New South Wales Supreme Court CITATION : Gazzo v Crimi [2008] NSWSC 217 HEARING DATE(S) : 5, 6 March 2008 JUDGMENT DATE : 17 March 2008 JUDGMENT OF : Gzell J DECISION : Legacy of $150,000 out of notional estate. CATCHWORDS : SUCCESSION - Family Provision and Maintenance - Failure of testatrix to make provision - Elderly daughter left nothing by mother - Executrix living in house, the only asset in the estate - Executrix's flats designated as notional estate - Executrix settled another claim by a sibling by legacy out of notional estate - Applicant's house subject to mortgage as a result of guarantee of son's business being called up - Whether a legacy sufficient to discharge mortgage is proper provision LEGISLATION CITED : Family Provision Act 1982 CATEGORY : Principal judgment CASES CITED : Singer v Berghouse (No 2) (1994) 181 CLR 201 Vigolo v Bostin (2005) 221 CLR 191 PARTIES : Agata Gazzo - Plaintiff Venera Elena Crimi - Defendant FILE NUMBER(S) : SC 4324/06 COUNSEL : Mr A Hill - For Plaintiff Ms A Healey - For Defendant SOLICITORS : Villari & Co. Lawyers - For Plaintiff Egisto Solicitors - For Defendant IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION GZELL J MONDAY 17 MARCH 2008 4324/06 AGATA GAZZO v VENERA ELENA CRIMI JUDGMENT 1 Agata Gazzo seeks an order for provision from the estate of her mother, the late Grazia Crimi. The defendant, Venera Elena Crimi, her older sister, is the executrix of the estate. 2 There is but one asset of the estate, a house at Homebush valued at $650,000 but requiring repairs in the agreed amount of between $100,000 and $120,000. Ms Crimi now lives there. It had been the matrimonial home of her parents. 3 Ms Crimi owns what was described in the evidence as a block of flats in Homebush, perhaps more accurately described as a duplex. The flats are worth $670,000 but require $20,000 to be spent on them to be make them habitable. 4 In a related matter in which Mrs Gazzo's brother, Phillip Crimi, sought provision from the estate, I made an order under the Family Provision Act 1982, s 24 designating the flats as notional estate of the deceased. That designation is equally applicable to these proceedings. Ms Crimi desires to remain in the house and desires any provision the Court might make in favour of Mrs Gazzo to be made out of the proceeds of sale of the flats. 5 Ms Crimi never married. In addition to holding down a number of jobs she tended to her mother and father. She regarded the house and the flats as her places of occupation but when she bought the flats, and until they became uninhabitable, she slept in one of them. During the illness of her father and her mother it was Ms Crimi who tended to them. 6 By his will, Ms Crimi's father, the late Luigi Crimi, appointed the deceased as his executrix and gave her his whole estate. The will provided that if she did not survive him by 30 days, Ms Crimi was appointed executrix and given the whole of the estate. The will concluded with the words: "I have given my estate to my daughter, VENERA ELENA CRIMI because she has been the one who has looked after my wife and myself in our old age and deserves to be rewarded for the care and attention she has given us. My other children I am certain will understand and appreciate the reason why I have given the estate to Venera." A like statement was contained in the will of the deceased. 7 The family lived in Agira in Sicily. Mrs Gazzo was the second of five children. Phillip was the youngest. Ms Crimi was the eldest. Upon completing elementary school in fifth class, Ms Crimi went on with further education until she was in her twenties. By contrast, Mrs Gazzo was withdrawn from elementary school in fourth class to take care of her younger siblings and to do most of the housework. 8 Mrs Gazzo became engaged to her future husband against the wishes of the deceased. She said Mrs Gazzo was too young. She wanted Ms Crimi to marry first. She did not like the influence the future husband had over Mrs Gazzo and she did not like him. 9 Mr Crimi migrated to Australia in 1952. He was joined by the third child, Guiseppe, in 1954. Mrs Gazzo continued to do the housework until she married in 1955 and moved to Catania with her husband. In 1957 the deceased told Mrs Gazzo that she and her husband could live in the house in Agira on condition that Mr Gazzo completed some renovations. Mr and Mrs Gazzo moved and her husband completed the renovations. 10 In 1958, the deceased and her other children, other than Mrs Gazzo, joined Mr Crimi in Sydney. Prior to their leaving, Mrs Gazzo said her husband borrowed 350,000 lira and gave it to the deceased. Ms Crimi denies that this happened. In those days a labourer could expect to be paid between 2,000 lira and 3,000 lira a week. 11 Mrs Gazzo said that before they left for Australia, the deceased and Ms Crimi told Mr Gazzo to approach Mr Crimi for more money to finish the renovations on the house than was required. Mr and Mrs Gazzo refused to do so. Desperate for money, the deceased told Mrs Gazzo they had no choice but to migrate to Australia. Mr Gazzo refused to pay the deceased a lump sum as rent for the house and a further block of land they owned to allow her to purchase clothing and furniture to take to Australia. 12 Mrs Gazzo wrote letters to her parents in Australia but received no reply. There was an animosity towards Mrs Gazzo by the deceased. 13 In 1957 Mr and Mrs Gazzo returned to Catania. Ms Crimi and Giuseppe stayed with them in 1965, rent free for nine months while Ms Crimi attended to the sale of the Agira house and the other land. 14 Mr and Mrs Gazzo migrated to Australia in 1968. They were met by Mr Crimi and her siblings but the reception, she said, was quite cool. She visited her mother but said she always received a cold reception as if she were not there. Despite feelings of rejection, Mrs Gazzo continued to visit her parents. She said the deceased refused to see her husband although Mr Crimi was friendly with him. 15 Mr Gazzo suffered a work injury in 1981 and has not worked since. Mrs Gazzo is now 74 years old. They receive a social security old age pension of $430 per week between the two of them. 16 Mr and Mrs Gazzo have a house at Ashfield valued at approximately $500,000. They have an Audi motor vehicle bought for them by their daughter for approximately $3,000. They have household furniture of approximately $5,000. 17 Mr and Mrs Gazzo have combined expenses of approximately $370 per week. 18 Leonardo Gazzo, their son, commenced business in 1988. His parents guaranteed that business providing security over their home. In 1992 the son's business failed and he became bankrupt. A mortgage of $150,000 was raised against their home. $1,300 per month is payable under the mortgage which is not due to be discharged until 2031. Mr and Mrs Gazzo's weekly expenses do not include a contribution to the mortgage repayments. They are paid by Leonardo Gazzo who intends to continue to make the payments. 19 Ms Crimi is now 76 years of age and in reasonable health. She receives a pension of $425.30 per fortnight. Since December 2002 there have been withholdings from the pension. The withholdings predate the transfer of the house to Ms Crimi in 2005. The withholdings are in payment of a debt due to Centrelink of $37,931.94. Ms Crimi denied that this debt arose because of rental income received by her from the flats. 20 Ms Crimi has been responsible for paying rates of $332.60 per quarter and land tax. She has a land tax debt on the flats of $3,808.40. In addition to the house and flats Ms Crimi has $16,000 in an investment services account and about $2,000 in a pensioner security account. 21 The notional estate is presently valued at $650,000 after repairs. It will be reduced by the land tax debt and by costs. Mrs Gazzo's costs have been estimated at $80,731.95. Ms Crimi's costs are estimated to be $50,650. There is no claim upon the notional estate for costs by Phillip Crimi. The notional estate is also reduced by the settled provision of $150,000 in Phillip Crimi's favour. The net distributable notional estate is thus $364,809.65. 22 The Family Provision Act, s 7 provides that if an applicant is an eligible person, the court may order such provision to be made out of the estate of a deceased person as, in the opinion of the court, having regard to the circumstances at the time the order is made, ought to be made for the maintenance, education or advancement in life of the eligible person. Mrs Gazzo is an eligible person. The term is defined in s 6(1) to include a child of the deceased. 23 The Family Provision Act, s 7 is subject to the operation of s 9. Relevantly for present purposes, s 9(2)(a) provides that the court will not make an order in favour of an eligible person unless it is satisfied that the provision (if any) made in favour of the eligible person by the deceased either during the deceased's lifetime or out of the deceased's estate is, at the time the court is determining whether or not to make such an order, inadequate for the proper maintenance, education and advancement in life of the eligible person. 24 The principles to be adopted in applying these provisions are well known. In Singer v Berghouse (No 2) (1994) 181 CLR 201 at 208, the High Court stated that the provisions required the court to carry out a two-stage process. First, the court must determine whether the applicant has been left without adequate provision for proper maintenance, education and advancement in life. Secondly, if that determination is made in favour of the applicant, the court has to decide what provision ought to be made out of the estate. At 209 the High Court said that concepts of moral duty or moral obligation were not of useful assistance in elucidating the statutory provisions and might well amount to a gloss on the statutory language. 25 That approach was questioned by three members of the High Court in Vigolo v Bostin (2005) 221 CLR 191 at [15], [115]-[117] where their Honours expressed the view that considerations of moral claims and moral duty are useful as a guide to the meaning of the statute. There was no suggestion by the court that the two-stage process enunciated in Singer (No 2) should be abandoned. 26 In Singer (No 2) at 210, the High Court said that the first question must be judged 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 had legitimate claims upon his or her bounty. 27 In my view the first question is answered in the affirmative. Mrs Gazzo was a daughter of the deceased and she was a person whom the deceased ought to have had in contemplation as a person having a legitimate claim upon her bounty. Mrs Gazzo received no provision from the deceased during her life and she and her husband made contributions for the benefit of the deceased and the family during her life time. 28 As to the second limb of Singer (No 2), I am of the view that provision ought to be made in Mrs Gazzo's favour of a legacy of $150,000 out of the notional estate. This will enable her to clear the mortgage on the house and continue to live in modest circumstances. 29 It was submitted that the mortgage was Leonardo Gazzo's, that Mr and Mrs Gazzo were in receipt of a pension only when they guaranteed his business, that Mrs Gazzo had no expectation that she would receive any benefit from the deceased's estate and the Court should not make an order the effect of which is to relieve Leonardo Gazzo from liability under the mortgage. 30 Leonardo Gazzo has a moral obligation to make the mortgage repayments as he was the cause of the guarantee being called up and the mortgage taken. But the liability under the mortgage is that of Mr and Mrs Gazzo and the legacy I propose will relieve them of that burden. 31 I am comforted in arriving at this figure by the fact that Ms Crimi settled Mr Phillip Crimi's application for provision out of the estate by a legacy of $150,000. He is in far better financial circumstances than either Mrs Gazzo or Ms Crimi. 32 I will hear the parties on the appropriate terms of orders, including the question whether interest should be payable on the $150,000 legacy to Mrs Gazzo if not paid by a specified date. I will also hear the parties as to whether the notional estate should be limited to the extent necessary to meet the legacies to Phillip Crimi and Mrs Gazzo, any interest due to late payment and the orders for costs. As to costs, I will hear the parties on whether it is appropriate to order that the costs of Mrs Gazzo on a party and party basis and the costs of Ms Crimi on an indemnity basis be paid out of the estate. I direct the parties to bring in short minutes of order reflecting these reasons. ********** 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.