Foley v Ellis

Case [2008] NSWCA 288

NEW SOUTH WALES COURT OF APPEAL

CITATION:
Foley v Ellis [2008] NSWCA 288

FILE NUMBER(S):
40829/07

HEARING DATE(S):
29 September 2008

JUDGMENT DATE:
6 November 2008

PARTIES:
Jeanette Ann Foley (Appellant)
Peter James Ellis (Defendant)

JUDGMENT OF:
Beazley JA Basten JA Sackville AJA   

LOWER COURT JURISDICTION:
Supreme Court

LOWER COURT FILE NUMBER(S):
SC 3887/05

LOWER COURT JUDICIAL OFFICER:
McLaughlin AsJ

LOWER COURT DATE OF DECISION:
12 November 2007

LOWER COURT MEDIUM NEUTRAL CITATION:
[2007] NSWSC 1277

COUNSEL:
Mr P Menadue (Appellant)
Mr L Ellison SC (Defendant)

SOLICITORS:
Kydon Segel Lawyers (Appellant)
Bartier Perry (Defendant)

CATCHWORDS:
FAMILY PROVISION – Estate of about $2.8 million – beneficiaries are three children of the deceased and two grandchildren – appellant (one of the children) received one-ninth share of residue worth about $165,000 - strained relationship and lack of contact between appellant and the deceased – whether primary Judge erred in dismissing appellant’s claim – re-exercise of discretionary power conferred by s 7 of the Family Provision Act 1982 (NSW).

LEGISLATION CITED:
Civil Procedure Act: s 56
Industrial Relations Act 1996: s 191
Family Provision Act 1982: ss 6, 7, 9, 11, 13, 14
Supreme Court Act 1970: s 75A

CATEGORY:
Principal judgment

CASES CITED:
Bosch v Perpetual Trustee Co Ltd [1938] AC 463
CDJ v VAJ [1998] HCA 67; 197 CLR 172
Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission [2000] HCA 47; 203 CLR 194
Costa v The Public Trustee of NSW [2008] NSWCA 223
Ex parte Australian Sporting Club Ltd; Re Dash (1947) 47 SR(NSW) 283
Foley v Ellis [2008] NSWSC 1277
Goodman v Windeyer [1980] HCA 31, (1980) 144 CLR 490
House v The King [1936] HCA 40; 55 CLR 499
Mulcahy v Weldon [2002] NSWCA 206
Palmer v Dolman [2005] NSWCA 361
Shorey v PT Limited [2003] HCA 27; 77 ALJR 1104
Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201
Victorian Stevedoring & General Contracting Co Pty Ltd v Dignan [1931] HCA 34; 46 CLR 73
Vigolo v Bostin [2005] HCA 11; 221 CLR 191
Warren v Coombes [1979] HCA 9; 142 CLR 531
Western Australia v Ward [2002] HCA 28; 213 CLR 1
Wentworth v Wentworth, Estate of G. M. Wentworth (unreported 14 June 1991)
Wheatley v Wheatley [2006] NSWCA 262

TEXTS CITED:

DECISION:
1.The appeal be allowed.[<br>][<br>]2. The orders made by the Associate Justice dismissing the appellant’s claim and in relation to the costs of the proceedings be set aside.[<br>][<br>]3. The bequests to Karl Konrad Foley and Patrick Walter Foley under the will of the Deceased dated 23 August 2002 remain unaltered and be paid without the deduction of any costs or expenses associated with the proceedings in this Court or in the Court below.[<br>][<br>]4. The bequests referred to in Order 3 be satisfied by the payment to each of Karl Konrad Foley and Patrick Walter Foley the following sums:[<br>](i)           $184,000[<br>](ii)     a sum representing simple interest on the sum of $184,000 calculated at…

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AGLC
Foley v Ellis [2008] NSWCA 288
Case
[2008] NSWCA 288
Decision Date

CaseChat Overview and Summary

The appeal concerned a claim brought by the appellant, one of the deceased's three children, under the *Family Provision Act 1982* (NSW) against the estate of her late mother. The estate was valued at approximately $2.8 million, with beneficiaries including the deceased's three children and two grandchildren. The appellant, who had a strained relationship with the deceased, received a one-ninth share of the residue, valued at about $165,000. The appellant contended that the primary judge erred in dismissing her claim.

The court was required to determine whether the primary judge had erred in dismissing the appellant's family provision claim and, if so, to re-exercise the discretionary power conferred by section 7 of the *Family Provision Act 1982* (NSW) to determine the appropriate provision, if any, to be made for the appellant from the estate. This involved considering the appellant's financial circumstances, her relationship with the deceased, and the overall distribution of the estate.

The Court of Appeal allowed the appeal, finding that the primary judge's factual findings regarding the appellant's earning capacity were contrary to the evidence and vitiated the exercise of his discretionary judgment. The court determined that remitting the matter for a further hearing would cause unwarranted delay and expense, and therefore proceeded to consider the questions afresh. The court found the appellant's financial position to be parlous, with expenditure significantly exceeding income and insufficient net assets to maintain her current standard of living, particularly given her health and limited capacity for remunerative work. The court also considered the evidence regarding the strained relationship between the appellant and the deceased, including the "Dachau" note and a letter dated 3 December 1997, which the primary judge had found to be grossly offensive and indicative of adverse conclusions the deceased might have drawn about the appellant's motives.

The appeal was allowed, and the orders made by the Associate Justice dismissing the appellant's claim and in relation to costs were set aside.

Orders

Orders of the court

1.The appeal be allowed. 2. The orders made by the Associate Justice dismissing the appellant's claim and in relation to the costs of the proceedings be set aside.

Background

Background to the litigation

The respondents’ counsel had used different calculations and had arrived at a figure of $121,000 as the value of the appellant’s entitlement under the will. In response to this calculation, his Honour merely observed that the appellant’s entitlement was no less than $121,000, but could be as much as $165,000. It followed that after allowing for the interim distribution in the appellant’s favour of $80,000, she could expect a distribution of at least another $41,000, but she might receive as much as an additional $85,000 from the estate.APPELLANT’S BACKGROUND AND CIRCUMSTANCES The appellant grew up in the family home at Mosman. She was educated at a private school and subsequently obtained tertiary qualifications, including a diploma in teaching in 1974, a Bachelor of Arts in Economics in 1978 and a Master’s degree in Educational Studies in 2001. The appellant left home in 1974 to study and to take up a teaching position near Port Kembla. Upon returning to Sydney in 1975, she purchased a home unit. She studied for her undergraduate degree whilst working full time during most of the course. The appellant worked in the commercial sector in various positions in the late 1970s and early 1980s. Until a particular incident in 1984, it appears that the appellant and the deceased enjoyed a close and affectionate relationship. However, an incident in that year led to some deterioration of the relationship between the appellant and her mother and to a more serious disruption of her relationship with her siblings. On the appellant’s account, Peter and Vivienne had asserted that she was suffering from psychiatric problems and had attempted physically to restrain her. At about that time, the appellant wrote what was referred to on the appeal as the “Dachau” note. In this undated note, which was not addressed to any specific person, the appellant made references to Hitler and Dachau in complaining about the conduct of her family. On her evidence, the Dachau note was never sent to the Deceased. Nonetheless, it was common ground at the trial that the Deceased, one way or another, had read the note. In 1987, the appellant travelled to the United States, where she met Tad. Although they were ultimately married in Australia, from 1989 to 1995 the appellant and Tad lived in the United States. During this period the appellant maintained regular contact with her parents by telephone and fax. The appellant, Tad and the children visited Sydney each year, at first staying with her parents and then in hotel accommodation paid for by the appellant’s parents. The appellant’s parents also visited the family in the United States each year. In March 1995, the appellant and her family returned to Australia to reside permanently in Sydney. At this time, the appellant’s father was suffering from a terminal illness and died in June 1995. He left a legacy of $30,000 to each of his three children and the residue of his estate to the Deceased. In August or September 1995, Tad, for reasons connected with his employment, moved into the Deceased’s residence. Soon after, matrimonial problems arose between the appellant and Tad and she moved to Queensland with her two children. She then instituted proceedings against Tad in the Family Court, although they were not finally divorced until 1999. It appears that the appellant and the children returned to Sydney in early 1997.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Vivienne’s assets totalled about $1.3 million, including her residence (valued at $580,000) and superannuation. Her income consisted of director’s fees of $10,000 per annum from Ellis Holdings and interest of about $4,000 per annum from investments. Her expenses were modest, amounting only to some $10,300 per annum. However, Vivienne gave evidence that refurbishment of her home unit and levies to the body corporate would come to $70,000. In addition, she was contemplating setting up a business which would require capital of about $50,000 and wished to make contributions to her superannuation. Vivienne’s share of the estate, like Peter’s, was valued at about $1,117,000.THE PRIMARY JUDGMENT The primary Judge found that the appellant was an ”eligible person” within para (b) of the definition in s 6(1) of the Family Provision Act. His Honour noted that the only other eligible persons in relation to the Deceased were Peter and Vivienne. The primary Judge recorded that the respondents had not submitted that the appellant had been guilty of what was once known as ”conduct disentitling”. Nonetheless, they had submitted that the relationship between the appellant and the Deceased was relevant to the appellant’s Family Provision Act claim. Among other things, the respondents relied on the Dachau note and a letter written in December 1997. The primary Judge dealt with this submission as follows:There were admitted into evidence, various letters addressed by the [appellant] to the Deceased. The language used by the [appellant] in those letters does not indicate a deep loving relationship between herself and her mother, at least at the time when the letters were written. The language of those documents, together with [a letter written on 3 December 1997] is grossly offensive. It is difficult to envisage a more hurtful or more insulting statement to a person of the Jewish faith (as was the Deceased, and also her husband) than to compare them with Adolph Hitler and to liken their family home to Dachau (the site of a concentration camp in which the [appellant’s] own grandparents had been incarcerated). By some means or other copies of those documents came into the possession of the Deceased. From them she would have been entitled to draw adverse conclusions about her daughter’s bona fides and motives.” The letter of 3 December 1997, to which the primary Judge referred in the extract above appears to have been a letter intended for distribution to friends and family just prior to Christmas. The letter contained references to the litigation with Tad and included the following passage:Through this my mother, brother and sister have proved beyond any doubt that they do not care for or have my childrens’ interests at heart nor do they have a tender feeling for me. The best I can say for them is that they are bent on the destruction of myself and my children. So to add to the pressures of this year I must end it with grieving the loss of these three permanently.”

Ratio Decidendi

Legal Principle Established

It is difficult to understand how, in the light of his findings and other uncontradicted evidence, his Honour could have concluded that there was no reason why the appellant could not increase her earnings by working full time. Nor was there an evidentiary basis for his conclusion that she would be able to earn substantially more as a private tutor. When pressed in cross-examination, the appellant accepted that she might be able to tutor for a short period in the afternoon or evening if she gave up her regular teaching position and slept for much of the day. However, there was no evidence that would support a finding that the appellant could earn more as a tutor than as a teacher. The factual findings made by the primary judge on these matters were therefore contrary to the evidence and, independently of any other error, vitiated the exercise of his Honour’s discretionary judgment on the jurisdictional question.Fresh consideration of the two questions As has been noted, the respondents submitted that if the Court found that the primary Judge had erred, it should give consideration to remitting the matter for a further hearing. In my view, there would be little benefit in such a course. The primary Judge made detailed findings of fact, including findings relating to the estrangement between the appellant and the Deceased. These findings, together with the evidence not seriously in dispute, enables this Court to make a determination both of the jurisdictional question and of the quantum of any provision that should be made for the appellant. Remitting the matter would involve the parties in unwarranted delay and additional expense that would significantly diminish the assets available for distribution. It is therefore appropriate for the Court to consider the questions afresh.The jurisdictional question The primary Judge’s findings show that the appellant’s financial position at the date of the hearing was parlous. Her expenditure of $1,268 per week exceeded her income by approximately $500 per week. Her net assets, giving the debt from Tad its full value, totalled about $200,000 (on the assumption that she had not instituted proceedings under the Family Provision Act). If allowance was made for the costs of the current proceedings, her net assets were substantially less than $200,000. Given the appellant’s state of health, her limited capacity for remunerative work and her need for rental accommodation she faces the realistic prospect that she will have insufficient resources to enable her to maintain her current standard of living, quite independently of any further expenses she may (or may not) choose to incur in the Family Court litigation. Certainly, she lacks the resources to purchase her own accommodation, even of a modest character. Indeed, her assets provide only a small buffer against the risk that her state of health will not permit her to continue in the workforce on a part-time basis. The appellant’s financial position becomes even more parlous when account is taken of the evidence admitted on the appeal. This shows that Tad has not paid the sum of $153,000 found by the primary Judge to be due to the appellant. Instead, Tad has paid approximately $97,000, claiming that he is entitled to set off unsatisfied costs orders made by the Family Court in his favour. While it is perhaps possible that the appellant could recover further moneys from Tad, the probabilities on the material before this Court are that she will not. If that is correct, her net assets, after allowing for the costs of the Family Provision Act proceedings and allowing for her entitlement under the will, are no more than about $130,000.