New South Wales Supreme Court CITATION : Handley v Cipollone [2002] NSWSC 347 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 4344/2000 HEARING DATE(S) : 18/04/2002 JUDGMENT DATE : 18 April 2002 PARTIES : EMMA HANDLEY v ROMOLO CIPOLLONE - ESTATE OF ARMANDO CERVONI JUDGMENT OF : Master Macready at 1 COUNSEL : Mr M. Willmott for plaintiff Mr M. Hilberry for defendant SOLICITORS : Eric Butler & Associates for plaintiff Autore & Associates for defendant CATCHWORDS : Family Provision. Claim by a daughter in respect of a small estate left to two of the deceased's grandchildren. Orders made in favour of the plaintiff. No matter of principle. DECISION : Paragraph 40 - 1 - THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION MASTER MACREADY THURSDAY 18 APRIL 2002 4344/00 - EMMA HANDLEY v ROMOLO CIPOLLONE - ESTATE OF ARMANDO CERVONI JUDGMENT 1 MASTER: This is an application under the Family Provision Act in respect of the estate of the late Armando Cervoni who died on 25 May 1999 aged seventy-four years. 2 The claim was brought by his only daughter. The deceased was survived by his two sons and also by his former wife from whom he had separated. His wife has been notified under the Rules and makes no claim. His two sons are aware of their right to make a claim and do not propose to do so. In these circumstances, it is unnecessary that they be served with notice under the Rules. 3 The deceased made his last will on 2 April 1997. He appointed the defendant, a friend, as Executor, and he gave the whole of his estate to two grandchildren, Marisa Rose Cervoni and Leah Maree Cervoni. The estate is a small one. 4 Its principal asset is a house at Wirra Place, Berkeley near Wollongong valued at somewhere in the area of $120,000. There is furniture worth $2,500, an unregistered car worth $250 and guns on the evidence valued at $870, a total of $123,620. 5 As with all these matters, costs intrude onto them. The plaintiff's costs are estimated at $30,000, somewhat high for a matter of this nature but probably as a result of there being a change of solicitors on the way through. The defendant's costs are estimated to be somewhere between $20,000 and $30,000. Apart from the actual assets, some of which may or may not be realised, it is obvious there will be expenses incurred in selling the house; there will be agents' fees, legal fees of somewhere between $3,000 and $5,000. Effectively, we are looking at an estate worth about $115,000 because the other matters will probably raise very little and there are these large costs which are imposed. 6 I will deal with the chronology of the matter. The deceased was born in 1926 and his daughter, the plaintiff, was born on 28 July 1950. His son Peter was born on 26 January 1952 and his son John on 17 July 1966. 7 The plaintiff married in 1961 and stayed at home for a few years before moving out and living her own life. 8 It was in March 1977 that the deceased and his wife separated. In that year, the plaintiff's first child, Joshua, was born and in 1978 the deceased and his wife were divorced. In 1979 the plaintiff's second child, Anthony, was born. 9 The plaintiff separated from her husband and in due course in 1993 she commenced a de facto relationship with Antonio Foini, and they have continued to live together to the present time. 10 The deceased's last will was made on 2 April 1997. 11 In 1998, various proceedings were commenced against a company, Tantii Pty Limited, and its directors, who include the plaintiff. These proceedings were brought by the Fair Trading Tribunal. In addition, the company has now been sued by a supplier in the District Court claiming a debt of $121,339.81. That claim is defended and there is a cross-claim brought. 12 The deceased died in May 1999. This was before what was to turn out to be a very material change in the plaintiff's circumstances. She and her company suffered a judgment of a substantial amount as a result of the Fair Trading Tribunal proceedings and she had to increase her mortgage in 1999 from about $100,000 up to $300,000. 13 Probate was granted on 27 October 2000 and the summons was filed on 25 October 2001 within the time prescribed by the Act. 14 In applications under the Family Provision Act, the High Court in Singer v Berghouse (1994) 181 CLR 201 set out the two-stage process the court must take. At page 209 it said the following: "The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Limited . The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or what, in all the circumstances, was the proper level of maintenance etc appropriate for the applicant 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 have legitimate claims upon his or her bounty. The determination of the second stage, should it arise, involves similar considerations. Indeed, in the first stage of the process, the court may need to arrive at an assessment of what is the proper level of maintenance and what is adequate provision, in which event, if it becomes necessary to embark upon the second stage of the process, that assessment will largely determine the order which should be made in favour of the applicant. In saying that, we are mindful that there may be some circumstances in which a court could refuse to make an order notwithstanding that the applicant is found to have been left without adequate provision for proper maintenance. Take, for example, a case like Ellis v Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors." 15 As directed by the High Court, I turn to consider the plaintiff's situation. She lives in a de facto relationship, which has been ongoing for some years. She is presently aged fifty-one and has two children aged twenty-two and twenty-five. They are still at home and suffer fluctuations in their present position. Sometimes some of them pay board, which she receives but this is largely expended in their upkeep. She is fortunately in good health. 16 She and her partner have an income from the business, to which I have referred. It is apparently a business which imports and installs various items and the income which the plaintiff and her partner receive is somewhat modest. Last year her taxable income was in the order of $22,651 and that of her partner was $19,246. All of this income is taken up with their expenses. 17 Their expenses include mortgage repayments as a result of the increase in the mortgage, to which I will refer. The repayments are $26,774.28 per annum, which is approximately fifty-six per cent of their income. They have assets. They have a home at Sandy Point near Wollongong, which is worth between $540,000 and $575,000. They have a car worth $8,000 and have recently sold their other car. They have furniture which is not insured but which they estimate has a value of $10,000. They have personal effects between them of $5,000 and cash of about $9,000. Between the two of them, their superannuation amounts to some $22,864 but less would be paid if they terminated that superannuation. 18 There is an interest which the plaintiff has in the Bill Fisher Trust. Although the trust owes her $88,000 it is apparent that the Trust finished a few years ago and the only debts to be collected are slightly in excess of $8,000. Accordingly, that is all that she would be likely to receive from that trust. 19 The mortgage I have mentioned is currently, in December 2001, $290,085 and is very slowly, and I emphasise very slowly, being reduced by her mortgage payments. There is tax liability of $1,244 for her partner. 20 The claim which has been brought in the District Court is one relating to the importation of some goods. That claim is defended and although I have the pleading I really have no information which would enable me to determine whether or not that a liability will materialise. All that can be said, as the plaintiff probably well knows, is that if there is litigation there are the costs of defending proceedings and that is something she will face. 21 The relationship with the deceased was something which, of course, the court must take into account. The evidence shows that the plaintiff continued to keep in touch with her father even after the divorce in 1977. 22 The plaintiff would take her children to see him and she would also help by taking her brother Peter's children also to see the deceased. This may be a reason why the deceased wanted to favour his two grandchildren. 23 It became apparent that after the separation of the deceased and his wife, the deceased became somewhat demanding and he insisted that the plaintiff not contact her mother. That, of course, was quite unacceptable and placed great strain on the plaintiff. Notwithstanding this, she continued to visit her father and for some time she had difficulty with her father. That culminated in 1990 in a conversation which was late at night when the deceased rang her complaining in a rambling way about her mother and ultimately called her various names that impugned her conduct and were probably very offensive to the plaintiff. The plaintiff had had enough of this. It had been happening a lot. She was subject of her father's railing against his wife and accordingly she slammed the phone down and did not speak to him again. 24 In my view, this break in the relationship was clearly the fault of the deceased, and I would not be critical of the plaintiff in this regard. Apart from her visits to keep in touch with her father in the years before this, there is no evidence of the contribution which helped to build up the estate of the deceased. 25 It is also necessary to have regard to the situation of others who have a claim on the bounty of the deceased. The only such persons are the beneficiaries under the will, namely, two of the deceased's grandchildren. They are Marisa Rose Cervoni and Leah Maree Cervoni, aged sixteen and fourteen. They have a brother but he did not benefit under the will. Both of these children are at school in their teenage years. They are in good health, doing well and, presumably, have no assets. 26 Peter Cervoni is their father. He and his wife have recently separated. Notwithstanding this, he has indicated that he is able and will continue to support the children in their education and until they become self-sufficient. He himself gave no details of his assets. 27 The plaintiff referred to them in her affidavit, and she indicated that he had three houses and land, motor vehicles and that he was employed as a landscaper. Apparently, she estimated his assets at close to a million dollars. 28 Obviously with the divorce that he is probably going to go through that asset base will be eroded, but it certainly indicates there is adequate there to look after his children. 29 There was, as I have indicated, contact between the deceased and his grandchildren, who benefited under the will, as the plaintiff used to take them to see him. 30 It is necessary to see how the plaintiff says she has been left without adequate provision and for her proper maintenance, education and advancement in life. In this regard, she puts forward the change in her financial position, which resulted from the awards against her company, herself and her partner in the order of $270,000. In 1999, their mortgage was only $100,000 and their payments were $280 per week, a total of $14,560 per annum. 31 The company had some funds to meet the judgment but it was necessary to increase the mortgage to $300,000. That has happened and the mortgage is now something just under $290,000. 32 As I have pointed out, the current mortgage payments are in the order of some fifty to sixty per cent of their combined income. The need that she puts forward is one for advancement in life in order to reduce the amount of the mortgage, so that she can manage in a better way than she can at the moment. 33 It was put in submissions for the defendant that the plaintiff was perfectly well qualified, had extensive experience, was in a good situation in life and would be able to look after herself in the future. Frankly, I see the amount of wages that the plaintiff has and takes from her company as very minimal. 34 The situation of her and her partner is not anything luxurious. They might be lucky enough to have a home which has increased in value but that is not unknown in and around Sydney and Wollongong. And the other thing is that she is fifty-one years of age. She might have done a lot of things in the past but she is now at that age and facing a mortgage of some $290,000, which it is almost impossible for her to service. 35 Normally people would not be able to achieve the level of repayments which the plaintiff and her husband have without very, very careful control of their living and expenditure. In my view, she demonstrates a very good case for further advancement. 36 Clearly the reduction in the mortgage will help her enormously. It will allow her to have some provision. It will also help her with the costs obviously that are going to be incurred in defending the ongoing District Court proceedings. 37 Against this one has the position of the two children. Clearly enough, bringing up children is an important matter and it is important that the children receive some proper education, which fits them for the skills they have. All the evidence before me points to the fact that their parents are well able to do that. Admittedly, there is clearly the deceased's desire to benefit them but the precise reasons why the two of them were chosen do not appear in the evidence. 38 It would be appropriate for them to receive something I would have thought but I would have thought that the majority of the estate ought to pass to the plaintiff. The problem is that there are enormous costs. If the costs are as high as they are estimated, one is only looking at an estate of about $55,000 left to all claims. 39 Now in the context of that, it seems to me that the only thing I can do is to change the provisions of the will to provide a small legacy for the grandchildren and the residue to go to the plaintiff. 40 Accordingly, the orders I make are as follows:- In lieu of the provision in cll 2.3 and 3 of the will, I order that there be: (a) a legacy for Marisa Rose Cervoni for $5,000; (b) a legacy for Leah Maree Cervoni for $5,000; (c) that the residue of the estate be held for the plaintiff. I order that the plaintiff's costs be on a party and party basis and the defendant's on an indemnity basis to be paid or retained out of the estate of the deceased. I order that interest will run on the legacies at the rate provided for under the Wills, Probate and Administration Act as from three months after the date of today. I order that the exhibits be returned. ********** Last Modified: 04/24/2002 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.