Guy Alexander Walsh and Charlotte Victoria Mortiboy Kane

Patrick J. Cannon, Coburn and Associates Pty, Patrick John Cannon and Thomas James Patrick Cannon

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

1. This proceeding is struck out under section 75 of the VCAT Act as lacking in substance.

1. The Applicants are beneficiaries under the will of their father, Barry Francis Walsh. Barry Walsh died on 2 April 2005. He instructed the second Respondent to make a will for him. The second Respondent is an incorporated legal firm and the other Respondents are solicitors in that firm. In his will Barry Walsh appointed the third and fourth Respondents as executors of his will and trustees of his estate.
2. At law, a person appointed executor or trustee is not entitled to be paid for his services. However, solicitors commonly accept appointment as executors of wills. It is often convenient for the estate and for the beneficiaries for this to occur. In such a case it is usual for the will to make specific provision allowing the solicitor-executor's legal firm to charge for the work involved in administering the estate, to make it clear that the solicitor-executor is not deprived of remuneration for the work performed for the estate.
3. Separately, an executor has no legal right to charge the estate for renumerated for his services as executor. An executor seeking remuneration must apply to the Supreme Court of Victoria for remuneration to be fixed. Alternatively, a testator can direct in his or her will that executor's commission be paid.
4. In this case before me, the question of whether the executors as solicitors could charge legal fees, and the question of whether the executors could charge commission, were both addressed in the will. Clause 12 of the will reads as follows

I direct that as my Executors and trustees of my estate are solicitors;

a) They shall be entitled to be paid all usual professional fees for work done by those executors or their firm (as executors or trustees or both) on the same basis as if they were not my executors but employed to act on behalf of my executors.

b) They shall in addition be entitled to executor's commission for their pains and trouble fixed at three per cent on corpus of my estate and on the income from me estate to be received by them as trustees.

1. After Barry Walsh died, the executors submitted the will for probate and in due course probate of the will was granted to them. The Applicants subsequently made a family provision claim under the Administration and Probate Act 1958 which was resolved by terms of settlement. A consent order was then made by the Supreme Court varying the will following execution of the terms of settlement.
2. The Respondent executors then proceeded, as they were required to do, to call in the assets of the estate.

1. 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.
2. 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)).
3. 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.
4. 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.
5. 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.

1. 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.
2. 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.
3. If the Tribunal so decides, it may refer the matter to the relevant Tribunal or Court if it considers it appropriate to do so.
4. 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.
5. 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.
6. 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.

1. Section 8A of the Fair Trading Act 1999 prohibits a person from engaging in unconscionable conduct in trade or commerce. The relevant part of the section reads as follows

A person must not, in trade or commerce, in connection with

(a) the supply or possible supply of goods or services from another person (other than a listed public company)

engage in conduct that is in all the circumstances unconscionable.

1. The Applicants say that the conduct of each of the Respondents in participating in allowing the third and fourth Respondents to charge a commission as well as instructing the legal firm to perform all possible work on the estate, is unconscionable conduct within the meaning of this section. They say that this conduct has been performed in connection with the supply of services to the Applicants, and further that those services are supplied in trade or commerce.

1. The relevant parts of section 9 of the Fair Trading Act 1999 provide that a person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive. The Applicants say that the conduct described above is misleading and deceptive, and that the conduct took place in trade or commerce.

1. In order to prove the claims under section 8A or 9 of the Fair Trading Act the Applicants must prove that the conduct complained of is conduct occurring in trade or commerce.
2. The Respondents say that whatever the merits of the claim made against any of the Respondents in their capacity as executors, their actions in administering the will cannot possibly be characterised as conduct in trade or commerce. The Respondents say further that whatever the merits of the claim made against any of the Respondents in their capacity as solicitors, it cannot possible succeed in this forum, as the conduct of solicitors in the ordinary course of their practice as solicitors can similarly not be characterised as conduct occurring in trade or commerce.
3. The Applicants say that a decision about whether or not the Respondents supplied services in trade or commerce, or engaged in misleading conduct in trade or commerce, relies on findings of fact, and those findings of fact cannot be made until all of the evidence in this case has been heard.

1. There are relatively few decisions on whether or not the services of a solicitor can properly be described as services rendered in trade or commerce. The Respondents say this is because the law is settled in this area.
2. First in recent time is a decision of the Full Court of the Supreme Court of Queensland in R v Small Claims Tribunal; ex p Gibson (1973) QR 490. Counsel for the Respondents says that although this is an interstate decision, I am bound under the authority of the High Court in Farah Constructions Pty Ltd and ors v SayDee Pty Ltd, [2007] HCA 22 which instructs courts of inferior jurisdiction and tribunals that there is one common law of Australia, and thus decisions of Full Court of any State, (such as the decision in Gibson), should be given effect to as binding insofar as those decisions interpret the common law, unless I am convinced the interpretation is plainly wrong.
3. In Gibson, at page 493 of the report, Stable J said this

In the ordinary everyday understanding of the ordinary intelligent subject reading for enlightenment his (or her) copy of the Small Claims Tribunal Act the field of trade or commerce means the shop counter or the showroom floor. The word "professional" would bring to this ideal being a far different concept. He (or she) would hardly think of the doctor as practising in the field of trade or commerce.

1. After further comment along the same lines, the learned judge observes

Ultimately one has to answer this question: Would the ordinary man, the ordinary reasonable man - the man, if you like to refer to an old friend, on the Clapham omnibus - say now, in the time in which we live, of any particular occupation, that it is properly described as a profession? I do not believe one can escape from that very practical way of putting the question...

1. The Court applied these principles to determine quite emphatically that a dentist practising his profession was not a trader within the terms of the relevant Queensland consumer statute, as he was not supplying services in trade or commerce.
2. In Fawke v Holloway [1986] VicRp 42; (1986) VR 411, the Supreme Court of Victoria held that the profession of a chiropractor was not to be characterised as services rendered in trade or commerce.
3. The most recent Victorian authority on the circumstances in which professional services should be characterised as being performed in trade or commerce is LT King Pty Ltd t/as Yarra Valley Financial services v Daniel Besser and White Cleland Pty Ltd [2002] VSC 354; (2002) 172 FLR 140.
4. In that case Osborn J considered whether or not professional legal services could be characterised as being in trade or commerce. I take that case as authority for the following propositions;

1. That the concept of trade and commerce is to be given a broad interpretation.

2. To decide whether a conduct in the course of providing professional services is conduct in trade or commerce requires "an assessment of the essential character of those services".

1. The fact that services are provided for fee will not mean the services are automatically to be characterised as being in trade or commerce.

4. The "essential character of core activities" undertaken by the legal profession is not that of trade or commerce.

5. The characterisation of conduct will always be a matter of fact and degree.

1. Several cases since King was decided make it clear that the characterisation of solicitors' services as being in trade or commerce will turn on the particular facts alleged. For instance, in King v Yurisich [2005] FCA 1277, Lander J suggested that the question will be answered differently at different stages of the solicitors retainer. The conduct of a solicitor in actually obtaining engagement as a solicitor would be conduct in trade or commerce, whereas once the engagement had been secured, the advice given to the client who had retained the solicitor would not be conduct in trade or commerce. Advice given by a solicitor in the ordinary practice of his profession may be advice regarding trade or commerce, but not given in trade or commerce. But if the advice was then used to induce a third person to induce that person to do business with the client, then the giving of that advice may be transformed into conduct occurring in trade or commerce. Lander J concludes

In the end, it is a question of fact and all the surrounding circumstances will be relevant in determining whether the conduct was in trade or commerce.

1. This last observation parallels that of Osborn J in King as follows

It should not be assumed that the relationship of practice of a profession to conduct in trade or commerce is necessarily fixed and constant.

1. The Applicants referred me to two decisions of this Tribunal, both of which have applied the principles in King.
2. The first in time is Habashy v Relpar Australia Pty Ltd [2006] VCAT 1912. The Member reviewed the relevant authorities on the circumstances in which the work of a health provider might be characterised as having been performed in trade or commerce, and concluded that the provision of a wheelchair by a health service was held not to be an activity in trade or commerce, and the activity itself not properly to be characterised as providing a "service" under the Fair Trading Act.
3. The second decision is Burton v Parkes Pty Ltd v Church Hill Lawyers [2007] VCAT 1490.
4. In that case the relevant authorities were reviewed as they applied to the services provided by a solicitor, and the member decided that as the points of claim inadequately described the precise work performed by the solicitor, he would need to hear evidence before deciding whether in the particular case before him, the work could be characterised as the provision of services in trade or commerce.
5. He thus held the Tribunal had jurisdiction to hear the matter, and reserved his decision on the jurisdictional question until the evidence had been heard.
6. Counsel for the Applicants further referred me to the observations of Deane J in Ku-ring-gai Cooperative Building Society (No 12) Ltd (1978) 36 FLR 1348 as follows;

While the particular instances that may fall within them will depend upon the varying phrases of development of trade, commerce and commercial communication, the terms are clearly of the widest import...they are apt to include commercial or business dealings in finance between a company and its members which are not within the mainstream of ordinary commercial activities and which, while being commercial in character, are marked by a degree of altruism which is not compatible with a dominant objective of profit making.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.

1. The question of whether an executor provides services in carrying out his or her executorial duties under a will, or is acting in trade or commerce when he carries out those duties, appears not to have been directly considered in any Victorian case.
2. In a decision of the Full Court of the Supreme Court of Tasmania in R v Antidiscrimination Commissioner ;Ex P McDermott (No 2) [2000] TASSC 180, the question of whether or not an executor provides services to beneficiaries under a will was considered.
3. In that case the Antidiscrimination Commissioner had purported to accept a complaint by female beneficiaries of a will that they had been discriminated against by an executor who was attempting to carry out the provisions of a will in which the female beneficiaries received less than the male beneficiaries.
4. One of the issues was whether the actions of the executor in distributing bequests under the will could be characterised as a service. The Court said this

The carrying out of a duty imposed by the prosecutors as executors of the testators will, still less the mere retention by them of the interests specifically devised to them by the will ....cannot be said to be a matter relating to the provision of a service. Nor, in my view, can it be said that what has happened to the complainants ...occurred while they were engaged in or undertaking any activity in connection with the provision of services.

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.

1. 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.
2. 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?
3. 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?
4. 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.
5. 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?

1. The Applicants suggest that as a fallback position, if I find that the conduct described is not within trade or commerce, the conduct described falls within section 8 of the Fair Trading Act 1999. That section provides

A person must not, in trade or commerce, in connection with the supply or possible supply of goods or services of a kind ordinarily used for personal, household or domestic purposes to a purchaser, engage in conduct that is in all the circumstances, unconscionable.

1. In my view this section does not describe any of the impugned conduct. Neither the conduct of the executors of the conduct of the solicitors can possibly be described as being in connection with the supply of goods or services, ordinarily used for personal, household or domestic purposes, and the Applicants are in no sense purchasers of these services.

1. 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.
2. 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.
3. 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.
4. 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.
5. But such a claim cannot be brought to this Tribunal until the procedural requirements of that Act have been satisfied.
6. 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.
7. 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.

1. Although from what I have said above it appears to me unnecessary to decide the section 77 point, I record that the facts of this case make it plain that the appropriate forum for litigating a dispute about executor's commission is the Supreme Court of Victoria. The Applicants suggest a particular interpretation of clause 12 of the will. A decision about whether they are right or wrong must necessarily involve a determination of the true meaning of that clause. This is not an appropriate job for this Tribunal.