out their fundamental submission (emphasis in original):

In the Requisition document the Registrar has, it is submitted, correctly stated the relevant principles of law in relation to the duties of an executor. At the top of page 4 the Registrar stated: “Notwithstanding that an executor may engage an agent, the executor is still under a duty to perform his or her duties as executor personally and where an executor has engaged agents to do executorial work such work will be disallowed and ordered to be refunded to the estate …” In the moderation exercise undertaken, the Registrar has failed to properly apply those principles in the exercise of his discretion by failing to take into account various material considerations concerning work undertaken by the Second Defendant, Mr White (within the principles discussed by the High Court in House v R) such that, on the facts, the moderation exercise was unreasonable or plainly unjust so that the Court, in this review, should exercise afresh its own discretion.

52. By reference to the exposition of the principles set out in paragraphs [41] to [43] above, the Court does not accept the Plaintiffs’ submission insofar as it suggests that House v The King represents the totality of the test to be applied on review. In the end, however, nothing turns on this point. The task before the Court requires it to consider each complaint in relation to each tax invoice. That is done in the next section of these reasons.

Tax invoice number 1092 dated 5 March 2010

53. This invoice was allowed in full by the Senior Deputy Registrar. The invoice includes an amount of $12,800 plus GST described as “To our professional costs for obtaining probate in accordance with Schedule 4 of the Legal Professional Further Amendment (Fixed Costs) Regulation 2008”.

54. The Senior Deputy Registrar appears to have overlooked a concession in Mr Lambert’s submissions about this amount, that in calculating the total value of the Estate for the purposes of the probate scale fee, the value of the Deceased’s superannuation fund was included among the assets of the Estate. A concession to like effect was made by Mr Lambert in his written submissions before me, conceding that the correct probate scale fee is $9,391.80 plus GST. The Plaintiffs have not demonstrated why there should be a different value for the Estate for the purposes of the probate scale fee.

55. The effect of Mr Lambert’s concession is that the amount which the Senior Deputy Registrar ordered Mr Lambert to refund to the Estate will need to be increased by $3,408.20 plus GST (being the difference between what was allowed and what Mr Lambert concedes should have been allowed) less $39.10 plus GST (being the allowance made by the Senior Deputy Registrar in relation to the affidavit of additional assets – see invoice of 25 February 2013 and the Senior Deputy Registrar’s decision in relation to the probate scale fee). The deduction of $39.10 plus GST is required because Mr Lambert’s concession is calculated on the value of the Estate including the additional assets and it is necessary to deduct the Senior Deputy Registrar’s allowance of $39.10 plus GST in relation to the additional assets in order to avoid double counting.

Tax Invoice Number 1281 dated 7 July 2010

56. In considering the Plaintiffs’ criticism of the Senior Deputy Registrar having allowed nearly all of this invoice, it is convenient to make a point which relates to a number of the invoices under challenge. The Court has already noted (see paragraph [31] above) this conclusion of the Senior Deputy Registrar (p 2) which is repeated here for convenience:

It would appear that the Plaintiffs had their own legal representation right from the start. That being the case, I think that it must follow that it would be reasonable for the executor likewise to consult a solicitor to deal with the issues raised by the representatives of the beneficiaries.

57. That observation is, with respect, plainly correct. The Plaintiffs appointed Glasson, Gemmill & McGill to act for them within days of probate having been granted to Mr Lambert. The administration of the Estate took on a deeply adversarial character from the outset, a feature which I have been able to observe in the several hearings over which I have presided. In making that observation I am not to be taken as suggesting that parties are not entitled to assert vigorously what they consider to be their rights. However, a consequence of the approach taken by the Plaintiffs has been to put Mr Lambert in a position where virtually every aspect of the administration of the Estate has been or could potentially be the subject of legal dispute with the Plaintiffs.

58. The Court therefore agrees with the Senior Deputy Registrar’s assessment as to Mr Lambert’s entitlement to have recourse to a solicitor. In my view the Senior Deputy Registrar understated that entitlement. Resort to legal assistance out of an abundance of caution in the context of the administration of the Estate by Mr Lambert was justified more than it might be in the administration of other estates that were not so thoroughly pervaded by an atmosphere of conflict. For this reason an expansive view of what could be referred to Mr White by Mr Lambert was properly open to the Senior Deputy Registrar.

59. The legally combative tone set by the Plaintiffs may be demonstrated by one example. Probate was granted on 17 February 2010. On 26 February 2010 one of the Plaintiffs, Joseph Falco, emailed Mr Lambert with copies to the other beneficiaries and to the Plaintiffs’ solicitor Mr McGill. The Court does not accept the Plaintiffs’ submission that this email should be read benignly:

Hi Peter,

Thank you for letting us know that we received probate. There are a number of issues that we want to address.

1.   This letter is on behalf of Tanya Falco, Mark Falco and Joseph Falco. We are in agreement on the following points. Michael Falco has received a copy of this email but IS NOT a party to this document. Tanya has advised you by email of her agreement with the content of this document. Mark is available by phone to confirm his agreement with this document.

2.   We wish to inform you that we have engaged the services of David McGill Solicitor and Mario Santoro Accountant. Both are people known to you. You have our authority to freely discuss any issues, and provide any documents or information they require.

…

4.   We direct that you take no action, make no decisions and commitments with regard to any part of the estate until you have consulted us and obtained our approval.

5.   The properties at Woolloomooloo can now be sold. We have decided that Tanya will get a quote to have a contract prepared for the sale of the properties and have discussions with an agent to appoint them to manage the sale process. As executor your input and authority will be obtained at every stage.

…

7.   We request that a meeting be arranged next week to discuss how we move forward with these issues. David McGill, Mario Santoro, Tanya and Joseph will attend. Mark has not indicated yet if he is available.

60. In the invoice under consideration in these paragraphs the Plaintiffs challenged the allowance of attendances and work undertaken between 10 and 17 March 2010. The Plaintiffs submit that the entries for that period described in paragraphs 7.1 and 7.2 of Mr White’s affidavit “represents work that should have been carried out by the executor, the first defendant, Mr Lambert personally and did not require the services of a solicitor”.

61. These reasons would become unwieldy if the Court set out the evidence on each issue. However, by way of example I will set out Mr White’s evidence in relation to the attendances under challenge:

7.1   On 10 March 2010 the executor received a lengthy email from Joseph, Mark and Tanya Falco (three of the beneficiaries) in relation to a lengthy meeting that they had had with the executor dealing with the dispute they had with the executor. The email objected to the executor administering the estate in any way other than by immediately transferring a 25% shareholding in each company referred to above and engaging in a share split. They also demanded full details of estimates of professional costs and capital gains tax implications. They also demanded that they dictate how the executor should administer the estate. They demanded that they should be able to appoint solicitors to act in relation to sale of the Woolloomooloo apartment. Joseph demanded that he be appointed to manage Tie Fabrications Pty Limited as general manager and be paid a salary of $125,000.00 per annum plus costs. They also demanded a copy of company accounts and tax returns for all the companies and superannuation fund. Joseph Falco stated that he no longer wished to renounce and abandon his right of first refusal. There was finally a direction that the executor take no action to administer the estate unless and until directed by them. It was clear that a major dispute had arisen between three of the beneficiaries and the executor.

7.2   On 10 March 2010 the executor sought our advice in relation to the matter and that resulted in various telephone discussions with him and correspondence with him and correspondence with Glasson, Gemmill & McGill on behalf of the three beneficiaries referred to. There was also a telephone discussion on 12 March 2010 with the other beneficiary Michael Falco who objected to a transfer of shares as stipulated but instead required that the estate be properly administered by sale of its assets and distribution between each of the four beneficiaries. He was also opposed to Joseph Falco being appointed manager of Tie Fabrications Pty Limited.

62. I accept Mr Lambert’s submission that the work undertaken by Mr White during this period of attending upon and advising Mr Lambert in relation to demands made by the Plaintiffs was not executorial work. Furthermore, Mr Lambert was entitled to have recourse to Mr White in relation to his interactions with the Plaintiffs directly as opposed to matters passing between the solicitors. If the Plaintiffs made assertions or demands to Mr Lambert directly, he was entitled to seek Mr White’s advice in relation to them. In the Court’s view that entitlement continued during the period between October 2010 and November 2011 when the Plaintiffs were not represented by solicitors. As the Court observes in a slightly different context in paragraph [89] below, just because a party which raises matters with potential legal ramifications chooses not to be represented does not make it unreasonable for the other party to seek legal advice.

63. The Court is unable to discern any error in the Senior Deputy Registrar’s decision to allow the attendances between 10 and 17 March 2010 or any other reason to interfere with this result.

64. Complaint is made about the allowance of attendances and work undertaken between 13 May 2010 and 30 June 2010 (noting that the Senior Deputy Registrar did not allow an attendance on 14 May 2010). I have read paragraphs 7.4 to 7.8 of Mr White’s affidavit and accept Mr Lambert’s submission that the work undertaken was not executorial. It involved advising Mr Lambert in relation to disputes which arose between the Plaintiffs and Mr Lambert regarding the sale of the Deceased’s property at Woolloomooloo and correspondence in relation to those disputes from both the Plaintiffs and their solicitors. No error has been demonstrated on the part of the Senior Deputy Registrar and no other reason to interfere has been identified.

Tax Invoice Number 1549 dated 8 December 2010

65. The Plaintiffs complain that the value of the invoice submitted for moderation is less than the original value of the invoice that was paid by the Estate. Mr Lambert’s submissions accept that proposition and indicate how the Estate has been credited with the overpaid balance. None of that is a matter which affects the moderation of the invoice that was presented to the Senior Deputy Registrar.

66. I have read paragraph 9 of Mr White’s affidavit explaining the work represented by this invoice.

67. The Plaintiffs have two complaints. First, they say that the invoice includes “numerous instances of work undertaken by Mr White in dealing with the three plaintiffs as beneficiaries of the Estate, and all such attendances should have been undertaken by the First Defendant, as executor. Dealing with the beneficiaries, even if contentious, is not legal work and is executorial work which should have been undertaken by Mr Lambert”. The Court does not agree. Mr Lambert was entitled to have recourse to Mr White to deal with the beneficiaries in the contentious circumstances of this Estate to which reference has already been made (see paragraphs [57] – [59] above).

68. The second complaint is that the Senior Deputy Registrar had “not paid sufficient regard to the description of the work in the second defendant’s affidavit such that tax invoice 1549 has not been properly moderated”. The Court is unable to identify any merit in that submission by reference to the material that was before the Senior Deputy Registrar.

69. The Plaintiffs have failed to demonstrate any error on the part of the Senior Deputy Registrar in relation to this invoice or any other reason to interfere.

Tax Invoice Number 1623 dated 9 February 2011

70. The Plaintiffs have no complaint about the Senior Deputy Registrar’s moderation. They raise the issue of an overpayment by the Estate. The Court accepts Mr Lambert’s explanation of how a credit has been allowed in relation to the overpayment and declines, in the exercise of its discretion, to make any further order on the basis that it falls outside the scope of a review.

Tax Invoice Number 1728 dated 28 April 2011

71. The Plaintiffs complain about the allowance of attendances on and after 11 March 2011 to 28 April 2011 insofar as (to quote the Plaintiffs’ written submissions) “a large number of the attendances ultimately appear to involve work undertaken by Mr White in relation to the preparation of settlement statements of distribution to the beneficiaries of their entitlements in the estate”. The Court notes that while some of the attendances during that period fit that description, it is difficult to tell whether all of them do.

72. I have read paragraph 12 of Mr White’s affidavit explaining the work contained in this invoice. On the face of the invoice it is clear that even the preparation of distribution statements for the beneficiaries was being done in the context of demands and disputes raised by the Plaintiffs. For example, the entry for 12 April 2011 is:

Telephone from client to discuss email from Joe Falco. Peter Lambert doesn’t want me to send the brief to barrister. He wants to send distribution letters to each of the beneficiaries. He will send details of refunds to be made to Tie Fab. Wants me to advise beneficiaries that their payments will cease on 24/4 as will m/vehicle payments. Mark, Joe and Tanya to be responsible for all m/vehicle costs.

73. The Court is of the view that the Senior Deputy Registrar was entitled, given the pervasive and ongoing disputes between the Plaintiffs as beneficiaries and Mr Lambert, to conclude that the latter was entitled to have recourse to Mr White in relation to the preparation of distribution statements. It is implicit in Mr White’s evidence that Mr Lambert could reasonably have expected that the distribution statements could themselves be the subject of challenge. In the context of the administration of this Estate, the Court sees no error in the Senior Deputy Registrar’s determination that advising and assisting in the preparation of the distribution statements was not work of an executorial nature. No other reason to interfere has been made out.

Tax Invoice Number 1201 dated 1 June 2010

74. The Plaintiffs’ complaint in relation to this tax invoice does not relate to moderation but involves an overpayment when the tax invoice as originally rendered to and paid by the Estate is compared to the invoice that was submitted for moderation.

75. The Court accepts Mr Lambert’s submission that credit has been allowed by Mr White to the Estate and declines to make any further order for the same reason set out in paragraph [70] above.

Tax Invoice Number 1657 dated 1 March 2011

76. This invoice was not the subject of moderation. It is therefore irrelevant to the present application. The Court notes Mr Lambert’s statement that a credit has been allowed by Mr White in relation to this invoice and declines to make any further order for the same reason set out in paragraph [70] above.

Tax Invoice Number 1729 dated 28 April 2011

77. This is an invoice for $311 plus GST.

78. The Plaintiffs submit that the work in the invoice is all of an executorial nature, comprising attendances and efforts by Mr White to assist Mr Lambert to obtain a new business broker in relation to the sale of one of the principal assets of the Estate, a company called Tie Fabrications Pty Limited (the “Company”).

79. I have read paragraph 15 of Mr White’s affidavit which deals with this invoice. That discloses that the background to these attendances was a concern on the part of Mr Lambert and Mr White that a business broker who had previously been retained had been unable to sell the Company after eight months. Mr White suggested another business broker who he knew and made contact with that person on behalf of the Estate.

80. In those circumstances, the Court is of the view that it was reasonably open to the Senior Deputy Registrar to conclude that this was work not purely of an executorial nature and was properly referable to a solicitor in connection with the administration of the Estate. It is not uncommon for clients to seek advice and assistance from solicitors who, by the nature of their practice and experience, may be able to recommend other professional service providers such as real estate agents and accountants. The Court does not discern any obvious error or other reason to warrant the exercise of its discretion to interfere with the Senior Deputy Registrar’s moderation of this tax invoice.

Tax Invoice Number 1945 dated 30 September 2011

81. In relation to this invoice, the Senior Deputy Registrar disallowed a number of attendances. From the Court’s perusal of the tax invoice, the disallowed attendances fall into two categories. First, there are a number of attendances which appear to be of a plainly ministerial or administrative nature. Their categorisation as executorial is correct. The second category relates to attendances involving communications with a Mr Walker, who was the prospective purchaser of the business of the Company. Implicit in the Senior Deputy Registrar’s disallowance of those attendances is the conclusion that those communications with the proposed purchaser (who had not retained a solicitor) were properly a matter for Mr Lambert as executor.

82. The Plaintiffs complain that there are a number of other attendances which the Senior Deputy Registrar did allow which appear to be in relation to the proposed sale of the Company or its business. I have read paragraph 16 of Mr White’s affidavit. He explains that the attendances to which the Plaintiffs now draw attention were with the new business broker and an accountant who Mr White had suggested should be retained to value the business and provide advice in connection with the proposed sale.

83. It is normal in a transaction such as a sale of business for the professionals retained by or on behalf of the client vendor – in this case the solicitor, an expert accountant and a business broker – to have communications among themselves. It is entirely artificial and incorrect to characterise such direct communication by Mr White with those people as executorial work. It appears that the Senior Deputy Registrar took the view that, in contradistinction to direct communications with the proposed purchaser, Mr White’s dealings with those professionals and related attendances on Mr Lambert were properly to be characterised as solicitor’s work in the interests of the Estate. The Court shares that conclusion. In any event, quite apart from the Court’s agreement, the Court is satisfied that it was reasonably open on the material for the Senior Deputy Registrar to reach that conclusion.

84. The Plaintiffs have failed to demonstrate any error on the part of the Senior Deputy Registrar in relation to this invoice or any other basis upon which the Court should interfere.

Tax Invoice Number 2121 dated 29 February 2012

85. This is a tax invoice for $21,175.40 plus GST. The Senior Deputy Registrar disallowed $11,599 plus GST in relation to attendances that he formed the view were related to the executor’s accounts and to commission. He gave detailed reasons for that disallowance.

86. The Plaintiffs object to the allowance of the balance of the invoice because they say the attendances allowed by the Senior Deputy Registrar relate to Mr White’s dealings with the beneficiaries both in connection to the Company and dealings between Mr White and the specialist accountant, Mr Oakeshott, in respect of the sale of the Company or its business. Complaint is also made about the allowance of a number of discussions which Mr White had with the proposed purchaser, Mr Walker.

87. Insofar as the attendances relate to dealings with the beneficiaries, the Court finds no error in the Senior Deputy Registrar’s approach for the reasons set out in paragraph [62] above. Insofar as there are attendances on Mr Oakeshott in respect of the proposed sale, the Court does not find any error in the Senior Deputy Registrar’s approach for the reasons set out in paragraph [83] above.

88. Different considerations may apply insofar as Mr White dealt with Mr Walker. The Plaintiffs’ written submissions contend “there is no reason why such negotiations could not have been engaged in by Mr Lambert as the executor of the estate, especially in circumstances where Mr Walker was not legally represented on the purchase”.

89. The difficulty with this submission is that just because the purchaser chose not to be legally represented does not mean that the Estate was not entitled to be legally represented. On the contrary, even though Mr Lambert was an accountant, he would have been subject to potentially legitimate criticism if he had embarked on selling the Company without appropriate legal and, as he and Mr White appeared to consider necessary in this case, independent accounting advice. The consequence in this case was that Mr White found himself dealing with Mr Walker directly rather than with Mr Walker’s solicitor.

90. I have read paragraph 17 of Mr White’s affidavit in support of this invoice. It is apparent from that affidavit that negotiations for the sale of the Company were well advanced (as opposed to earlier direct attendances between Mr White and Mr Walker which were disallowed – see paragraph [81] above). The high point of the Plaintiffs’ criticism is an attendance on 21 October 2011 of 4.7 hours described as “Attending to Peter Oakeshott and Mal Walker (including travelling)”. This is explained and the context given in Mr White’s affidavit:

17.8   A lengthy conference was organised between the prospective purchaser and the accountant, Peter Oakeshott and myself where negotiations proceeded in relation to the offer submitted. There were then substantial telephone calls and correspondence between the prospective purchaser and the accountant and myself and the executor in relation to sale of shares.

17.9   I prepared a draft agreement for sale of shares which was revised by the prospective purchaser. Advice was sought from the accountant in relation to taxation implications and in relation to termination of employees and the financial statements to be attached to the contract and changes to be made to the accounts prior to completion.

17.10   It was agreed to provide the prospective purchaser with due diligence and I prepared a confidentiality agreement to permit due diligence to occur subject to the said agreement.

91. It appears that by the period of the invoice under consideration, the sale of the Company had now become the subject of an offer from Mr Walker. While it may be the case, as it appeared to be in relation to invoice 1945 above, that many aspects of the negotiation of a sale of the asset of an estate are executorial in the sense that the executor will necessarily be the prime mover and be involved in negotiating the sale, there will eventually – and perhaps quite quickly – come a time when an executor will be entitled to have a solicitor involved. That must be the case when detailed negotiations are undertaken. That is not to say that an executor cannot, if he or she feels able, conduct detailed negotiations himself or herself. However, as Powell J pointed out in The Estate of Orre (see paragraph [39] above), if the nature of what was being done made it prudent for the executor to have another do that work, then that cost will be allowed. The use of a solicitor in connection with the detailed negotiations for sale of the Company readily falls into that class.

92. Looking at the matter another way, if Mr Walker had been represented and Mr Lambert had chosen to attend, the attendees at the meeting of 21 October 2011 to negotiate in response to Mr Walker’s offer would have been entirely unremarkable as a matter of commercial practice: the vendor, the vendor’s solicitor and the vendor’s accountant meeting with the purchaser and the purchaser’s solicitor. In this case Mr Walker did not have a solicitor but, as the Court has already observed, that does not mean that it was not right or prudent for Mr Lambert to have a solicitor. Furthermore, there is nothing to suggest that matters weren’t at the point where, as sometimes occurs in negotiations, there was utility in having the professional advisers meet to further negotiations in the absence of their principals.

93. In summary, the Court is satisfied from the material that was before the Senior Deputy Registrar that the negotiations had reached the point where it was prudent for Mr Lambert to protect the Estate’s interests in relation to the proposed sale by involving Mr White. The Court is unable to discern any error in the Senior Deputy Registrar’s approach. Alternatively, having regard to the material before him, it was reasonably open to him to allow the attendances which he did in this invoice. No other reason has been shown for the Court to interfere.

Tax Invoice Number 2166 dated 30 April 2012

94. This was an invoice for $1,181 plus GST. The Senior Deputy Registrar disallowed an amount of $660 plus GST in relation to two attendances which concerned the Estate accounts.

Whether charges should be allowed out of the estate is a question which depends on the facts of each case, on the amount of the work involved, on the position of the executor and on other considerations: Harbin v Darby (28 Beav. 325). If the work is not done by the executor himself, even although payments may be allowed out of the estate, the amount allowed for commission may be diminished.

181. The Decision is an eloquent example of how each case must turn on its facts. The Senior Deputy Registrar’s moderation of Mr White’s invoices demonstrates that there were many things undertaken by Mr White which could be properly charged against the Estate (albeit strictly through the right of Mr White as executor to indemnity from the assets of the Estate). The Decision also demonstrates that there were a number of items, disallowed by the Senior Deputy Registrar, which were not matters that could be charged from the Estate. Contrary to Mr White’s submissions, s 53(5) in particular meant that s 53 justified the Senior Deputy Registrar’s disallowances rather than providing a general defence.

182. Finally in relation to Mr White’s dismissal argument, the Court does not accept his submission that the Decision rendered it an abuse of process for the case against him to continue. On the contrary, the Decision had the effect foreseen by the Court in referring the Accounts Summons to the Senior Deputy Registrar: to quantify the extent of any claim, if there be one, against Mr White by determining those charges which had been levied by him and paid out of the Estate but in respect of which Mr Lambert was not entitled to indemnity.

183. The conclusions in paragraphs [177] to [182] above mean that Mr White’s application to have the case against him summarily dismissed does not succeed.

184. Insofar as striking out the claim against Mr White is concerned, the parties’ concentration on questions said to arise from the absence of a charging clause obscured what the Court has concluded is a fundamental deficiency in the pleading of the Barnes v Addy case. This reaches its high point in paragraph 9O of the amended statement of claim (which is reproduced here again for convenience):

9O   By reason of the Second Defendant’s knowledge and furtherance of, and participation in, the First Defendant’s breach of fiduciary duties the Second Defendant is liable to the beneficiaries of the Estate:

(a)   as a Constructive Trustee of the monies received from the Estate;

(b)   to repay the said monies to the Estate;

(c)   in the alternative, to pay Equitable Compensation to the Estate;

(d)   to pay interest on the monies received to the Estate.

185. It is now well accepted in equity jurisprudence that Barnes v Addy claims have two limbs. This was explained by the High Court in Farah Constructions Pty Limited v Say-dee Pty Limited [2007] HCA 22; (2007) 230 CLR 89 (“Farah”):

111.   The "rule in Barnes v Addy" stated. In Barnes v Addy Lord Selborne LC said:

Those who create a trust clothe the trustee with a legal power and control over the trust property, imposing on him a corresponding responsibility. That responsibility may no doubt be extended in equity to others who are not properly trustees, if they are found either making themselves trustees de son tort, or actually participating in any fraudulent conduct of the trustee to the injury of the cestui que trust. But, on the other hand, strangers are not to be made constructive trustees merely because they act as the agents of trustees in transactions within their legal powers, transactions, perhaps of which a Court of Equity may disapprove, unless those agents receive and become chargeable with some part of the trust property, or unless they assist with knowledge in a dishonest and fraudulent design on the part of the trustees.

The form of liability referred to in the first part of the last sentence is often called the "first limb" of Barnes v Addy, and the form of liability referred to in the second part of the last sentence is often called the "second limb". In Barnes v Addy itself, the Court of Appeal in Chancery (Lord Selborne LC, James and Mellish LJJ) upheld the decision of Wickens VC that two solicitors, Mr Preston and Mr Duffield, had not received any trust property and had no knowledge of any dishonest and fraudulent design to make them parties to the breach of trust by the sole trustee. It was insufficient that Mr Preston had been alive to the danger of the course of appointing a sole trustee and that Mr Duffield had prepared the appointment of that trustee.

112.   It has become common to describe the first limb as involving "knowing receipt" and the second limb as involving "knowing assistance". Lord Selborne LC did not use the expression "knowing receipt". It seems to have been employed first in 1966 by the editors of Snell's Principles of Equity. Even then, it was only introduced by inserting under the pre-existing heading "Receipt of Trust Property by Stranger to Trust" a new sub-heading "Knowing Receipt or Dealing". However, in 1972 Brightman J adopted the expression in Karak Rubber Co Ltd v Burden (No 2). He said that the labels "knowing receipt or dealing" and "knowing assistance" employed by Snell were "an admirable shorthand description of their different natures". Those labels have been commonly used since then. In contrast, Lord Selborne LC's expression was "receive and become chargeable". Persons who receive trust property become chargeable if it is established that they received it with notice of the trust.

186. The difficulty which the Court has identified is that while the tenor of the way in which the Plaintiffs’ counsel explained the case against Mr White suggested that the case against him was nothing more than a first limb case of “knowing receipt”, the use in paragraph 9O of the amended statement of claim of the words “knowledge and furtherance of, and participation in” is redolent of a second limb “knowing assistance” case.

187. As the High Court observed in Farah, a second limb Barnes v Addy case raises serious issues which much be pleaded and particularised:

170.   Had the Court of Appeal turned its mind to whether Mrs Elias and her daughters were liable as knowing participants in a dishonest and fraudulent design - an allegation the seriousness of which means that it ought to have been pleaded and particularised, and the assessment required by Briginshaw v Briginshaw kept in mind - it ought to have rejected the allegation. That rejection would follow from consideration of what was said in Consul respecting the second limb of Barnes v Addy, both in relation to "knowledge" and to "dishonest and fraudulent design".

188. The pleading is currently ambiguous as to the type of claim which Mr White must meet. If the Plaintiffs wish to bring a second limb Barnes v Addy case against Mr White, it will be necessary for them to plead and particularise Mr Lambert’s dishonest and fraudulent design (as to which see Hasler v Singtel Optus Pty Ltd [2013] NSWCA 266; (2014) 87 NSWLR 609) and how, precisely, Mr White is said to have known of and participated in it. Given the potential consequences for a solicitor such as Mr White, the need for full and precise pleading of such serious allegations is only fortified. Mr White is entitled to know exactly what case he has to meet.

189. On the other hand, in a first limb Barnes v Addy case, dishonesty is not required on either the part of the trustee or the third party. It is sufficient if it can be shown that a defendant has received trust property with notice that such receipt was in breach of a trust or fiduciary duty. Nevertheless, it is still necessary for the alleged breach of trust or fiduciary duty to be precisely identified (including as to how it is said to have arisen) and how the defendant had the requisite notice. The type of notice alleged (for example, actual or constructive knowledge) must also be clearly identified because the law is not without its complications as to what kind of notice will be sufficient even in first limb Barnes v Addy cases. During the course of argument the Court adverted to the difficulty which may attend proving the requisite notice if Mr White received money from the Estate in satisfaction of his invoices which both Mr Lambert and Mr White reasonably and in good faith believed could properly be visited upon the Estate only to have that conclusion controverted by a subsequent decision of a Registrar on moderation.

190. For the reasons given in paragraphs [185] to [189] above, if the Plaintiffs wish to press a Barnes v Addy case against Mr White, it will have to be repleaded.

191. Similarly, the Court accepts Mr White’s criticism of paragraph 9P of the amended statement of claim (reproduced here again for convenience):

9P   In the circumstances, the Second Defendant owed the following duties to the Estate:

(a)   a duty to ensure that the First Defendant complied with his duties as executor;

(b)   a duty to ensure that the First Defendant administered the Estate properly;

(c)   a duty to ensure that the First Defendant administered the Estate in a timely manner;

(d)   a duty to ensure that Estate monies were paid with proper authorisation; and

(e)   a duty to ensure that Estate monies were paid in accordance with the law.

192. Simply to assert such duties arose “in the circumstances” is inadequate as a matter of pleading. Nor is this something that can be cured by particulars. Primary facts must be alleged and the legal nature of the duties asserted must be specified. The contractual, tortious and fiduciary duties which a solicitor owes to his or her client primarily arise by reference to the solicitor’s retainer. That retainer will include both the instructions received at the start of the professional relationship and, to the extent relevant, instructions received or other developments during the course of the relationship. On the basis of what the Court has seen during the course of argument, and far from expressing any final view on the question, some of the duties alleged in paragraph 9P may be more obviously applicable than others in the circumstances of this case. For present purposes it is sufficient to conclude that the facts, matters and circumstances relied upon for the existence of the alleged duties must be pleaded and how it is said they have been breached.

193. The Court’s earlier conclusions as to the irrelevance of the allegation concerning the absence of a charging clause and the inadequate pleading of both the Barnes v Addy claim (paragraph 9O) and breach of duty claim (paragraph 9P) are sufficient to justify the order which the Court proposes to make striking out the entirety of the claim against Mr White but with leave to the Plaintiffs to replead. To the extent it may assist in that process and while not the subject of argument, the Court has also concluded that the claim of breach of duty alleged in paragraphs 9I to 9K must be repleaded (reproduced here again for convenience):

9I   At all material times the First Defendant, as Executor of the Estate, owed fiduciary duties to the beneficiaries of the Estate as particularised under paragraph 9A above.

9J   The Second Defendant, being a qualified solicitor, knew, or ought to have known, that the First Defendant owed the said duties to the beneficiaries of the Estate.

9K   The Second Defendant failed to advise the First Defendant that he was in breach of his said duties.

194. There are at least two difficulties with this pleading.

195. First, as currently drafted, it does not go anywhere. There is no allegation that the failure to advise alleged in clause 9K was a breach by Mr White of his alleged duties to Mr Lambert. The absence of such an allegation means it is unclear whether the alleged failure to advise is to be included as one of the breach of duties relied upon in paragraph 9R for the allegation of loss being suffered by the Estate.

196. Second, assuming without deciding the correctness of the allegation in paragraphs 9I and 9J, there is a conceptual gulf between the allegations in paragraph 9J and 9K. What is missing is any allegation by reference to any properly pleaded retainer or other fact, matter or circumstance to be relied upon for the proposition that Mr White had a duty to advise Mr Lambert of the matters alleged.

197. If the allegations in paragraphs 9I to 9K are to play a part in these proceedings, they will need to be repleaded. When combined with the Court’s earlier conclusions it is clear that there is a proper basis for the Court to exercise its discretion to strike out the entirety of the claim against Mr White (including the references to the absence of a charging clause wherever else they appear in the amended statement of claim) with leave to replead.

198. In considering Mr White’s stay application, the Court will not hesitate over the question of whether the Accounts Summons and the Plaintiffs’ revocation proceedings constitute “several proceedings” for the purposes of UCPR Part 28, r 28.5. All of the various motions and claims in these proceedings are brought within the original probate proceedings. There is nothing wrong with that. However, it does mean they all bear the same case number. “Proceedings” is not defined in the UCPR. No point was taken about this by the Plaintiffs and they were correct not to do so. If it be necessary to decide, the Court is of the view that the Accounts Summons and the amended statement of claim constitute “several proceedings … pending in the court”. In any event, the Court has power to grant the stay sought by Mr White under its inherent jurisdiction.

199. Generally, for the reasons advanced by Mr White (see paragraph [161] above), the Court accepts his submission that the proceedings against him should be stayed pending determination of the Accounts Summons (and, therefore, necessarily pending determination of the revocation proceedings). The Court has reached this conclusion primarily by reference to what appears to be the very small amount of “damages” for which Mr White may be liable (if he has any liability at all) and the desirability of recourse first being had against Mr Lambert as executor to make any refunds. This conclusion is based upon considerations of proportionality and the overriding requirement under s 56 of the CPA to exercise the power to stay in a way which achieves the overriding purpose to ensure the just, quick and cheap resolution of the real issues in dispute.

200. As the Court has already observed (see paragraph [160] above), what the case against Mr White is really about is his receipt of fees from the Estate in respect of matters which have been disallowed in the Decision. The Decision has fulfilled the Court’s expectation in referring the matter to the Senior Deputy Registrar (see paragraph [20] above) to ascertain how much the parties are really arguing about. Counsel for Mr White’s written submissions included an appendix which purported to demonstrate that, after moderation, an amount of $2,819.94 (inclusive of GST) was properly owing from the Estate to Mr White. The result of this review (an increase in the amount disallowed by $3,585.10 plus GST) will, on the calculations presented by Mr White, mean that no more should be paid out of the Estate to Mr White. However, it also means that there are no potential “damages” because not all of Mr White’s invoices submitted for moderation had been paid by the Estate in any event.

201. On the other hand, by letter dated 22 July 2014 to Mr White’s solicitors, the Plaintiffs’ solicitors propound a calculation which suggests that as a result of the Decision an amount of $1,364.96 (inclusive of GST) remains to be refunded to the Estate by Mr White (assuming he has any obligation to make any refund to the Estate at all). Again, without necessarily accepting the correctness of the Plaintiffs’ calculation, that amount will increase by $3,585.10 plus GST as a result of this review. It nevertheless remains unclear whether that or any other amount, after payment by Mr Lambert of the refund pursuant to the Decision and this review, could possibly be left as “damages”, being amounts paid to Mr White out of the Estate in respect of matters which had been disallowed on moderation. What is clear, however, is that the amount for which Mr White might potentially be liable in respect of such payments appears to be less than $4,000 plus GST. If the parties cannot work it out then in due course, and subject to the stay being lifted and liability against Mr White being established, it could be worked out by a Registrar.

202. There can be no doubt that the costs to all parties of the case sought to be run against Mr White and the time it would add to any trial against Mr Lambert are significantly disproportionate to the amount that appears to be at stake. However, that may not, in and of itself, justify a stay of proceedings. It is that factor, when combined with the recognition that there is a longstanding and well understood process of dealing with these matters by way of a refund from the executor of disallowed payments out from the Estate, that persuades the Court that a stay is appropriate in this case. When measured against the current scheme for moderation of executor’s accounts and refunds by the executor, the case sought to be brought against Mr White constitutes collateral litigation of a kind which should be discouraged when it appears to be for such a relatively small amount.

203. In reaching this conclusion the Court has also placed some, but not in and of itself decisive, weight on the possibility that Mr Lambert may receive commission which would be offset against any refund liability. As the Senior Deputy Registrar pointed out in his requisition of 3 March 2014 (see paragraph [123] above), commission has been allowed even where there has been a breach of trust e.g. In the Will of Sherriff [1971] 2 NSWLR 438. In saying this the Court expresses no view on whether a breach of trust has occurred in this case beyond acknowledging that the Barnes v Addy claim is arguable (see paragraph [177] above).

204. The Court’s conclusions mean that some consideration needs to be given to the interaction between the striking out of the amended statement of claim with leave to replead and the stay. If the Plaintiffs wish to press their claim against Mr White, a further amended statement of claim should be prepared and served in the near future, notwithstanding the proceedings will then be stayed. Depending upon the form of any further amended statement of claim which the Plaintiffs are ultimately permitted to file, the practicability of the stay may need to be reconsidered. Mr Lambert will have a real interest in this question in his own right to the extent there may be a risk that he would have to “come back” if the outcome of the revocation proceedings and the completion of consideration of the Accounts Summons meant that any case against Mr White would still be pressed by the Plaintiffs.

205. Finally, the Court’s conclusions mean that there is no basis upon which the separate question proposed by Mr White should be ordered. That result would follow even if the case were proceeding on the amended statement of claim and the stay had not been granted. This is because the issue of the absence of the charging clause is irrelevant and the difficulty of defining a “charging clause” means that a satisfactory formulation of a useful question is most unlikely, if not impossible. The Court also accepts the Plaintiffs’ submission that the separate question would also have no utility because on any view it would not dispose of the entirety of the proceedings.

Conclusion

206. The Court will make directions for the parties to make such submissions as may be necessary to enable final orders to be made to give effect to these reasons, including as to costs.

207. There are also two general observations which the Court wishes to make in concluding these reasons.

208. First, these proceedings demonstrate that it is, at the very least, desirable, and usually essential, for a solicitor retained generally by an executor in connection with the administration of an estate to advise the executor, upon receiving instructions, as to the executor’s duties and as to how the executor and those agents the executor retains may be remunerated. This observation and the giving of that advice is not intended to have a chilling effect on the degree to which an executor should properly have recourse to the services of a solicitor or other advisers. In my experience, the vast majority of work done in the ordinary course by solicitors for executors in connection with estates is properly remunerated from the assets of the estate or, to the extent an executor must bear those costs personally, by an allowance of commission. Nevertheless, these things should be explained by a solicitor to his or her client at the start of their relationship.

206. Second, a difficulty with applying the observations made in the preceding paragraph is that it would appear, again as a matter of personal observation and anecdotal evidence, that many practitioners may not be familiar with the principles and practice which have been canvassed in these reasons. It is now possible to qualify as a legal practitioner without formal tertiary study in the areas of probate and succession. The wisdom of that development is open to question, given that matters in connection with wills and the administration of estates are something which most people might still have to consult a solicitor about.

207. In other areas of social activity it is frequently observed that more Australians are living longer and that the proportion of older citizens to the total population is increasing. The legal needs of such people and their families now fall into an area which is often described as “elder law”. The demographic phenomenon to which I have referred suggests that there is a strong case for members of the profession to ensure that they are able to advise competently what appears to be an increasing number of people in matters of probate, succession, guardianship and related areas. In making these observations I stress that I am not to be taken as in any way reflecting on the competence or experience of any of the legal practitioners involved in these proceedings nor am I expressing any view as to the outcome of the revocation proceedings.

**********

Decision last updated: 14 September 2015