Herr v Fitzgibbon [2008] NSWSC 297 | Case summary

3319/05 JOHN GEORGE HERR & OTHERS v COLIN GRAHAM FITZGIBBON JUDGMENT 1 The plaintiffs, John George Herr, Catherine Judith Gazzard and Malcolm Ian Herr are siblings who seek orders that provision be made for them out of the estate of their late mother, Catherine Hanna Violet Herr, under the Family Provision Act 1982, s 7. 2 The defendant, Colin Graham Fitzgibbon, is also a sibling. He is the executor of the estate. Its only asset of substance is a two-thirds interest in a property at Mount Colah in New South Wales. From about 1996 until the date of her death the deceased lived with Mr Fitzgibbon in that property. 3 By her will, the deceased granted Mr Fitzgibbon a life tenancy over the property for a nominal rent and bequeathed her interest in it to Gail Lynette Fitzgibbon, Mr Fitzgibbon's daughter. The remainder of the estate was to be divided equally between three of Mr Fitzgibbon's children, Ms Fitzgibbon, Christine Ann-Marie Fitzgibbon and John Patrick Fitzgibbon. 4 In 1992, Mr Fitzgibbon had funds from the sale of two properties he had developed. He intended to utilise the funds to purchase the Mount Colah property; to subdivide it into two blocks; to build freestanding homes on each; and to sell them and move on to another development. Mr Fitzgibbon said that the deceased wished to sell the home she and her late husband had lived in and move on. Mr Fitzgibbon changed his plans with respect to the Mount Colah property and decided to build a house for the deceased on one lot. 5 Having taken separate legal advice, the deceased executed a deed in August 1992 with Mr Fitzgibbon, under the name Colin Graham Herr, and Mr Fitzgibbon's then wife, Doreen Margaret Herr. From the proceeds of sale of her home, the deceased paid the purchase price for the Mount Colah property of $120,000 and retained $20,000 to purchase furniture and appliances. The deed provided that apart from the provision of $140,000, the deceased would not be required to pay or fund any moneys towards the construction of the dwellings by Mr Fitzgibbon. The deed provided that Mr Fitzgibbon's then wife would purchase the land and hold one dwelling in trust for herself and Mr Fitzgibbon as joint tenants. With regard to the house to be built for the deceased, the deed provided that Mr Fitzgibbon's then wife would hold the land on trust for the deceased as to an undivided two-thirds share and for Mr Fitzgibbon as to an undivided one-third share as tenants in common. 6 When Mr Fitzgibbon's marriage failed, consent orders were filed under the Family Law Act 1975 (Cth) whereby his former wife transferred all her right, title and interest in the Mount Colah property to Mr Fitzgibbon who became the registered proprietor of the two lots, one of which was subject to the two-thirds interest of the deceased. 7 Mr Fitzgibbon built the two houses. The deceased moved into one of them. 8 The deed provided that Mr Fitzgibbon's former wife, with the consent of the deceased and Mr Fitzgibbon, could use the premises as security for any advance, overdraft or borrowing. From time to time Mr Fitzgibbon mortgaged the property to provide funds to complete the construction of the dwellings. 9 After the conclusion of the trial I sought further information as to the extent of the mortgage and who was to discharge it. As at 27 March 2008 the amount owing was $119,895.06. I was informed that Mr Fitzgibbon accepted that he was personally liable for this amount and it was not a debt of the estate. 10 Two market appraisals for the Mount Colah property in February 2008 were in evidence. One put a figure between $440,000 and $470,000, a mean of $450,000 on the property. The other put a range of the mid to high of $500,000s on the property, a mean of approximately $570,000. Thus, the deceased's interest in the property was worth somewhere between $303,330 and $380,000. 11 The plaintiffs' costs and disbursements are estimated at approximately $95,000. Mr Fitzgibbon's costs are estimated at approximately $97,400. Provision for them reduces the value of the estate to between $110,930 and $187,600. 12 Mr Fitzgibbon was subjected to an extensive cross-examination directed to his credit. It was submitted that his evidence as to need should not be accepted. That evidence was that he had total weekly expenses of $606 that Ms Fitzgibbon discharged for him. He had no income but expected to receive about $25,000 when a property at Cannon Hill in Brisbane, Queensland, was sold later this year. He had just over $1,000 in a bank account, $1,000 worth of personal effects, a motor vehicle of approximately $20,000 and his one-third interest in the Mount Colah property. Mr Fitzgibbon is a builder. If he can raise sufficient funds to obtain insurance he would regain a licence in New South Wales and continue his property developments in Queensland. 13 Mr Fitzgibbon was less than frank about his building projects. He had acquired a number of properties under different names. He was born as Colin Graham Herr. In 1994 he changed his name by deed poll to Colin Graham Fitzgibbon. In 2000 he changed his name by deed poll to John Matherson, he said to avoid his ex-wife making contact with him. The name on the title to a property in Asquith was changed from Fitzgibbon to Matherson. Shortly thereafter he began using the name Robert Johnson, the change being formalised later. That was his name when he swore his affidavits under the name Colin Graham Fitzgibbon. 14 In his major affidavit, Mr Fitzgibbon did not disclose his property investments. That only occurred after affidavits sworn on behalf of the plaintiffs mentioned some of those investments. Mr Fitzgibbon then revealed that the Asquith property was sold to Sarah Williams in February 2000, a further property in Asquith was sold in September 2000 and two properties in Wahroonga were acquired by him and Ms Fitzgibbon in October 2002 and sold in April 2004 and July 2006. Further, in June 2005 the Cannon Hill property was purchased and transferred to Ms Fitzgibbon in July 2006. 15 At the time the Wahroonga properties were acquired, Mr Fitzgibbon was a bankrupt. He became a bankrupt in November 2001. He was discharged from his bankruptcy in May 2004. He said he informed his trustee verbally that he intended to acquire the properties in another name and the trustee consented to this course. At the time, Mr Fitzgibbon was in receipt of unemployment benefits. He said Centrelink was aware of the properties he held in various names. 16 When it was pointed out to Mr Fitzgibbon in cross-examination that he was an undischarged bankrupt in receipt of Centrelink benefits when the Wahroonga properties were acquired, he said that Anne Johnson paid $400,000 towards their purchase. He said she was repaying a debt she incurred years earlier but then conceded there was no loan to her and it was not a debt but a gift. Mr Fitzgibbon and Ms Johnson had been a couple for a few months from September 1999. 17 Mr Fitzgibbon said he purchased the Wahroonga properties with a view to making a profit on sale sufficient to discharge the single debt that caused him to become bankrupt. That was in an amount of approximately $264,000. Mr Fitzgibbon could offer no explanation as to why he had not asked Ms Johnson for $264,000 to discharge his bankruptcy. He said he was suffering a mental illness at the time. Following the breakdown of his marriage, Mr Fitzgibbon suffered a nervous breakdown in 1997 including symptoms of deep depression. 18 With respect to the Asquith property sold to Ms Williams, Mr Fitzgibbon at first said he had nothing further to do with the matter after the sale to her. Ms Williams sold the property in April 2001 for $233,000. She had bought it from Mr Fitzgibbon for $160,000. Later in cross-examination Mr Fitzgibbon said he was paid when Ms Williams sold the property and that Centrelink was aware of how much he received. 19 Mr Fitzgibbon had said that Ms Johnson had not been repaid any of the $400,000 advanced for the purchase of the Wahroonga properties. In answer to interrogatories, however, Mr Fitzgibbon had said that Ms Johnson received the net sale proceeds of the other Asquith property. Mr Fitzgibbon claimed he was confused and affected by mental illness when he said Ms Johnson received no repayment. 20 In cross-examination Mr Fitzgibbon revealed that he had sold five blocks of land at Asquith, each at about the figure for which Ms Williams sold her block. 21 In seeking finance for his property investments, Mr Fitzgibbon signed application forms that misrepresented his financial position. His explanation was that the figures were filled out by an agent at a level the agent thought was necessary to acquire the loans. Nonetheless, Mr Fitzgibbon was prepared to sign the documents. They stated that he had not been made bankrupt. 22 Not only did Mr Fitzgibbon say that he received no funds when the Cannon Hill property was transferred to Ms Fitzgibbon, he also said he made no contribution to the acquisition of the property. 23 Mr Fitzgibbon set out a list of moneys that he had paid to or for the benefit of the deceased from 1992 until 2004 totalling over $56,500. He said he constructed this list from scraps of paper on which he recorded the amounts at the insistence of the deceased. The scraps had been kept in a plastic bag. He said his documents had been destroyed in a flood. 24 Neither Ms Fitzgibbon, nor Ms Johnson, nor Ms Williams were called to give evidence. 25 I have difficulty accepting the evidence of Mr Fitzgibbon. His explanation that he informed his trustee in bankruptcy and Centrelink of his investments in other names is implausible. His assertion that agents filled in the details in finance applications does not excuse him. He signed and proffered the documents. And the suggestion that Ms Johnson made a gift of $400,000 is highly improbable. Where Mr Fitzgibbon's evidence differs from the evidence of the plaintiffs, I prefer their evidence. 26 Mr John Herr continued to have regular contact with the deceased when she moved to Mount Colah. He spoke with her by telephone on approximately a weekly basis. In the last twelve months of her life, however, the deceased became more dependent on Mr Fitzgibbon. She had breast cancer and after she recovered from that she had a leg amputated. She became frailer. 27 Mr John Herr is 59 years old. He was diagnosed with myelofibrosis in October 2006 and was forced into retirement. The condition is incurable. He was a draftsman. A report from a haematologist states that Mr Herr remains quite well in himself. But the medical problems are usually related to anaemia and enlargement of the spleen and there is also the risk of transformation to the acute leukaemia. He has a life expectancy of five years after diagnosis. The usual progression is slow at the start but more rapid in the last 12 months. His current symptoms are fatigue and loss of concentration. 28 Mr John Herr is now in receipt of a disability support pension of $452 per fortnight. His wife is on a newstart allowance of $387.80 per fortnight. He has continued to do some small drafting jobs and in his 2006 tax return he disclosed a net profit of just over $3,000. He expects to show net earnings of around $300 in his 2007 tax return. 29 Mr John Herr and his wife own their home. It has an estimated value of approximately $400,000. They have a motor vehicle worth around $2,000. He has an old boat worth between $3,000 and $4,000. He estimates his furniture at around $2,000. He has a bank savings account of about $900. He estimates their living expenses at $450 per week. They have a mastercard debt of approximately $1,200. 30 Mr John Herr indicated his future needs as the purchase of a newer and safer car at around $20,000; painting of the house at around $10,000; replacement of furniture at about $4,000; and the replacement of carpet at about $5,000. He also seeks provision for unforeseen circumstances and his deteriorating health, more frequent travel and the purchase of more generous gifts for their grandchildren. 31 Mr John Herr said that the deceased often said to him that she would leave the house to her children in equal quarter shares. 32 Mrs Gazzard maintained a close relationship with the deceased. During the course of the building of the house at Mount Colah the deceased resided with Mrs Gazzard for approximately eight months and then with Mr John Herr for approximately three months. 33 Mrs Gazzard moved to Forster in 1999. She visited her mother when she came to Sydney. Otherwise, she spoke with her mother on the telephone on a regular basis. 34 On a number of occasions the deceased said to Mrs Gazzard that she intended to leave her house to her four children equally. 35 Mrs Gazzard is 69. She and her husband each receive an aged pension of $452 per fortnight. They own their home valued at approximately $350,000. They jointly own a motor vehicle worth $1,000 to $2,000. They withdraw $400 per month from a personal pension plan account with a balance of approximately $35,800 in December 2007 to assist in paying living expenses. They have an investment account of $70,000 earning approximately $3,000 per annum in interest. The interest is transferred to their pensioner security account from which they defray living expenses. The pensioner security account had a balance of approximately $760 in it. They have an additional pension account with approximately $350 in it. 36 Mr and Mrs Gazzard have a credit card with a debit balance of around $165. Their combined weekly living expenses are approximately $275 to $300 per week. 37 Mrs Gazzard would like to update their motor vehicle at a cost of $15,000 to $20,000; replace damaged paving in a courtyard for approximately $7,000; update a lounge suite and television set at a cost of $3,000 to $4,000; go on a holiday and have a knee replacement at a cost of around $10,000. Mr Gazzard needs his teeth extracted and dentures fitted at a cost of around $3,000. 38 Mr Malcolm Herr maintained a relationship with his mother although, as a result of what he regarded as inappropriate behaviour of his father towards his daughter, he rarely visited his parents' home unless his father was absent. After the death of his father he resumed a closer relationship with the deceased. In 1990 he took his mother, his wife and daughter on a trip to the United Kingdom. When the deceased moved to Mount Colah, Mr Malcolm Herr and his family visited her on a regular basis. But after a while his contact was reduced to telephone conversations. 39 Mr Malcolm Herr said that on a number of occasions the deceased told him that when she died she would divide the house up so that each of her children got a quarter. 40 Mr Malcolm Herr recently moved to Queensland. He is 54. Since February 2008 he has been employed on annual salary of $45,000. He was to move into rented premises at $310 per week. 41 Around July 2007, Mr Malcolm Herr received approximately $111,000 from the sale of the former matrimonial home under property settlement arrangements with his former wife. He now has approximately $31,000 from that source. He said he used up $80,000 when he was out of work and resettling in Queensland. He has purchased furniture and household items at around $5,000. And he has superannuation entitlements of about $60,000. 42 Notwithstanding the deceased's statements that she intended to divide her house between her four children on her death, she clearly had a change of heart when Mr Fitzgibbon became her principal carer. She inscribed her bible in October 2003 asking God to take care of Colin her son who had been so very caring and good to her. 43 The principles to be adopted in applying the provisions of the Family Provision Act are well known. In Singer v Berghouse (No 2) (1994) 181 CLR 201 at 208, the High Court stated that the provisions required the court to carry out a two-stage process. First, the court must determine whether the applicant has been left without adequate provision for proper maintenance, education and advancement in life. Secondly, if that determination is made in favour of the applicant, the court has to decide what provision ought to be made out of the estate. At 209 the High Court said that concepts of moral duty or moral obligation were not of useful assistance in elucidating the statutory provisions and might well amount to a gloss on the statutory language. 44 That approach was questioned by three members of the High Court in Vigolo v Bostin (2005) 221 CLR 191 at [15], [115]-[117] where their Honours expressed the view that considerations of moral claims and moral duty are useful as a guide to the meaning of the statute. There was no suggestion by the court that the two-stage process enunciated in Singer should be abandoned. 45 In Singer at 210, the High Court said that the first question must be judged having regard, amongst other things, to the applicant's financial position, the size and nature of the deceased's estate, the totality of the relationship between the applicant and the deceased and the relationship between the deceased and other persons who had legitimate claims upon his or her bounty. 46 In my view the first question is answered in the affirmative with respect to each of the plaintiffs. They were children of the deceased and were persons whom the deceased ought to have had in contemplation as having a legitimate claim upon her bounty. None of the plaintiffs received any provision under the will. 47 No evidence was adduced as to Ms Fitzgibbon's financial position and I have doubts as to the evidence given by Mr Fitzgibbon as to his. In any event he has a one third interest in the property worth between approximately $151,600 and $190,000. 48 The gift in the will to Ms Fitzgibbon was not, on the evidence, due to any special relationship with the deceased save derivatively through Mr Fitzgibbon. 49 The estate is a small one and it is difficult to determine its net distributable value. As an average it stands at approximately $149,265. 50 In my view, Mr Malcolm Herr is far better placed than Mr John Herr or Mrs Gazzard. 51 In answering the second question under Singer, I am of the view that legacies of $40,000 should be granted to Mrs Gazzard and Mr John Herr and a legacy of $20,000 should be granted to Mr Malcolm Herr. 52 I will hear the parties on the appropriate terms of orders including the question whether it should be provided that the legacies are to be discharged before the life tenancy referred to in clause 4 of the will comes into effect and whether there should be a postponement of any interest on the legacies if paid by a specified date and if not so paid that they should bear interest at the rate prescribed for unpaid legacies under the Wills, Probate and Administration Act 1898. I will also hear the parties on whether it is appropriate to order that the costs of the plaintiffs on a party and party basis and the costs of Mr Fitzgibbon on an indemnity basis be paid out of the estate. I direct the parties to bring in short minutes of order reflecting these reasons.

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Herr v Fitzgibbon

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