Misrepresentation of Financial Position Leads to Dismissal of Family Provision Act Claim

The claimant sought an order under s.7 of the Family Provision Act 1982 (NSW) for her maintenance out of the estate of the deceased. The claimant misrepresented her true financial position for the purposes of the claim. Palmer J dismissed the summons with costs, finding that the claimant's misrepresentation of her financial position led to the dismissal of her claim.

New South Wales Supreme Court

CITATION : [NAME] v [NAME] & Anor: [NAME] [2005] NSWSC 54

HEARING DATE(S) : 3 and 4 February, 2005

JUDGMENT DATE : 4 February 2005

JURISDICTION : Equity Division

JUDGMENT OF : Palmer J

DECISION : Summons dismissed with costs.

CATCHWORDS : FAMILY PROVISION ACT - Claimant lived in domestic relationship with deceased for eight months prior to deceased's death - deceased left marriage of thirty years to live with claimant - claimant misrepresented her true financial position for purposes of claim.

LEGISLATION CITED : Family Provision Act 1982 (NSW) - s.7

[NAME] - Plaintiff PARTIES : [NAME] - First Defendant [NAME] Defendant

FILE NUMBER(S) : SC 6393/03

[NAME] - Plaintiff COUNSEL : [redacted] SOLICITORS : [redacted]

LOWER COURT JURISDICTION :

Ex tempore

Introduction

1 The Plaintiff, [NAME], seeks an order under s.7 of the Family Provision Act 1982 (NSW), for her maintenance out of the estate of the late [NAME]. The Plaintiff brings her claim as a person with whom the deceased was living in a domestic relationship at the time of his death. There is no dispute that the Plaintiff was in such a relationship with the deceased and that she is an eligible person as defined in the Act. 2 The deceased died on 30 June 2002, leaving a will dated 28 October 1979. The will left the whole of his estate to the Second Defendant who was, as at the date of the deceased's death, still his wife. Probate of the will was granted to the First Defendant as executor on 17 June 2003. 3 The deceased was born in 1951. He married the Second Defendant, who was born in [DATE]. There were two children of the marriage, [NAME] born in 1975, and [NAME] born in 1979. Without intending any disrespect, and purely for the sake of intelligible reference, I will refer to the members of the [NAME] as [NAME] and [NAME]. The relevant facts

4 [NAME] and [NAME] appear to have had a happy marriage up until the events now in issue. The evidence given by [NAME] and friends of the family depicts [NAME] as a happy, stable man in a responsible position in employment, a supportive and caring husband, a devoted, affectionate father who participated enthusiastically in his children's activities, and a respected and loyal friend to many people. 5 [NAME] and [NAME] first lived in a house at Kings Langley which they improved and extended considerably over the years, mainly by their joint personal efforts. [NAME] enjoyed doing building work and [NAME] assisted him when she could. Together they provided a comfortable home for the family. 6 In 1993, the family realised a long-held dream of living near the beach. [NAME] and [NAME] bought, as joint tenants, a run-down little house in [ADDRESS], Narrabeen, only a short distance from the sea. They both set about doing considerable renovations and improvements, working themselves mostly on weekends and often with the assistance of their children. The purchase and renovations of the houses at Kings Langley and then at Narrabeen, were paid for both by [NAME] and [NAME]. [NAME] took on part-time work to supplement [NAME]'s income, working on Saturdays and three or four nights a week and her income was used to meet mortgage repayments and the cost of building materials for the renovations. 7 After four years of work, done mostly by [NAME] with the assistance of the family, the house at Narrabeen was transformed into a spacious and very comfortable home. The whole family was very proud of this achievement. 8 In March 2001, [NAME] and [NAME] went on a cruise of the Pacific Islands to celebrate [NAME]'s fiftieth birthday. After they returned, [NAME] noticed that [NAME] was spending a great deal of time at the computer, apparently playing cards with a person identified as "[NAME]". When [NAME] inquired who "[NAME]" was, [NAME] told her that she was a lady of sixty-five years of age living in Texas. 9 "[NAME]" was in fact, [NAME], who was indeed at that time sixty-five years of age and living in Austin, Texas. [NAME] was married and living with her husband [NAME]. They had been married for forty-four years and had four grown up children and a number of grandchildren. 10 The relationship between [NAME] and [NAME] quickly developed from Internet communication to almost daily telephone calls. In May 2001, [NAME] asked [NAME] to come to Australia and she agreed. She arrived in early July 2001 and a sexual relationship commenced immediately. They travelled together to the Gold Coast for a week. [NAME] told [NAME] that he had to go away for a conference. The following week, [NAME] spent the day with [NAME] and returned home each night. [NAME] returned to Texas on 25 July 2001. [NAME] paid for [NAME]'s expenses while she was in Australia. 11 According to [NAME], in August 2001 [NAME] asked her in several telephone calls to leave her husband and come to Australia to live with him. In a telephone conversation with [NAME] on 16 August 2001, [NAME] agreed, apparently without regret according to her own evidence. She immediately told her husband that she was leaving him. The following day, that is 17 August, [NAME] told [NAME] that he was leaving her for [NAME] and that he was going to Texas to help her pack up and move to Australia to live with him. [NAME] had had no inkling of the relationship between [NAME] and [NAME] up until that point. 12 On 22 August 2001, [NAME] filed a petition for divorce in the District Court of Texas. On 5 September 2001, [NAME] went to Texas to help [NAME] to arrange her affairs and to move to Australia. [NAME] left her employment and reached agreement with [NAME] as to the division of the matrimonial property. She attempted to sell the matrimonial home in [ADDRESS], Austin, but decided to wait until market conditions improved. 13 A property agreement between Mr and [NAME] was executed on 22 October 2001. Very soon afterwards, [NAME] left for Australia and arrived on 27 October 2001. [NAME] had returned to Sydney a few days earlier and had rented a unit in Narrabeen. He and [NAME] lived there together from late October 2001.

14 The sudden and unexplained end of the marital relationship with [NAME] and [NAME] deeply shocked their children and their families. It is very clear from the evidence that [NAME] and the extended families could not bring themselves to accept what had happened or, indeed, even to meet [NAME]. The relationship between [NAME] and his children, which had been very close and loving, became strained and distant, if not hostile at times. 15 On 30 June 2002, some seven months after [NAME] had commenced living with [NAME] in Sydney, he took his own life without any warning. On 11 July 2002, [NAME] returned to Texas and resumed residence in the former matrimonial home in [ADDRESS]. In December 2002, [NAME]'s solicitors gave notice of a claim under the Family Provision Act to the solicitors for [NAME]'s estate, and on 18 December 2003 she commenced these proceedings.

The estate

16 During his life time, [NAME]'s major asset was his interest as joint tenant with [NAME] in the matrimonial home at Narrabeen. That interest and other property held as joint tenants passed to [NAME]'s survivorship upon [NAME]'s death, so that the majority of assets requiring consideration fall into the category of notional estate. The parties have helpfully agreed upon a statement of the position of the estate: "Estate: 99/100th interest 203/20-[ADDRESS], Strathfield 62,753.62 – net balance realised after payment of Agent's Commission, selling costs and adjustments Shares 27,317.00 Colonial First State 4,700.00 NAB account no. 534250856 0.99 Long Service Leave 5,779.39 Total Estate $100,551.00

Liabilities: NAB Visa account 17,803.55 NAB Visa account 29.95 [NAME] on Grant of Probate 4,100.00 Taxation 2,725.00 Funeral expenses 4,500.00 Estimated CGT 10,000.00 Total liabilities $ 39,158.50 Net Estate $ 61,392.50

No allowance is made in relation to any right to reimbursement in the Second Defendant in respect of payments made in respect of the Strathfield unit or liability to the estate in respect of rentals received from that unit.

Notional Estate: Half interest [ADDRESS], Narrabeen 457,500.00 Half interest in [NAME] 2,750.00 [NAME] Benefit 232,426.01 AMP Super Benefits 66,716.54 Net Notional Estate $759,392.55

Net estate 61,392.50 Net notional estate 759,392.55 TOTAL NET ESTATE $ 820,785.05

The net estate is therefore $820,785 less, of course, a provision for legal costs. They amount in total to some $30,000 on behalf of the Plaintiff and $48,000 on behalf of the Defendants.

[NAME]'s financial position, according to her affidavit evidence

17 [NAME] is now sixty-seven years of age. Shortly after [NAME]'s death, she returned to Texas and resumed living in her house at [ADDRESS], Austin. She is in good health apart from needing some dental treatment. From my observation of [NAME] in the witness box, she is an intelligent, alert and active lady of strong character. 18 According to [NAME]'s affidavit evidence, her position is as follows. Because of her love for [NAME], she obtained a divorce from her husband, gave up a secure and well-paid job as an accountant in Austin, Texas, together with the continuing attached retirement fund benefits, and moved to Australia. She now lives alone at the [NAME]. She has been continuously looking for employment since September 2002 but without success. 19 A major obstacle to re-employment is the fact that she does not own a car and cannot afford to buy one. The fact that she has no car causes her other great hardship. Her house is almost a kilometre walk from a bus stop, and it is very difficult for her to wait for the bus in the extreme weather conditions which Texas experiences. In order to buy food, she must walk almost a kilometre to the nearest shopping centre. On the few occasions she has done this, she has arrived home feeling exhausted, light-headed and faint. She has therefore been compelled to rely on the generosity of neighbours to drive her, but this makes her feel humiliated. To purchase clothing and household items, [NAME] must walk to the bus stop, take a bus to central Austin and transfer to another bus route. 20 [NAME] attends church every Sunday and often likes to go to the church during the week for choir practice and meetings. Because she has no car and has to walk a kilometre to the church, she finds this very difficult and feels unsafe when she has to walk home in the dark after choir practice. [NAME] says, therefore, that she has a strong case for provision from [NAME]'s assets to enable her to purchase a car. She has made enquiries and thinks that a suitable car may be purchased from between AUD19,000 and AUD23,000. 21 [NAME]'s assets are: her home at [ADDRESS] valued at USD232,618; a retirement fund constituted by investments now valued at USD112,000; a 51% share in a photography business conducted by her son, [NAME]. The business is not profitable and its liabilities equal or exceed assets. She believes that her interest in the business has no value; a small amount of cash in savings account. 22 [NAME]'s liabilities are: a credit card debt of about USD3,600; a mortgage on the [NAME], USD28,455; loans from [NAME] totalling USD6,837 to assist with replacement of the garage door and specified medical expenses. 23 [NAME]'s weekly income is entirely derived from a retirement pension and social security which totals USD458 per week. Her weekly expenses including the mortgage payments, total USD766. [NAME]'s weekly income is insufficient to cover her weekly expenses, she cannot afford to incur many of her normal weekly items of expenditure. 24 The position generally presented by [NAME] in her affidavit evidence is that of a single, elderly lady living alone in difficult financial circumstances.

[NAME]'s true financial position

25 Regrettably, the account of [NAME]'s financial position given in her affidavit is not accurate. In fact, I am compelled to conclude that it is substantially and deliberately misleading, as emerged from [NAME]'s cross examination. [NAME]'s financial position, as I find it in fact to be, is as follows. 26 When [NAME] returned to the [NAME] in Austin, her ex-husband, [NAME], who resided there while she was in Australia, continued to live there with her. [NAME] was asked directly in cross examination whether [NAME] was living at the [NAME]. She evaded that question twice by saying that "he spent some time there" . She reluctantly conceded, however, that [NAME] stays at her home, "has some clothes there" , sleeps there "occasionally" , and that she usually sees him once a day. He does the household maintenance and is there every day to drive her wherever she wants to go. She said on a number of occasions in her evidence that she and [NAME] had always remained very good friends. 27 When asked where [NAME] lived if he were not living full-time at the [NAME] she said, however, that she did not know and had never asked [NAME]. I find this answer highly improbable, particularly when coupled with the following evidence which emerged during [NAME]'s cross examination. 28 A bank account with the Bank of America which was in [NAME]'s sole name when she resided in Australia was changed to include the name of [NAME] shortly after [NAME]'s return to Texas. [NAME] denied that she had authorised this change, but she could give no explanation of how the inclusion of [NAME]'s name on the account could have happened. I find this evidence quite improbable and unsatisfactory. 29 An up-to-date certificate of voter registration for [NAME] was tendered showing that his current address is recorded as the [NAME]. [NAME] conceded that [NAME] had driven her to the polling booths to vote at a recent election. Her explanation was that [NAME] simply omitted to change his address. 30 A current certificate of registration of a Buick motor vehicle was tendered. It showed that the registered owners of the car were both Mr and [NAME] and that their address was the [NAME]. A current record of [NAME]'s driver's licence was tendered. It showed that his address was the [NAME]. A current driving licence for [NAME] was also tendered. It is clear that she and [NAME] are registered owners of the Buick car and that [NAME] is currently licensed to drive a motor vehicle. 31 A receipt from a tradesman dated 16 November 2002 was tendered showing that [NAME] had certified that some work done on the house at [ADDRESS] had been properly carried out. A similar certificate dated 20 April 2004, signed by [NAME] was also tendered. 32 Documentary evidence also shows that, since [NAME]'s return to Texas, she has gone on two holidays with [NAME]. Most significantly, the credit card records of [NAME] show, as she eventually conceded in cross examination, that almost all of the personal expenses which she has incurred on her credit cards since her return from Australia have been paid for by [NAME]. 33 In the light of these circumstances, [NAME]'s evidence that [NAME] must simply have omitted to change his address on a number of critical records and that she does not know where he lives presently is completely incredible and I do not accept it. 34 I am satisfied that when [NAME] returned to Austin, Texas in July 2002 she resumed cohabitation with [NAME] and that thereafter [NAME] has contributed substantially to her support and maintenance. I have no evidence from which I can conclude that this situation will not continue. 35 [NAME] was not unaware that [NAME] had a continuing relationship with [NAME] even while she was living in Australia. During the period from the end of October 2001 until 10 July 2002, when [NAME] left Australia, [NAME] made a total of ninety-seven telephone calls to [NAME], many of them lengthy. [NAME] attempted to explain these telephone calls in cross examination by saying that she was requesting [NAME] to send her regularly some non-prescription medication that was not available in Australia, that she was enquiring about her grandchildren, and that she was discussing taxation or financial matters. 36 I do not accept that evidence. [NAME] himself did not perceive that to be the character of the continuing telephone calls and the relationship between Mr and [NAME]. He left two suicide notes. One of those notes was addressed to [NAME], and read: " [NAME] I suggest you pack up & go back to [NAME]. He still loves you & you him a little I know (all the phone calls to him) Good luck"

[NAME] did not disclose that suicide note in her evidence. 37 Another significant misstatement by [NAME] in her affidavit evidence was the value of her house at [ADDRESS]. She gave that value as USD230,000. However, in cross examination she conceded that that was the value of the house as shown in the US equivalent of a land tax assessment valuation, and that the current market value of the house was about USD350,000, a misstatement in value in her favour for the purpose of her claim of some USD118,000. 38 Because of the unsatisfactory evidence given by [NAME], I am unable to accept uncritically that she has continually endeavoured to obtain employment since her return to Texas, but has been frustrated by her lack of a car. The evidence shows, as I have said, not only that she is the joint owner of a car and has a current driver's licence, but that she has a sum of USD112,000 approximately in her retirement fund from which she could draw sufficient funds to purchase a car, if she wished. 39 In short, as the Defendants submit, [NAME] has deliberately chosen not to put her true financial position to the Court, not in minor respects, but in critically important respects. I cannot accept her evidence generally with any confidence. There may be other assets and income to which she has recourse which she has not disclosed and which have not been revealed by the Defendants' investigations. I am unable, therefore, to be satisfied of what her true financial position is and what, if any, need she may have for provision from [NAME]'s estate. 40 I bear in mind that [NAME] did give up her job in Texas to come to Australia, but her evidence about the telephone conversation with [NAME] on 16 August 2001 shows that she did so willingly and freely. She was in Australia only for about eight months. As I have said, I am unable to rely on [NAME]'s evidence that she has been unable to obtain employment since her return, despite genuine efforts to do so. 41 I bear in mind also that after [NAME]'s death, some AUD20,000 was provided out of [NAME]'s estate to cover various expenses which [NAME] had incurred, so that to that extent she has already received some benefit from the estate. 42 In summary, because [NAME] has not disclosed her true financial position fully and frankly, I hold that [NAME] has failed to prove any need for any provision out of the estate of [NAME]. I should, however, go on to give other reasons why I would dismiss [NAME]'s application.

Competing claims

43 I must bear in mind the competing claims on [NAME]'s testamentary disposition, both by [NAME], who was unquestionably living in a domestic relationship with him, and by his wife, [NAME]. On the one hand, as I have noted, [NAME] lived in a domestic relationship with [NAME] for about eight months. On the other hand, as at the date of [NAME]'s death he had been married to [NAME] for almost thirty years. Together, he and [NAME] had not only had a family but had largely built and/or refurbished two houses. In that endeavour [NAME] contributed very substantially both financially and by her physical efforts. In order to make that contribution, [NAME] had engaged in as much part-time work as she could. 44 The state of [NAME]'s health is not entirely good. As at the date of [NAME]'s departure in September 2001, [NAME] had diabetes and was insulin-dependent, needing injections twice daily. However, since then she has been able to take oral medication. She is now on three tablets daily for treatment of her diabetes. [NAME] also suffers from high blood pressure and is required to seek medical assessment of her condition and blood tests approximately every two months. 45 [NAME] has endeavoured to obtain permanent employment since [NAME]'s death to assist with her financial position. However, she does not have any technical or professional qualifications and she has been successful only in obtaining casual employment. She has no guarantee of any security of employment. 46 [NAME]'s living expenses are almost $2,000 a month. She has some income from a unit in which both she and [NAME] invested. She has medical bills to pay as well as expenses such as rates and insurance and so on, amounting to about $3,600 or $3,700 per year. She has other weekly expenses of some $645. She has been receiving since [NAME]'s death an income from her casual employment of approximately $600 net per week. Her son [NAME] lives with her at the moment and is paying board of some $70 a week. He contributes to the payment of telephone and electricity bills. 47 In view of the length of the marriage, in view of the very considerable financial contributions to [NAME]'s financial position and welfare which [NAME] has made over some thirty years of marriage, it seems to me that [NAME]'s claim on the testamentary disposition of [NAME] is an extremely high one. In my opinion, it completely outweighs such claim as [NAME] has on his testamentary disposition, bearing in mind the nature of the relationship, its duration and the fact that the estate has already provided some $20,000 to pay her expenses. 48 For those reasons also, in my opinion, [NAME] is not entitled to any provision out of the estate of the deceased. The Summons is therefore dismissed. I will hear argument as to costs. 49 As I have said in my judgment, this is a case in which [NAME] has made a claim against the estate based upon deliberate and substantial misstatement. It is true that she is a "[NAME]", that is, she was a person living in a domestic relationship with the deceased at the time of his death, but she has deliberately misrepresented her financial position, which is the very foundation of her claim. In those circumstances, I do not think it appropriate to allow her costs out of the estate. Indeed, this is one of those rare cases where I think it is appropriate to make an order that she pay the Defendants' costs. 50 The orders of the Court will therefore be:

i) the Summons is dismissed;

ii) the Plaintiff will pay the Defendants' costs. ~ oOo ~

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