Barristers’ Conduct Rules Proscribe Barrister Acting as a Paid Executor or Administrator or Acting as a Lawyer in Estate

The decision in Re Estate Kleinlehrer, Deceased [2024] NSWSC 648 (29 May 2024) emphasises the need for counsel to exercise care when advised that they are to be or have been appointed executor under a will, or following death are advised that is so.  What cannot ensue that such appointment attracts remuneration, or even if not that counsel “intermeddles” in the estate administration in their capacity as a legal practitioner.  If problems arise then counsel ought promptly renounce.  The decision underscores that. The ethical rules under consideration there have analogues in rules 17(h), 18 and 19 of the Barristers Rules 2011 (Qld).  Lindsay J wrote:

INTRODUCTION

[1]  The question for determination in this judgment is whether one of two executors named in a will (of the two plaintiffs, the first) who has intermeddled in the affairs of a deceased estate should be granted leave to renounce probate.

[2]  A third named executor (not a party to these proceedings) has filed a “Renunciation of Probate” in the Approved Form which contains a declaration that she had not intermeddled in the estate of the deceased. She may be taken to have renounced probate without qualification. She is not a necessary party to the proceedings.

[3]  The remaining two executors (the plaintiffs) applied for a grant of probate (by a summons filed on 21 August 2023) and, in the ordinary course, were met with requisitions from the Probate Registry. One of those requisitions drew to the executors’ attention that the first plaintiff is a barrister and that the will of the deceased contemplates that he would be remunerated for his work as an executor, thereby engaging rule 13 of the Legal Profession Uniform Conduct (Barristers) Rules 2015 NSW.

[4]  So far as is relevant, rule 13 is in the following terms:

13. A barrister must not, subject to rules 14 and 15: …

(a) act as a person’s general agent or attorney in that person’s business or dealings with others, …

(h) administer any trust, estate or fund for any other person,

(i) obtain probate or letters of administration for any other person, …

(l) hold, invest or disburse any funds for any other person.

[5]  Rules 14 and 15 are in the following terms:

14. A barrister does not breach rule 13 by doing any of the matters referred to in that rule, without fee and as a private person not as a barrister or legal practitioner.

15. A barrister does not breach rule 13(a), (h) or (l) if the barrister becomes such an agent, is appointed to act or becomes responsible for such funds as a private person and not as a barrister or legal practitioner.

[6]  As the will of the deceased, and a separate deed between the two plaintiffs and the deceased’s beneficiaries, contemplate that the first plaintiff be remunerated for his work as an executor, a decision was taken by the plaintiffs, quite properly, that the first plaintiff should apply to the Court for leave to renounce probate, leaving the second plaintiff, as the one remaining executor, to apply for probate on the basis that the two other persons named in the deceased’s will had renounced.

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THE DECEASED’S ESTATE AND THE EXECUTOR’S DISCLOSURE OF INTERMEDDLING

[91]  These proceedings concern the estate of Aron Kleinlehrer (“the deceased”) who died on 20 January 2023 leaving a will dated 1 January 2013 and an estate (ostensibly free of debt) valued at about $36.7 million.

[92]  The wife of the deceased died in October 2015, leaving a will dated 1 January 2013 probate of which was granted to the plaintiffs on 12 December 2023. That will provided for the deceased (as he is in these proceedings) to have a life interest in the matrimonial home (with a gift over in favour of an unrelated entity) and named the deceased as the sole residuary beneficiary.

[93]  Predeceased by his wife, the deceased was survived by his two children (Robert and Esther) and their respective children, his grandchildren, totalling five in number.

[94]  The deceased’s will named as “executors and trustees” of his estate the two plaintiffs and a third person who has uncontroversially renounced probate. Clause 4(b) of the will expressly provides that, if a “Trustee” renounces or is otherwise unable to continue acting as Trustee, the remaining Trustees or Trustee will become the Trustees of my estate, and if only one of them, will become the sole Trustee of my estate”.

[95]  The will was drafted by the first plaintiff (formerly a solicitor) and bears a back sheet that identifies him as a “barrister” with a residential address which I take to be his home address, not a professional address.

[96]  The will contains a number of specific gifts (some of them subject to conditions) and names the deceased’s five grandchildren as residuary beneficiaries. Gifts in favour of the deceased’s children are expressed to be conditional.

[97]  The will provides, in terms, for each of the three named executors to receive a specific, indexed annuity (in a different amount for each executor), with provision for the payment of a capital sum on the 10th anniversary of the deceased’s death and another capital sum upon finalisation of the deceased’s affairs or upon a particular grandson attaining the age of 21 years, in lieu of any other entitlement they may have to remuneration.

[98]  The first plaintiff’s intermeddling was active and extensive (although ostensibly limited in nature and scope) over a substantial period of delay in administration of the estate attributed to a need to investigate the deceased’s affairs and to consider how best to resolve disputes involving parties outside the deceased’s family circle. It was not limited to preservation of estate assets.

[99]  Both plaintiffs must be taken to have accepted their appointment as executors, and the burdens of that office, in anticipation of an application for probate being made. In the meantime, no application was made for an interim grant of administration. The affairs of the estate were not obviously neglected but, rather, managed informally, I infer with the acquiescence of the deceased’s family.

[100]  The first plaintiff seeks now to renounce probate because a failure or refusal to do so could expose him to disciplinary proceedings as a barrister. His application for leave to renounce probate is dictated by the prudence of doing so in that context, not an abstract unwillingness or incapacity to perform the obligations of an executor.

[101]  His renunciation of probate, if leave is granted, will come at the cost to him of disclaiming a substantial entitlement to remuneration which the family of the deceased (by a Deed of Arrangement dated 6 July 2023) agreed to pay him for work undertaken in administration of the deceased’s estate. By consenting to his application for leave, I take it that the deceased’s family has agreed to release him from any obligation he may otherwise have had under the Deed to apply for probate of the deceased’s will and to act as executor and trustee in administration of the deceased’s estate.

[102]  In an affidavit affirmed on 23 April 2024 the first plaintiff deposes to his “intermeddling in the deceased’s estate”. As disclosed in the affidavit, that “intermeddling” largely involved his conduct (in common with the second plaintiff) in instructing the estate’s solicitors about steps taken by or through the solicitors in administration of the estate, in relation to dealings with third parties, in preparation of the plaintiffs’ application for probate and dealing with requisitions, in anticipation of an application for judicial advice relating to management of the deceased’s estate in light of events that occurred between the date of his will and the date of his death, and in a response to claims made by each of the deceased’s children for a family provision order under Chapter 3 of the Succession Act 2006 NSW.

[103]  It is difficult to imagine that the first plaintiff did not bring to bear upon the steps taken by the plaintiffs in administration of the deceased’s estate his professional experience as a lawyer. Nor is it difficult to imagine that his professional expertise was a factor in the deceased’s family agreeing (in the Deed of Arrangement dated 6 July 2023) to allow him, as an executor, a higher rate of remuneration than that for which the deceased’s will provided.

[104]  The first plaintiff’s affidavit discloses that the plaintiffs have incurred legal costs with respect to the instructions given by them to the estate’s solicitors. I am assured, however, that those costs can and will be paid out of the estate of the deceased by the second plaintiff should a grant of probate be made to her and that no beneficiary objects to that course.

[105] The affidavit includes the following express declarations:

I have not received any fees or payment for my work in respect of the deceased’s estate.

I do not intend to claim, and will not take any fees or commission for my work in respect of the deceased’s estate.

I will not claim and will not take any fees or payment in respect of the Deed of Arrangement I entered into with the deceased’s family members on 6 July 2023.

I have not taken any action in respect of the deceased’s assets or distributed any monies from the deceased’s estate other than as disclosed in this affidavit.

[106] In relation to administration of the related estate of the deceased’s wife the affidavit contains the following statements:

The estate of [the wife] comprises one residential property and shares in two private family companies. Since the grant of probate [in respect of her estate] I have not taken any action to administer this estate. The only steps that will need to be taken to administer this estate will be to transfer the one property and the shares to the deceased’s estate after a grant of probate is made in respect of the deceased’s estate.

I intend to complete those outstanding steps, together with [the second plaintiff], in the best interest of the beneficiary of this estate.

However, I am prepared to consent to an order for the revocation of my grant of probate and for a new grant of probate to be issued to [the second plaintiff] if considered necessary, expedient or appropriate in the circumstances.

I have not received any fees or payment or made any claim for my work in respect of [the wife’s] estate.

I do not intend to claim, and will not take any fees or commission for my work in respect of [the wife’s] estate.

[107]  Under the heading “Creditors of the Estate [of the deceased] at the Date of Death”, the first plaintiff deposes that “[at] the time of the filing of the probate application [by a “summons for probate” filed on 21 August 2023] the deceased’s estate had a net value of $36,784,570.74 and had no liabilities as set out in the “affidavit of executors” affirmed by the plaintiffs on 17 August 2023.

[108]  The “inventory of property” annexed to the “affidavit of executors” identifies as assets of the deceased’s estate eight parcels of land, several bank accounts, shares in two private companies and the deceased’s interest in the estate of his wife, as well as household furniture and personal effects with the total estimated value of $36,784,570.74. The inventory also discloses that the deceased died with bank investments held outside New South Wales, with an estimated value in excess of $1 million.

[109]  The plaintiffs’ disclosure of intermeddling extended, in response to inquiries made by the Court, to disclosure of three deeds entered into by the plaintiffs in their assumed capacity as executors of the estate of the deceased. The first in time was the “Deed of Arrangement” dated 6 July 2023 earlier mentioned. On 15 December 2023 a “Deed of Indemnity” was entered into between the plaintiffs, the deceased’s family and an unrelated entity relating to administration of the deceased’s estate. On 6 March 2024 a “deed of release” was entered into by the plaintiffs in their capacity as executors, the deceased’s family and two unrelated entities relating to administration of the deceased’s estate.

[110]  It is not necessary for the purpose of this judgment to articulate the terms of any of these deeds or to place on record the nature of confidential settlements with parties unrelated to the deceased’s family.

CONSIDERATION

[111]  The first plaintiff’s application for leave to renounce probate is supported by the second plaintiff as his co-executor and (leaving aside the two unrelated entities who have entered into a Deed of Release) is the subject of what appears to be fully informed consent on the part of the deceased’s beneficiaries, all of whom are adults, independently advised.

[112]  The second plaintiff’s support for the first plaintiff’s application has been given notwithstanding my expression of a concern that her interests and those of the first plaintiff may be in conflict. No such concern appears to be shared by either plaintiff or any beneficiary.

[113]  On the evidence before the Court, the deceased’s estate is without any substantial liabilities beyond a liability for legal costs arising from work done by or through the solicitors acting (upon instructions of the plaintiff) on behalf of the estate. The beneficiaries’ consent to the first plaintiff’s application for leave to renounce probate and the second plaintiff’s application that she be granted probate as a sole executor can be taken to extend to an acceptance that all legal fees payable by the plaintiffs to date can, and will, be paid from funds amply available in the estate.

[114]  The due administration of the deceased’s estate is unlikely to be prejudiced in any substantial way by the first plaintiff’s renunciation of probate and entrustment of administration of the estate to the second plaintiff alone.

[115]  On the other hand, any insistence by the Court that the first plaintiff adhere to his application for a grant of probate would expose him to a risk of disciplinary proceedings by reason of the prohibitions contained in rule 13 of the Legal Profession Uniform Conduct (Barristers) Rules 2015 and, incidentally and unnecessarily, potentially embroil the estate in a controversy collateral to a due administration of the estate.

CONCLUSION

[116]  For these reasons, I propose to grant the first plaintiff’s application for leave to renounce probate.

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(emphasis added)

The full decision may be found here.