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Supreme Court 30 March 2001

RICHARDSON v PEDLER

[2001] NSWSC 221

Fraud & dishonesty
HELD IT WAS NOT.

Citation: Richardson v Pedler [2001] NSWSC 221
Court: Supreme Court of New South Wales (Equity Division)
Date: 30 March 2001
Judge(s): Master Macready

Background

The deceased died in a car accident in August 1994, survived by his adult son (the defendant and executor under the will) and his de facto wife of approximately three years (the plaintiff). His will left substantially the entire estate to his son. The estate's principal asset was a partially completed residential property at Hunters Hill, which by the time of the hearing had grown in value to $1,250,000.

Following the deceased's death, the plaintiff applied for and obtained a grant of Letters of Administration. She did so after destroying the deceased's executed will, a fact that came to light when her short-lived subsequent husband disclosed the information following the breakdown of their marriage. In October 1997, Justice Young set aside the grant of administration on the basis that it had been obtained by fraud.

The present proceedings involved two related matters: the plaintiff's application under the Family Provision Act for a share of the estate, and the defendant's cross-claim for repayment of estate funds the plaintiff had paid to herself during her period as administrator. A companion proceeding concerning an insurance claim was heard alongside the family provision application.

  • Whether the plaintiff's Family Provision Act claim should be permitted to proceed despite being brought outside the statutory time limit, and whether the court should exercise its discretion to extend time
  • Whether the plaintiff's destruction of the will and fraudulent conduct as administrator should preclude that extension of time
  • Whether the defendant was entitled to mesne profits (compensation for occupation of land by a trespasser) from the plaintiff for her continued occupation of the Hunters Hill property after her administration was revoked
  • Whether section 12 of the Landlord and Tenant Act 1899 was extended by operation of Part 8 Rule 1 of the Supreme Court Rules
  • Whether the plaintiff was liable to repay estate funds she had distributed to herself during the period of her fraudulent administration

Decision

Family provision claim: extension of time refused. The plaintiff's Family Provision Act claim had not been brought within the time prescribed by the legislation. The court considered whether to exercise its discretion to extend time, but declined to do so. The central reason was that the plaintiff's own unconscionable conduct, specifically her destruction of the will and the fraudulent obtaining of the grant of administration, was the direct cause of the delay. A court of equity will not assist a party whose own wrongdoing created the circumstances giving rise to the prejudice they now seek to cure.

Mesne profits claim: liability not established. The defendant sought compensation for the plaintiff's occupation of the Hunters Hill property after the revocation of her administration. The court considered whether a claim for mesne profits could succeed. Mesne profits are typically available against a former tenant who holds over without right. The court found that the plaintiff's occupation did not arise from a landlord-tenant relationship, which is a prerequisite for such a claim. The court also considered whether section 12 of the Landlord and Tenant Act 1899 was extended by Part 8 Rule 1 of the Supreme Court Rules and held that it was not. The claim for mesne profits therefore failed on liability grounds, and the court did not need to calculate the quantum that would otherwise have applied.

Repayment of estate funds. The plaintiff had paid herself $215,000 from estate funds during her administration, including a $200,000 distribution and earlier amounts. With her Letters of Administration revoked, she had no entitlement to retain those funds. The defendant had already recovered $150,000 through a settlement with an insurer that had issued a bond over the administration. The court ordered the plaintiff to repay the shortfall of $65,000, on the basis of money had and received (a common law restitutionary claim requiring repayment of money received without legal basis).

Orders Made

  • The plaintiff's Family Provision Act claim was refused (no extension of time granted)
  • The defendant's claim for mesne profits failed
  • Judgment for the defendant against the plaintiff in the sum of $65,000 on the claim for repayment of estate funds
  • Parties directed to bring in short minutes on the question of costs

Key Takeaways

  • A court exercising discretion to extend time under the Family Provision Act will not do so where the applicant's own fraudulent or unconscionable conduct is the reason the claim was not brought in time.
  • Destruction of a will by a person who then obtains a grant of administration on intestacy constitutes fraud sufficient to justify setting aside that grant, and the downstream consequences of that fraud are borne by the wrongdoer.
  • Mesne profits require the existence of a prior landlord-tenant relationship; occupation of property by someone who never held as tenant cannot ground such a claim, regardless of the unlawfulness of the occupation.
  • Section 12 of the Landlord and Tenant Act 1899 was held not to be extended by Part 8 Rule 1 of the Supreme Court Rules, limiting the procedural avenues available in landlord-tenant disputes of this kind.
  • Where a grant of administration is revoked due to fraud, an administrator who paid estate funds to herself holds those funds without legal entitlement and is liable to repay them, subject only to credit for any amounts already recovered by the estate from third parties.

Legislation and Cases Referenced

Legislation:
- Family Provision Act (NSW)
- Landlord and Tenant Act 1899 (NSW), s 12
- Supreme Court Rules, Part 8 Rule 1
- Supreme Court Act (NSW), s 68

Cases:
- Re Guskett (Deceased) (1947) VLR 211
- Massie v Laundy (Young J, 7 February 1986)
- Phillips v Quinton (Powell J, 31 March 1988)
- Basto v Basto (Hodgson J, 8 September 1989)
- Singer v Berghouse (1994) CLR 201
- Goloski v Goloski (Court of Appeal, 5 October 1993)
- Luciano v Rosenblum (1985) 2 NSWLR 65
- Elliott v Elliott (Court of Appeal, 24 April 1986)
- Oliveri v Oliveri (Master Macready, 5 March 1999)
- Minister of State for the Interior v R.T. Co Pty Ltd (1962) 107 CLR
- Swain v McWhirter (Master McLaughlin, 29 August 1996)
- General Mediterranean Holdings (SA) v Patel [1999] 3 All ER 673