1. The respondent having pleaded guilty to a charge of professional conduct within the meaning of section 4.4.4(b) of the Act in that he charged excessive legal costs in connection with the practice of law in his administration of the estate of the late Dennis Cain, he is found guilty as charged
2. The respondent is reprimanded.
3. The respondent is to pay a fine of $5,000 to the Legal Services Board by 18 November 2014.
4. The respondent is to repay the sum of $21,000 to the estate of Dennis Cain deceased by 18 November 2014.
5. The respondent is to notify the applicant when the sum referred to in Order 12 has been paid.

1. The respondent having pleaded guilty to the charge of misconduct at common law within the meaning of professional misconduct in section 4.4.3(1) in that in the administration of the Estate of Dennis Cain he acted in breach of his duties towards the beneficiaries of the Estate in that he:

(a) was in a fiduciary relationship with the beneficiaries;

(b) had a duty to act in their best interests by obtaining the best price for the Estate property at 25A Becket Street North in Glenroy;

(c) sold the property to his daughter, a person who was not at arm's length, by a transaction which returned approximately $25,000 less than had it been sold at auction;

(d) and so breached the duty referred to in (b) by failing to obtain a sworn valuation of the property and/or sell it at auction

1. The respondent is reprimanded.
2. The respondent is to pay a fine of $5,000 to the Legal Services Board by 18 November 2014.
3. The respondent is to pay compensation fixed in the sum of $25,000 to the estate of Dennis Cain deceased by 18 November 2014.
4. The respondent is to notify the applicant when the sum referred to in Order 17x has been paid.
5. By 18 February 2015, the respondent is to attend seminars or any other form of education approved by the applicant relating to legal costs charged as between solicitor and client, and attracting three continuing professional development points. These points are to be over and above the respondent's normal obligations in relation to continuing professional development. The one day workshop conducted by the Leo Cussen Centre for Law on the subject of wills - from drafting to costing, which was attended by the respondent on 9 April 2014, is to be credited towards such attendance.
6. The respondent is to pay to the applicant his costs of this proceeding fixed by the Tribunal in the sum of $15,000 by 18 November 2014.

1. The respondent is and was at all material times the principal of Frank J Horvat & Co Pty Ltd, an incorporated law practice ('the firm').
2. He has been in private practice as a principal and held a Victorian principal practising certificate continuously since 1979.
3. The matters the subject of this Application came to the Notice of the Legal Services Commissioner following a trust account inspection of the respondent's trust and other records in October 2010. The investigation was conducted by Mr A Colombathantri, an Inspector acting under appointment from the Law Institute of Victoria.
4. Prior to acting as Mr Funtak's administrator as a person under a disability and then administrator of his deceased estate, and as executor of Mr Cain's deceased estate following Mr Cain's request, the respondent had only agreed to act as executor once or twice.

1. In early 2006, the respondent was approached by welfare authorities to accept an appointment as Mr Funtak's administrator. He accepted, and VCAT appointed him.
2. In late 2006, Mr Funtak died and at the request of his beneficiaries the respondent applied for letters of administration appointing him administrator.
3. The respondent and the beneficiaries agreed by telephone that he would charge his usual legal fees for the work in obtaining letters of administration and administering the estate.
4. The beneficiaries of Mr Funtak's estate were his sister and brother both of whom lived in Croatia and both of whom appointed the respondent her and his attorney under power.
5. In July 2007, the Supreme Court granted the respondent letters of administration in his capacity as the duly constituted attorney under power of the beneficiaries 'for their use and benefit limited until they or any one of them shall apply for and obtain a grant' of letters.
6. According to the Inventory of Assets and Liabilities filed with the Supreme Court, the assets in the Estate amounted to $830,638.99, made up of the following:

(a) a property at 31 Stanhope Street, Broadmeadows, valued at $126,000;

(d) Colton Close refund of Accommodation Bond $323,936.

1. In October 2007, Mr Horvat distributed the estate of Funtak to the beneficiaries both of whom received about $400,000. At the same time, the respondent sent a bill for $60,234 for all his work since he had been appointed administrator by VCAT, which he paid from the estate's funds, a claim for remuneration for all work at his usual charges for legal work. Of the total bill, the respondent charged $45,000 for his administration of the Estate.
2. The remuneration of $45,000 was excessive in that the proper remuneration on scale / PRO was somewhere between [sum of Johnson's deceased estate figures] and [sum of White's figures for that work]. The charging of excessive remuneration amounted to professional misconduct.

1. In 2006, the respondent acted for Mr Cain. Mr Cain was the executor of his deceased step-father's estate. The respondent assisted Mr Cain in carrying out his duties as executor and charged his usual legal fees for doing so.
2. In the course of that retainer, Mr Cain asked the respondent to make a will for him which appointed the respondent to be his executor on the basis that the testator was estranged from and disliked his distant relatives in Australia, had no living parents, children or siblings, and had no one else he could trust as executor.
3. The respondent agreed but made clear that he would charge his usual legal fees for all of the work he carried out as executor.
4. The respondent subsequently drew a will and conferred a second time with Mr Cain when it was executed. The will left the estate to the Royal Children's Hospital and the National Heart Foundation. Clause 3 provided a charging clause. The Will, dated 4 April 2007, is annexed as attachment 1.
5. The respondent and Mr Cain discussed the effect of cl. 3 but the respondent did not, before Mr Cain signed the will inform Mr Cain in writing of the inclusion in the will of the provision entitling the firm to charge legal costs in relation to the administration of the estate, contrary to the requirements of r. 10.1.2. The firm was an 'associate' of the respondent for the purposes of the rule. The respondent's breach of the rule amounted to unsatisfactory professional conduct.
6. Mr Cain died in late January 2009. The respondent proved the will and acted as executor.
7. Probate was granted on 2 June 2009. According to the Inventory of Assets and Liabilities filed with the Supreme Court, the assets in the Estate amounted to $368,087.74, made up of the following:

(a) a property at 25A Becket Street North, Glenroy, valued at $290,000;

1. In mid-February 2009, the respondent sought an appraisal from Richard Imbesi of Stockdale & Leggo's Glenroy office, of the value of Mr Cain's residence which stood vacant at 25A Becket Street North, Glenroy. Mr Imbesi had worked in Glenroy selling real property in Glenroy for many years. Mr Imbesi inspected the property and told the respondent that:

(a) he had had difficulty selling the similar house next door to Mr Cain's, no. 25, the previous year, because of the unattractive location of Becket St North;

(b) that had been sold after a long campaign by private sale for $310,000 in May 2008 but was in much better condition and was better presented than Mr Cain's residence;

(d) renovation of the property would not necessarily increase the price achievable substantially;

(e) the block had potential for demolition, subdivision and re-development;

1. Mr Imbesi's formal written appraisal and its annexure is attachment 2.
2. Costs of sale at auction by an estate agent would have reduced the return to the estate by about $10,000.
3. In late April 2009, the respondent, as Mr Cain's executor, sold Mr Cain's house by a private sale in Becket St North, Glenroy to his daughter Bianca, a real estate agent, for $290,000, without incurring any advertising costs or real estate agent's fees.
4. After settlement in early July 2009, Ms Horvat lived there until she demolished it in June 2010, by which time the market for real property in Glenroy had risen substantially, built three townhouses on the block, and sold them in mid-2011 for more than the purchase price, borrowing costs, and demolition and redevelopment costs.
5. The sale to Bianca represented a return to the estate of an amount less than the return which would have been achieved had it been sold at auction at the market value of the land, $325,000. Accepting that value for present purposes, that amount was about $25,000 after the executor's time, agent's commission and advertising costs which would have been incurred by a sale at auction are taken into account.
6. The failure to take all reasonable steps to obtain the best realisation of the estate's asset, namely to obtain a sworn valuation or sell at auction, amounted to professional misconduct.

1. In July 2010, the respondent distributed the estate with each beneficiary receiving $160,000. He billed $43,082 for his work as executor, understanding the charging clause in the will to entitle him to charge his usual legal fees for all of his work as executor.
2. The respondent's claim for remuneration was excessive in that the proper remuneration on scale was somewhere between [Johnson] and [White], and amounted to professional misconduct.
3. It is no part of the Applicant's case that the Respondent engaged in conduct which was dishonest in any of the senses explained in Derry v Peek.

1. Professional misconduct within the meaning of section 4.4.4(b) of the Act in that he charged excessive legal costs in connection with the practice of law in his administration of the Estate of the late George Funtak.

1. Unsatisfactory professional conduct within the meaning of section 4.4.4(a) of the Act in that he failed to comply with Rule 10 of the Professional Conduct and Practice Rules 2005 when preparing the will for the late Dennis Cain.

1. Professional misconduct within the meaning of section 4.4.4(b) of the Act in that he charged excessive legal costs in connection with the practice of law in his administration of the Estate of the late Dennis Cain.

1. Misconduct at common law within the meaning of professional misconduct in section 4.4.3(1) in that in the administration of the Estate of Dennis Cain he acted in breach of his duties towards the beneficiaries of the Estate in that he:

(a) was in a fiduciary relationship with the beneficiaries;

(b) had a duty to act in their best interests by obtaining the best price for the Estate property at 25A Becket Street North in Glenroy;

(c) sold the property to his daughter, a person who was not at arm's length, by a transaction which returned approximately $25,000 less than had it been sold at auction;

(d) and so breached the duty referred to in (b) by failing to obtain a sworn valuation of the property and/or sell it at auction.

1. The respondent pleads guilty to all four charges.

1. The respondent is found guilty as charged in relation to all four charges.

1. It is well established that the primary purpose of any disposition in matters such as this is protection of the public. The disposition is not meant to be punitive, although there may be some punitive effect. Further elements are individual deterrence, general deterrence and protection of the reputation of the legal profession.

1. The respondent has been in practice for 35 years. For nearly all of that time he has been a sole practitioner practising in Glenroy. With two minor exceptions, he has no record of prior disciplinary matters. No other matters have come to the attention of the applicant subsequent to the events giving rise to the charges in this proceeding. the requirement of protection of the public would appear to be of relatively minor significance in the respondent's case. The undertaking given to the Tribunal by the respondent substantially satisfies the public protection requirement as it removes any future possibility of the respondent repeating the conduct.

1. The isolated nature of the cause of conduct giving rise to the charges in this proceeding satisfy me that for the majority of his professional career the respondent has practiced honourably.

1. Whenever a member of the legal profession commits offences against the Act or the Rules, it is necessary to inform the legal profession of the Tribunal's denunciation of those actions in order to deter others from committing similar offences. It should be noted that the undertaking given by the respondent, the orders for repayment of legal fees overcharged, the payment of compensation and the payment of fines constitute a significant disposition which should act as a warning to members of the profession.

PROTECTION OF THE REPUTATION OF THE LEGAL PROFESSION

1. The denunciation of the respondent's actions and the disposition referred to above should reassure members of the public that actions such as these are the subject of denunciation on behalf of a profession which seeks to maintain the highest standards.

1. The respondent is the sole principal of the practice in which he works. His wife works as a bookkeeper in the practice and there are three other employees. The respondent is a speaker of the Croatian language, and as such is one of a small number of legal practitioners in Melbourne with this language skill. As such, he is able to provide legal services to members of the community with a Croatian background. He and his wife support an adult daughter who suffers from a profound intellectual disability. The Tribunal has been provided with a number of references from persons all of whom state that they are aware of this proceeding and all of whom attest to the respondent's good character.
2. There has been a considerable delay in bringing this matter to a conclusion. The applicant's investigation commenced in 2010. This must be seen as a mitigating factor.
3. Since the events giving rise to the charges which are the subject of this proceeding, the respondent has practised in a fit and proper manner.
4. I am satisfied that the respondent has demonstrated remorse and contrition. He has pleaded guilty to all charges, undertaken a course of further education in the relevant area of law and has given an appropriate undertaking to the Tribunal which deprives him of an aspect of legal practice.
5. It was submitted on behalf of the applicant that the Tribunal should suspend the respondent's practising certificate for a period of 12 months. Having considered the factors above, the Tribunal considers that it is not necessary to suspend the respondent's practising certificate in order to meet the objectives set out above. The mitigating factors referred to also lead the Tribunal to this conclusion. The objectives are met by the undertaking, the imposition of fines, the payment of compensation, the attendance at courses of further legal education and lastly the reprimands. It should be noted that a reprimand in itself is a significant sanction. The findings of guilt follow from the plea of guilty, but the reprimands signify denunciation of the respondent's actions. These remain recorded against his name for the rest of his practising career.