Hypotheticals by Manny Wood. Published in the Coffs Coast Advocate on 4 June 2016.
This week’s column looks at whether an unusually large “gift” should be repaid.
When Jane, a once successful business person, dies at the age of 88, she leaves her very large estate to her children equally.
Two years before her death, Jane signed a cheque for $1.2 million made-out in favour of her son-in-law, John.
When Jane’s other children discover this payment, they claim that it was a loan and should be repaid to Jane’s estate.
Jane appointed two independent executors to administer her estate and although they are unwilling to commence action regarding the payment, they are joined in the proceedings, which are heard in the Supreme Court of NSW, Sydney.
John claims, as defendant, that the cheque was a gift and he has no obligation to repay the funds.
During cross-examination, John says, given the size of the gift, that he was “stunned by it”. He says that without Jane’s “emphatic insistence” he was “resistant to the idea”.
The evidence indicates that John wrote-out the cheque before it was signed by Jane.
In relation to Jane’s capacity to make the gift, the court notes that in her last years, she was an “intelligent, perceptive woman, well in control of events and having good reasons for everything that she did”.
John’s wife, Jill did not give evidence at the hearing with John claiming that her poor health prevented her from doing so.
The court notes that there were some “imperfections” in John’s version of events but in circumstances where he was in his 70s and trying to recall events that occurred 5 years earlier, the court ultimately accepted his evidence.
The court found that there was insufficient evidence to support an application that the funds were a loan and dismissed the plaintiff’s case.
The plaintiff’s alternative cases, claiming that the payment was made as a result of deception or a mistake by Jane, were also dismissed.
If Jane and John signed a written Loan Agreement or Deed of Gift, litigation could have been avoided.
