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

In the matter of the estate of Arthur Michael Falco, the deceased's executor, Falco, sought to challenge the Registrar's moderation of fees paid to his solicitor out of the estate. The dispute was heard by the Supreme Court of New South Wales. The key issue before the court was whether the beneficiaries could bring an arguable claim against the solicitor for fees paid by the executor but subsequently disallowed upon moderation. Additionally, the court had to determine whether the proceedings against the solicitor should be dismissed or stayed.

The court found that the beneficiaries had standing to bring a claim under Barnes v Addy against the solicitor. The court held that there was an arguable claim that the solicitor had acted as a constructive trustee in relation to the disallowed fees. This was because the solicitor had paid the fees without properly considering whether they were reasonable, and had thereby acted in breach of their fiduciary duty to the estate. The court also found that the beneficiaries' proceedings against the solicitor should not be dismissed or stayed, as they had a valid claim against the solicitor for the disallowed fees.

The court ordered that the beneficiaries could proceed with their claim against the solicitor for the disallowed fees. The court held that the beneficiaries had a direct interest in the disallowed fees, as they would have benefitted from those fees if they had been properly allowed. The court also found that the beneficiaries had standing to bring the claim, as they were seeking to recover funds that had been paid out of the estate but were not properly allowed as executor's fees. The court ordered that the matter be remitted to the probate division for further proceedings against the solicitor.

The court's decision in this case provides guidance on the circumstances in which beneficiaries may bring a claim against a solicitor for fees paid by the executor but subsequently disallowed upon moderation. The court held that such a claim is arguable under Barnes v Addy, and that beneficiaries have standing to bring the claim. This decision is likely to be of interest to executors, beneficiaries, and solicitors involved in probate and administration matters in New South Wales.