New South Wales Supreme Court CITATION : Lo Surdo v Public Trustee & Anor [2003] NSWSC 837 HEARING DATE(S) : 10 September 2003 JUDGMENT DATE : 17 September 2003 JUDGMENT OF : Gzell J DECISION : Application for summary termination and security for costs dismissed. Application for injunction dismissed. CATCHWORDS : SUCCESSION - Family Provision and Maintenance - Plaintiff non-resident son of deceased - 'Affiliato' to Italian couple - Whether adopted or fostered - Adopted child entitled to inheritance in Italy, 'affiliato' not - Plaintiff registered to property in Italy by succession at law to Italian 'affilianti' - Whether proceedings should be summarily dismissed - Whether plaintiff should provide security for costs - Estate of deceased largely distributed to sister as sole residuary beneficiary - Application by plaintiff to have property designated as notional estate - Whether sister should be enjoined from dealing with property Family Provision Act 1982 LEGISLATION CITED : Adoption Act 2000 Supreme Court Rules 1970 Foreign Judgments Act 1973 Lieberman v Morris (1944) 69 CLR 69 at 85 Re Whiting [1938] SASR 188 King v Foster (unreported, CA (NSW), 7 December 1995) Dey v Victorian Railways Commissioners (1948-1949) 78 CLR 62 General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 Swain Investments Ltd v Danumet Pty Ltd (unreported, SC (NSW), 5 May 1989) Connop v Varena Pty Ltd [1984] 1 NSWLR 71 Barton v Minister for Foreign Affairs (1984) 2 FCR 463 Kent Heating Ltd v Cook-on Gas Products Pty Ltd (1984) 59 ALR 277 CASES CITED : CBS Records Australia Ltd v Telmak Teleproducts (Aust) Pty Ltd (1987) 72 ALR 270 Singer v Berghouse (1993) 114 ALR 521 Re Simson decd; Simson v National Provincial Bank Ltd [1950] Ch 38 Re Ralphs decd; Ralphs v District Bank Ltd [1968] 1 WLR 1522 Re Gough decd; Gough v Fletcher (1973) 5 SASR 559 Massie v Laundy (unreported, SC (NSW), 7 February 1986) Deguara v Mercieca (unreported, SC (NSW) 23 August 1988) Packo v Packo (1989) 17 NSWLR 316 Moon v Gordon (unreported, SC (NSW), 30 April 1996) Carmelo Lo Surdo - Plaintiff PARTIES : The Public Trustee (as executor of the will of the late Carmela Cipolla) - 1st Defendant Iolanda Quagliero - 2nd Defendant FILE NUMBER(S) : SC 3317/02 COUNSEL : Mr R D Wilson - Plaintiff Mr V Ruta - 2nd Defendant N J Papallo & Co - Plaintiff SOLICITORS : P J Whitehead - 1st Defendant McBride, Harle & Martin Solicitors - 2nd Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION GZELL J WEDNESDAY 17 SEPTEMBER 2003 3317/02 CARMELO LO SURDO v PUBLIC TRUSTEE & ANOR JUDGMENT 1 The second defendant, Iolanda Quagliero, is the sole beneficiary under the will of her mother, Carmela Cipolla, deceased. She applied to stay or strike out the proceedings and, in the alternative, she sought an order for security for costs. The first defendant, the public trustee, is the executor and trustee of the estate. He did not appear on the application and will abide any orders of the court. 2 The respondent to the application, Carmelo Lo Surdo, is the plaintiff in the proceedings. He seeks provision from the estate under the Family Provision Act 1982, s 7. He says he is the son of the deceased. 3 The estate is almost completely distributed. In particular, a property at Rofe Street, Leichhardt, New South Wales and a property at Norool Street, Bargo, New South Wales have been distributed to the second defendant. The plaintiff seeks an order that the properties be designated as notional estate under the Family Provision Act 1982, s 24. 4 The plaintiff brought an application, upon which the first defendant will abide any order of the court, for an injunction restraining the second defendant from dealing with the properties pending the final determination of the proceedings. 5 The Adoption Act 2000, s 95(2) provides that an adopted child has the same rights in relation to the adoptive parents as a child born to the adoptive parents and the adopted child ceases to be regarded in law as the child of the birth parents and the birth parents cease to be regarded in law as the parents of the adopted child. 6 The second defendant argued that the plaintiff was adopted by Antonino Lo Surdo and Giuseppa Gaetano, his wife, and is not, in consequence, a child of the deceased nor otherwise within the definition of an eligible person in the Family Provision Act 1982, s 6(1). 7 The plaintiff's birth certificate naming him Carmelo Ranieri, contains an endorsement that he was affiliato to Antonino Lo Surdo and Giuseppa Gaetano. The word was initially translated to mean adopted. But Italian law experts retained by both sides are in agreement that affiliato refers to a status that was repealed in Italy in 1983, although persons of that status prior to the repeal continue under it. The affilianti, the affiliating parents, had rights of parental authority and were required to maintain the affiliato and to provide schooling and general education. 8 Under Italian law, an adopted child but not an affiliato has the same legal relationship as between legitimate or natural parents and a child including rights of inheritance. The translators now say that affiliato is best translated to mean fostered. 9 The natural parents of the plaintiff were not recorded in his birth certificate. There is, however, a deal of evidence in the form of letters from the deceased from which I would conclude for the purposes of these proceeding that the deceased was the natural mother of the plaintiff. 10 The plaintiff commenced proceedings in Italy for partition of the joint interests he said he had with Pietro Lo Surdo in a property to which they were said to have succeeded upon the death of Antonino Lo Surdo. 11 The request for registration of the real estate indicated that the succession devolved at law and not by succession. One of the Italian experts, Professor De Palma, explained that a succession at law can only be made in favour of children who are legitimate, legitimised, natural or adopted. In other words, a succession at law cannot arise with respect to an affiliato. 12 The succession was entered following a declaration made by Giuseppa Gaetano in 1960 that the plaintiff and Pietro Lo Surdo were her children. The plaintiff said he did not see his birth certificate until 1961 when he was married. He said that it was not until 2001 he was told by his Italian lawyer that because he was an affiliato he had no right of inheritance in relation to the Lo Surdo family. He gave instructions to his Italian lawyer to discontinue the partition proceedings. 13 It does not follow that because the plaintiff was registered as having succeeded to the property of Antonino Lo Surdo by law, he must have been adopted by that family. The registration came about because of the declaration by Giuseppa Gaetano that the plaintiff and Pietro Lo Surdo were her children. 14 The plaintiff's birth certificate does not establish that he was adopted. On the contrary, the expert evidence establishes that he was fostered and had no rights of inheritance to Antonino Lo Surdo's property. 15 It was not argued that the plaintiff was an eligible person within the definition in the Family Provision Act 1982, s 6(1) otherwise than as a child of the deceased. 16 The second defendant also submitted that the Family Provision Act 1982 had as its purpose the provision of proper maintenance for persons for whom a testator might be expected to have made provision and who in the absence of such provision might otherwise become a charge on the community. Reference was made to Lieberman v Morris (1944) 69 CLR 69 at 85, Re Whiting [1938] SASR 188 at 192 and King v Foster (unreported, CA (NSW), 7 December 1995). 17 It was submitted that the benefit of the legislation should not extend to the plaintiff who had no assets in Australia, who was domiciled in Italy, could not enter Australia otherwise than on a visitor's visa and had no desire to belong to the Australian community. 18 In my view, that submission ought not to be accepted on an application for summary termination of the proceedings. The opposition to it is clear. There is nothing on the face of the legislation that excludes a non-resident child with no intention of becoming part of the Australian community. 19 The principles applicable to summary dismissal of an action are well understood. The case must be very clear to justify summary intervention to prevent a plaintiff submitting his case for determination in the appointed manner (Dey v Victorian Railways Commissioners (1948-1949) 78 CLR 62 at 91). The court's powers of summary dismissal should not be exercised to deny a plaintiff access to the courts unless the lack of a cause of action is clearly demonstrated (General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125 at 129). 20 In my view, the second defendant has not established that the plaintiff is not a child of the deceased. A basis has not, in my view, been made out for summary termination of the proceedings. I will dismiss par 1 of the second defendant's notice of motion. 21 The second defendant's application for security for costs is brought under the Supreme Court Rules 1970, Pt 53 r 2(1)(a) which provides that where it appears to the court on the application of a defendant that a plaintiff is ordinarily resident outside the State, the court may order the plaintiff to give such security as the court thinks fit for the costs of the defendant of and incidental to the proceedings and the proceedings may be stayed until security is given. 22 While the plaintiff has no assets in Australia, he does have assets in Italy. Italy is listed as a country with respect to which the Governor was satisfied that its superior courts extended substantial reciprocity of treatment respecting enforcement of judgments given by the Supreme Court of this State as the Supreme Court of New South Wales extended to the enforcement of judgments of the superior courts of Italy for the purposes of the Foreign Judgments Act 1973, s 5(3). 23 In Swain Investments Ltd v Danumet Pty Ltd (unreported, SC (NSW), 5 May 1989), Cole J expressed the view that effective reciprocal legislation permitting enforcement of judgments of the Supreme Court of New South Wales in a foreign country by registration, had removed, substantially, the basis for ordering security for costs against, in that case, a company registered in the foreign country with its major assets there. Similar principles, in my view, apply to a non-resident individual. 24 His Honour referred to Connop v Varena Pty Ltd [1984] 1 NSWLR 71, Barton v Minister for Foreign Affairs (1984) 2 FCR 463 and Kent Heating Ltd v Cook-on Gas Products Pty Ltd (1984) 59 ALR 277. He concluded that if an order for security for costs was to be made, an appropriate order would be that the plaintiff provide security sufficient to cover the cost of registration in the foreign country of any judgment obtained by the defendant against the plaintiff in this court. 25 There was no estimate of this cost in the material before me. The claim for $100,000 was based upon estimates of expert Italian lawyer's fees and solicitor's and counsel's fees for a five day trial totalling $118,000. Were I minded to give security for costs based on the likely costs and expenses of the second defendant, I would regard a claim for $100,000 as excessive. 26 The mere fact that the plaintiff is a resident of Italy does not entitle the second defendant to an order for security for costs. Non-residence is a pre-condition to the exercise of the court's discretion but there must be something more to justify an order. The suggestion that plaintiff's case is weak is not sustained in light of the reasons expressed above for the view that the second defendant failed to demonstrate that the plaintiff is not the child of the deceased. 27 In CBS Records Australia Ltd v Telmak Teleproducts (Aust) Pty Ltd (1987) 72 ALR 270 Bowen CJ, in the absence of evidence to assist the court in relation to the amount that might be required for security, was not persuaded that he should exercise his discretion to make an order for security for costs. 28 In Singer v Berghouse (1993) 114 ALR 521 Gaudron J dismissed an application for security for costs of an appeal, for which the High Court had granted special leave, against a decision of the Court of Appeal of this State upholding a decision of a Master rejecting the appellant's application for provision from the estate of her late husband under the Family Provision Act 1982. 29 The appellant was the wife of the deceased. Her Honour pointed to the Family Provision Act 1982, s 33(3) which provides that the court should not order that the whole or any part of the costs of the proceedings made by an eligible person be paid out of the estate or notional estate of the deceased by reason only of the fact that the eligible person was a person described in par (a) or (b) of the definition of eligible person in s 6(1) or the fact that the court has made an order for provision in favour of the eligible person on the application. Her Honour remarked that it was by no means certain that even if the appellant was unsuccessful she would be ordered to pay the costs of her appeal to the High Court. 30 Similar considerations apply in the instant circumstances since a child is within par (b) of the definition of eligible person. Gaudron J went on to say that having regard to the special nature, so far as costs are concerned, of family provision cases and, in particular, the Family Provision Act 1982, s 33, the application for security for costs should be dismissed. 31 I respectfully agree with that course. Furthermore, if I had been minded to grant security for costs, I would have limited the amount to a registration fee in Italy of a judgment of this court. In the absence of any evidence as to this amount, or if evidence revealed a relatively small amount was payable, I would have exercised my discretion against making any order. I will dismiss par 2 of second defendant's notice of motion. 32 The plaintiff's notice of motion to restrain the second defendant from dealing with the properties distributed to her from the estate of the deceased, appears to have been motivated by the second defendant's notice of motion that the proceedings be struck out or security for costs be given. 33 Leave to amend the summons to include a claim for designation of the properties as notional estate was given in December 2002. The notice of motion for injunctive relief was filed on 4 July 2003, the second defendant's notice of motion having being filed on 16 June 2003. 34 On 18 November 2002, an undertaking was sought from the second defendant by the plaintiff's then solicitors. No further action was taken until 6 June 2003 when the present solicitors for the plaintiff sought an undertaking from the solicitors for the second defendant that she would not deal with the property pending the determination of the proceedings. No such undertaking was forthcoming. 35 There is some conflict in the authorities dealing with the question whether an executor should be restrained from dealing with the estate pending the determination of an application under the Family Provision Act 1982. 36 In Re Simson decd; Simson v National Provincial Bank Ltd [1950] Ch 38, Vaisey J held that an executor should make no distribution to beneficiaries while such proceedings were pending. At 42 he said that it was the paramount duty of an executor to avoid embarrassing the court and an executor should think several times before allowing any part of the estate to be paid out to any beneficiary while such an application was pending. 37 In Re Ralphs decd; Ralphs v District Bank Ltd [1968] 1 WLR 1522, Cross J disagreed with this approach. He took the view that when such an application was pending, the executors should form their own view as to payments that could properly be made and, if necessary, ask beneficiaries for their consent and if that was withheld an application could be made to the court for leave to make the payments in question. 38 Zelling J followed Re Simson in granting an injunction restraining the executor from selling portion of the real estate comprised in the estate to enable payment out of the proceed of sale of estate duty and other charges in Re Gough decd; Gough v Fletcher (1973) 5 SASR 559. 39 In Massie v Laundy (unreported, SC (NSW), 7 February 1986) the executor proposed to continue with an auction to sell portion of the realty in the estate to get a bigger income for the estate. Young J referred to Re Gough and Re Ralphs and granted an injunction on the basis that the court had power, at the suit of a claimant under the Family Provision Act 1982 whose case was not hopeless, to preserve the estate so that the court could deal with the application according to law. 40 Powell J doubted this line of authority in Deguara v Mercieca (unreported, SC (NSW), 23 August 1988). His Honour expressed the view that it was open to doubt whether the court had power, pending the hearing of an application under the Family Provision Act 1982, to restrain an executor to whom probate had been granted from distributing the testator's estate in accordance with the will of which probate had been granted. 41 In Packo v Packo (1989) 17 NSWLR 316, Young J referred to the difference of opinion in the authorities and maintained his view that the court had power to make orders of interim preservation of property pending the determination of such proceedings. 42 Finally, in Moon v Gordon (unreported, SC (NSW), 30 April 1996) Young J adhered to his view that there was jurisdiction to preserve the subject matter of proceedings before a court and in a proper case the court would grant an injunction. 43 The plaintiff relied on Packo. The bulk of the estate comprised funds invested in a finance company and some real property, both of which were held by the executor who was also the sole beneficiary. The plaintiffs had asked the executor not to use the moneys. There was no response. Young J treated the moneys as still in the hands of the executor even though they were in his hands as beneficial owner rather than trustee. The executor had not put forward any material to show any undue hardship in retaining the moneys at interest for a reasonable period of time and if the moneys were dissipated, the plaintiffs would be disadvantaged. His Honour granted an injunction. 44 It is to be noted that the bulk of the estate in that case was cash that could be easily dissipated. Furthermore, his Honour regarded the case as one of restraint of an executor and not one of restraint of a beneficiary to whom the estate had been distributed. 45 The question whether an injunction should be granted against a third party holder of property that might be designated as notional estate arose in Moon. The plaintiff sought an injunction against Prudential Australia Superannuation Ltd the owner of superannuation policy that was subject to the election of a beneficiary. It had been joined as a second defendant. The plaintiff sought to prevent it from dealing with or otherwise determining the policy. 46 Young J pointed out that the plaintiff was not in the position of a beneficiary under a trust. She merely had a statutory right. Moreover, the restriction under the Family Provision Act 1982, s 28 that the court is not to make an order designating property as notional estate unless the deceased left no estate or an estate insufficient to allow the making of proper provision, meant that where there was an actual estate and there were other persons to whom the deceased owed obligations to make provision, the applicant might not succeed in the designation. 47 His Honour went on to say that there was great doubt in his mind as to whether any order could be made restraining a stranger to the estate, who held notional property under the terms of a trust or contract from making a distribution to other persons not parties to the proceedings. His Honour did not finally decide the question, having determined that there was insufficient material on which to base an injunction. 48 Like the instant circumstances, the estate had been largely distributed in Deguara. Eleven children shared equally the residue of the estate. One of the children and her husband offered to buy the only substantial asset in the estate at a figure above valuation. The executor accepted the offer. Eleven cheques were then drawn and distributed to the beneficiaries. The plaintiff was one of the beneficiaries. She had earlier threatened to bring proceedings under the Family Provision Act. She sought orders that the executor be restrained from distributing the estate and that he be ordered to seek the return of funds from the beneficiaries. 49 Powell J observed that, the estate having been substantially distributed, the making of the first order would achieve little. He doubted that there was power to grant the injunction but in the exercise of his discretion he refused to do so. 50 In the instant circumstances, the second defendant refused to give an undertaking that she will not dispose of the properties in question. On the other hand, there is no evidence of any threat to sell either property. Unlike the refusal in Packo with respect to moneys that could easily be dissipated, the refusal in this case is, in my opinion, of less impact. 51 The properties having been distributed to the second defendant, I share the concerns of Young CJ in Eq as to whether there is power to restrain such a third party from dealing with property that may never be designated as notional estate. 52 I base my decision, however, on an exercise of discretion. Assuming that the court has power to grant the injunction, I refuse to do so. 53 There is no evidence of an immediate threat to dispose of the property. The plaintiff delayed in bringing the application. The inference I draw is that it was brought in response to the second defendant's notice of motion. The second defendant is in the position of a third party and more needs to be demonstrated than would apply under the court's inherent power to preserve an estate pending the determination of an application under the Family Provision Act 1982. The plaintiff's case is by no means strong in light of the difficulty he faces in overcoming the restriction in s 28 in light of the size of the estate and the obligation owed by the deceased to her daughter. 54 I will dismiss the plaintiff's notice of motion. I will hear the parties on costs. I direct the parties to bring in short minutes of orders reflecting these reasons. ********** Last Modified: 09/19/2003 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.