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Costing: Take care when combining roles

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Cite as: December 2010 84(12) LIJ, p.70

The consequences of error can be severe when the roles of solicitor and executor are combined.

Recent cases suggest there is still considerable confusion among legal practitioners about combining the roles of solicitor and executor.

This is particularly true in respect of the law relating to executors’ remuneration. Confusion can lead to errors, whose consequences can be severe.

A solicitor/executor was recently found guilty of professional misconduct for taking a commission to which he wasn’t entitled and unsatisfactory professional conduct for writing to the beneficiaries and representing that Supreme Court “guidelines” permitted a rate of commission of up to 7 per cent on corpus.1

Legal work and executorial duties are performed in different capacities. An executor owes a fiduciary duty to the beneficiaries and performs executorial functions pursuant to the testator’s will. Legal work is performed as solicitor or legal adviser to the estate. The functions are distinct and the distinction extends to work that is strictly legal (professional work) and non-professional work capable of being performed by a “lay” executor.

The general rule is that an executor, even if appointed as a consequence of their professional expertise, cannot profit by their position. Before taking commission or charging fees for professional and/or non-professional work, a solicitor/executor must be authorised to do so. This can be by:

  • the will itself providing for remuneration by way of a commission or charging clause;
  • the executor applying pursuant to s65 of the Administration and Probate Act 1958 for a grant of commission not exceeding 5 per cent for the “pains and troubles” of administering the estate;2 or
  • all beneficiaries being sui juris consenting to an agreed basis of remuneration.

A will including a commission clause authorises the executor to retain a specified portion of the estate. A charging clause can be limited to professional work but can also extend to non-professional work. If the charging clause is restricted to professional work only, solicitor/executors need to take care to avoid including charges for the performance of executorial duties or the “administration” of the estate.

An entitlement to charge for professional and/or non-professional work under a charging clause does not preclude an executor from applying to the court for commission. The amounts charged will be taken into account in determining the level of commission (if any) allowed and the court will need to be satisfied that the estate is not paying twice for the same service.

In the Will of Mary Irene McClung3 a solicitor/executor, in accordance with a charging clause, had charged for both professional and non-professional work. The solicitor and his co-executor (an accountant) both applied for commission.

The court noted that there were no particular difficulties in the administration and considered the extent to which the executors’ “pains and troubles” had already been rewarded. In dismissing the application, the court considered the amounts charged to be excessive, included duplications and improper charges, and noted that the solicitor’s bills made no attempt to distinguish legal work from executorial duties.

The co-executor accountant was also criticised for not satisfying himself that the accounts were appropriate.

In the absence of a will containing a commission clause, a solicitor/executor can seek the consent of all sui juris beneficiaries to receive an agreed rate of commission rather than, or in addition to, charging legal costs for professional work.

In Walker & Ors v D’Alessandro,4 some of the beneficiaries applied to set aside an agreement providing for the solicitor/executor to be paid 3 per cent on corpus and income. In writing to the beneficiaries, the solicitor requested that they indicate whether they agreed to what was described as a “fair claim” of 3 per cent, or if an application to the court was required.

The letter noted that legal costs in excess of $16,000 had to be paid (even though the will contained no charging clause) and suggested that a partial distribution could be arranged if the beneficiaries consented to the proposed commission. If the beneficiaries required the executor to make an application to the court, he couldn’t “say with any degree of certainty when a distribution will be made . . .”.

In setting aside the agreement, Forrest J held that a solicitor/executor seeking to procure beneficiaries’ consent had to disclose at a bare minimum:

  • details of the work done to justify the commission;
  • the basis of any charge for legal work so the beneficiaries could accurately measure the “pains and troubles” of the executor beyond the subject matter of the legal costs and disbursements;
  • that the beneficiaries were entitled to have the court assess the commission pursuant to the Administration and Probate Act 1958; and
  • that it was desirable that the beneficiaries obtain independent legal advice.5

Some simple precautions can help solicitor/executors avoid potential problems.

Solicitor/executors should maintain two separate files – one for legal work and one for detailed records of executorial duties. The preparation of itemised bills will assist the beneficiaries in understanding the basis of any charges made or commission being sought. It will also enable a court to satisfy itself that there has been no “double-dipping” and to properly assess the executor’s “pains and troubles” in any application for commission.



ROGER WALTON is a costs lawyer with LIV Legal Costing. For more information on Legal Costing’s services see www.liv.asn.au/costing or ph 9607 9403. If you have a topic for a future article, email costingcolumn@liv.asn.au or ph 9607 9403.

1. Legal Services Commissioner v Hession [2010] VCAT 1328 (11 August 2010).

2. The Supreme Court also has an inherent jurisdiction presumably invoked when commission in excess of 5 per cent is sought.

3. [2006] VSC 209.

4. [2010] VSC 15.

5. The decision in Walker was followed in Re Estate of Zsusanna Gray [2010] VSC 173 where the court, while finding that the solicitor/executor had fulfilled his responsibilities as executor “conscientiously and meticulously”, criticised the letter sent to the beneficiaries as conveying the impression that any substantial distribution of the estate was contingent on the beneficiaries agreeing to the commission as requested.

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