Annual Report 2011 - Legal Services Commissioner

Legal Services Commissioner v Hession
[2010] VCAT 1687 (5 October 2010)
Mr Hession was appointed sole executor of a will and also
performed legal work in relation to the estate. In administering
the estate, Mr Hession transferred various amounts totalling
over $30,000 to pay for the legal services.
He later transferred various amounts totalling over
$100,000 as executor’s commission after he was told by a
costs consultant that an executor can charge between 2%
and 5% of the value of the estate. This amount was 5% of the
value of the estate. Some months later, the law practice’s
trust account was inspected by a trust account inspector
and found to be deficient.
Mr Hession was advised by the trust account inspector that
he was not entitled to charge executor’s commission if not
authorised by the will, unless he obtained the consent of the
beneficiaries or an order of the Supreme Court. Accordingly,
Mr Hession repaid the money into trust.
In relation to the taking of executor’s
commission, VCAT found Mr Hession guilty
of misconduct at common law. He had not
independently researched the area of law
about executor’s commission and had relied
on the advice of the costs consultant.
VCAT indicated that a competent practitioner would have
made enquiries as to the accuracy of the advice of the costs
consultant and investigated whether it was subject to any
qualifications. Had he done so, he would have discovered
that in the absence of a provision in a will authorising an
executor to charge commission, an executor is entitled to
commission only if all the beneficiaries have full capacity
and give informed consent to the payment of commission,
or if an order for the payment of commission is made by
the Supreme Court.
Furthermore, the Administration and Probate Act 1958
authorises the Supreme Court to allow payment of
commission to an executor not exceeding 5% ‘for his pains and
trouble as is just and reasonable’. Here, ‘trouble’ appears to
relate to work performed by the executor in the administration
of the estate; and that in determining whether commission
should be awarded, the Court will determine whether the
work performed by the executor includes legal work for which
the executor has been separately remunerated.
VCAT found that Mr Hession had also displayed
indifference to, and disregard for, his obligations as
trustee to administer the estate in the best interests of the
beneficiaries and according to law. His conduct in taking
executor’s commission would be reasonably regarded as
disgraceful and dishonourable by lawyers of good repute
and competency. In relation to the letter to the beneficiaries
seeking their consent to pay him 7% commission, VCAT
found that the practitioner had breached his fiduciary
obligation to provide full and accurate information in that
the letter made a number of false representations including
false representations about how much commission may
be payable and when commission may be taken.
Further, when preparing the letter to the beneficiaries,
the practitioner relied on the advice of the trust account
inspector and did not research the law himself. This conduct
was considered reckless. VCAT found Mr Hession’s conduct
in relation to the letter was unsatisfactory professional
conduct (and so falling short of misconduct).
VCAT ordered that he pay a fine of $30,000 to the LSB.
VCAT also required Mr Hession to complete further education
and training before acting in this area of law again.
18 Legal Services COMMISSIONER Annual Report 2011