Council of the Law Society of New South Wales v Haseldine

NCAT Occupational|2016-04-20

In the Will of Shannon [1977] 1 NSWLR 210 In the Will of Sheppard [1972] 2 NSWLR 714 Kennedy v The Council of the Incorporated Law Institute of New South Wales (1939) 13 ALJ 563 Law Society of New South Wales v Carvan Unreported Court of Appeal, 14 May 1981 (BC8111397) Law Society of NSW v Jones, Unreported Court of Appeal, 29 July 1978 (NSW) Law Society of NSW v Shehadie [2016] NSWCATOD 46 Legal Services Commissioner v Brereton [2011] VSCA 241 Legal Services Commissioner v Rhoden [2016] VSC 67 Neat Holdings Pty Limited v Karajan Holdings Pty Limited (1992) 110 ALR 449 New South Wales Bar Association v Cummins (2001) 52 NSWLR 279 New South Wales Bar Association v Osei (No. 2) [2008] NSWADT 324 Prothonotary of the Supreme Court of New South Wales v Da Rocha [2013] NSWCA 151 Prothonotary of the Supreme Court of New South Wales v McCaffery [2004] NSWCA 470 R v Lawrence [1997] 1 VR 459 Re Croser (1973) 6 SASR 427 Re Estate Gowing; Application for Executor's Commission [2014] NSWSC 247 Re McCutcheon [1941] VLR 174 Solicitor v Council of the Law Society of New South Wales (2004) 78 ALJR 310 Spellson v George (1992) 26 NSWLR 666 Stewart v Layton (1992) 111 ALR 687 Stokes v Churchill; Estate of Fryer (1994) NSW ConvR 55 - 694 Surf Road Nominees Pty Ltd & Ors v Tass James & Ors [2004] NSWSC 61 The Council of the Law Society of New South Wales v Nicholls [2012] NSWADT 222 The Council of the New South Wales Bar Association v Costigan [2013] NSWCA 407 The Council of the New South Wales Bar Association v Sahade [2007] NSWCA 145 The Law Society of New South Wales v McCarthy [2003] NSWADT 198 The Prothonotary of the Supreme Court of New South Wales v Leon Nikolaidis [2010] NSWCA 73 Walker & Ors v D'Alessandro [2010] VSC 15 Ziems v The Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279 Category: Principal judgment Parties: Council of the Law Society of New South Wales (Applicant) Christopher John Haseldine (Respondent) Representation: Counsel: PA Maddigan (Applicant) CJ Haseldine (Respondent in person)

Solicitors: Law Society of New South Wales (Applicant) C J Haseldine Solicitors (Respondent) File Number(s): 2015/00383906, 1520225

Introduction

By application for disciplinary findings and orders filed by the Council of the Law Society of New South Wales (the Council) on 29 October 2015, the Council seeks the following orders against Mr Haseldine: 1. Under s 562(2)(a) of the Legal Profession Act 2004 (NSW) (LPA) that the name of Christopher John Haseldine be removed from the local Roll or in the alternative, under s 302(f) of the Legal Profession Uniform Law (NSW) (LPUL) recommending that the name of Christopher John Haseldine be removed from the Roll of Australian lawyers; and 2. That Mr Haseldine pay the costs of the Council; and 3. That Mr Haseldine be subject to any other order as the Tribunal deems fit.
The grounds for the application are that Mr Haseldine is guilty of professional misconduct because when acting in the estate of Niobe Rideout Belletty he: 1. Paid himself executor's commission when he had neither filed nor passed accounts, nor obtained the informed consent of the beneficiaries which are characterised as breaches of fiduciary duty. 2. Breached s 255 of the LPA. 3. Misappropriated trust money.
Mr Haseldine in his reply to application filed on 15 January 2016 admits that he paid himself executor's commission but says that the payment was made pursuant to a specific provision contained in the Will of the testatrix. He also says that he obtained the beneficiaries' consent retrospectively. He otherwise denies the grounds of the application.
For the reasons which follow we are satisfied that the breaches of fiduciary duty are made out and that there should be a finding of professional misconduct against Mr Haseldine both under s 497(1)(b) of the LPA and at common law. We are not satisfied that breach of s 255 of the LPA or misappropriation are established. The Council is seeking an order that he be removed from the roll. Mr Haseldine did not lead any evidence relevant to or make submissions about the orders which should follow any finding of professional misconduct. It was anticipated by the parties at the hearing that depending upon our finding as to conduct Mr Haseldine should have an opportunity to do so. We will make directions for that to occur.

History of the matter before the Tribunal, hearing and evidence

As we have indicated the application for disciplinary findings and orders was filed by the Council on 29 October 2015. Mr Haseldine filed his reply to application on 15 January 2016. He filed an amended reply on 10 February 2016.
The Council filed in its case the affidavit of Anne-Marie Foord, solicitor, sworn 26 October 2015 with exhibit AMF1 thereto and two affidavits of John Michalski, trust account investigator, sworn 26 October 2015 with exhibit JM1 thereto and 24 March 2016. Mr Haseldine filed an affidavit sworn 13 January 2016.
The Council filed submissions dated 31 March 2016 on 4 April 2016. Mr Haseldine filed submissions dated 4 April 2016 on 5 April 2016. Mr Haseldine also filed on 12 April 2016 what he called an "addendum to outline of submissions". The Council filed submissions in reply dated 7 April 2016.
The matter proceeded to hearing on 20 April 2016. The affidavits in each party's case were read and exhibits tendered without objection. The deponents were not required for cross-examination.
At the conclusion of the hearing the following directions were made: 1. On or before 4 May 2016 the Council to file and serve any further written submissions restricted to the issues of: 1. The legal obligations upon the executor upon claiming commission and his entitlement to do so; 2. Whether the beneficiaries' consent might be sought to a commission payment retrospectively. 1. On or before 18 May 2016 Mr Haseldine file and serve submissions in reply.
The Council filed and served supplementary submissions dated 29 April 2016. Mr Haseldine filed and served submissions in reply on 9 May 2016. Our decision was reserved.

Jurisdiction

The Council has claimed an order under s 562(2)(a) of the LPA or in the alternative s 302(f) of the LPUL. Mr Haseldine submitted that an order under s 302(f) of the LPUL was not available to the Council because the legislation did not come into force until 1 July 2015, well after the matter complained of.
The complaint the subject of the application was resolved by the Council on 6 April 2014 under s 504 of the LPA. As we have indicated the application in these proceedings was filed on 29 October 2015. Accordingly, the application was filed after commencement of the LPUL in respect of investigations begun beforehand.
At the hearing both parties submitted that consistently with the savings and transitional provisions found in clause 26 of Schedule 4 to the Legal Profession Uniform Law (NSW) and subsequent authorities (to which for present purposes further reference need not be made) the matter should be considered on the basis that the LPA continued to apply. We have proceeded on that basis.

Relevant evidence and findings of fact

Mr Haseldine does not dispute the basic facts alleged by the Council and set out in the application and supporting affidavits. We are satisfied on the evidence as to the proof of the following factual matters particularised in the application: 1. Mr Haseldine is an Australian lawyer and was admitted to practice on 10 February 1967. 2. At all material times Mr Haseldine was a legal practitioner and sole principal of the law practice known as Milford Haseldine & Williams conducting business in Bankstown, New South Wales (the law practice). 3. Ms Niobe Rideout Belletty was a client of the law practice. 4. Mr Haseldine drafted a will for Ms Belletty which was executed on 10 December 2010 (the Will). 5. Ms Belletty died in March 2012. 6. The law practice was retained on behalf of the estate of the late Niobe Rideout Belletty to administer the estate in accordance with the terms of the Will. 7. On or before 2 April 2012 the law practice created trust ledger number 651 estate of the late N Belletty (estate trust ledger). 8. Probate of the Will was granted to Mr Haseldine as executor on 5 July 2012 with the value of the estate cited as $1,184,189.74. 9. On 12 July 2012 the sum of $6,381.31 was debited from the estate trust ledger and there described as a transfer to the MHW general account on account of costs and disbursements. 10. On 31 July 2013 a sum of $49,806.15 was debited from the estate trust ledger and there described as a transfer to the MHW general account on account of costs and disbursements. 11. On about 31 October 2013 the sum of $11,000 was debited from the estate trust ledger and there described as executor's commission (the commission). 12. On 20 November 2013 the remaining sum of $484.54 was debited from the estate trust ledger and there described as a transfer to the MHW general account on account of costs and disbursements. This took the total costs and disbursements paid by the estate to the law practice to $56,672.
The Will provided at clause 2 for the appointment of Mr Haseldine as sole executor and trustee. At clause 4 it provided for twenty six beneficiaries with the residue to be divided between twenty-one non-charitable beneficiaries in proportion to the gifts already bequeathed to them. One of these predeceased the testatrix.
Clause 10 of the Will provided as follows: "I DIRECT that should the said Christopher John Haseldine act as executor of this my Will he shall be entitled to act in his capacity as solicitor and to be entitled to charge for acting in that capacity and he shall also be entitled to charge commission for acting in his capacity as executor for services or attendances for which a charge in his capacity as solicitor would not be appropriate and he shall be entitled to charge for acting in his capacity as solicitor at a fair and reasonable rate."
On 17 March 2014 Mr Michalski conducted a trust account inspection of the law practice. The Council wrote to Mr Haseldine on 14 May 2014 notifying him that the Council had resolved to make complaints against him under s 504 of the LPA the complaints being: 1. Paying to himself commission when he had neither filed or passed accounts nor obtained the consent of the beneficiaries. 2. Breach of the s 255 of the [LPA].
Correspondence then ensued between the Council and Mr Haseldine to which reference will be made in the course of these reasons where relevant.
Mr Haseldine wrote to each residuary beneficiary on 29 June 2015 enclosing for execution a form of consent to him receiving the payment for commission. The letter was in the following terms: "Re estate late Niobe Rideout BELLETTY You will recall that I was the executor of the Will of the late Niobe Rideout Belletty and I was also the solicitor for her estate. I previously carried on legal practice as Milford, Haseldine & Williams at Bankstown, a Sydney suburb. Although I have recently semi-retired, any correspondence sent to my previous address (that is, the address appearing on the letterhead of correspondence I have previously sent to you) will still reach me. As the solicitor for the estate, I prepared an account for legal services. I also made a claim against the estate for commission for acting in my capacity as executor. The value of the estate was disclosed for probate purposes at $1,184,189.74, most of which was represented by the deceased's home at 6 Hood Street, Rodd Point, another Sydney suburb. There were 26 beneficiaries named in the Will, one of whom predeceased the deceased, leaving 25 beneficiaries including five charitable organisations. In some instances there were joint beneficiaries, that is, husband and wife whom I have counted as a single beneficiary for the purpose of this letter. Four of the beneficiaries resided interstate and five resided overseas. Some of the beneficiaries have changed addresses and it was of course necessary to trace them. There were three major difficulties associated with administering the estate. One of the difficulties was that although the deceased was survived by her daughter and two grandchildren, it appears she was estranged from them with the result that there was no-one with a reasonable knowledge of the deceased's financial affair. I had to make fairly extensive inquiries to identify assets and to exclude the possibility of other assets. Another difficulty related to the realty, that is, the deceased's home which remained registered in the names of the deceased and her late husband, Richard, who predeceased her by some years. Richard and the deceased purchased the property in 1970 subject to a mortgage which was discharged in 1973. However, the relevant documents, specifically the certificate of title (more commonly known as ('the Deed') had been lost. To avoid or at least minimise the risk of fraud, the procedure to replace a lost certificate of title is quite complicated. For example, the writer as executor had to produce an official copy of his own birth certificate notwithstanding having been on the roll of the Supreme Court for over 40 years. Before the estate could put the realty on the market, the name of Richard Rideout Belletty had to be removed, leaving the deceased as sole registered proprietor, that is, the sole owner, and then the property transferred into my name as the executor. This caused considerable delay. Another difficulty arose simply out of the number of beneficiaries and their places of residence. As executor, the writer remained responsible for the security and maintenance of the realty until the estate was able to sell it. The writer frequently called into the realty simply to check on its security. It is not possible to calculate an executor's commission with mathematical precision but it is my understanding that such commission was usually in the order of 2 per cent of the gross value of the estate. As legal costs were quite substantial, I made a claim against the estate for commission of $11,000 which included $1,000 goods and services tax (GST). The Law Society of New South Wales has a number of functions in connection with solicitors within the state of New South Wales including a supervisory or regulatory capacity. The Law Society has expressed the view that before an executor can claim commission, the executor is required either to obtain the consent of the beneficiaries or to pass accounts. At the risk of oversimplifying, passing accounts requires the executor to submit his administration of the estate to the Supreme Court for what amounts to an audit. I did neither and The Law Society has formed the view that in paying myself a commission without observing either of those requirements, I have breached the Legal Profession Act. With due respect to the Law Society, I am of the opinion that the Law Society is in error. When I drew the deceased's will, I was conscious of a potential difficulty. Consequently the Will contains provision in the following terms: "I DIRECT that should the said Christopher John Haseldine act as Executor of this my Will he shall be entitled to act in his capacity as solicitor and to be entitled to charge for acting in that capacity and he shall also be entitled to charge commission for acting in his capacity as executor for services or attendances for which a charge in his capacity as solicitor would not be appropriate and he shall be entitled to charge for acting in his capacity as solicitor at a fair and reasonable rate." I should also mention that the deceased signed the Will after speaking with two independent and well experienced solicitors who witnessed her signature to the Will. In my view therefore, the deceased herself authorised the commission and the provision quoted above is sufficient authority. It seems to be an oddity of law in this state that I have not been able to find any statement of law that specifically covers the present situation. However, a number of fellow practitioners have expressed the view that the authority contained in the deceased's will is quite sufficient; that is, they agree with the view I took. Throughout my administration of the estate, I endeavoured to keep the beneficiaries advised of progress. One of the purposes of this letter is to advise you of this development. The terms of the deceased's will require any residue to be apportioned amongst beneficiaries, excluding the five charitable organisations. This means that if the Law Society is correct and I am in error, the sum of $11,000 is to be refunded to the estate. Your entitlement to participate in a distribution would be proportional. I have calculated your entitlement to be [amount included by reference to entitlement]. I also ask you to consider this situation: assume that the Law Society is correct in its view, would you now consent to my receiving the commission I have mentioned above. I have taken the liberty of enclosing a form of letter of consent. If you consent, would you kindly sign and return the letter to me at your earliest convenience. In addition to signing and dating the letter, would you also please print your name in legible form? Alternatively, you may send a letter in similar form to me by e-mail. My e-mail address is [email address inserted]. You may telephone me on [telephone number inserted]. In my submissions to the Law Society, I have included a copy of this form of letter. If you wish to communicate directly with the Law Society, the address is [address inserted]. Yours faithfully (C.J. Haseldine)"
Mr Haseldine received what he described as "positive" responses from nineteen of the twenty remaining beneficiaries.

Issues for consideration

There is no issue between the parties that prior to debiting the estate trust ledger in the sum of $11,000 on 31 October 2013 with what is described as executor's commission, Mr Haseldine did not: 1. obtain a direction or authority from the beneficiaries to withdraw $11,000 from the trust account; 2. obtain the informed consent of all or any of the beneficiaries to the passing of accounts; 3. file and pass accounts or make application for the payment of commission to the Court pursuant to s 86 of the Probate and Administration Act 1898 (NSW) (PAA); or 4. obtain an order of the Court pursuant to s 86 of the PAA authorising him to receive commission in a sum either approved by or nominated by the Court.
The Council says that in the circumstances there has been a breach of fiduciary duty, a breach of s 255 of LPA and that Mr Haseldine misappropriated the sum of $11,000.
As we have indicated in his amended reply Mr Haseldine admits debiting the sum of $11,000 from the estate trust ledger and transferring it to his general account. He admits the matters particularised by the Council but says that clause 10 of the Will provided an authority for the debiting of the estate trust ledger on account of executor's commission and payment into his general account. It follows from his calculation of the amount of commission that Mr Haseldine also considers that he was authorised to do this under clause 10. He submits in the alternative that the payment was authorised by the beneficiaries retrospectively.
In light of Mr Haseldine's admissions we consider the questions for determination by the Tribunal to be as follows: 1. Is clause 10 of the Will sufficient authority for Mr Haseldine to claim and pay himself the commission? 2. If not, can such authority be given retrospectively and by less than all beneficiaries? 3. If not, by application from the law practice's trust account of the sum of $11,000 to the commission payment has Mr Haseldine: 1. acted in breach of fiduciary duty; 2. breached s 255 of the LPA? 1. If so or otherwise has Mr Haseldine misappropriated trust moneys? 2. Is Mr Haseldine guilty of professional misconduct? 3. Appropriate orders.

The capacity in which the conduct was undertaken

Neither of the parties addressed directly in the application or reply or in their submissions the effect of any distinction to be drawn in the context of considering the grounds alleged between conduct by Mr Haseldine in his capacity as executor and trustee of the estate and his conduct as principal of the law practice. We will characterise the capacity in which the conduct was undertaken for the purposes of considering whether if established it occurred in the practice of law or otherwise and whether it falls within the statutory or common law definitions of professional misconduct in the course of these reasons.

The legal basis for claiming commission

Section 85 of the PAA Act provides: "85 Executor, administrator or trustee to pass accounts (1) … (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 Act 2009 . (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."
Section 86 of the PAA provides: "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."
Section 86A provides: "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."
The obligation to file or verify, file and pass accounts is mandatory in respect of persons identified in s 85(1AA). It is not the Council's case as we understand it that Mr Haseldine was the subject of that mandatory requirement. It was not ultimately in dispute between the parties that Mr Haseldine not being a person to whom subsection 85(1AA) applied might file or verify, file and pass his accounts relating to the estate under s 85(1B) but was under no mandatory legal obligation to do so.
Nor in our view does s 86(1) operate to require that all claims for commission must be made to the Court upon the passing of accounts. By the natural and ordinary meaning of the words used the subsection operates permissively in the sense that where an application for the passing of accounts has been made as required or otherwise permitted by s 85 the Court may allow such commission as it may direct. The parties did not submit otherwise.
It is also not in dispute that the power of the Court with respect to remuneration of executors is not exclusive. The decision of Holland J in In the Will of Shannon [1977] 1 NSWLR 210 concerned that question and whether as a matter of public policy it is for the Court alone to decide in its discretion the rate, if any, at which an executor, administrator or trustee can be remunerated for performing their duties of office under s 86 of the PAA. The decision provides some guidance about the parameters of a valid clause allowing for payment of commission.
In that case the subject clause provided that the executor should "be entitled to charge and be paid all usual professional and other charges for work or business done or transacted by him or his firm in proving (the) Will or in execution of or in connection with the trusts" thereof and should "be entitled to commission at the same rate as that applicable to the Public Trustee of New South Wales". Holland J (at 214) said that the power of the Court to allow remuneration to executors, administrators and trustees existed "by reference to relief against the rule that, generally, executors and others with fiduciary duties may not derive any profit or advantage from their office or position, if not expressly authorised by the trust instrument" [emphasis added].
His Honour concluded (at 217) that there was no basis for finding that such a provision should be held invalid or inadmissible to probate as an attempt to oust the jurisdiction of the Court or that it was otherwise offensive to public policy. His Honour found (at 216) that the provision expressly conferred on the executor a right to commission and specified the rates at which it was to be calculated and that it thus directly dealt with the same subject matter as s 86 of the PAA.
It had been argued in In the Will of Shannon that by s 86 of the PAA the legislature was expressing a public policy with respect to the allowance of commission to executors upon which the provisions of a will could not be allowed to intrude. His Honour (at 217) made reference to the apparent contrary view taken by the legislature in the Trustee Companies Act, 1964 (NSW) by s 18(5) which provided that nothing should prevent the payment of any commission which a testator has in his will directed to be paid either in addition to or in lieu of the commission provided by the section. This his Honour determined gave "legislative recognition to the right of a testator to direct that his executor shall be entitled to receive a commission at a particular rate and, by implication, to acknowledge that the validity of such a direction would be recognised by the courts" [emphasis added].
The Council in its submissions identifies alternatives to the filing of an application under s 86 of the PAA which it expresses in the following terms: "(a) the will provides for an amount in the favour of the executor in consideration for being the executor and that amount is expressed either as a legacy or lump sum; (b) the will indicates a rate of commission on capital and income; (c) the will indicates an entitlement to commission on capital and income according to a specified rate; or (d) by agreement between the beneficiaries of the estate and the trustees, they all being sui juris and a unanimous agreement as to the payment and the applicable rate."
However, the Council submits that in the absence of a will providing a specified amount of commission (whether by way of a lump sum or providing a method of calculation) or the unanimous agreement by the beneficiaries with the executor, any claim for commission by an executor must be made in accordance with s 86 PAA.

The proper construction of clause 10

Council referred us on the issue of the proper construction of clause 10 to the decision of White J in Chick & Anor v Grosfeld (No 3) [2012] NSWSC 1536. This concerned a provision in a will allowing for the charging for work done in lieu of commission not apposite to the circumstances presently under consideration. However, White J set out some general principles governing the entitlement to professional charges for executorial work.
Except to the extent to which the Court allows commission pursuant to s 86 of the PAA and unless a will otherwise provides an executor is not entitled to remuneration for carrying out executorial functions; Chick at [7].
As His Honour said at [8]: "Even where the executor is entitled to incur an expense and charge it to the estate, such as by engaging the services of a solicitor to act on a conveyance, or engaging the services of an accountant to complete the deceased's or the estate's tax returns, unless the will otherwise provides, an executor who is a professional is not entitled to charge for his or her services if he or she does such work. Nor is the executor entitled to engage, for remuneration, a firm of which he or she is a member if he or she would thereby directly or indirectly benefit from the engagement. This follows from the rule that unless the trust instrument or will so provides, or the beneficiaries being sui juris give their informed consent, a fiduciary cannot place himself or herself in the position of conflict or sensible possibility of conflict between his or her personal interest and fiduciary duty. In assessing the quantum of commission that can be allowed under s 86 of the Probate and Administration Act the Court may allow commission at a rate or in an amount that reflects work done by the executor that required the exercise of professional skill. But in the absence of an appropriate charging clause in the will an executor who is a professional, such as a solicitor or an accountant, can only receive remuneration for the exercise of his or her professional skills indirectly through the allowance of commission (In Re Craig (1952) 52 SR (NSW) 265 at 267-268; Broughton v Broughton (1854) 5 De G, M and G 160 at 164; 43 ER 831; In Re Doody; Fisher v Doody [1893] 1 Ch 129 at 134-135; In Re Gates; Arnold v Gates [1933] Ch 913 at 918; In the Estate of Instone at BC9303622 at 30-35)."
The principles applicable to whether an executor may claim commission where a will contains a clause providing for executor's remuneration were cited by the Court at [9] by reference to the decision of Jordan CJ in In the Will of Kerrigan (1935) 35 SR (NSW) 242 (at 245), namely: "The general rule is that if a testator directs that his executor is to receive a particular remuneration for his services as executor, he is restricted to this remuneration, and if he proves the will, the Court will not, in the absence of special circumstances, exercise its jurisdiction to give him different or greater remuneration: In the Estate of Burdekin (1 S.R. (B. & P.) 1); In the Will of Pauton (26 W.N. 51); In the Will of Wheelihan (29 W.N. 98); Winter Irving v. Winter (1907 V.L.R. 546); In the Will of Steele (15 S.R. 247). If, however, the language used by the testator is permissive and not restrictive and he merely authorises the executor to charge for his services, the executor may either, pursuant to the authority, make such charges as he considers reasonable and have the amount moderated on the passing of his accounts, or he may, instead, make no charges but apply for commission in the usual way, bringing the nature of the services rendered to the notice of the Court by affidavit. If, being a professional man, he is by the will authorised to charge for both professional and other services, he may charge for his professional services, moderating his bill before the Registrar and, in respect of his other services, may either apply for commission or render a bill for moderation: In the Will of Marsden (43 W.N. 170). Whether such an authority extends to all work done or only to professional work is a question of construction of the will in which the authority occurs. In In re Ames (25 Ch. D. 72); In re Fish ([1893] 2 Ch. 413); Swanson v. Emmerton (1909 V.L.R. 387), and Re Smith (16 S.R. 422), it was held to apply to all work. In Clarkson v. Robinson ([1900] 2 Ch. 722), and In re Chalinder and Herrington ([1907] 1 Ch. 58) it was held to apply to professional work."
The Council accepted that consistently with the finding in In the Will of Kerrigan, clause 10 of the Will allowed Mr Haseldine to claim commission. It says however that in the absence of a specified amount or means of calculation he must either apply for commission or render a bill for moderation. No other authority was cited by the Council in support of this submission.
We should in passing make reference to the duty of a solicitor to his or her client when including in a will provision by which a benefit is conferred on him or her. A clause similar in terms to the one in In the Will of Shannon was held to be invalid in the absence of evidence that the testator was fully informed of the effects of the proposed clause and consented to it.
In Re Croser (1973) 6 SASR 427 concerned a clause empowering the executor to retain remuneration equal to that which would have been payable to the Public Trustee. Zelling J at [423] said: "It is a clearly improper clause in the case of an executor who is drawing the will and on whose advice the testator is acting. There is a clear conflict of interest and duty in such a case and such clauses should certainly not appear in wills drawn in these circumstances, if at all."
Holland J in In the Will of Shannon (at 217) whilst accepting what Zelling J had said in respect of the potential conflict of duty took the view that the "evil in it disappears if the testator is fully informed as to the effect of the proposed clause and consents to it". On the facts of that case his Honour found that no objection on the ground of conflict of interest and duty could be taken to the clause in question.
There was in very general terms evidence in this matter that the Will was witnessed by two solicitors of many years' experience and that the testatrix was independently advised. The validity of the clause by reference to the circumstances surrounding the drawing and execution of the Will and any advice given to the testatrix during the course of the process formed no part of the complaint against Mr Haseldine and it is not necessary to consider those circumstances in that context.
On the issue of construction, Mr Haseldine said in his affidavit: "I say that when I prepared the Will for the testatrix, I was aware of the potential difficulties relating both to legal costs and to executor's commission. I have been preparing wills and administering estates throughout the whole of my professional life and with the supervision of a master solicitor, previously as an articled clerk although I have never had the personal experience of this sort of situation nor have I spoken with a fellow practitioner who has. It was and remains my opinion that paragraph 10 of the Will is sufficient authority. I recognised the potential for a conflict of interests and it was for the reasons [sic] that I arranged for Mr Stockman and Mr Evans to advise the testatrix before she executed the Will and to witness her execution of it."
He submitted that based upon 50 years' experience in estate administration it was not possible to provide a realistic estimation of commission at a time when a Will is made. He said this would require detailed knowledge of the testatrix's financial and legal circumstances as they would be at the time of her death. He submitted that if a practitioner were to be held to an estimation the only safe basis from the practitioner's perspective would be to quote a very high rate to allow for most possibilities.
We cannot accept this submission. There is clear authority that it is permissible to incorporate in a valid commission clause an allowance for the amount for commission in a fixed sum or to specify the basis for calculation of the amount of commission.
Holland J in In the Will of Shannon (at p 216) noted that testamentary provision by way of legacy commission or other remuneration of executors for their pains and trouble in administering the deceased estate has long been regarded as bounty of the testator (albeit in the context of a question of whether such clauses offended public policy). His Honour had regard to examples of commission clauses which were not held to be invalid. In In the Will of Hutchings (1889) 15 VLR 419 the Will specified the rates of commission for both capital realisations and income. In In the Estate of Burdekin (1981) 1 SR (NSW) B&P 1 commission was fixed at an annual sum. In Re McCutcheon [1941] VLR 174 the Will fixed the same rates as provided or permitted by law in respect of trustee companies in Victoria.
It is also possible as the parties accepted for an executor to apply to the court for an order for the allowance of commission upon the passing of accounts under s 86. The fact that an amount of likely commission is unable to be calculated with certainty at the time of drawing the Will does not otherwise prevent incorporation of a mechanism for calculation.
Mr Haseldine further submitted that in executing the Will the testatrix had the capacity to place a limit on commission but did not do so. This would of course depend upon the testator receiving advice and being able to make an informed decision about her right to limit commission. There is no detailed evidence of this. Mr Haseldine submitted that the testator "must therefore have a discretion not to [place a limit on commission] and rely on s 86A of PAA". In our view such a proposition would place an executor as fiduciary in a position of conflict or sensible possibility of conflict between his or her personal interest and fiduciary duties; see Chick at [8]. We do not accept the submission. We were not referred to any authority in support of the proposition that notwithstanding the decision in In the Will of Kerrigan by not placing a limit on the amount of commission the authority to charge commission was at large.
Mr Haseldine conceded that the Will made no reference to how commission was to be calculated. He said that the method of calculation should "by necessary implication" be by reference to what is "fair and reasonable". This we take it is a reference to s 86 of the PAA which makes an allowance for "such commission or percentage for the executor's, administrator's or trustee's pains and trouble as is just and reasonable". Mr Haseldine did not make any submission to us as to the principles which would apply to assessing a claim for commission on the basis of what is "fair and reasonable". He did not direct us to any authority for the proposition that the existence of principles for assessing commission by the Court of itself authorised an executor to undertake the calculation and make payment of commission to himself where no express authority was contained in the underlying clause. This would also place the executor in a position of conflict or sensible possibility of conflict identified in Chick at [8]. Mr Haseldine identified no authority in support of this submission. We do not accept it.
Mr Haseldine further submitted that the beneficiaries had the benefit of s 86A of the PAA which allows the court to review a claim for commission. Nor does this go to the proper construction of the clause.
Mr Haseldine did not engage with the Council's submission that in order to authorise the payment of commission the Will must either indicate a rate of commission on capital and income or indicate an entitlement to commission on capital and income according to a specified rate. Mr Haseldine said that the Council accepted the charging clause was sufficient with respect to the charging and payment of professional costs and questioned (rhetorically) whether there was a significant difference between professional costs and executor's commission. He repeated in his addendum to outline of submissions that there was no substantive difference between claiming a commission and charging professional costs.
We do not accept this submission. As we have indicated the general charging clause in respect of professional costs by which he had calculated and paid himself professional fees for work undertaken expressly provided that Mr Haseldine be entitled to calculate his charges in his capacity as a solicitor at a "fair and reasonable rate". That part of the clause concerning the entitlement to charge commission did not so provide. Mr Haseldine concedes this in his supplemental submissions. The distinction between the nature of and entitlement to claim professional costs and commission is clearly identified in the s 86 of the PAA and the authorities; see In the Will of Kerrigan at 254 and In the Will of Shepherd [1972] 2 NSWLR 714 at 718, 720.
In support of his interpretation of clause 10 Mr Haseldine referred in his supplemental submissions to several passages from Chick at paragraphs [12], [23] and [24]. As we understood these references they went to whether in his words he had "an entitlement both to professional costs and executor's commission". Mr Haseldine said "… the word 'entitled' is used in clause 10 both in respect of professional costs and executorial commission. The authority comes from the testatrix herself". It is uncontroversial that a testator might expressly provide for separate claims for professional costs and commission; see In the Will of Kerrigan (at 245). To the extent that Mr Haseldine is seeking to make the submission that the use of the word "entitled" provides authority for the calculation of commission at the same rate as that provided for professional costs under the Will we cannot accept the submission.
The use of the word "entitled" in the context of a commission clause was considered in the authorities to which we have referred. Holland J In the Will of Shannon at [216] found a provision incorporating the words "be entitled to commission" expressly conferred on the executor a right to commission. The clause in that case specified the rate at which the commission was to be calculated and the decision is not authority for the proposition that use of the word "entitlement" carries with it a general authority to calculate and pay commission as opposed to an authority to make a claim. In In the Will of Kerrigan at [245], referred to in Chick at [9] Jordan CJ held that where the language used by the testator is permissive and not restrictive it is a mere authority which in respect of non-professional services might be the subject of an application for commission or a bill rendered for moderation. The use of the word "entitled" in respect of both professional charges and commission is in our view no more than permissive and does not afford the authority in respect of the basis for calculation of the amount of commission upon which Mr Haseldine relies.
Mr Haseldine was able to point us to no other authority in support of the proposition that a clause in terms of clause 10 in the Will which he drafted and which did not specify a fixed sum or method of calculation of commission authorised him as executor to calculate and pay himself commission.
Neither party made detailed submissions concerning the general principles for construction of a clause in a will. Gray J in the Supreme Court of South Australia considered these in In the Estate of Josef Bernhard Nies (deceased) [2014] SASC 93. The application before the Court was to rectify the provision under consideration. His Honour said at [10] - [14]: "Construction - General Principles [10] It is necessary to determine the proper construction of the will before considering a rectification application. The reason for this was identified by Pagone J when considering the provision allowing rectification in s 31 of the Wills Act 1997 (Vic) in ANZ Trustees Ltd v Hamlet: … It is a condition precedent to the exercise of the power in s 31 that the Court be satisfied that the Will does not carry out the testator's intentions and that this satisfaction be based on one of two specified reasons namely, either that a clerical error was made or that the Will does not give effect to the testator's instructions. The existence of the second of these conditions requires the Will to be construed and to be found upon its proper construction not to give effect to the instructions of the testator. [11] The task of a court when construing a will is to discover the intention of the testator: I take it to be a cardinal rule of construction that a will should be so construed as to give effect to the intention of the testator, such intention being gathered from the language of the will read in the light of the circumstances in which the will was made. [12] A word or phrase in a will is generally given its usual or ordinary grammatical meaning. However, the usual or ordinary meaning of a word may be displaced if, in the context of the will as a whole, and in the light of the surrounding circumstances, it appears that the ordinary meaning of a word or phrase does not make sense, but a secondary meaning would make sense, in which case the court will adopt the latter meaning. The court avoids giving words a literal interpretation where that would lead to a capricious result and where it is considered that this cannot have been the intention of the testator. In Re Allsop, Lord Denning MR observed: … The object of the court in construing a will is to discover the intention of the testator. I do not think his intention is to be discovered by looking at the literal meaning of the words alone. That has led, times out of number, to the frustration of his intentions. You must look at the will in the light of the surrounding circumstances. Eschewing technical rules and literal interpretation, you must look to see simply what the testator intended. If you find that a literal interpretation gives rise to a capricious result which you are satisfied the testator can never have intended, then you should reject that interpretation and seek for a sensible interpretation which does accord with his intention. It is sometimes said that a testator can be capricious if he likes. Yes, if you are sure he intended to be. But you should not impute capriciousness to him merely to justify yourself in giving the words a literal interpretation … [13] In order to determine the context and circumstances existing at the time the will was made, the court places itself in the position of the testator. This principle, sometimes referred to as the "armchair principle", has been expressed in the following terms: The general rule is that, in construing a will, the court is entitled to put itself in the position of the testator, and to consider all material facts and circumstances known to the testator with reference to which he is to be taken to have used the words in the will, and then to declare what is the intention evidenced by the words used with reference to those facts and circumstances which were (or ought to have been) in the mind of the testator when he used those words. [14] The modern approach to interpretation has been summarised by the Supreme Court of the United Kingdom in Marley v Rawlings: When interpreting a contract, the court is concerned to find the intention of the party or parties, and it does this by identifying the meaning of the relevant words, (a) in the light of (i) the natural and ordinary meaning of those words, (ii) the overall purpose of the document, (iii) any other provisions of the document, (iv) the facts known or assumed by the parties at the time that the document was executed, and (v) common sense, but (b) ignoring subjective evidence of any party's intentions. In this connection, see Prenn at 1384-1386 and Reardon Smith Line Ltd v Yngvar Hansen-Tangen [1976] 1 WLR 989, per Lord Wilberforce, Bank of Credit and Commerce International SA v Ali [2002] 1 AC 251, para 8, per Lord Bingham, and the survey of more recent authorities in Rainy Sky, per Lord Clarke at paras 21-30. When it comes to interpreting wills, it seems to me that the approach should be the same. Whether the document in question is a commercial contract or a will, the aim is to identify the intention of the party or parties to the document by interpreting the words used in their documentary, factual and commercial context. As Lord Hoffmann said in Kirin-Amgen Inc v Hoechst Marion Roussel Ltd [2005] 1 All ER 667, para 64, "No one has ever made an acontextual statement. There is always some context to any utterance, however meagre." To the same effect, Sir Thomas Bingham MR said in Arbuthnott v Fagan [1995] CLC 1396, that "[c]ourts will never construe words in a vacuum". Of course, a contract is agreed between a number of parties, whereas a will is made by a single party. However, that distinction is an unconvincing reason for adopting a different approach in principle to interpretation of wills: it is merely one of the contextual circumstances which has to be borne in mind when interpreting the document concerned. Thus, the court takes the same approach to interpretation of unilateral notices as it takes to interpretation of contracts - see Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749, per Lord Steyn at 770C-771D, and Lord Hoffmann at 779H-780F. Another example of a unilateral document which is interpreted in the same way as a contract is a patent - see the approach adopted by Lord Diplock in Catnic Components Ltd v Hill & Smith Ltd [1982] RPC 183 at 243, cited with approval, expanded, and applied in Kirin-Amgen at paras 27-32 by Lord Hoffmann. A notice and a patent are both documents intended by its originator to convey information, and so, too, is a will. In my view, at least subject to any statutory provision to the contrary, the approach to the interpretation of contracts as set out in the cases discussed … above is therefore just as appropriate for wills as it is for other unilateral documents. This may well not be a particularly revolutionary conclusion in the light of the currently understood approach to the interpretation of wills (see eg Theobald on Wills, 17th edition, chapter 15 and the recent supplement supports such an approach as indicated in RSPCA v Shoup [2011] 1 WLR 980 at paras 22 and 31). Indeed, the well known suggestion of James LJ in Boyes v Cook (1880) 14 Ch D 53 at 56, that, when interpreting a will, the court should "place [itself] in [the testator's] armchair", is consistent with the approach of interpretation by reference to the factual context."
The circumstances surrounding the drafting and execution of the Will were set out in Mr Haseldine's evidence. He says relevantly that he had prepared several wills for the testatrix which up until the final will had named friends as executors. He says in late 2010 he was telephoned by the executrix, that she had changed her mind as to the appointment of the executor named in the then current will, had no further options for appointment and asked Mr Haseldine to act in that capacity. He says: "I briefly explained the potential difficulties and the distinction between an executor's commission and legal costs associated with administration of an estate. I also spoke of a difficulty on my part in that there was a potential for a conflicts of interests [sic], being the person who drew the Will and a beneficiary of legal costs and executor's commission, nevertheless she prevailed upon me to accept the appointment."
Mr Haseldine says that he sent the new will to the testatrix which she approved. He attended the testatrix's home on the day of execution with Allan Stockman and Linden Evans who carry on practice as solicitors at Bankstown. He had known both of them for over 40 years. His evidence was: "On 10 December 2010 I drove Mr Stockman and Mr Evans to the home of the testatrix … I introduced them to the testatrix. I pointed out to them what I perceived as a potential difficulty arising out of my nomination as executor. I also repeated to the testatrix the reason for my asking Mr Stockman and Mr Evans, each of whom was an independent solicitor, to go through the Will with her and act as witness. I then left the premises and went for a walk. I returned about half an hour later by which time the Will had been executed in the form in which it now appears. From conversations with them, I understood they found the testatrix mentally alert and that they had explained to her the difference between legal costs and executor's commission and the likely amount of such commission."
The form of the evidence was not objected to nor the subject of cross-examination or evidence to the contrary. We accept the evidence in its terms. Mr Haseldine said in his supplemental submissions that he had wished to obtain an affidavit from one of the witnesses to the Will but did not do so upon the Council's indication that there was no dispute that the testatrix had had the benefit of proper independent professional advice. The evidence does not however identify the terms of the advice said to have been given to the testatrix in detail including the likely amount of the commission or how it was to be calculated. There was no evidence before us of these matters.
In our view, in their natural and ordinary meaning the relevant words of clause 10 of the Will provide that in respect of executorial work Mr Haseldine should be entitled to act in his capacity as a solicitor and charge for acting in that capacity at a fair and reasonable rate. They separately provide that he shall be entitled to charge commission. They occur within the terms of the Will reflecting the testatrix's intentions as to what charges might be claimed by the executor in the administration of her estate. The purpose of the clause on its face is to provide an entitlement to charge for professional work and the basis upon which charges might be levied for that work and a separate entitlement to claim commission. As we have indicated, the wording is similar to the clause considered by Holland J In the Will of Shannon who concluded that the provision conferred on the executor a right to commission.
The clause however does not allow a particular amount for commission or otherwise provide for the way in which it is to be calculated. This is to be contrasted with that part of the clause dealing with professional costs which does specify a means of calculation. The lack of consistency does not support a conclusion that the testatrix had an intention to authorise calculation and payment of commission by the executor. Furthermore, in its terms the rate specified is expressed to be in respect of work undertaken in Mr Haseldine's capacity as a solicitor. The clause expressly distinguishes such work from that undertaken in his capacity as executor for services or attendances for which a charge in his capacity as solicitor would not be appropriate. No rate is specified for these services and attendances that are the subject of an entitlement to charge commission.
Referring to the evidence of independent advice having been given to the testator, Mr Haseldine invited the Tribunal to "the inescapable conclusion that the testatrix both knew and understood very well what she was doing in executing the Will in the terms in which it appears".
In the absence of evidence of the terms of the advice given to the testatrix there is no reasonable basis to conclude that notwithstanding the words used in the clause the testatrix intended to provide authority not only for a claim for commission but that Mr Haseldine be authorised to calculate the commission.
A further indication of Mr Haseldine's construction of clause 10 is contained in paragraph 15 of his letter to the Professional Standards Department of the Law Society of New South Wales dated 29 June 2014 which was in evidence. Paragraph 15 reads as follows: "15 It is my understanding that an executor ought not to receive a benefit from the estate other than his commission. It seems to me contradictory that clause 10 is sufficient to allow me to act in a professional capacity and to charge for so doing but the same clause is deemed to be not sufficient to cover the matter of executor's commission. The clause, in my submission, is an authority from the testatrix herself having the benefit of independent legal advice at the time she executed the Will."
Mr Haseldine's construction of clause 10 as to the basis of his authority to calculate and pay himself commission appears to derive from the inclusion of the words "and he should be entitled to a charge for acting in his capacity as a solicitor at a fair and reasonable rate". We do not accept that construction. The specified rate for charging is plainly in respect of acting in his capacity as a solicitor when carrying out the work of an executor. The claim for commission is expressly limited to services or attendances for which a charge in his capacity as a solicitor would not be appropriate.
There was no specific evidence of any other facts known or assumed by the testatrix in the light of which the meaning of the words could be identified to identify her intention in respect of the calculation and payment of commission.
Applying the principles of construction identified in In the Estate of Josef Bernhard Nies (deceased) at [14] referred to above we are not satisfied upon consideration of the natural and ordinary meaning of the words used, the purpose of the clause within the Will or the inclusion of words which provide expressly for the basis on which professional charges could be calculated with no similar provision in respect of commission that it was the testatrix's intention in clause 10 to authorise Mr Haseldine to calculate and pay commission on his own account.
The construction to which we have come is consistent with the decision of Holland J in In the Will of Shannon to which we have referred (at 217) in which his Honour found that the legislative recognition of an executor's entitlement to receive a commission at the direction of a testator was "at a particular rate" rather than at large.
This construction is also consistent with the general rule identified by White J in Chick at [8] to which reference has been made, namely that unless the trust instrument or will so provides or the beneficiaries being sui juris give their informed consent the fiduciary cannot place himself or herself in the position of a conflict or sensible possibility of conflict between his or her personal interest and fiduciary duty. In our view a construction of clause 10 which allowed an executor to calculate and pay commission without reference to a fixed amount or method of calculation would give rise to such a conflict or at least the sensible possibility of such a conflict.
We find accordingly that on its proper construction clause 10 in the Will drafted by Mr Haseldine merely entitled him to claim commission. It did not authorise him to calculate it on his own account and pay it. It follows and we find that the transfer of moneys from trust to office for the commission payment to Mr Haseldine was not authorised by clause 10.

Retrospective consent of beneficiaries

The Council accepts that the beneficiaries and trustee all being sui juris and in unanimous agreement as to payment and the applicable rate the executor may be remunerated for his or her "pains and trouble" other than by way of an application under s 86 PAA. It says that such agreement must occur before the payment.
It is not in dispute that Mr Haseldine did not notify the beneficiaries that he intended to take the commission prior to paying himself the commission. Nor was prior consent sought.
Mr Haseldine submitted that payment of commission might be authorised by all of the beneficiaries sui juris after the payment is made.
The evidence establishes that Mr Haseldine sought retrospective authority from the beneficiaries by his letter dated 29 June 2015 to which we have referred over 1½ years after the commission had been taken. Mr Haseldine has put into evidence the consents received from eighteen of the beneficiaries. They take the form of the consent which had been attached to his letter of 29 June 2015 to each beneficiary in the following terms: "CJ Haseldine Solicitor [address supplied] Sir/Madam Re estate late Niobe Rideout BELLETTY I am one of the beneficiaries named in the Will of the abovenamed deceased. I acknowledge receipt of your letter dated 30 June, 2015. I consent to you receiving commission for acting as executor of the estate of the late Niobe Belletty dated July 2015."
A reply in slightly different terms was received from the beneficiaries, M B Armitage and J A Armitage. It was addressed to Mr Haseldine and dated 31 July 2015 and said as follows: "We refer to your letter of 29 June 2015 concerning your role as executor of the Will of the abovenamed deceased. As you are aware we are one of the beneficiaries named in the Will of the late Niobe Rideout Belletty. We have noted the terms of the deceased's Will and hereby consent to you receiving commission for acting as executor of the estate."
Mr Haseldine did not receive a reply from Dianna Smith a beneficiary described in the Will as "… my daughter …".
He gave evidence that he received a telephone call from Mrs Smith's husband Mr Barry Smith on 30 July 2015 in which Mr Smith said to him: "This is Barry Smith. This has gone on long enough. We won't be doing anything more,"
or words to that effect.
Mr Haseldine's evidence was that Dianna Smith is the mother of Angela Mees a beneficiary who did consent to the payment of commission. He said that he understood from that conversation with Angela Mees that the testatrix and Mrs Smith had long been estranged. He said that he understood that Mrs Smith was protected by her husband. He said that he understood from Angela Mees that Mr Smith had a law degree, that he had served in the Colonial Office in India and had finished his working life as the chief executive officer of the Australian subsidiary of a large American corporation. Mr Haseldine submitted that the telephone call from Mr Smith was an acknowledgement of his letter and that the lack of any further response was tantamount to a consent.
We do not accept that submission. Certainly by the conversation deposed to it is apparent that Mr Smith was responding to Mr Haseldine in respect of the letter which he had forwarded to Dianna Smith. However, a formal consent was not returned nor was consent expressly given.
Quite properly the Council referred us to the statement in Re Estate Gowing; Application for Executor's Commission [2014] NSWSC 247 at [130] in the following terms: "The absence of an objection to an allowance of commission is not as powerful as an expression of consent by a beneficiary, but it is a factor to be taken into account."
There is in this instance not merely an absence of an objection to the allowance of commission. In our view the terms of Mr Haseldine's conversation with Mr Smith on behalf of his wife establish that Mrs Smith would not be taking any further steps in the administration. These included providing a consent.
We cannot conclude that consent can or should be implied from the conversation. Nor is there evidence of other conduct by which the consent might be inferred. It follows and we find that all beneficiaries sui juris did not consent retrospectively to the commission payment to Mr Haseldine.
If we are wrong about this we will proceed to consider the parties' submissions in respect of whether as a general principle consent might be given retrospectively to the payment of commission otherwise in breach of trust and, if so, whether that occurred in this case.
The Will of Mrs Belletty appointed Mr Haseldine as executor and trustee at clause 2. At clause 4 it provided: "I give devise and bequeath the whole of my property both real and personal of whatsoever kind and whatsoever situate unto my executors to sell, call in and convert into money such part or parts thereof as shall not consist of money save and except the chattel hereinafter specifically mentioned and to stand possessed of such chattel and moneys upon the following trust, that is to say - …"
There was no issue between the parties that the conduct of a trustee of a deceased estate is governed by the operation of the Trustee Act 1925 (NSW) and general principles of fiduciary obligation. Mr Haseldine did not submit to the contrary. As the Council submitted, after completing executorial duties an appointed executor and trustee holds the remaining assets as an express trustee; see Stokes v Churchill; Estate of Fryer (1994) NSW ConvR 55 - 694 at [59], [967-59], [968]. There was evidence that Mr Haseldine completed his executorial duties on or about 10 September 2013. Accordingly, at the time of taking commission in late October 2013 Mr Haseldine did so in his capacity as trustee of the assets then held in accordance with clauses 2 and 4 of the Will. This was not contested.
The Council submitted that in paying himself commission without authority Mr Haseldine was in breach of his fiduciary duty to the beneficiaries. It conceded that it was open to the beneficiaries to ratify the actions of Mr Haseldine but that such ratification by all beneficiaries required their fully informed consent; Australian Annuities Pty Ltd (In Liquidation) (Receivers & Managers Appointed) v Rowley Super Fund Pty Ltd (2015) 318 ALR 302 at [75]; see also Chick at [8].
The Council submitted and Mr Haseldine did not contest that in order to obtain retrospective consent of beneficiaries to a breach of trust, Mr Haseldine would need to establish: 1. that each of the beneficiaries is sui juris; Surf Road Nominees Pty Ltd & Ors v Tass James & Ors [2004] NSWSC 61 at [198]; 2. the full knowledge on the part of each beneficiary of the factual circumstances and rights and claims he or she may have against the trustee; see Spellson v George (1992) 26 NSWLR 666 at [670] per Handley JA; and 3. that the decision of each beneficiary was an exercise of free and unfettered choice and was not the result of pressure or undue influence from the trustee; Surf Road Nominees at [210].
In particular, the Council says it would be important to know whether the beneficiary received independent advice.
The Council also submitted that a trustee was not entitled to avoid liability for breach of trust simply by putting the beneficiary to an election either to object or acquiesce in the breach; see Spellson v George at [672] per Handley JA.
In particular the Council set out in the application at paragraph 25(c) the particulars in respect of which it says that Mr Haseldine's letters to living beneficiaries could not elucidate informed consent. The letters it submits contained: 1. No detail of the work that was done to justify the payment of the Commission. 2. No detail of the tax invoices already rendered by Mr Haseldine for his professional costs in the sum of $56,672. This detail is necessary it is said for the beneficiaries to estimate the "pains and troubles" experienced by Mr Haseldine that would entitle him to a "just and reasonable" commission. 3. No information about the rights of the beneficiaries to have the court assess the requested commission pursuant to s 86A of the PAA. 4. No advice that the beneficiaries seek independent legal advice as to their position on the issue of consent.
The Council also says that the letter contained a statement likely to be construed as coercive, namely that: "… an application to the Supreme Court would be quite lengthy, complex and expensive. Strictly speaking, the costs would be costs against the estate."
Additionally the Council says that there was no method of calculation of the commission provided to the beneficiaries other than a statement in his letter in the following terms: "It is not possible to calculate an executor's commission with mathematical precision but it is my understanding that such commission is usually in the order of 2% of the gross value of the estate. As legal costs were quite substantial, I made a claim against the estate for commission of $11,000 which included $1,000 goods and services tax (GST)."
Mr Haseldine did not refer to any authorities on this aspect of the matter. He submitted in respect of the satisfaction of the elements necessary for retrospective consent of the beneficiaries that there was no suggestion that any of the beneficiaries were not of full age and sui juris. He pointed to evidence in the affidavit of the executor sworn in support of the probate application which identified the age of each beneficiary. He said that the consent of each beneficiary is prima facie evidence of the mental capacity of that beneficiary.
The obligation of an executor seeking consent to the payment of commission was considered by T Forrest J in Walker v D'Alessandro [2010] VSC 15 where his Honour said at [27]: ""Any benefit or gain acquired by a fiduciary in circumstances where a significant possibility of the conflict existed or where the benefit or gain was acquired by reason of the fiduciary position itself must be the subject of a full account by the fiduciary to the person to whom his obligation is owed [referring to Chan v Zacharia (1984) 154 CLR 178 at [198] - [9] per Deane J]. In other words a beneficiary must be fully informed as to any potential benefit to be made by the fiduciary before he can give an informed consent to the fiduciary receiving that benefit."
We accept that in order to exercise free choice in the consideration of the request for their consent the beneficiaries would require information in the nature of that identified by the Council. Mr Haseldine did not submit to the contrary.
As we have indicated no detailed evidence was given by Mr Haseldine as to the way in which he calculated the commission payment. In his letter to the Council dated 3 October 2014 Mr Haseldine says: "I did a certain amount of reading on the question of commission and the amount of commission before arriving at the amount of $11,000 which is slightly less than 1% of the value of the estate as disclosed in connection with the probate application."
In his letter to beneficiaries dated 29 June 2015, Mr Haseldine set out what he described as three major difficulties associated with administering the estate. Saying: "One of the difficulties was that although the deceased was survived by her daughter and two grandchildren, it appears she was estranged from them with the result that there was no-one with a reasonable knowledge of the deceased's financial affair. I had to make fairly extensive inquiries to identify assets and to exclude the possibility of other assets. Another difficulty related to the realty, that is, the deceased's home which remained registered in the names of the deceased and her late husband, Richard, who predeceased her by some years. Richard and the deceased purchased the property in 1970 subject to a mortgage which was discharged in 1973. However, the relevant documents, specifically the certificate of title (more commonly known as ('the Deed') had been lost. To avoid or at least minimise the risk of fraud, the procedure to replace a lost certificate of title is quite complicated. For example, the writer as executor had to produce an official copy of his own birth certificate notwithstanding having been on the roll of the Supreme Court for over 40 years. Before the estate could put the realty on the market, the name of Richard Rideout Belletty had to be removed, leaving the deceased as sole registered proprietor, that is, the sole owner, and then the property transferred into my name as the executor. This caused considerable delay. Another difficulty arose simply out of the number of beneficiaries and their places of residence. As executor, the writer remained responsible for the security and maintenance of the realty until the estate was able to sell it. The writer frequently called into the realty simply to check on its security."
Mr Haseldine concluded with the statement to which we have referred: "It is not possible to calculate an executor's commission with mathematical precision but it is my understanding that such commission is usually in the order of 2 percent of the gross value of the estate. As legal costs were quite substantial, I made a claim against the estate for commission of $11,000 which included $1,000 goods and services tax (GST)".
Helsham J in In the Will of Sheppard [1972] 2 NSWLR 714 at (718) described what is meant by "professional costs" and distinguished them from "charges for non-professional activities". He said at [718]: "… professional costs that is to say costs which an executor would have been entitled to incur and charge against the estate from the use of independent persons in the role of solicitor, accountant and estate agent in the necessary work of administering an estate; [and] charge for non-professional activities, that is to say duties in administering the estate which could have been adequately performed by persons not exercising the skills or performing the duties of a solicitor, estate agent or accountant."
His Honour at (720) considered the relationship between the amounts allowed for professional services and calculation of commission saying: "As a general rule the amount allowed against the estate for the rendering of professional service in connection with its administration would not be a matter affecting the quantum of the commission to be allowed, and this is so whether the professional services are rendered and charged for by the executor or by some stranger to the estate. Such charges for professional services are subject to moderation that would not be allowed against the estate as professional fees and costs unless properly charged for professional work. This position is no doubt different where the terms of a will allow the payment of solicitors', accountants', or estate agents' charges professional and non-professional and where both professional and non-professional charges are allowed out of the estate; in such a case where there is a right to claim commission as well, the amount of non-professional charges allowed will be taken into account in fixing the quantum of commission; see In the Will of Douglas (1951) 51 SR (NSW) 282; 68 WN 164. Likewise professional work done by an executor and not charged against the estate as professional fees may be taken into consideration as a reason for increasing the amounts of commission; Re Craig (1952) 52 SR (NSW) 265; 69 WN 205, Re Whitehead [1958] VR 143. But professional work properly charged for and allowed will not afford any reason for reducing or cutting down that which is to be allowed by way of commission for the executor's pains and trouble in performing his duties as executor."
His Honour went on to say: "So that the professional charges allowed will not of themselves affect the quantum, this must be fixed having regard to the pains and trouble of the executor in the administration of the estate with reference to the accounts being passed in the period covered by them."
In his Honour's view at (720): "The assessment must be made by reference to what has been done by the executor in performance of his executorial duties and not having regard to what he may have been entitled to receive as a professional man."
In respect of the calculation of quantum his Honour considered that the relevant matter was not the size of the estate but "what activities have been carried out in relation to it during the period covered by the appellants …. It seems to me that the proper approach is to put a value upon the pains and trouble of the executor with reference to the particular accounts"; see In the Will of Sheppard at (720) - (721).
Executors are not entitled to commission on the whole value of the estate only on such portions as are realised by them or pass through their hands; see Crout v Beissel [1909] VLR 207 per A'Beckett J.
The entitlement to and basis for calculation of executor's commission by the Court was considered in detail by Lindsay J in Re Estate Gowing; Application for Executor's Commission who said relevantly as follows: "43 The powers of the Court to allow remuneration to executors, administrators and trustees exist as a means of granting to those fiduciaries relief, more particularly, against the rule that, generally, a fiduciary may not derive any profit or advantage from his, her or its position if not duly authorised to do so: In the Will of Shannon [1977] 1 NSWLR 210 at 214G-215D citing Dale v Inland Revenue Commissioners [1954] AC 11 at 27 and Brown v Inland Revenue Commissioners [1965] AC 244 at 256. 44 Although the starting point for consideration of an application for executor's commission remains that the office of an executor, administrator or trustee is, prima facie, a gratuitous one, the jurisdiction to award executor's commission (upon an exercise of inherent jurisdiction, derived from the Charter of Justice, or under PAA s 86) requires a preparedness on the part of the Court to move beyond that point and to do so by reference to the particular circumstances of each case. 45 An allowance of executor's commission is customarily expressed in the form of a percentage of entries in estate accounts (as a percentage of income collections, a percentage of capital realisations and/or a percentage of the sworn value of assets transferred in specie during the period covered by the accounts) vouched as correct by the Court. Consistently with this, as demonstrated, the Probate Rules require that a certificate issued on the passing of an executor's accounts include, when commission is allowed, information about these types of transaction: formerly SCR Pt 78 r 81, now SCR Pt 78 r 84. 46 This approach traditionally breaks down the task of assessing the quantum of remuneration, in a case such as the present one, into three categories of dealing with estate property (capital realisations, income collections and asset transfers in specie), each one of which, experience suggests, may have its own dynamic in a factual setting. However, these categories do not, in themselves, govern the performance of the Court's task. They provide assistance in the performance of that task similar to a set of procedural guidelines. By reference to PAA s 86(1), the task remains one of assessment of an allowance that is "just and reasonable" for the pains and trouble taken by an executor who applies for commission. … 48 The quantum of remuneration that may be "allowed" is to be determined, in the particular circumstances of each case, by reference to a standard governed by what is "just and reasonable" for an executor's "pains and trouble" in administration of an estate. 49 Care needs to be taken, in each case, to bear in mind that the process of decision-making leading to an allowance of executor's commission is intended to be a summary one. Were the position otherwise, the administration of estates could be frustrated by collateral litigation. 50 The jurisdiction to allow executor's commission does not shift the primary focus of the Court away from the task of ensuring that there is due administration of an estate, having regard to the interests of the estate, beneficiaries and any known testamentary intentions of the deceased. 51 Quantification of an allowance for executor's commission is notoriously difficult. The customary practice of allowing commission as a percentage of entries in estate accounts reflects an aspiration for a standard that can be applied summarily, as an objective means of allowing, and confining, remuneration within a reasonable range. It is not applied without reference to the reasonableness or otherwise of the total amount of remuneration allowed in the particular case. On the contrary, a correct decision making process requires the Court "to put a value upon the pains and troubles of the executor with reference to the particular accounts": In the Will of Sheppard [1972] 2 NSWLR 714 at 721. Essentially, what has to be considered, on the facts of the particular case, is the work done by the executor and what is a reasonable allowance for that work: Watters, Re Estate of Dibbs [2006] NSWSC 1277 at [16]. … 54 To focus unduly on the application of percentage rates that might be perceived to be those that have been, or should be, "ordinarily" or "usually" applied is an invitation to error. They can be a useful guide to decision making, and their utility is not to be discounted because of a need to adapt them to the facts of the particular case, but they are no more than a guide. 55 In Phillips, Re Estate of Joel [2007] NSWSC 639 at [11] Windeyer J appears to have condoned resort to such a guide in terms that suggest he accepted as "usual rates of commission" (not, it must be said, "the" usual rates of commission): between 0.25% and 2.5% on capital realisations, 1%-2% on assets transferred in specie, and 1%-5% on income. At the same time, he cautioned that each case must be looked at on its own facts and that, where an estate is a large one, a rate at the lower end of the range would be "usual". 56 In Hawkins v Barclay-Brown [2010] NSWSC 48 at [68]-[69] Slattery J accepted, as rates of commission commonly allowed in practice, rates published in Mason & Handler, Succession Law and Practice NSW (Lexis Nexis, 1985), para [144.1.1.3]: from 0.25% to 2% on capital realisations; from 2% to 4% on income collections; and from 1% to 2% on assets transferred in specie. Upon an assessment of commission to be allowed in a large estate, his Honour selected rates at or below those ranges: 1% on capital realisations; 2% on income collections; and 0.5% on assets transferred in specie: [2010] NSWSC 48 at [69]-[70]. … 61 If and to the extent that reference is made to "ordinary" or "usual" rates, as a compendious way of referring to accumulated experience, care needs to be taken to place that reference in the context of a determination of what is "just and reasonable" for the executor's "pains and trouble". Whatever intermediate calculations are made by reference to the categories for which the Probate Rules provide (in old SCR Pt 78 r 81(3), now SCR Pt 78 r 84(2)), an assessment of remuneration that is "just and reasonable" requires the ultimate, resultant dollar amount to be weighed in the balance. 62 The concept of a "just and reasonable allowance" likewise counsels caution against an application of standards of reasonableness that might be applied in other areas of the law, such as on a quantum meruit claim (a claim of right) at common law. In the application of the Court's probate and equitable jurisdiction, discretionary in character, regard must be had to a range of factors (including the summary nature of the jurisdiction, the size and nature of the deceased's estate, the terms of any will and the rights of beneficiaries) rather than taking refuge in standard rates of remuneration that may guide a common law claim in contract or restitution: Watters, Re Estate of Dibbs [2006] NSWSC 1277 at [16]. 63 For most purposes, the expression "just and reasonable" may be taken to be commensurate with the word "reasonable" standing alone. However, the conjunction of "just" and "reasonable" does have work to do. … 85 In all cases, regard must be had to the terms of the Will and the extent to which (if at all) a will-maker intended to benefit, or to permit a benefit to accrue to, an executor in deciding whether (and, if so, in what amount) the executor is to be allowed commission: In the Will of Kerrigan (1935) 35 SR (NSW) 242 at 245-246 and 251-252; In the Will of J Marsden (1926) 43 WN (NSW) 170; In the Will of TS Douglas (1951) 51 SR (NSW) 282 at 284-285; Re Craig (1952) 52 SR (NSW) 265 at 267-268; In the Will of Sheppard [1972] 2 NSWLR 714 at 720A-F; In the Will of Oddie [1976] 1 NSWLR 371 at 374-376; In the Will of Shannon [1977] 1 NSWLR 210 at 216C-F; Hawkins v Barkley-Brown [2010] NSWSC 48 at [47]-[55]."
The matters identified by Lindsay J concern assessment of executor's commission under s 86(1) of the PAA. Mr Haseldine made no submission that the governing factors would be different if we had been persuaded that he was authorised by clause 10 to calculate the commission on his own account.
There was some discussion during the course of submissions as to the basis upon which Mr Haseldine had calculated the commission payment. This was not pursued it not being relevant to the issue then under consideration, namely whether the payment without authority was in breach of trust. Mr Haseldine otherwise had the opportunity to put on the evidence to which we have referred and any other evidence as to the way in which he calculated the commission payment.
There was no evidence that Mr Haseldine had regard to any of the matters identified by Lindsay J when assessing the amount of commission. There is no evidence that Mr Haseldine undertook a detailed assessment of what was just and reasonable having regard to the pains and trouble which he says were involved in the administration of the estate.
Mr Haseldine does not set out the basis for his claim for commission in other than the most general terms. The basis of his claim for professional charges was not in evidence. It is unclear whether obtaining a replacement certificate of title was not properly the subject of professional charges rather than a claim for commission. Ensuring the security and maintenance of the realty would not on its face be a professional cost but there is no evidence as to the number of attendances or other circumstances so as to enable a value to be put upon the pains and trouble associated with that task.
More importantly there is no evidence that Mr Haseldine had regard to the principle identified in the authorities to which we have referred that an amount of commission is calculated by reference to such portions of an estate as pass through an executor's hands and a value identified for his pains and trouble for each activity undertaken. To the contrary, on his evidence he calculated commission by reference to a percentage of the value of the estate. In his initial submissions he pointed to no justification for this approach at law. In his addendum to outline of submissions Mr Haseldine appears to concede by reference to the decision in Hawkins v Harkley-Brown & Anor [2010] NSWSC 48 at (59) that ranges of commission awarded in practice might be calculated on the basis of differing percentages for different activities including capital realisations, income, collections or assets transferred in specie. There is no evidence that he had regard to such principles at the time of calculating and making the commission payment. His correspondence both to the beneficiaries and the Council refers to the calculation of commission by reference to the value of the estate.
It is not specifically a ground of the complaint the subject of these proceedings or Council's case that the calculation of the amount of commission by Mr Haseldine had no legal basis. The Council says more broadly in the context of its submission that Mr Haseldine did not provide the beneficiaries with sufficient information to enable them to make an informed decision about his claim for commission that there was no method of calculation provided to the beneficiaries other than in a statement to which we have referred in very general terms.
On the basis of the evidence to which we have referred we find that Mr Haseldine did not inform the beneficiaries of an appropriate legal basis for the calculation of his claim for commission. It is plain from the contents of his letter to the beneficiaries and we also find that Mr Haseldine did not inform them of the matters set out in paragraph 25(c) of the application to which we have referred.
It follows and we find that such consent as was given by the beneficiaries was not informed in the respects detailed by the Council and was therefore ineffective. It was not one of the grounds for the application that the letter contained material which was coercive and we make no finding about that submission by the Council.

Breach of fiduciary duty

We have made findings that the calculation and payment of commission by Mr Haseldine was not authorised by clause 10 of the Will. The parties conceded that no prior consent of the beneficiaries was sought. We have also found that the beneficiaries sui juris did not all consent retrospectively to the commission payment.
We have found that Mr Haseldine did not provide each of the beneficiaries with sufficient information to allow them to make an informed decision about giving their consent to the payment of commission including as to the appropriate legal basis for its calculation.
The Council submitted that by the unauthorised withdrawal of commission Mr Haseldine had breached his fiduciary duty to the beneficiaries. There is no dispute between the parties that as at the time of the payment Mr Haseldine was trustee of the estate and moneys in the law practice's trust account were held on his behalf as trustee. It is well established that the application and disbursement of trust money by a fiduciary inconsistently with the terms upon which it is received is a fiduciary breach. It is no defence that the beneficiaries suffer no loss or that the trustee acted with bona fides or honestly; see in the context of a solicitor disbursing trust money Council of the Law Society of NSW v Nicholls [2012] NSWADT 222 at [31] referring to Council of the Queensland Law Society Inc. v Wakeling [2004] QCA 42, Stewart v Layton (1992) 111 ALR 687. We are satisfied and find that the calculation and payment of commission by Mr Haseldine as trustee of the estate without authority was in breach of his fiduciary duty to the beneficiaries.
The Council has also submitted that Mr Haseldine was in breach of fiduciary duty by failing to inform the beneficiaries of the true position in relation to the commission. It follows from our finding that Mr Haseldine did not provide sufficient information to the beneficiaries to allow them to provide fully informed consent to the taking of commission in the respects identified and we find that he has breached his fiduciary obligation to them in that regard.

Breach of s 255 LPA

Section 255 of the LPA provided as follows: "255 Holding, disbursing and accounting for trust money (1) A law practice must: (a) hold trust money deposited in a general trust account of the practice exclusively for the person on whose behalf it is received, and (b) disburse the trust money only in accordance with a direction given by the person. Maximum penalty: 50 penalty units. (2) Subsection (1) applies subject to an order of a court of competent jurisdiction or as authorised by law. (3) The law practice must account for the trust money as required by the regulations."
The Council submitted that the payment of commission was disbursed by the law practice without any direction from the beneficiaries upon whose behalf the money was held. It says that the retrospective consent from the beneficiaries even if it had been effective does not remedy the breach. It submits that ground two of the complaint has been satisfied. Mr Haseldine does not in terms make any submission about the alleged breach of s 255.
In consideration of this aspect of the matter it is important to distinguish on whose behalf the trust money held by the law practice was held. In Dupal v Law Society of New South Wales [1990] NSWCA 56 Handley JA at [11] considered the operation of s 41(1) of the Legal Practitioner's Act 1898 which provided materially: "All moneys received … for and on behalf of any person by any solicitor shall be held by him exclusively for such person, to be paid to such person, or to be disbursed as he directs …"
Section 255(1)(a) LPA was the same in substance. It had been argued that in Dupal the person on whose behalf the trust funds had been received was the appellant himself as trustee of that trust rather than in his capacity as solicitor. His Honour determined that where moneys in question are vested in a trustee he or she is the person referred to in the section and not the beneficiaries under the trust. His Honour found that the appellant did not receive the trust funds "for or on behalf of any person" and did not contravene s 41. In this instance the person on whose behalf the moneys were received into trust by the law practice was Mr Haseldine as trustee of the estate, not the estate beneficiaries. Mr Haseldine as trustee authorised the payment by the law practice. In our view there cannot be said to have been a failure by the law practice to hold the trust money deposited in the general trust account exclusively for Mr Haseldine as trustee. We find that the breach of s 255 LPA is not made out.

Misappropriation

The Council seeks a finding that the unauthorised payment of the commission by Mr Haseldine constituted misappropriation. This it says arises from the circumstances described in paragraphs 12 and 14(b) - (d) of the application.
It is relevant to note that these provide as follows: "12. On or about 31 October 2013 the sum of $11,000 was debited from the Estate Trust Ledger and there described as Executor's Commission … 14. Prior to receiving Commission the respondent failed to: … (b) obtain the informed consent of all or any of the beneficiaries to the passing of accounts; (c) file and pass accounts or make application for the payment of commission to the Court pursuant to section 86 of the Probate and Administration Act 1898; (d) obtain an order of the Court pursuant to section 86 of the PAA authorising him to receive commission in a sum either approved by or nominated by the Court."
We have had regard to the authorities to which we have been referred by the parties. It is no part of the allegation of misappropriation that Mr Haseldine has retained the moneys received.
As the Council submitted the term "misappropriation" is not defined in the LPA. It has been held to have the base meaning of "wrongful conversion"; see Council of the Law Society of New South Wales v Doherty [2010] NSWCA 177 at [41] per Young JA, Tobias and Campbell JJA agreeing.
The position at general law was referred to by the Tribunal in Nicholls at [11] - [12] where the Tribunal said: "11 The Society submitted that conversion is an intentional tort and is actionable per se (see: Lancashire Railway Co v. MacNicoll (1919) 88 LJKB 601). Further, as Dixon J held in Penfolds Wines Pty Ltd v. Elliott (1946) 74 CLR 204 at [229] "The essence of conversion is dealing with a chattel in a manner repugnant to the immediate right of possession of the person who has the property or special property in the chattel". 12 The Society argued that for misappropriation to be established, it was necessary that the alleged convertor intended to do that which would deprive or impair the owner's immediate right to possession, or to do the act of converting a thing to one's own use or the intention to do the act of dealing with a thing, but that no wrongful motive is required and it was not necessary that the convertor did not intend to challenge the owner's right to possession (see: Penfolds Wines at [218 - 19] per Latham CJ, 234-5 per McTiernan J). Further, it was not necessary for the claimant to prove that they have suffered harm and/or that the alleged convertor had an intention to cause harm."
In the disciplinary context, the meaning of "misappropriation" was considered more extensively by the Supreme Court of Victoria in Brereton v Legal Services Commission [2010] VSC 378 in which Bell J said at [50] - [54]: "50 It follows that the word 'misappropriation' in its ordinary sense involves a mental element. Misappropriation is dishonestly misapplying property, including money, held on behalf of another. In the criminal context, misappropriation by and to the trustee personally is not a crime at common law because the trustee already has the property; but it is conduct which, but for that, would be theft. It is 'stealing' in another guise because it is wrongful appropriation by the trustee of property being held for another. 51 Because dishonesty is a mental element of misappropriation in its common law sense, it is necessary to consider what dishonesty means, remembering here we will be doing so in a civil context. The Court of Appeal examined what dishonesty meant in that context in Harle v Legal Practitioners Liability Committee. At issue was whether a solicitor was entitled to indemnity under an insurance policy which did not cover the 'dishonesty or fraudulent act or omission of any insured'. 52 As to the meaning of 'dishonesty', Chernov JA (Callaway and Buchanan JJA agreeing) held: It seems clear enough that where, as here, dishonesty is not used in a special sense in relation to statutory offences, it is not a term of art and is to be given its ordinary meaning. It embraces deliberate conduct which is considered to be dishonest by the standard of ordinary decent people, or, put another way, the ordinary standards of reasonable and honest people. Whether particular conduct amounts to dishonesty involves the consideration of the mental state - the knowledge, belief or intention - of the person whose conduct is impugned. 53 While an allegation of dishonesty requires consideration of the person's mental state, in neither the criminal nor the civil context is it necessary to establish that the person subjectively knew or believed that the actions concerned were dishonest. What must be established is that the person subjectively intended to do the acts which are said to be objectively dishonest by the ordinary standards of reasonable and honest people. Thus the course to be adopted in determining whether conduct is dishonest was explained by Toohey and Gaudron JJ in Peters v R as follows: In a case in which it is necessary for a jury to decide whether an act is dishonest, the proper course is for the trial judge to identify the knowledge, belief or intent which is said to render that act dishonest and to instruct the jury to decide whether the accused had that knowledge, belief or intent and, if so, to determine whether, on that account, the act was dishonest ... If the question is whether the act was dishonest according to ordinary notions, it is sufficient that the jury be instructed that that is to be decided by the standards of ordinary, decent people. 54 The steps involved in this formulation are: (1) identify the knowledge, belief or intent which is said to render the acts dishonest; (2) determine whether the accused (or defendant in the civil context) subjectively had that knowledge, belief or intent; and (3) determine whether, on that account, the acts were objectively dishonest according to the standards of ordinary and decent (that is reasonable and honest) people."
The test for dishonesty as an element of misappropriation set out by Bell J at [53] in Brereton has been applied in subsequent decisions of the Administrative Decisions Tribunal in Council of the Law Society of NSW v Clapin [2011] NSWADT 83, Council of the Law Society of NSW v Pizzinga [2010] NSWADT 2011 and Nicholls although not satisfied on the findings of fact in each instance. The Council relied upon the Brereton formulation as modified by the Tribunal in Council of the Law Society of New South Wales v Coombes [2015] NSWCATAD 108 at [36].
Notwithstanding the adoption of the formulation in Brereton by the Tribunal in Coombes there remains a doubt as to whether dishonesty is an element of a charge of misappropriation.
Tate JA in Victorian Court of Appeal in Legal Services Commissioner v Brereton [2011] VSCA 241 said at [69]: "69 However, and with great respect to the trial judge, it is unclear whether dishonesty is a necessary element of misappropriation in the common law sense. In my opinion, there is room for doubt whether dishonesty is always an integral element of a charge of misappropriation, within a professional disciplinary context.
The Tribunal in Nicholls when considering the issue said at [29] - [31] 29 In reaching this conclusion, [Tate JA] referred to the decision of the Full Court of the Supreme Court of South Australian in Legal Practitioners Conduct Board v. Jones [2010] SAS CFC 51 (at [12]), which acknowledged the distinction between 'misappropriation' and 'fraudulent misappropriation' in the disciplinary context. She posed the following question: "If an allegation of misappropriation necessarily incorporates dishonesty as an element, what is added by the ostensibly additional element of charging a practitioner with fraudulent misappropriation?" Her Honour also considered the reasoning of Gibbs CJ in Daly v. Sydney Stock Exchange Limited [1986] HCA 25; (1986) 160 CLR 371. That matter involved the alleged defalcation by a stockbroker, in which Gibbs CJ recognised that in the absence of a statutory definition 'a defalcation need not require dishonesty even where the defalcation occurs by means of misappropriation'. Tate JA observed: "This is consistent with the objectives of legislation creating civil norms governing the conduct of legal practitioners, the aim of which is the protection of the public and not the denunciation of the practitioner. That aim is furthered if the threshold for disciplinary action is lower rather than higher, with the penalty for contravention being suitably adjusted depending on the circumstances of the case" at [73]. 30 This analysis of misappropriation, which does not compromise a mental element of dishonesty, is perhaps more consistent with the principle that monies received by a solicitor from or on behalf of a client and which are not intended to become the beneficial property of the solicitor, are subject to fiduciary obligations on the part of the solicitor. 31 In this context, for a Solicitor to apply or disburse trust money inconsistently with the terms under which it was received can be viewed as a fiduciary breach and it is no defence that the client suffered no loss as a result of the breach or that the solicitor acted with bona fides or honestly (see: Riley Solicitors Manual at 35, 055. 10-25; Council of the Queensland Law Society Inc v. Wakeling [2004] QCA 42, Stewart v. Layton (1992) 111 ALR 687)."
Tate JA in Brereton doubted whether at law a legal practitioner could only be guilty of misappropriation if he or she had acted dishonestly but did not need to determine the issue in that case; see Legal Services Commissioner v Brereton at [74]; see Nicholls at [13] - [17] referring to The Law Society of New South Wales v McCarthy [2003] NSWADT 198 at [21]. The Council did not address the issue. It sought in reliance upon the Tribunal's decision in Coombes and in the circumstances of this matter a finding of dishonesty on the part of Mr Haseldine as a necessary element of misappropriation. We have proceeded to consider the issue of dishonesty on that basis.
Although adopted in Coombes the Tribunal did not apply the Brereton formulation in its terms. It determined (at [42]) that the Society did not have to establish that the solicitor in that case had the relevant mental element noting its conclusion on the evidence that there could not be a finding of deliberate or subjective dishonesty on the facts. The Tribunal at [43] then proceeded to determine the matter by reference to two questions, namely: "Whether the Solicitor intended to do the acts which are the subject of the complaint and secondly whether ordinary and decent people would regard these acts as dishonest." The Council submitted by reference to this passage in Coombes that this was the appropriate test.
No authority was cited in Coombes for the formulation of the test which the Tribunal adopted at [43]. The words are taken from Brereton at [53] in the discussion of what was required in considering an allegation of dishonesty. The words are not the ultimate formulation of the three steps involved in determining whether an action is dishonest set out in Brereton at [54]. The authorities referred to at [36] of Coombes, namely the decisions in Clapin, Pizzinga and Nicholls applied the three-part Brereton test in its terms.
The issue was considered more recently by Deputy President O'Connor ADCJ sitting in the Tribunal in Law Society of NSW v Shehadie [2016] NSWCATOD 46. The decision was published on the day of hearing of this matter. Although the parties were not by the directions made given the opportunity to address it, the decision nevertheless informs consideration of the elements of the appropriate test as applied by the Tribunal following Coombes and it is appropriate to refer to it. Neither party will be prejudiced by our doing so. The Tribunal considered at [39] that by its the earlier decision in Coombes the Tribunal had conflated the first two steps set out by Bell J. The Tribunal said at [37]: "In disciplinary proceedings of the present kind, therefore, the three steps to which Toohey and Gaudron JJ refer, and reiterated by Bell J at para [54] apply. It will be seen that those steps draw a clear distinction between the understanding of the defendant when engaging in the conduct and the characterisation of that understanding. Commonly, evidence will establish a state of knowledge, belief or intent in relation to the conduct under notice, and the issue will then be (step three) whether the proven state of understanding can fairly and properly be found to be dishonest. In making that finding the tribunal of fact will look at the totality of the evidence, and apply the standards of the community to what has been put to it by the defendant in that regard."
The Tribunal in Shehadie applied the three part formulation identified by Bell J at [54] of Brereton by reference to the course to be adopted in determining whether conduct is dishonest explained by Toohey and Gaudron JJ in Peters at [503] - [504].
In our view in light of this decision and the application of a three stage formulation of the test for dishonesty applied in the earlier decisions of the Administrative Decisions Tribunal to which we have referred the formulation in Brereton which was not disturbed by the Victorian Court of Appeal on that issue remains authoritative on the question of what constitutes dishonesty where that is alleged as an element of misappropriation. We consider it appropriate to determine the issue before us by reference to the three stage formulation identified in that case.
The civil standard of proof on the balance of probabilities applies to the application of the test. In Briginshaw v Briginshaw (1938) 60 CLR 336, Dixon J said in particular at 361: "The truth is that, when the law requires the proof of any fact, the tribunal must feel an actual persuasion of its occurrence or existence before it can be found."
His Honour said at 362: "…The seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding are considerations which must affect the answer to the question whether the issue has been proved to the reasonable satisfaction of the tribunal. In such matters "reasonable satisfaction" should not be produced by inexact proofs, indefinite testimony, or indirect inferences."
The principle in Briginshaw was considered in Neat Holdings Pty Limited v Karajan Holdings Pty Limited (1992) 110 ALR 449 - 450 by Mason CJ, Brennan, Deane and Gaudron JJ in the following way: "The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud. On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict proof is necessary 'where so serious a matter as fraud is to be found'. Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct."
We have had close regard to these passages in evaluating the evidence concerning the alleged dishonest conduct in this case.
The question of onus of proof where an allegation of dishonesty is made was also considered by the Victorian Court of Appeal in Law Services Commissioner v Brereton. It had been submitted on appeal that upon the basis of the New South Wales Court of Appeal decision in Doherty all the Commissioner needed to do was plead facts establishing a wrongful conversion and the respondent then bore the onus to establish a claim of right and an honest belief in such a claim. The Victorian Court of Appeal analysed the question of which party bore the onus by reference to Doherty's case in the following way: "76 Doherty's case involved an appeal by the New South Wales Law Society as to the adequacy of an order made by the Administrative Decisions Tribunal ('the ADT') in cancelling Mr Doherty's practising certificate for twelve months rather than striking his name off the roll. The ADT found that Mr Doherty was guilty of having misappropriated $35,000 belonging to Mr Rafter and held that there was professional misconduct. The Law Society argued that certain other conduct should not have been considered to be minor but that in itself, the findings on the charge of misappropriation could lead to only one consequence, namely striking off. The New South Wales Court of Appeal disagreed. In expressing that disagreement, Young JA (with whom Tobias and Campbell JJA agreed) said: The respondent [Mr Doherty] contended that, although "technically" there was a misappropriation of Mr Rafter's $35,000, he genuinely believed that he was entitled to use the money the way he did. ... It must be noted that in most cases of appropriation of the property of another, claim of right is a good defence and to establish a claim of right, all the accused need show is that he or she had an honest belief in the claim and not also that that belief was based on logic or reason: R v Nundah (1916) 16 SR (NSW) 482, a proposition that has never been doubted. 77 In my opinion, when Young JA said that 'to establish a claim of right, all the accused need show is that he or she had an honest belief in the claim', the statement was not intended to express the view that the onus lay with the defendant to disprove an allegation of dishonesty. The statement was intended to express no more than that a defendant, when faced with the allegation that he or she subjectively intended to perform actions that are objectively dishonest by the ordinary standards of reasonable and honest people, can resist that allegation by establishing an honest belief in the claim. This requires that there be something of substance for the defendant to resist. The statement in Doherty's case does not support the proposition that a reverse onus lies on a defendant to prove a claim of right whenever an allegation in a written charge implies that a defendant has acted dishonestly, without there being any identification, or evidence in support, of the specific mental state of the defendant said to render the act dishonest or the manner in which it is contrary to the standards of ordinary and decent people. In my view, the statement cannot be properly relied upon to obviate the need for the party alleging dishonesty to prove it to the requisite standard. 78 The observations of the Court in Doherty's case reflect the accepted understanding that, as explained by Callaway JA in R v Lawrence: The common law concept of dishonesty, at least in a criminal context, is subjective. If a person has a belief inconsistent with dishonesty, he cannot be convicted of an offence of which that is an element even if his belief is unreasonable. The reasonableness of the belief goes only to its plausibility: "a man may be a stupid, unreasonable, or wrong-headed man, without being a dishonest one". See R v Nundah (1916) 16 S.R. (N.S.W.) 482 at 489. That case illustrates the cognate proposition that a genuine belief that one has a lawful claim is a defence in relation to property offences at common law and under statutes to which the common law applies. Such a bona fide claim of right may be both unreasonable and unfounded, although, if it is, it is less likely to be believed or, more correctly, to engender a reasonable doubt. 79 It follows that it was incumbent on the Commissioner to establish that Mr Brereton was dishonest, in the Peters sense, in the payment of the retainers. It did not fall to Mr Brereton to prove that he had acted honestly, by choosing to give evidence or otherwise, at pain of an adverse inference being drawn against him in the absence of any evidence from the Commissioner."
It is clear on the basis of this analysis that the Council bears the onus of establishing that Mr Haseldine had the requisite dishonest knowledge, belief or intent.
Turning to the first step in the formulation, the relevant act is the transfer to himself as executor and trustee by Mr Haseldine out of trust the sum of $11,000 said to be applied to commission payable under clause 10 of the Will. We find that the knowledge, belief or intent which is said to render the act dishonest is that the payment of commission was unauthorised.
The second step to be considered is whether Mr Haseldine subjectively had that knowledge, belief or intent. At the time of the transfer Mr Haseldine had not made an application under s 86 of the PAA for an order for commission nor had he obtained the fully informed consent of all of the beneficiaries sui juris. There was in evidence a letter from Mr Haseldine to the Law Society dated 14 July 2014 in which he conceded that he was ignorant of ss 85, 86 and 86A of the PAA. In his submissions he said that notwithstanding this he was not unaware of the general terms of the effect of the sections. Mr Haseldine relied upon his construction of clause 10 as authority for the calculation and payment of commission.
Mr Haseldine's evidence as to his state of mind, knowledge and intention at the time of the alleged breach was set out in his affidavit. He said: "I administered the estate to the point where the realty was sold, assets realised and debts excluding legal costs and commission had been paid. I prepared a bill of my costs to that point as I considered that to be the only means of accurately determining my costs given the complexity of administration. Using the relevant parts of that bill as a guide, I estimated the costs that would be incurred in making a final distribution. I also formulated a claim for commission. I investigated the position as to commission and I struck upon the amount I claimed as being well within what had been determined in other matters. I was then able to determine the amount payable to each beneficiary in accordance with the will."
He does not identify the nature of the investigations undertaken or the basis for his conclusion.
Mr Haseldine also gave the evidence to which we have referred that when he prepared the Will for the testatrix he was "aware of potential difficulties both as to legal costs and to executor's commission". His evidence was in the following terms: "I have been preparing wills and administering estates throughout the whole of my professional life and with the supervision of my master solicitor, previously as an articled clerk although I have never had the personal experience of this sort of situation nor have I spoke with a fellow practitioner who has. It was and remains my opinion that paragraph 10 of the Will is sufficient authority. I recognise the potential for a conflict of interests [sic] and it was for the reason that I arranged for Mr Stockman and Mr Evans to advise the testatrix before she executed the Will and to witness for execution of it."
That evidence does not go into the nature of the previous experience which Mr Haseldine had had or the forms of the clauses which he had dealt with. The evidence does not establish that the testatrix was specifically advised that the clause on Mr Haseldine's construction of it provided that not only could he claim commission but that he could set the amount without reference to a lump sum or other method of calculation or the need to apply to the court.
Mr Haseldine submitted that the allegation of misappropriation only arose after he disclosed to the Council that he had not refunded the moneys to the estate and concludes that the applicant's position is that he misappropriated moneys by not transferring the funds back to the estate. This is not the Council's case as we understand it. The complaint is that Mr Haseldine paid himself commission without authority. Mr Haseldine also submitted that the term misappropriation means applying the money or property of another for one's own use without authority to do so. We accept that submission.
Mr Haseldine submitted that if there had been misappropriation it occurred when he transferred the funds from the trust account to the general account but that the Council did not regard the transfer at that time as a misappropriation. We do not see that that follows. The Council's submission is that Mr Haseldine appropriated the payment to his own purposes. That submission is made out on the facts which we have found, namely that as executor and trustee he authorised the transfer of the funds from his trust account to his general account without authority.
Mr Haseldine submitted that misappropriation required a wrongful intention and that an omission cannot constitute a misappropriation. Mr Haseldine did not refer us to any authority for that proposition and in particular the decision in Brereton and the third element of the test to which reference has been made.
We have been concerned that apart from his assertion as to the proper construction of clause 10 and the statements of his investigations of the legal position in the most general terms, Mr Haseldine has pointed to no principle of construction or authority upon which we could be satisfied that his view that his construction of clause 10 was thoroughly reasoned or considered by reference to the authorities or probate practice and in conformity with the law.
However, Bell J in Brereton found on the facts of that case that where the practitioner had an "honest and reasonable belief" that he had consent to make a payment to himself there could be no misappropriation; see Brereton at [32]. His Honour said at [59]: "59. The state of knowledge, belief or intent associated with being negligent, incompetent and in reckless disregard of professional responsibilities is less than, and does not amount to, dishonesty, and is not sufficient to establish that a lawyer is guilty of misappropriation. Therefore, to find Mr Brereton guilty of misconduct based upon misappropriation, the tribunal had to be satisfied to a high standard of proof that he knew he did not have authority to make the relevant payments, even assuming for present purposes that he did not have that authority."
This finding was not disturbed on appeal although as we have said the Court of Appeal questioned but did not need to determine whether dishonesty was a necessary element of misappropriation in the professional context. It is not the Council's case that a finding of misappropriation can be made without the element of dishonesty being established in accordance with Coombes.
The evidence establishes and we find that Mr Haseldine intended to make payment to himself of the commission which he had calculated. However, notwithstanding the concern we have expressed, we are not satisfied on the evidence that Mr Haseldine's view as to the scope of his authority under clause 10 was dishonest or so unreasonable as to amount to dishonesty. His evidence as to the basis of his own construction of clause 10 was uncontradicted and was not the subject of cross examination. We accept his evidence in its terms and find that he considered himself authorised within the terms of clause 10 to make the payment. There was no suggestion in the evidence that Mr Haseldine was not aware of the requirement to keep trust moneys separate from his own. The payment might have been in the words of Bell J "negligent, incompetent or in reckless disregard of professional obligations" but the Council has not established on the evidence to our satisfaction that Mr Haseldine subjectively had the knowledge, belief or intent said to render the payment dishonest, namely that it was unauthorised; see Legal Services Commissioner v Brereton at [78] referring to R v Lawrence [1997] 1 VR 459.
The third step to be considered is whether the payment of commission in all the circumstances was nevertheless objectively dishonest according to the standards of ordinary and decent (that is, reasonable and honest) people.
By reference to the third limb of the test (which the Council identified as the second limb by reference to Coombes) the Council submits that the commission taken by Mr Haseldine without authority is conduct that ordinary decent people would regard as dishonest. It relies upon the statement of Dixon J in Legal Services Commissioner v Rhoden [2016] VSC 67 at [14] as follows: "Misappropriation of estate funds by improperly charging an executor's commission to which a solicitor is not entitled is a most serious matter. Theft of funds from deceased estates by solicitors is particularly odious for the profession and significantly undermines the confidence of the public in the legal profession and in the law and practice of administration of deceased estates."
In Rhoden a finding had been made that the solicitor had acted dishonestly. We accept that deliberate subjectively dishonest conduct of the nature referred to would be regarded by ordinary decent people as dishonest. However we have not been satisfied on the evidence that a finding of deliberate subjective dishonesty can be made against Mr Haseldine. In our view the statement by Dixon J is not apposite to the circumstances of this case.
The Council says that this limb of the test is also established by the following matters: 1. The commission was taken by the respondent without authority from or regard to the beneficiaries on or about 31 October 2013. 2. When the Society (through Mr Michalski) raised the question in March 2014 of whether the respondent was entitled to the commission in the absence of an order of the Court or consent from the beneficiaries, the respondent maintained his position and took no steps to refund the commission. 3. When asked by the Society by its letter dated 20 April 2015 whether he had refunded the commission to the estate, the respondent stated in his response dated 29 June 2015 at [26]: "If I am wrong as a matter of law, that is there is an authoritative determination that I was not entitled to the commission I had claimed, I am ready, willing and able to make the payments set out in my letters to the beneficiaries. That of course would be subject to their responses to my letter." 1. The respondent did not contact the beneficiaries until his letter of 29 June 2015 to seek their retrospective consent and in circumstances where: 1. He had their contact details; 2. He had apparently been in contact with the beneficiaries regarding the distribution of the estate; and 3. The amount of commission was calculated prior to making the final distribution of the estate.
The ground of misappropriation appearing in the application is based upon the alleged payment of the commission by Mr Haseldine to himself without authority or otherwise obtaining the consent of the beneficiaries or filing and passing accounts. It is not part of that ground that Mr Haseldine has retained the funds and not refunded them pending the determination of the matter. Accordingly, it is not relevant to consider any failure to return the moneys in the context of dishonesty as an element of misappropriation. The beneficiaries have been put out of the use of the moneys. Any failure to repay the moneys will of course be relevant to the orders which ultimately should be made.
We are not satisfied that Mr Haseldine's conduct in paying himself commission where the proven state of his understanding was that he was authorised to do so even, as in this case, where it has subsequently been established that on a proper construction of clause 10 there was no such authority as a matter of law, would fairly and properly be regarded by ordinary decent people as dishonest.
It follows and we find that the test for dishonesty identified in Brereton as an element of the alleged ground of misappropriation is not satisfied. We find that the ground of misappropriation is not made out.

Professional misconduct

The Council seeks a finding of professional misconduct based upon the grounds identified in the application. We have made a finding that clause 10 of the Will did not authorise Mr Haseldine to withdraw the commission and that he thereby breached his fiduciary duty owed to the beneficiaries. We have found as a separate matter that Mr Haseldine did not provide sufficient information to the beneficiaries to enable them to give fully informed consent to his request for approval of the commission payment retrospectively including in respect of the calculation of the amount and that he breached his fiduciary duty in that regard.
The Council in its Application submits that the conduct reflects a failure by Mr Haseldine to identify the conflict between his personal interest in paying himself the commission and his duty to the estate to maintain the corpus and therefore the bequests to the residuary beneficiaries under the Will. The payment it says represents a failure to avoid that conflict of interest.
There was evidence before the Tribunal that Mr Haseldine informed the Society by his letter of 14 July 2014 in the following terms: "I concede I was ignorant of sections 85, 86 and 86A of the Probate and Administration Act to which the Law Society has drawn my attention. Notwithstanding my research, I did not find reference to these sections. However even if I had found reference, I do not think it would have altered my understanding of the situation and my interpretation of those sections …"
Council says that in the circumstances Mr Haseldine has by his conduct demonstrated a lack of knowledge of the prevailing law in relation to the payment of commission to the executors of estate and competence as a lawyer in his research, understanding and application of the law in relation to executorial functions. The Council says that Mr Haseldine failed to take prompt or adequate or meaningful steps to rectify the default and has refused to repay the sum of $11,000 to the estate. It says he has demonstrated a lack of understanding of his duty as a fiduciary to avoid a conflict of interest with his principle and integrity in failing to refund the commission to the estate.
In his reply and amended reply, Mr Haseldine maintained his position that clause 10 of the Will was sufficient authority to withdraw the funds. He said that although ignorant of the precise wording of the relevant sections of the PAA he was aware of the law generally and particularly that it was within the power of the Court to pass accounts and make determinations as to commission. He says that the consent of the beneficiaries was an acceptable alternative. It is noted that the Council concedes that retrospective consent to the breach of duty might have been obtained from all the beneficiaries had they been fully informed.
Mr Haseldine has informed the Council that he would make repayment to the beneficiaries if it were established that clause 10 does not provide the authority for which he contends. He says that the Council has not put forward any argument to contradict the view he has taken which he considered to be reflective of there being no direct authority covering the matter. Mr Haseldine denies that he failed to understand the relevant law noting that firstly as a clerk and subsequently as a practitioner he has had the carriage of several hundred deceased estates. He says that the present complaint is unique. He denies the conflict the interest noting that he ensured that the testatrix had independent legal advice prior to executing the Will.
In his addendum to outline of submissions, Mr Haseldine made further submissions concerning the matters to be taken into account in considering the finding to be made on the question of conduct. 1. That he arranged for the testatrix to have independent advice from two senior solicitors. 2. That there is no suggestion that he did not administer the estate in a competent manner. 3. There is no suggestion that he did not perform the duties of an executor in a competent manner. 4. The undertaking which he gave to repay the commission subject to the consents of beneficiaries. 5. That he acted in good faith relying on the charging clause in paying himself a commission. 6. That the consents of beneficiaries were given on a reasonable disclosure of relevant matters of fact.
As to the first matter we have not been satisfied that on proper construction of clause 10 was authorised Mr Haseldine to calculate and pay himself commission. It is not an issue in the proceedings that the testatrix did not receive independent advice although the detail of that advice for the purposes of construing clause 10 was not in evidence. The second, third and fourth matters are not relevant to the question of conduct based upon the findings which we have made. They were not in issue. As to the fifth matter we have found that Mr Haseldine did not act dishonestly in paying himself the commission for the purposes of the claim for misappropriation. Nevertheless, we have found that the payment was not authorised. As to the last matter we have found that the consents of all beneficiaries were not obtained and separately that they were not given sufficient information to provide informed consent.
Council had included in its application an allegation of Mr Haseldine's lack of understanding that his entitlement as a solicitor to be paid reasonable costs and disbursements arose from the law practice being retained by the executor to administer the estate in accordance with the terms of the Will. As Mr Haseldine submits there was no evidence about this matter and it does not go to any of the grounds of the application. Accordingly, we have not considered it.
Council submits that the conduct which we have found would be found to be professional misconduct either being conduct that would be regarded as disgraceful and dishonourable by reputable members of the legal profession in line with Allinson v General Council of Medical Education and Registration [1894] 1 QB 740 or in the alternative falling within the definition of professional misconduct set out in s 497(1)(b) of LPA.
At common law professional misconduct includes conduct in pursuit of professional activities which would reasonably be regarded as disgraceful or dishonourable by professional colleagues of good repute and competency, see The Council of the New South Wales Bar Association v Sahade [2007] NSWCA 145 at [54] (per Basten JA). In that decision the Court noted the adoption for legal practitioners of the test propounded in Allinson (at 763) for medical practitioners. In Allinson, Lopes LJ put it in this way: "If it is shown that a medical man, in pursuit of his profession, has done something with regard to it which would be reasonably regarded as disgraceful and dishonourable by his professional brethren of good repute and competency, then it is open to the General Medical Council to say that he has been guilty of 'infamous conduct in a professional respect."
As to the statutory formulation, s 496 of the LPA provided: "496 Unsatisfactory professional conduct For the purposes of this Act: "unsatisfactory professional conduct" includes conduct of an Australian legal practitioner occurring in connection with the practice of law that falls short of the standard of competence and diligence that a member of the public is entitled to expect of a reasonably competent Australian Legal practitioner.
S 497 of the LPA provided: "497 Professional misconduct (1) For the purposes of this Act: "professional misconduct" includes: (a) unsatisfactory professional conduct of an Australian legal practitioner, where the conduct involves a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence, and (b) conduct of an Australian legal practitioner whether occurring in connection with the practice of law or occurring otherwise than in connection with the practice of law that would, if established, justify a finding that the practitioner is not a fit and proper person to engage in legal practice. (2) For finding that an Australian legal practitioner is not a fit and proper person to engage in legal practice as mentioned in subsection (1), regard may be had to the matters that would be considered under section 25 or 42 if the practitioner were an applicant for admission to the legal profession under this Act or for the grant or renewal of a local practising certificate and any other relevant matters."
Section 498(1)(a) provided: "498 Conduct capable of being unsatisfactory professional conduct or professional misconduct (1) Without limiting section 496 or 497, the following conduct is capable of being unsatisfactory professional conduct or professional misconduct: (a) conduct consisting of a contravention of this Act, the regulations or the legal profession rules, …"
As we have indicated in considering whether the conduct falls within s 497(1)(b) upon the basis that the conduct would justify a finding that the practitioner is not a fit and proper person to engage in a legal practice regard may be had to the matters which would be considered under s 25 or s 42 LPA.
Section 25 of the LPA provided: "25 Suitability for admission (1) In deciding if an applicant is a fit and proper person to be admitted, the Admission Board: (a) must consider each of the suitability matters in relation to the applicant to the extent a suitability matter is appropriate, and (b) may consider any other matter it considers relevant. (2) However, the Admission Board may consider a person to be a fit and proper person to be admitted despite a suitability matter because of the circumstances relating to the matter."
The suitability matters referred to are set out in s 9 and include at s 9(1): "(a) where the person is currently of good fame and character, … (j) whether the person has contravened, in Australia or a foreign country, a law about trust money or trust accounts."
Section 42 of the LPA provided relevantly: "42 Suitability to hold local practising certificate (1) This section has effect for the purposes of section 48 (Grant or renewal of local practising certificate) or any other provision of this Act where the question of whether or not a person is a fit and proper person to hold a local practising certificate is relevant. (2) A Council may, in considering whether or not the person is a fit and proper person to hold a local practising certificate, take into account any suitability matter relating to the person, and any of the following, whether happening before or after the commencement of this section: … (e) without limiting any other paragraph: … (iii) whether the person has contravened a requirement of this Act or the regulations about trust money, or …"
As the Council has pointed out, the statutory definitions of professional misconduct are inclusive meaning that regard might be had to the common law for guidance.
Ridge J in Kennedy v The Council of the Incorporated Law Institute of New South Wales (1939) 13 ALJ 563 considered the parameters of a charge of misconduct saying: "… a charge of misconduct as relating to a solicitor need not fall within any legal definition of wrongdoing. It need not amount to an offence under the law. It was enough that it amounted to grave impropriety affecting his professional character and was indicative of a failure either to understand or to practice the precepts of honesty or fair dealing in relation the courts, his clients or the public. The particular transaction the subject of the charge must be judged as a whole and the conclusion whether it betokened unfitness to be held out by the court as a member of the profession in whom confidence could be placed, or on the other hand, although a lapse from propriety, was not inconsistent with general professional fitness and habitual adherence to moral standards, was to be reached by a general survey over the whole transaction."
The wide breadth of the concept might be observed from the judgment of McClellan CJ at CL in Bechara v Legal Services Commissioner [2010] NSWCA 369 at [44] in which his Honour said: "44. As Klein [Klein v NSW Bar Association (1960) 104 CLR 186] made plain, there are no fixed categories of professional misconduct. Much depends on whether the conduct falls outside 'generally accepted standard[s] of common decency and common fairness."
In particular, conduct might amount to professional misconduct even though it does not involve deliberate dishonesty; see Law Society of New South Wales v Carvan Unreported Court of Appeal, 14 May 1981 (BC8111397), Bolster v Law Society of New South Wales Unreported, Court of Appeal, 20 September 1982 (BC8211696) at 1 referred to in Clapin at [200] - [201], [212] where a solicitor was ignorant of the fiduciary principles that he had violated.
The factual findings we have made are that prior to debiting the estate trust ledger in the sum of $11,000 on 13 October 2013 Mr Haseldine as executor and trustee failed: 1. to obtain a direction or authority from the beneficiaries to withdraw $11,000 from the trust account; 2. to obtain the informed consent of all or any of the beneficiaries to the passing of accounts; 3. to file or pass accounts or make application for the payment of commission to the Court pursuant to s 86 of the PAA; 4. to obtain an order of the Court pursuant to s 86 of the PAA authorising him to receive commission in a sum either approved by or nominated by the Court.
Additionally we have found that all beneficiaries sui juris did not consent retrospectively to the payment of commission to Mr Haseldine;
We have found on questions of law: 1. on its proper construction clause 10 in the Will did not authorise Mr Haseldine to calculate commission on his own account and pay it to himself and accordingly that the commission payment was not authorised and in breach of his fiduciary duty to beneficiaries; 2. such retrospective consent as was given by the beneficiaries was not informed in the respects detailed by the Council including as to the appropriate legal basis for the calculation of Mr Haseldine's claim for commission and that the failure to provide information sufficient to enable informed consent was in breach of Mr Haseldine's fiduciary duty to the beneficiaries.
It is necessary to consider for the purposes of satisfying the statutory and common law definitions of professional misconduct whether the conduct which we have found occurred in connection with the practice of law. Conduct occurring otherwise than in connection with the practice of law could not satisfy the requirement for professional misconduct under s 497(1)(a). This subsection requires a determination of unsatisfactory professional conduct of which one element is that the conduct occurred in connection with the practice of law. As we have indicated s 497(1)(b) provides within the definition of professional misconduct for conduct: "… occurring otherwise than in connection with the practice of law that would, if established, justify a finding that the practitioner is not a fit and proper person to engage in a legal practice."
Where it occurs otherwise than in connection with the practice of law a question arises as to the nature and seriousness of conduct necessary to fall within the definition.
The words "in connection with" were considered in The Council of the New South Wales Bar Association v Costigan [2013] NSWCA 407 by reference to clause 106A of the Legal Profession Regulation 2005 (NSW). The Court concluded at [55] - [56]: "55 In this case, the nature of the connection can be evaluated by reference to the specific obligations imposed on the barrister both with respect to the deposit and withdrawal of money received from direct access clients. Although the Act specifies that the money received from direct access clients is not trust money, the barrister receiving money on account of legal costs for services to be provided, must deal with the money in the prescribed manner if he or she is to bring themselves within the exemption provided by cl 106A. 56 In the case of the respondent's Account 72333, it is clear from the nature of the entries recorded in that account that it was used for the respondent's personal financial affairs. The position is likewise in relation to the credit card Account 3725, and credit card Account 5500. None of these accounts were maintained by the respondent "in connection with" his practice as a barrister."
The Tribunal in Council of the Law Society of New South Wales v Gates [2016] NSWCATOD 35 at [82] considered that conduct which did not involve the provision of legal services nor arising as a result of the solicitor taking advantage of privileges afforded to him or her by reason of their status as a legal practitioner was not conduct in connection with the practice of law.
The question was earlier considered in New South Wales Bar Association v Osei (No. 2) [2008] NSWADT 324. In that case a barrister had appeared before the Refugee Review Tribunal. The Bar Association had argued that his role in doing so was "sufficiently closely connected with actual practice" that it should be held as being "in connection with the practice of law". The Tribunal said at [87]: "87 The mere fact that some similar skills may be deployed in the RRT by a migration agent as are commonly employed by lawyers appearing in Courts or other Tribunals is not to the point. The connection must be between the conduct of the lawyers and the lawyer's legal practice. It is not sufficient that the nature of the conduct in question is such that it is of a type that might be engaged in by a lawyer in legal practice."
The payment the subject of the finding is that of commission. Clause 10 of the Will provides as we have indicated that the entitlement to charge commission arises for services or attendances undertaken in Mr Haseldine's capacity as executor for which a charge in his capacity as a solicitor would not be appropriate. It is distinguished from work being undertaken as executor of the Will in which he was entitled to act in his capacity as a solicitor and entitled to so charge.
The facts alleged and not disputed by Mr Haseldine include that the law practice was retained on behalf of the estate to administer the estate in accordance with the terms of the Will. In the letter to beneficiaries to which we have referred Mr Haseldine stated that he was the solicitor for the estate. In the same letter he says "I also made a claim against the estate for commission for acting in my capacity as executor". In paragraphs 17 and 18 of the application Council makes reference to the alleged conflict between Mr Haseldine's personal interest in paying himself the commission and his duties to the estate to maintain a corpus and therefore the bequests to the residuary beneficiaries under the Will. This duty and the asserted conflict with his personal interest both arise in Mr Haseldine's capacity as executor and trustee rather than his capacity as solicitor for the executor and trustee.
The claim for commission arose in respect of the carrying out of non-professional work. Such work might have been undertaken by a non-professional executor and trustee. Mr Haseldine's letter to beneficiaries was not on letterhead and although the address made reference to "CJ Haseldine Solicitor" in its terms it sought the consent of the beneficiaries to Mr Haseldine receiving commission payable to him as executor and trustee. We find that that letter or at least the relevant parts of it was also written to beneficiaries in Mr Haseldine's capacity as executor and trustee rather than his capacity as solicitor.
The breaches of fiduciary duty which we have found occurred in the course of Mr Haseldine making a claim and paying commission and seeking the beneficiaries' retrospective consent to the commission payment. The conduct occurred in the course of Mr Haseldine acting as executor and trustee. The work did not involve the provision of legal services. There was no connection between Mr Haseldine's conduct and his legal practice. We find that the work being undertaken occurred "otherwise than in connection with the practice of law" for the purposes of s 497(1)(b) of the LPA.
The extent to which conduct occurring otherwise than in connection with the practice of law could constitute professional misconduct within the operation of 127(1)(b) of the Legal Profession Act 1987 (as it was, in relevantly identical terms to s 497(1)(b)) was considered by the New South Wales Court of Appeal in Sahade in which Basten JA with whom the other members of the Court agreed concluded at [74]: "The better view is that conduct occurring otherwise or in connection with the practice of law will only constitute professional misconduct as it would justify a finding of the kind identified in the definition. In other words, the definition may be expansive in respect of personal conduct but only in respect of misconduct sufficiently serious to warrant a finding of unfitness or lack of good character. There is no temporal element involved in this, rather the identification or a high standard."
In a Solicitor v Council of the Law Society of New South Wales [2004] HCA 1; (2004) 78 ALJR 310 the Court considered the question of fitness was to be determined at the time of hearing at [21]. The operation of s 127(1) and timing of the subject conduct was also considered in Sahade by Basten JA who held at [69] - [72]: "69. …Thus, it should be accepted that s 127(1) was in the true sense a definitional provision and not an operative provision: accordingly, the defined terms, when they appeared in relevant operative provisions, should have been given the meaning identified in the definition section. Thus, the Commissioner established under the Act was empowered to receive "complaints about professional misconduct": s 131(1)(a), and later s 59D(1)(a): see Legal Profession Amendment (Disciplinary Provisions) Act 2001 (NSW). When accepting a complaint, the Commissioner had to be satisfied that it "concerns an allegation of professional misconduct" and that it is necessary in the public interest to investigate the complaint: s 138(2)(b). It was the complaint which had to be passed through various procedural steps including investigation: see ss 147A and 148. Further, pursuant to s 155, either the relevant Council or the Commissioner was required to institute proceedings in the Tribunal with respect to the complaint "if satisfied that there is a reasonable likelihood that the legal practitioner will be found guilty by the Tribunal of unsatisfactory professional conduct or professional misconduct". As was illustrated by the present case, proceedings were instituted in the Tribunal "with respect to a complaint" against a legal practitioner, by laying an information and the Tribunal was required to conduct a hearing into each such complaint: s 167. Further, the legal practitioner was required to file "a reply to the allegations in the information 70 It is tolerably clear from these provisions that a complaint was made in relation to misconduct which had occurred in the past (though it could include misconduct which was continuing), being misconduct which could be investigated and assessed against appropriate professional standards. So understood, it was the misconduct which, if established, would justify a particular finding, regardless of subsequent rehabilitation or reformation of character. It was unlikely that the lay complainant was required to assess the present character of the practitioner in order to make a valid complaint, or that the Council or Commissioner was required to carry out such an assessment in order to determine whether the complaint should have been accepted and investigated. Indeed, this was consistent with the very term being defined, namely a concept that involved "misconduct". So understood, the reference to fitness to practise was not to be understood as requiring a prediction as to the actual order a Tribunal would be likely to make, but rather was to be understood as the classification of the conduct according to the importance of the standard and the seriousness of the breach. 71 Further support for this approach could be found in the separate provision, then in s 171C of the 1987 Act (as set out at [13] above) as to the orders the Tribunal might make if satisfied that the legal practitioner "is guilty of professional misconduct or unsatisfactory professional conduct". There may have been cases in which a practitioner who was found by the Tribunal at the date of its determination to be not of good fame or character, or to be not a fit and proper person to remain on the roll, but whom the Tribunal might yet have considered should not be removed from the roll. Nevertheless those would have been truly unusual cases and it would be surprising if the range of powers conferred under s 171C were indiscriminately assumed all to be relevant both to a finding of professional misconduct and to a finding of unsatisfactory professional conduct. However, as the present case demonstrates, there is nothing anomalous about conferring such a range of powers, even in the case of a finding of professional misconduct, if the finding could properly have been made by the Tribunal in relation to past misconduct, judged in isolation from subsequent events. Circumstances in which the Tribunal could then properly have declined to make an order in the nature of disbarment, because the practitioner was found no longer to be unfit to remain on the roll at the date of the order, can readily be envisaged. The panoply of alternative protective orders would then become relevant. 72 As Mr Rayment QC, senior counsel for the Barrister, noted on the hearing of the appeal, some confusion may have crept into the discussion with respect to the statutory definition arising from the recent, though unsurprising, statement of the High Court in A Solicitor v Council of the Law Society of New South Wales (2003) 216 CLR 253 at [21] that fitness "is to be decided at the time of the hearing". That comment was made in the context of a statement that "professional misconduct may not necessarily require a conclusion of unfitness to practise, and removal from the roll". It is clear that "fitness" in that passage was a reference to fitness as a precondition to continued practice. If the reference to "professional misconduct" was intended to include professional misconduct as defined in the statute, the statement provides support for the view that the definition does not preclude a finding of professional misconduct, where there is a finding that a person is fit and proper at the date of the hearing. On the other hand, the Court was probably using the term "professional misconduct" more broadly. The joint judgment had noted in the previous paragraph that the definition of "professional misconduct" under s 127 of the 1987 Act did not apply to the case in hand."
Accordingly we have determined the question of fitness to practice by reference to classification of the conduct according to the importance of the standard and seriousness of the breach.
The phrase "fit and proper person" was not defined in the LPA. In Ziems v The Prothonotary of the Supreme Court of New South Wales (1957) 97 CLR 279, Kitto said (at 298): "The issue is whether the appellant is shown not to be a fit and proper person to be a member of the Bar of New South Wales. It is not capable of more precise statement. The answer must depend upon one's conception of the minimum standards demanded by a due recognition of the peculiar position and functions of a barrister in a system which treats the Bar as in fact, whether or not it is also in law, a separate and distinct branch of the legal profession. It has been said before, and in this case the Chief Justice of the Supreme Court has said again, that the Bar is no ordinary profession or occupation. These are not empty words, nor is it their purpose to express or encourage professional pretensions. They should be understood as a reminder that a barrister is more than his client's confidant, adviser and advocate, and must therefore possess more than honesty, learning and forensic ability. He is, by virtue of a long tradition, in a relationship of intimate collaboration with the judges, as well as with his fellow-members of the Bar, in the high task of endeavouring to make successful the service of the law to the community. That is a delicate relationship, and it carries exceptional privileges and exceptional obligations. If a barrister is found to be, for any reason, an unsuitable person to share in the enjoyment of those privileges and in the effective discharge of those responsibilities, he is not a fit and proper person to remain at the Bar. Yet it cannot be that every proof which he may give of human frailty so disqualifies him. The ends which he has to serve are lofty indeed, but it is with men and not with paragons that he is required to pursue them. It is not difficult to see in some forms of conduct, or in convictions of some kinds of offences, instant demonstration of unfitness for the Bar. Conduct may show a defect of character incompatible with membership of a self-respecting profession; or, short of that, it may show unfitness to be joined with the Bench and the Bar in the daily co-operation which the satisfactory working of the courts demands…."
The passage concerned the conduct of a member of the Bar. The principles referred to are apposite to consideration of the fitness to practice of members of the profession more generally.
The New South Wales Court of Appeal in The Prothonotary of the Supreme Court of New South Wales v Leon Nikolaidis [2010] NSWCA 73 said at [20] - [21]: "20 A finding that a person is not a fit and proper person to engage in legal practice and thereby to remain on the Roll is a question in respect of which regard may be had to the matters that would be considered under s 25 or s 42 of the Legal Profession Act 2004 (NSW): s 497(2) of that Act. Sections 25 and 42 deal with suitability for admission and suitability to hold a local practising certificate. Each provision refers to a "suitability matter", a term defined by s 9. That definition of "suitability matters" includes: "(a) whether the person is currently of good fame and character; … (c) whether the person has been convicted of an offence in Australia or a foreign country, and if so: (i) the nature of the offence, and (ii) how long ago the offence was committed, and (iii) the person's age when the offence was committed." 21 The phrases "fit and proper person" used in s 497(1)(b) and "good fame and character" in s 9(a) are not defined in the Legal Profession Act, but are both well-known. As Mahoney JA said in Law Society of New South Wales v Foreman (1994) 34 NSWLR 408 at 449, character involves, amongst other things, the acceptance of high standards of conduct and acting in accordance with them, under pressure."
The finding which we have made concerning the unauthorised payment of commission by Mr Haseldine to himself is a grave matter. The importance of the standard is high. In the Law Society of NSW v Jones, Unreported Court of Appeal, 29 July 1978 (NSW) Street CJ with whom the other members of the Court agreed said: "Reliability and integrity in the handling of trust funds are fundamental prerequisites in determining whether an individual is a fit and proper person to be entrusted with the responsibilities belonging to a solicitor. Members of the public, many of whom are wholly inexperienced and unskilled in matters of business or of law, inevitably must put great faith and trust in the honesty of solicitors in the handling of moneys on their behalf. The Court must ensure that this trust is not misplaced."
In our view the breach was serious. As we have said, the Tribunal in Nicholls at [31] considering the fiduciary obligations on the part of a solicitor said: "In this context, for a Solicitor to apply or disburse trust money inconsistently with the terms under which it was received can be viewed as a fiduciary breach and it is no defence that the client suffered no loss as a result of the breach or that the solicitor acted with bona fides or honestly (see: Riley Solicitors Manual at 35, 055. 10-25; Council of the Queensland Law Society Inc v. Wakeling [2004] QCA 42, Stewart v. Layton (1992) 111 ALR 687)".
The fact that the breach was in Mr Haseldine's submission inadvertent or by omission does not excuse it. The same obligations apply in relation to a trustee who is not a solicitor.
A breach of duty does not cease to be such because the solicitor is ignorant of his duties. Lack of awareness that what a solicitor does is misconduct does not make it otherwise; see Bolster v Law Society of New South Wales NSW Court of Appeal No 233 of 1982, 20 September 1982 (at 8) per Moffit, P at (9) (with whom Hope and Samuels JJA agreed).
The seriousness of the conduct is reflected in the observation that the failure to maintain the integrity of moneys held by in trust by a solicitor in the course of the practice of law would have rendered the solicitor liable to a finding of breach of s 255 of the LPA for which no element of dishonest intent is required. Such a breach is also capable of being professional misconduct under s 498(1)(a) of the LPA.
The standard is also high in respect of the obligation of a fiduciary to obtain informed consent from beneficiaries when receiving any benefit. We have referred earlier to the passage in Walker at [27].
Mr Haseldine as a fiduciary failed to discharge his general obligation to fully inform the beneficiaries of the basis and calculation of his claim for commission when seeking approval. In our view the breach is serious.
In Sahade the conduct complained of was found to reveal a defect in character because of its deceptive or deceitful nature. The Court found at [86]: "Whilst that aspect of character is of high importance in relation to practice as a legal practitioner, it may be accepted that individuals behave differently in different circumstances. It would be wrong in the presence [sic] case simply to assume that a reasonably brief period of deceptive conduct in relation to private investments, is of weighty significance in relation to the practice of law."
The Court observed at [58]: "58 … some aspects of character are likely to be of limited relevance to the practice of law. However, willingness to engage in deceptive or dishonest behaviour will generally be a matter of central relevance. Such a characteristic may be revealed by conduct in the practice of law or in conduct unrelated to the practice of law."
There is no issue in these proceedings that the conduct concerned dishonesty. However, in our view, the breaches of fiduciary duty which we have found directly reflect upon Mr Haseldine's ability to competently construe a commission clause or give accurate and relevant information to beneficiaries for the purpose of obtaining consent. He has received a benefit in the form of the commission payment without authority in breach of the trust under the Will. This conduct incorporating as it does skills of interpretation and understanding of and discharging fiduciary duties for the protection of beneficiaries goes to the heart of his competence and fitness to practice law. In our view the fiduciary breaches which we have found do not reflect an acceptance by Mr Haseldine of high standards of conduct and acting in accordance with them.
In Ziems which concerned a barrister having been found guilty of manslaughter in causing the death of a motor cyclist while driving under the influence of alcohol and serving a term of imprisonment Kitto J stated at p 297: "…The conviction is of an offence the seriousness of which no one could doubt. But the reason for regarding it as serious is not, I think, a reason which goes to the propriety of the barrister's continuing [as] a member of his profession. The conviction relates to an isolated occasion, and, … it does not warrant any conclusion as to the man's general behaviour or inherent qualities. … It has neither connexion with nor significance for any professional function."
We cannot take a similar view in respect of the findings of conduct in these proceedings going to breaches of fiduciary duty which although not occurring in connection with the practice of law in the circumstances in which they occurred are otherwise of central importance to legal practice.
In line with the authorities to which we have referred we are satisfied that the established conduct justifies a finding that Mr Haseldine is not a fit and proper person to engage in legal practice within the meaning of s 497(1)(b) and is guilty of professional misconduct and we find so.
In light of our findings by reference to the authorities it has been unnecessary to consider the "suitability matters" in s 9 of the LPA to which regard might be had under s 497(2) in any detail.
The finding that Mr Haseldine is not a fit and proper person within the meaning of s 497(1)(b) of the LPA for the purposes of the definition of professional misconduct has been established on the evidence presently put before the Tribunal. The hearing before us proceeded on the basis that if there was finding of professional misconduct there would be a separate hearing on the question of appropriate orders. In line with the discussion in Sahade to which we have referred the question of fitness in the context of appropriate orders will be considered at the time of that hearing.
The question of whether the common law test of professional misconduct required that the conduct involved be directly referable to legal practice was discussed in Gates at [122] - [123] as follows: 122 The common law test of professional misconduct and whether it requires that the conduct involved be directly referrable to legal practice was considered by Spigelman CJ (Mason P and Handley JA) in New South Wales Bar Association v Cummins [2001] NSWCA 284 at [36] - [43] in which the Chief Justice stated: '36 The origins of contemporary doctrine on these matters is to be found in the judgment of Lopes LJ in Allinson v General Council of Medical Education and Registration [1894] 1 QB 750 where his Lordship at 763 propounded what he described as a non-exhaustive definition of "infamous conduct in a professional respect" as follows: "If it is shewn that a medical man, in the pursuit of his profession, has done something with regard to it which would be reasonably regarded as disgraceful or dishonourable by his professional brethren of good repute and competency,' then it is open to the General Medical Council to say that he has been guilty of 'infamous conduct in a professional respect'." 37 In Allinson, the Court of Appeal was exercising a statutory jurisdiction. The phrase "infamous conduct in a professional respect" was statutory, appearing in s29 of the Medical Act (21 and 22 Vict. c. 90) (U.K.). 38 This definition was applied to the case of the solicitor in the case of In re A Solicitor. Ex parte The Law Society [1912] 1 KB 302, where the issue was the definition of "professional misconduct" within the Solicitors Act 1888 (U.K.). 39 In Myers v Elman [1940] AC 282 Viscount Maugham adopted this definition for purposes of the exercise of the inherent jurisdiction of the Courts when he said at 288-289: "Apart from the statutory grounds, it is of course true that a solicitor may be struck off the rolls or suspended on the ground of professional misconduct, words which have been properly defined as conduct which would reasonably be regarded as disgraceful or dishonourable by solicitors of good repute and competency: In re a Solicitor. Ex parte The Law Society ." 40 Lord Atkin may have taken a different view in Myers v Elman, when he said at 303 that the words "professional misconduct" … "only mean misconduct in the exercise of the profession". 41 Viscount Maugham's approach - which omits from the Allinson formulation, the introductory words "in the pursuit of his profession" - appears to have prevailed, at least in New South Wales (see Re Hodgekiss (1962) SR (NSW) 340 at 351; Re Mayes and the Legal Practitioners Act [1974] 1 NSWLR 19 at 24-25; Prothonotary of the Supreme Court of New South Wales v Costello [1984] 3 NSWLR 201 at 203D-E, 207B-C). 42 In Marten v Royal College of Veterinary Surgeons' Disciplinary Committee [1966] 1 QB 1, Lord Parker CJ said at 9: "… Mr Crispin says that as a matter of law a professional man's conduct cannot be said to be disgraceful to him in a professional respect unless it was done 'in pursuit of his profession,' and he would add that 'in pursuit of his profession' meant 'in the course of the practice of the profession.' For my part I see no valid ground for limiting the words in the manner suggested. If, of course, the conduct complained of is equally reprehensible in anyone, whether a professional man or not, as for example, conduct constituting some traffic offence, that conduct would not come within the expression. But if the conduct, though reprehensible in anyone is in the case of the professional man so much more reprehensible as to be defined as disgraceful, it may, depending on the circumstances, amount to conduct disgraceful of him in a professional respect in the sense that it tends to bring disgrace on the profession which he practises. It seems to me, although I do not put this forward in any sense as a definition, that the conception of conduct which is disgraceful to a man in his professional capacity is conduct disgraceful to him as reflecting on his profession, or, in the present case, conduct disgraceful to him as a practising veterinary surgeon." 43 In that case, the conduct involved the mistreatment of animals which, although not arising in the course of practice, did have a direct bearing on the practice of his profession by a veterinarian." At [56] the Chief Justice further stated: 'There is authority in favour of extending the terminology 'professional misconduct' to acts not occurring directly in the course of professional practice. That is not to say that any form of personal conduct may be regarded as professional misconduct. The authorities appear to me to suggest two kinds of relationships that justify applying the terminology in this broader way. First, acts may be sufficiently closely connected with actual practice, albeit not occurring in the course of such practice. Secondly, conduct outside the course of practice may manifest the presence or absence of qualities which are incompatible with, or essential for, the conduct of practice. In this second case, the terminology of 'professional misconduct' overlaps with and, usually it is not necessary to distinguish it from, the terminology of 'good fame and character' or 'fit and proper person.' 123 On the basis of the conclusions reached in Cummins, in our view the dishonest conduct by which the solicitor misled her employer to direct superannuation moneys into a personal account would reasonably be regarded as disgraceful or dishonourable by solicitors of good repute and competency and, although a form of personal conduct, may in the circumstances be regarded as professional misconduct although at the lower end of the scale.
In our view the fiduciary breaches which we have found manifest the absence of qualities which are essential for the conduct of legal practice. We find that the failure to maintain the integrity of the estate funds of which he was trustee in the circumstances in which it occurred while not dishonest amounted to impropriety affecting his personal character and was indicative of a failure to understand and practise the precepts of honesty and fair dealing in relation to the beneficiaries. The same finding is made in respect of Mr Haseldine's failure to elicit the beneficiaries' informed consent. We are satisfied and find that his conduct in the circumstances identified would be reasonably regarded as disgraceful and dishonourable by his professional brethren of good repute and competency and that there should be a finding of professional misconduct at common law.
The Council made submissions as to appropriate further orders. Mr Haseldine did not adduce evidence or make detailed submissions about these. As we have indicated the parties accepted that if a finding of professional misconduct was made it was appropriate that Mr Haseldine be given the opportunity to do so. We will make orders accordingly.

Orders 1. The solicitor is guilty of professional misconduct. 2. The matter is stood over for further hearing to a date to be fixed by arrangement with the Registry. 3. The solicitor is to file and serve any evidence and any submissions upon which he intends to rely limited to the nature of the orders which should follow our finding of professional misconduct within 21 days. 4. The applicant file and serve any evidence and submissions in reply within 21 days thereafter.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 31 October 2017

Legal Practitioner's Act 1898(NSW)

Legal Profession Act 2004(NSW)

Legal Profession Regulation 2005(NSW)

Legal Profession Amendment (Disciplinary Provisions) Act 2001(NSW)

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