New South Wales Supreme Court CITATION : Guisande v Rosario [2008] NSWSC 860 HEARING DATE(S) : 1 May 2008 JUDGMENT DATE : 21 August 2008 JUDGMENT OF : McLaughlin AsJ 1. I order that, in lieu of the benefits given to her by clauses 4 and 5 in the will of the late Eduardo Hernandez Guisande ("the Deceased"), and in addition to the other benefits given to her by that will, the Plaintiff receive a legacy in the sum of $360,000, such legacy not to bear interest if paid on or before 21 November 2008, and if not so paid to bear interest at the rates prescribed for unpaid legacies by the Probate and Administration Act 1898. DECISION : 2. I order that the costs of the Plaintiff on the party and party basis and the costs of the Defendant on the indemnity basis be paid out of the estate of the Deceased. 3. The exhibits may be returned. CATCHWORDS : SUCCESSION - family provision - claim by widow - lengthy marriage - matrimonial home is only significant asset - plaintiff given right of residence - financial and material circumstances of Plaintiff - whether Plaintiff has been left without adequate provision for her proper maintenance - competing claims of other beneficiaries - claim of a widow is not automatically to be accorded primacy over all other claims. LEGISLATION CITED : Family Provision Act 1982 CATEGORY : Principal judgment Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 CASES CITED : Bladwell v Davis [2004] NSWCA 170 Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 19 PARTIES : Mercedes Bernia Guisande (Plaintiff) Rosario Kitto (Defendant) FILE NUMBER(S) : SC 2573 of 2007 COUNSEL : Mr P. Blackburn-Hart SC (Plaintiff) Mr R. Tregenza (Defendant) SOLICITORS : Lee Hourigan & Brooks (Plaintiff) Russell Kelly & Associates (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION ASSOCIATE JUSTICE McLAUGHLIN Thursday, 21 August 2008 2573 of 2007 MERCEDES BERNIA GUISANDE –v- ROSARIO KITTO JUDGMENT 1 HIS HONOUR: These are proceedings under the Family Provision Act 1982. 2 By summons filed on 4 May 2007 Mercedes Bernia Guisande claims an order for provision out the estate of her late husband Eduardo (also known as Edward) Hernandez Guisande (to whom I shall refer as "the Deceased"). 3 The Deceased died on 5 July 2006, aged about 83. He left a will dated 3 November 2004, probate whereof was on 10 July 2007 granted to Rosario Kitto, the executor named in such will (who is the Defendant to the present proceedings). 4 The inventory of property discloses the only significant asset in the estate to be a house property situate at and known as 162 Buffalo Road, Ryde, to which an estimated value of $383,000 was attributed. The only other assets were shares (having an estimated value of $2724) and personal effects and jewellery (having an estimated value of $590). 5 In addition, the inventory of property discloses various assets owned by the Deceased conjointly with the Plaintiff (being three term deposits, a bank account and shares in Telstra Corporation Limited), having a total estimated value of almost $57,000. 6 By his will the Deceased gave to the Plaintiff a right of residence in the house property at Ryde (which had been the matrimonial home of himself and the Plaintiff), subject to the Plaintiff paying all rates, taxes, and other outgoings and insurance premiums, and keeping the house in repair. The will further provided that the house and contents should not be sold without the written consent of the Plaintiff, or until she ceased to reside in the house permanently or to comply with the foregoing conditions of her right of occupation therein. The will also provided that, upon the written request of the Plaintiff, the trustees should sell the Ryde property and buy another residence to which the same provisions would apply. 7 The will then provided that when the Plaintiff should cease to live permanently in the Ryde residence or in any substitutionary residence, then such residence "shall be divided and distribute [sic] equally amongst such of my children ROSARIO KITTO, REMEDIOS TOWERS and CHRISTINA BYRNE as survive me and attain twenty five (25) years of age". 8 After making four gifts, each in the sum of $8750 (one such gift being given to each of the Deceased's four children), the Deceased by his will gave the residue of his estate to the Plaintiff. 9 At the commencement of the hearing it was noted that the parties were in agreement that the house property at 162 Buffalo Road, Ryde has a present value of $542,500. 10 In calculating the value of the estate available for distribution the costs of the present proceedings, should be taken into account, since normally the Plaintiff, if successful, will be entitled to an order that her costs be paid out of the estate, whilst normally the Defendant, irrespective of the outcome of the proceedings, will be entitled to an order that her costs be paid out of the estate. It was estimated on behalf of the Plaintiff that her costs will total about $30,500, whilst it was estimated on behalf of the Defendant that her costs will total $38,000. 11 Accordingly, it is appropriate to proceed upon the basis that the value of the distributable estate is in the order of about $477,000. When the total amount of $35,000 (representing the four legacies of $8750 each) is deducted from the value of the estate, there will remain an amount of about $442,000. Further, the costs of administration of the estate were estimated to be $6119. 12 The Deceased was born in Philippines in 1923. He married his first wife, Mercedes Perez, in the Philippines in 1946. Of that marriage were born four children, being Rosario (Mrs Kitto), who was born on 16 October 1950 and is presently aged 57; Remedios (Mrs Towers), who was born on 2 April 1955 and is presently aged 53; Christina (Mrs Byrne), who was born on 26 October 1958 and is presently aged 49; and Maricar, who was born on 3 January 1968 and is presently aged 40. 13 In or about 1965 the Deceased, his wife and the three children who by then had been born to them emigrated to Australia, and the Deceased commenced employment at a sawmill. The Deceased's youngest child, Maricar, was born in the Philippines. Apparently she was not a daughter of the late Mrs Merecedes Perez Guisande, and the Plaintiff herself only became aware of the existence of Maricar when the Deceased so informed her in 1993, and also told her that from 1975 he had regularly been sending money to Maricar, in amounts of at least $300 a month. According to the Plaintiff, the Deceased continued to make those payments to Maricar until his death. The Plaintiff said that the Deceased was also regularly sending money to his sister Mary and her family in the Philippines, in amounts of between $300 - $400 each month. When Mary died in June 1998 the Deceased paid $800 towards her funeral expenseses. 14 Shortly after their arrival in Australia, the Deceased and Mrs Mercedes Perez Guisande purchased the residence at 162 Buffalo Road, Ryde ("the Ryde property") on 23 December 1965, that purchase being funded by a loan from the CBC Savings Bank, secured by mortgage. 15 Mrs Mercedes Perez Guisande died on 7 January 1971. 16 The Plaintiff also was born in the Philippines, on 4 November 1929 (she presently being aged 78). In or about 1972, the Plaintiff emigrated to Australia. At the outset she resided with her brother, and she subsequently commenced employment as a sales assistant with Farmers (later known as Myer). 17 The Deceased and the Plaintiff were married on 18 October 1975, and the Plaintiff (who to that time had been living in rented accommodation at Gladesville) moved into residence in the house property at Ryde, bringing with her all her own furniture and possessions. That house property was the matrimonial home of the Plaintiff for the entire 31 years of her marriage to the Deceased, and she continues to resides there to the present time. 18 At the time of their marriage there was an amount of about $6,000 outstanding upon the mortgage over the Ryde property. It was the evidence of the Plaintiff that the payments on that outstanding mortgage were, after the marriage of the Plaintiff and the Deceased, made from a joint bank account to which the Plaintiff and the Deceased contributed more or less equally. 19 According to the Plaintiff the Buffalo Road house property was in a run down and neglected condition, and most of the furniture and furnishings therein were old and in poor condition. The Plaintiff gave evidence of the work which was done to the Ryde property by way of renovation and repairs, and by way of replacement of furniture and furnishings. 20 At the time when the Plaintiff married the Deceased, his daughter Christina (known as Tina), who was still at school, was residing with him. She continued to live with the Deceased and the Plaintiff in the Buffalo Road residence until she left home in about 1978 or 1979. Although it was the Plaintiff's evidence that Christina did not contribute to the household expenses, nevertheless it was Christina's evidence (upon which she was not cross-examined) that whilst in employment and living at Buffalo Road she paid board of about $50 a week. 21 In about 1979 the Deceased left his employment with Watson & Victor as a storeman. After a period of unemployment he worked for RCA Records. He was subsequently employed for Johnson & Johnson and later he worked for Telectronics. The Deceased retired from employment in about 1987. The Plaintiff retired from her employment with Myer in about 1990. 22 The Deceased suffered from various health problems throughout his marriage to the Plaintiff. The Plaintiff said that the Deceased was not a very healthy man, and that he was constantly sick and in hospital. She gave details of those health problems and the various periods in which the Deceased was hospitalised. It fell to the Plaintiff to look after the Deceased during his periods of ill health, especially after his health significantly declined in 2002, and he was diagnosed as suffering from pancreatic cancer. 23 During the period of her employment the Plaintiff contributed her income to the relationship with the Deceased. After his retirement in 1987 the Plaintiff supported him from her earnings. During several periods while the Deceased was unemployed (those periods totalling four and half years) he received little by way of unemployment benefits, and the Plaintiff's income was applied towards the joint expenses of herself and the Deceased during those periods). When the Deceased retired in 1987 he received a superannuation payment of $6,000. From the beginning of 1988 until the Plaintiff's own retirement in 1990 the Deceased's fortnightly pension was $69.10. Throughout that period the Plaintiff was the main income earner, and she and the Deceased subsisted from the Plaintiff's salary and the Deceased's pension. 24 Upon her retirement from employment in 1990 the Plaintiff received a superannuation payment of $40,500 and accumulated long service leave in an amount of $1704. She applied those payments to the relationship with the Deceased. 25 At the present time the Plaintiff's assets consist of: St George term deposit $23,285 St George savings account $28,619 400 Telstra shares, having an estimated value of $1,600 26 The Plaintiff has no debts or other liabilities. 27 The Plaintiff's present income consists of a pension of $516 a fortnight, together with interest of about $240 a month upon her savings. That is, the Plaintiff's total income is about $16,300 a year. The Plaintiff gave evidence her outgoings, totalling about $18,350 a year. 28 The Plaintiff is in reasonable health for a ladyof her age. However, she suffers osteoarthritis in the back, high blood pressure, a hiatus hernia and deep vein thrombosis to her left leg. 29 It is the Plaintiff's present desire to remove from the Buffalo Road residence, since she said that it brings back many sad memories. She said she is desirous of acquiring a smaller, single level villa or townhouse, and of being able to spend some time with her sisters overseas. She also expressed a desire to own her own residence, and to be financially independent from her stepchildren. The Plaintiff expressed a desire to reside near her brother, who lives at Castle Hill. She said that housing in that area was more affordable than in Ryde. 30 The Plaintiff provided details of searches which she had conducted in December 2006 and in April 2008, concerning the cost of housing in the Castle Hill area. 31 The claim of the Plaintiff must be approached in the light of competing claims upon the testamentary bounty of the Deceased. The only such competing claims are those of the Deceased's four children. 32 I shall, for convenience and without intending any disrespect, refer to each of the four children of the Deceased by her given name. 33 It should here be recorded that three of those four children disclosed details of their financial and material circumstances. The remaining child, Remedios, has not done so. 34 Rosario is presently aged 57 and is divorced. She married Kenneth Kitto in 1968. Of that marriage were born two children (now aged respectively 39 and 33), who apparently are no longer dependent upon Rosario. Rosario and her husband, who was a medical practitioner, separated in about 2003, and subsequently divorced. After their separation they sold their matrimonial home at North Richmond. 35 Rosario presently owns a one half interest in a residential property situate at and known as 19 Pitt Lane, North Richmond. That property has an estimated value of $655,000 and is subject to mortgage in an amount of $450,000. Rosario's current equity in the property is $102,500, her liability under the mortgage presently being $225,000. 36 Rosario also has the following assets: Savings account, ING Bank (Australia) Limited, about $26,743 1991 Holden Barina Hatch motor vehicle, having an estimated value of $3,000 Household goods and furniture, having an estimated value of $20,000 Personal effects and jewellery, having an estimated value of $10,000 37 Rosario's only liability is the mortgage on the Pitt Lane property. 38 Rosario's income consists of: Disability support pension $375.85 a fortnight Pharmaceutical allowance $5.80 a fortnight Rent assistance $104 a fortnight Allocated pension $392.30 a fortnight Interest on bank accounts $71.83 a fortnight Rental income (being one half of income from Pitt Lane property) $500 a fortnight Total $1,449 a fortnight 39 Rosario gave evidence concerning her outgoings, which, upon my calculations, total $2314 a fortnight. The chief items of those outgoings are rent of $300 a week (which the Plaintiff pays for her present accommodation), and an amount of about $684 a fortnight, representing Rosario's one half share of the mortgage payments on the Pitt Lane property. 40 Rosario is not in good health. She suffers from high blood pressure, cataracts on both eyes, chronic back problem, problems with her teeth. She also suffers from psychiatric problems. She receives treatment from various medical practitioners and a dental surgeon. She is currently taking medication for pain suppression, high blood pressure, hormonal treatment, allergies, and depression. She has recently undergone surgery to her back. However, the evidence was far from clear as to the cost to Rosario herself for that surgery. It would appear that most of the cost of that surgery, has been (or will be) met by Rosario's private medical fund. 41 Rosario is currently in a relationship with Edwin Frederick Gadd. Mr Gadd, who is presently aged 62, owns the other half interest in the house property at Pitt Lane. It is the intention of Rosario and Mr Gadd to marry after they move into residence in that property. (They have given the present tenants a notice to vacate.) When Rosario marries Mr Gadd she will lose her entitlement to her present disability support pension. She and Mr Gadd will then be chiefly reliant upon his income, which is in an amount of about $128,000 gross a year. The Pitt Lane residence was purchased by Rosario and Mr Gadd in June 2007 for about $655,000. Although it is in reasonably good condition, Rosario said that it needs new tiles and carpets, which she estimates would cost about $10,000. She also expressed a desire for extensions to be effected to that house, and for the acquisition of various new items of furniture and furnishings (at a total cost of about $8,300). 42 Rosario is desirous of replacing her present motor vehicle, which is 16 years old. She said that the cost of replacement by a new Holden Barina Hatch motor vehicle (taking into account the trade in value of her current motor vehicle) would be in the vicinity of $15,000. 43 Christina is presently aged 49. She and her husband reside in rented accommodation at Eastwood. Christina is employed in a casual capacity as a dining room assistant. For the year ended 30 June 2006 her taxable income was almost $22,700. Her husband, Chris Byrne (who is presently aged 53) is self employed, operating a coach touring business. His net taxable income for the same year, was $26,706. The net taxable income for his business for that year was $17,355. The total net taxable income for Christina, her husband and his business for the year ended 30 June 2006 was $66,754. Christina gave evidence concerning outgoings of herself and her husband, totalling $63,348 a year. 44 The assets of Christina and her husband consist of: Motor vehicle coach $65,000 Superannuation (Christina) $34,818 Superannuation (Chris) $4,781 Savings account $7000 Coach touring business, which according to Christina is now worth no more than the value of the motor coach. Household goods and furniture, estimated value of $2,500 Personal effects and jewellery, estimated value of $2,000 1987 Nissan Civilian mini-bus, estimated value of $6,000 45 The liabilities of Christina and her husband consist of: Westpac visa gold credit card (Christopher) $9,000 Aussie mastercard (Christopher) $8,000 46 It was the evidence of Christina that she and her husband expected that their business would cease by the end of 2007, and that Chris would then be unemployed. It was Christina's evidence that in 1979 she was retrenched from her employment when her employer company closed down. She then worked in Melbourne for two years. Upon returning to Sydney in 1981 she resumed living with the Deceased and the Plaintiff until 1983. During that later period Christina was unemployed. However, it was her evidence that she nevertheless paid board of about $50 a week. She finally moved out of the Buffalo Road property in 1983. 47 Christina suffers from a number of health problems. She takes medication for blood pressure. She also suffers from type 2 diabetes, although she does not take any medication for that condition. She said that she requires treatment for bilateral varicose veins, and wears surgical stockings for that condition. 48 Christina and her husband do not own their residence. It was Christina's evidence that she was depending upon the inheritance from her father's estate to use as a deposit on the purchase of a residence. Christina gave evidence concerning the need to repair and replace various items of furniture and furnishings in her home, including various pieces of electronic equipment and a bedroom suite (to a total cost of about $4,100). Christina expressed a desire to visit relatives in the Philippines and Spain, saying that her father had also desired to do so. She estimated that the cost of such a trip would be in the vicinity of $5,000. 49 The Defendant filed an affidavit sworn by Maria Carmen (Maricar M.) Guisande, the youngest child of the Deceased. Maricar (for I will refer to her by that name), who was born on 3 January 1968 in the Philippines and is now aged 40, is unmarried. Maricar has lived in the Philippines all her life. She is currently employed as a call centre representative/financial consultant with the Hong Kong and Shanghai Banking Corporation, receiving a net monthly income in the equivalent of $266. 50 Maricar's assets consist of: Home appliances, having an estimated value of $1,252 Savings account with LBC Bank $577 Savings account with HSBC Bank $78 51 Maricar gave evidence concerning her current living expenses, in a total amount of about $262 a month. The most significant of those expenses is the rental of her apartment, in an amount of $118 a month. 52 Maricar does not have any liabilities. Her health is good. 53 Maricar expressed a wish to purchase her own residence (on which the cost of a deposit would be about $6,565). She also expressed a desire to purchase a second hand motor vehicle, since her place of work is 10 kilometres from her residence, and she said that public transportation is scarce at the times when she travels to and from work. She said that the cost of a second hand motor car would be about $4,858. 54 Maricar said that during her father's lifetime he sent her financial support of $236 a quarter and that they communicated regularly by telephone and through letters. The Deceased visited Maricar whenever he was in the Philippines on vacation, and he also prepared documentation sponsoring her to migrate to Australia. Maricar expressed a desire to visit Australia, and, if possible, to migrate to this country. She estimated that the cost of airfares and accommodation would be about $3,000. 55 It is in the light of the foregoing facts and circumstances that the Court must proceed to a consideration of the claim of the Plaintiff. 56 I have had the benefit of receiving a written outline of submissions and a chronology from Counsel for the respective parties. 57 The Plaintiff as the widow of the Deceased is an eligible person within paragraph (a) of the definition of that phrase contained in section 6 (1) of the Family Provision Act. As such, she has the standing to bring the present proceedings. It will be appreciated that each of the four children of the Deceased is also an eligible person in relation to the Deceased, each of those children being an eligible person within paragraph (b) of the foregoing definition. 58 In carrying out the first stage in the two-stage process identified by the High Court of Australia in Singer v Berghouse [1994] HCA 40; (1994) 181 CLR 201 at 208 – 210 (the correctness of which test was affirmed by the High Court in Vigolo v Bostin [2005] HCA 11; (2005) 221 CLR 191) the Court must determine whether in consequence of the provisions of the will of the testator the applicant has been left without adequate provision for her proper maintenance. 59 The High Court in Singer v Berghouse (at 209 – 210) said that the determination of the first stage calls for an assessment of whether the provision (if any) made was inadequate for 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. 60 The Defendant concedes that a bare right of residence (subject to the payment of outgoings and the keeping of such residence in repair), be it in the Buffalo Road property, or in a substitutionary property, is not adequate provision for the Plaintiff, who is presently aged 78. 61 The problem in the instant case is to determine the nature of the adequate provision which should be made for the Plaintiff within the constraints imposed by the value of the distributable estate. As I have already observed, the assets have a total value of a little under $546,000. The costs of both parties in the present proceedings total $68,500. It has been estimated on behalf of the Defendant that the costs of administration of the estate will be $6,119. That leaves a distributable estate of only $471,694. 62 The four legacies have a total value of $35,000. It will be appreciated that, even if the provisions of the will remain unaltered, it is inevitable that the house property must be sold, if only to pay the foregoing legacies. Once the costs of the present proceedings and the administration expenses are taken into consideration, there will remain only a little over $436,000. Even that calculation does not take into account the costs associated with the sale of the Buffalo Road property (such as estate agent's commission and legal costs). 63 It has been submitted on behalf of the Plaintiff that, in the circumstances of the instant case, the Plaintiff should receive the entirety of the estate absolutely. Such an outcome would then enable the Plaintiff to acquire a residence of her choice in the vicinity of Castle Hill, and no longer to be bound by any continuing practical relationship with the Defendant executor or other members of the Deceased's family. 64 The Defendant, however, pointed to the fact that none of the Deceased's four children are in affluent financial circumstances, although Rosario, on account of the income of Mr Gadd (her partner and her intended husband), is in a somewhat better financial position than her sister Christina and her half sister Maricar. 65 In Bladwell v Davis [2004] NSWCA 170, Bryson JA (with whom Ipp JA and Stein AJA agreed) made certain observations concerning claims of widows. Having reviewed a number of relevant authorities, he said at paragraph [19], it would be an error to accord to widows generally primacy over all other applicants regardless of circumstances and regardless of performance of the stages of consideration described in Singer v. Berghouse . 66 However, in agreeing with Bryson JA, Ipp JA said, at [2], I would add, however, that where competing factors are more or less otherwise in equilibrium, the fact that one party is the elderly widow of the testator, is permanently unable to increase her income, and is never likely to be better off financially, while the other parties are materially younger and have the capacity to earn more or otherwise improve their financial position in the future, will ordinarily result in the needs of the widow being given primacy. That is simply because, in such circumstances, the widow will have no hope of improving herself economically, whereas that would not be the position of the others. In that event, the need of the widow would be greater than that of the others. 67 The foregoing comments of Ipp JA are apposite to the facts in the instant case. 68 I consider that the following matters are relevant to the exercise of the Court's discretion in determining the nature of the provision which should be made in favour of the Plaintiff. First, the marriage of the Plaintiff and the Deceased was a lengthy one, subsisting for almost 31 years. The Plaintiff made significant financial contributions towards the conservation and improvement of the Buffalo Road property (including the payment of about half of the outstanding mortgage debt), and also towards the financial well-being of the Deceased. It was the Plaintiff's earnings which largely supported the household when the Deceased was unemployed and when he ultimately, on account of his health, had to give up work. It should not be overlooked, however, that the Deceased had a close and loving relationship with each of his four daughters, and gave financial assistance to his youngest daughter Maricar. 69 I have arrived at the conclusion that, first, the legacies to each of the four children of the Deceased should be preserved. Further, that from the balance then remaining in the distributable estate, the Plaintiff should receive a legacy in an amount sufficient to enable her to purchase an appropriate residence in the location of Castle Hill, that being her location of choice. The material disclosed in Exhibit 1 (concerning properties available for purchase or recently sold in such location) suggests that an appropriate residence could be acquired for about $350,000. To that sum should be added a further amount, of, say, $10,000, towards the Plaintiff's legal costs of such a purchase and her relocation expenses. 70 I propose, therefore, to order that, in lieu of the right of residence given to her by clauses 4 and 5 in the will of the Deceased, but in addition to the other benefits given to her in the will, the Plaintiff should receive a legacy in the sum of $360,000, and that the balance then remaining from the proceeds of sale of the Buffalo Road property should be distributed in accordance with the provisions of clause 6 of the will equally among Rosario, Remedios, and Christina. Upon my calculations that balance will be in the order of $ 76,000 (possibly somewhat less, when estate agent's commission and legal costs of the sale are taken into account). 71 I make the following orders: 1. I order that, in lieu of the benefits given to her by clauses 4 and 5 in the will of the late Eduardo Hernandez Guisande ("the Deceased"), and in addition to the other benefits given to her by that will, the Plaintiff receive a legacy in the sum of $360,000, such legacy not to bear interest if paid on or before 21 November 2008, and if not so paid to bear interest at the rates prescribed for unpaid legacies by the Probate and Administration Act 1898. 2. I order that the costs of the Plaintiff on the party and party basis and the costs of the Defendant on the indemnity basis be paid out of the estate of the Deceased. 3. The exhibits may be returned. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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