Walsh & Anor v Cannon & Ors

Walsh & Anor v Cannon & Ors - [2008] VCAT 962 - VCAT 2008 case summary — Zoe

[12]

The executors instructed their own firm Patrick J Cannon, Coburn and Associates, as solicitors to the estate. In doing so, they instructed them to carry out all of the tasks necessary in administering the estate. The Applicants do not complain about any specific action of the firm in connection with the administration, although they do say that the firm has made some charges which are either excessive or not on scale in relation to settling a claim regarding racehorses, and also that they have charged GST inappropriately on a bill of costs. The amounts in dispute in relation to these issues appear relatively small.
The main complaint of the Applicants is that as well as instructing the firm to undertake all things necessary in administering the estate, (as they were entitled to do under clause 12 (a)), the executors have also charged the estate the 3 % executor's commission (as they were entitled to do under clause 12 (b)).
The Applicants say the executors should not have charged the estate under both subclauses. They say it is apparent that the executors have not gone to any "pains and trouble" at all in connection with the estate, as everything required to be done for the estate was actually performed by, and charged by, the legal firm in which the executors are partners. They say thus the estate has been improperly charged twice for the same work.
They say either the 3 % executor's commission should be refunded to the estate, or an analysis should be made of what exactly should be the work of the executors, and what should be the work of the firm, and the firm should reimburse work it has charged for which is within the province of the executors, and which was expected to be done by them in exchange for payment of executor's commission.
The above explanation is that given at the hearing by counsel for the Applicants. It is not as clearly expressed in the points of claim. For the purposes of this jurisdictional hearing, I take the claim to be that as set out above.

[13]

This proceeding is listed before me today as a jurisdictional hearing. The jurisdictional issue was raised before His Honour Judge Bowman at a directions hearing at 20 March 2008 and submissions were invited from the parties as to whether an order should be made under section 77 of the VCAT Act, or as to any other jurisdictional issues.
Section 77 of the VCAT Act provides that the Tribunal may make an order striking out all or any part of a proceeding if it considers that the subject matter of the proceeding would be more appropriately dealt with by another Tribunal or a Court.
If the Tribunal so decides, it may refer the matter to the relevant Tribunal or Court if it considers it appropriate to do so.
The Respondents say that I cannot determine the section 77 jurisdictional issue without first determining that there is a dispute over which VCAT has jurisdiction.
VCAT is entirely a creature of statute. It has no inherent legal or equitable jurisdiction. It can only exercise the jurisdiction it is given under various acts of parliament. The Respondents say that it is clear that VCAT has no jurisdiction at all in respect of this dispute, either as the claim is framed in the points of claim, or as the claim is explained in submissions by Counsel for the Applicants. The Respondents say that the claim as pleaded in the points of claim, and as outlined in the Applicants' submissions, is so lacking in substance that it should be struck out under section 75 of the VCAT Act. Therefore the section 77 issue does not arise.
The Applicants say the facts alleged invoke VCAT's jurisdiction under the Fair Trading Act 1999. The sections of that Act relied on are sections 8A, possibly 8 as a fallback position, and section 9. The Applicants say that VCAT is the appropriate forum for this dispute to be heard, but that when the Respondents have filed a defence to the Points of Claim, the terms of that defence may require the Tribunal to consider if the dispute should be transferred to the Supreme Court under section 77. The Applicants contend that any decision about that now is premature.

[37]

Counsel for the Applicants says that once I have heard the evidence in this case of what the solicitors (and the executors) actually did in rendering accounts and calling in assets in what was said to be a large and complex estate, I will be persuaded that the activity engaged in is properly to be described as occurring in trade or commerce. In any event, he says that there is sufficient doubt on the matter for the jurisdictional issue to await a full hearing.
However, the points of claim in this case are very detailed. I am making this decision on the points of claim as presently drawn, amplified by the Applicants' submissions. The points of claim, and the submissions, clearly suggest that it is the conduct of the solicitor in accepting instructions from the testator in making his will, and in accepting instructions from the executors to administer the estate, which is the impugned conduct. No claim is made in respect of any other aspect of the solicitors work in acting for the estate. The size or complexity of the estate will not affect my decision about the impugned conduct.
In my view it is possible to make a decision as to whether this conduct can be characterised as occurring in trade or commerce without the need to hear evidence. Evidence of the size of the estate, or of other commercial activities supervised by the executors will not be relevant to my task. This work is not the subject of this claim. Any evidence about other aspects of the solicitors work will not change the character of the conduct which is the subject of this allegation. I am therefore in a position now to consider whether or not that conduct detailed in the Points of Claim is conduct performed in trade or commerce.
The Applicants say that it will not be until the Respondents file a defence to the points of claim that it will be known whether or not there is a jurisdictional issue at all. They posit that the jurisdictional point may not be taken. They suggest that this Tribunal has jurisdiction at least up until the time the characterization of the conduct as being services in connection with trade or commerce is contested. In my view this point has no substance. It is for the Applicants to positively prove that VCAT has jurisdiction - it is not for the Respondents to prove that it has not. In any event the Respondents have squarely challenged the jurisdiction of the Tribunal in submissions before me.
In my view the conduct complained of against the solicitor-respondents is clearly conduct performed in the ordinary business of the profession of a solicitor. It is not work performed in trade or commerce. It is the act of accepting instructions to act on behalf of a client, the client being the executors or the estate. In my view this act falls squarely within the core activities of a lawyer's practice. To use the language of King "the essential character of the conduct in issue" is not that of trade or commerce.

[40]

I take the impugned conduct against the executor-respondents in this proceeding to be the action of claiming executors' commission under clause 12 (b) of the will in circumstances where their own firm was charging fees as solicitor for the estate. It is difficult to be more precise. In submissions counsel for the Applicants suggested that the complaint was limited to the executors making a full claim for commission - he suggested an apportionment should be made between the time spent by the executors on estate business, and the time spent by the solicitors on estate business. So in effect he accepted that a moderate claim for commission could justifiably be made. He protested only against the charging of the commission in full.
As I have said, no other authority was cited to me on the question of whether or not the action of an executor in claiming commission under a will could be considered conduct in trade or commerce. However, in my view logic demands the conclusion that it is not.
One can imagine acts of an executor which might be so characterised. For instance, if an executor was required or authorised by a will to carry on a business which comprised part of the estate, his actions in so doing would be properly defined as conduct in trade or commerce. However, there is no such allegation in this case.
Counsel for the Applicants suggested that there may be evidence in this case that the executors had collected rents on behalf of the estate, and that such an activity is clearly to be described as occurring in trade or commerce. However, there is no criticism at all by the Applicants of the executors' conduct in the course of collecting rent for the estate. The criticism is of them accepting executors' commission in accordance with the will.
The payment of executors' commission is in my view so closely bound up with the duties of executors under a will that it is inappropriate for the impugned conduct to be characterised as conduct in trade or commerce, still less in connection with the provision of services.
The conduct complained of by the executors is work performed in the discharge of their executorial duties. There is no credible way in which the conduct complained of - that is, the charging of commission- can be described as being performed in trade or commerce.

[41]

Even if I am wrong, and the conduct described in the Points of Claim or Applicants' submissions is properly to be described as being in trade or commerce, it appears to me that the Applicants face another insuperable obstacle to an action under section 9 of the Fair Trading Act. The Applicants can only succeed under section 9 if they can show that the Respondents have engaged in conduct that is misleading and deceptive or is likely to mislead or deceive.
The impugned conduct of the solicitors in this case is that they accepted instructions to act as solicitors under the will, and perhaps against some of the Respondents the impugned conduct is that they accepted instructions to draw the will with the insertion of clause 12. How is it possible to say that this alleged conduct is misleading or deceptive, or likely to mislead or deceive? The problem that arises is - who is it said was misled or deceived?
No claim can surely be made that it is the testator who was misled or deceived. To prove such a thing the Applicants would have to have evidence that the testator wished some different clause to be inserted in his will, or understood that the clause would produce some different result to be achieved from that which the clause provides. Counsel for the Applicants told me in argument that the terms of the will are not in dispute. How then can the conduct of the Respondents in accepting instructions under clause 12 (a) of the will possibly be characterised as misleading and deceptive conduct?
If it is not the testator, then who else could be the subject of the misleading or deceptive conduct? One cannot conceive that there could be a claim of misleading and deceptive conduct against the beneficiaries in the drawing of the will. The actions of the solicitors in accepting instructions from the estate as they were entitled to do under clause 12 (a) of the will similarly cannot possibly be characterised as misleading or deceptive conduct, or likely to mislead or deceive.
The same point can be made about the claim under section 8A that the conduct is properly to be described as unconscionable. If it is suggested that the testator was the victim of this unconscionable conduct, how could a decision be made about this without hearing evidence from the now deceased testator as to his understanding of the meaning and effect of the impugned terms? How could the drawing of a will be determined to be unconscionable without hearing evidence from the now deceased testator? If the conduct complained of is the Respondents' conduct in claiming the commission due to them under the will, how could the doing of an act which the will invites them or allows them to do be characterised as unconscionable conduct?

[45]

The fundamental problem with the Points of Claim as presently drawn, and as amplified in the applicants submissions, is that the applicants case assumes that the testator did not intend the outcome of which the Applicants complain. The Applicants assume the testator did not want subsections (a) and (b) of clause 12 of the will to be activated at the same time, despite the clear words of the clause.
In my view the subject matter of this claim does not arise under the Fair Trading Act. The actions alleged do not arise in trade or commerce. The conduct alleged cannot be brought under any of the sections of the Fair Trading Act.
My ruling does not mean that all other remedies are unavailable to the Applicants in respect of the impugned conduct. It means that this Tribunal has no jurisdiction because there is nothing in this claim which brings the claim into any of the statutory jurisdictions of VCAT.
Included in the Points of Claim is a claim of overcharging against the estate solicitors. It may be that the Applicants have a remedy for this under the Legal Profession Act 2004. Similarly there is a claim that GST has been improperly added to a solicitor's account. Once again, there may be a remedy under that Act. If there is a claim for excessive charging of costs by the solicitors or inappropriate settling of the horseracing claim by the executors, these claims should be made to the Legal Services Commissioner.
But such a claim cannot be brought to this Tribunal until the procedural requirements of that Act have been satisfied.
Further, it may be that there is a claim against the executors arising out of the facts in the Points of Claim for breach of fiduciary duty, or for some such other equitable remedy. I express no view on the merits of such a claim. But such a claim cannot be heard in this Tribunal.
Accordingly the points of claim do not disclose a cause of action under the Fair Trading Act and the Tribunal is without jurisdiction to hear the claim. The most appropriate course is for the proceeding to be struck out as lacking in substance under section 75 of the VCAT Act.

At a glance

Court

Decision date

Before

Source

Judgment (46 paragraphs)

Walsh & Anor v Cannon & Ors (Legal Practice) [2008] VCAT 962 (28 May 2008)

Parties

Legislation Cited (2)

Cases Cited (2)