In Walsh v PJCC&A Pty [2008] VCAT 962, beneficiaries of an estate were critical of the testator’s lawyers before death. They became his executors after his death, and appointed the firm they worked for as their solicitors. The beneficiaries sued the firm, and its solicitor-executors for unconscionable conduct and misleading or deceptive conduct. Their beef was the level of fees charged by the firm in the context of the executors having left all of the work of the administration of the estate to the firm as their solicitors, and yet having scooped up the 3% executors commission provided for in the will. Judge Harbison summarily dismissed the whole case principally on the basis that when they engage in professional work, lawyers do not engage in trade or commerce, as required by both causes of action under the Fair Trading Act, 1999. The trade or commerce requirement was a jurisdictional issue, she said, for the applicants to establish at the outset of the case, not something for the respondents to establish the absence of. It was permissible, and quite possible, to determine the question by reference to the particulars of dispute so long as they were articulated sufficiently.
Interestingly, despite numerous strike out applications, a professional negligence claim against solicitors pleaded as a misleading and deceptive conduct case has survived in Western Australia, though it is not clear that anyone has taken the point that lawyers do not engage in trade or commerce in that case: Alpine Holdings Pty Ltd v Feinauer [2008] WASCA 85.
The will, which the solicitors drew, said that since the executors were by occupation 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.’
This is an unusually high level of remuneration, and the testator must have really liked the executors. (Rule 10, of the Solicitors Professional Conduct Rules, 2005 is reproduced at the end of this post. It governs the disclosures lawyers must make when drawing wills by which they will be remunerated.)
The man’s son and daughter said that it was improper for the firm of solicitors to do everything towards the administration of the estate while the executors did nothing, for the firm to charge its standard fees, and for the executors to get their 3%.
It is important to be clear about what conduct was impugned. The children said:
- the conduct of each of the law firm and the solicitor executors who worked at the firm was a participation in allowing the solicitor executors to charge a commission as well as instructing the firm to perform all possible work for the estate, and that that was unconscionable conduct in connection with the supply of services. [19], [49]
- the conduct of the firm of solicitors in accepting instructions from the testator in making his will, and in accepting instructions from the executors to administer the estate, was the impugned conduct of the firm of solicitors. No claim was made in respect of any other aspect of the solicitors’ work in acting for the estate. [41]
The vehicles the applicants chose to agitate their claims were a misleading or deceptive conduct claim under s. 9 of the Fair Trading Act, 1999 (‘A person must not, in trade or commerce, engage in conduct which is misleading or deceptive’) and an unconscionable conduct claim under s. 8A (‘A person must not, in trade or commerce, in connection with the supply of services from another person engage in conduct that is in all the circumstances unconscionable.’) Vice-President Harbison struck the misleading and deceptive conduct claims out under s. 75 of the VCAT Act, 1998 because:
- it could not be said that the solicitors misled anyone — this was just not a misleading and deceptive conduct case; and
- solicitors do not engage in trade or commerce when involved in their core professional activity (see below).
And she struck the unconscionable conduct claims out too because:
- it was unclear whether the executors had in fact provided any ‘services’ as defined in the Fair Trading Act, 1999, and her Honour cited without disapproval an authority which suggested they did not (R v Antidiscrimination Commissioner; Ex P McDermott (No 2) [2000] TASSC 180);
- executors do not engage in trade or commerce when administering an estate, or by the action of claiming executors’ commission.
Her Honour gave short shrift, appropriately, to the applicants’ claim that it was premature to decide whether the respondents’ conduct was in trade or commerce, and that that was a matter for evidence and therefore trial, effectively not following an earlier decision of Senior Member Howell referred to at [36]. Both claims involved allegations of wrongdoing in the provision of professional services to clients: the earlier case was an orthodox professional negligence claim, while in this case, amongst other things, the beneficiaries under a will complained about the provision of legal services to the testator in drafting his will.
Finally, her Honour indicated that even if she had found jurisdiction, she would have dismissed the matter under s. 77 of the VCAT Act, 1998 on the basis that the Supreme Court — the traditional specialist probate jurisdiction — was a more appropriate forum for the beneficiaries’ grievances.
Her Honour’s recitation of the authorities as to whether solicitors engage in trade or commerce, in full:
‘[25] 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.
[26] 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.
[27] 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…
[28] 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.
[29] In Fawke v Holloway (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.
[30] 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) 172 FLR 140.
[31] 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”.
3. 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.’
Rule 10:
‘10. Receiving a Benefit under a Will or other Instrument
10.1 A practitioner who receives instructions from a client to draw a will appointing the
practitioner or an associate of the practitioner an executor must inform the client in
writing before the client signs the will –10.1.1 of any entitlement of the practitioner, or the practitioner’s firm or
associate, to claim commission;
10.1.2 of the inclusion in the will of any provision entitling the practitioner, or the practitioner’s firm or associate, to charge legal costs in relation to the administration of the estate, and;10.1.3 if the practitioner or the practitioner’s firm or associate has an entitlement to claim commission, that the person could appoint as executor a person who might make no claim for commission.
10.2 A practitioner who receives instructions from a person to –
10.2.1 draw a will under which the practitioner or the practitioner’s firm or associate will, or may, receive a substantial benefit other than any proper entitlement to commission (if the practitioner is also to be
appointed executor) and the reasonable professional fees of the practitioner or the practitioner’s firm; or
10.2.2 draw any other instrument under which the practitioner or the practitioner’s firm or associate will, or may, receive a substantial benefit in addition to the reasonable remuneration, including that payable under a conditional costs agreement, must:(a) decline to act on those instructions; and
(b) offer to refer the person, for advice, to another practitioner who is not an associate of the practitioner’.
