PATA v VUMBUCA

• 1 - THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2471/2001 DANIEL PATA v FRANK CARMELO VUMBACA - ESTATE OF THE LATE STELLA DIMARCO

1 MASTER: This is a hearing of an application under the Family Provision Act in respect of the estate of the late Stella Dimarco, who died on 3 August 2000, aged 91 years. The deceased's husband pre-deceased her and she left no issue. 2 The plaintiff, who is the deceased's nephew, was brought up by the deceased for the greater part of his childhood. The will of the deceased was made on 4 March 1974. By that will she appointed the defendant executor of the estate and gave a number of small pecuniary legacies. The residue was left to be divided equally between the Subnormal Children's Welfare Association, the Deaf & Dumb Society of New South Wales and the New South Wales Institution for Deaf & Blind Children. 3 The first of those institutions is now known as the Challenge Foundation. 4 At the date of death the estate had two properties and cash. There were properties at Liverpool and Newtown. The Liverpool property has now been sold but the Newtown property is still retained by the executor. That property has a value of some $450 000. Accordingly, the net distributable estate after provision of what, in this case, is a somewhat modest provision for costs for both parties, will be $1,050,000. 5 I will deal with the history of the family. The deceased was born in 1909 and the plaintiff was born on 19 April 1951. In 1954, at the age of three, the plaintiff was separated from his mother and given over by his father to live with the deceased, along with his older sister, Angela, at the Newtown premises. 6 It is in this year that the deceased's first husband died. Both the plaintiff and his sister were dependent upon the deceased at this stage for food, clothing, accommodation and schooling. The deceased worked at IXL as a process worker. 7 In 1958 the deceased married Stan Dimarco and moved to Liverpool with him. The plaintiff and his sister remained in the Newtown premises with their father, who was often absent, sometimes for periods up to six months at a time. The deceased visited the plaintiff and his sister regularly. They would go to her place on weekends. She continued to assist with food and clothing. 8 In 1964 the deceased's second husband died. As a consequence the plaintiff moved to Liverpool and lived with the deceased. 9 In 1970 the plaintiff left school and took his initial employment at a jewellery factory and travelled to Liverpool to work for a time. After a while there was a return to the Newtown premises by the deceased and the plaintiff, and in 1974 the plaintiff's father left those premises. It was about this time that the last will of the deceased was executed. The plaintiff was then 22 and in employment from time to time. 10 From 1974 to 1975 the plaintiff undertook an art course and in this enterprise he was given financial assistance by the deceased. In 1975 the plaintiff and his actual mother made contact and thereafter there was some contact over the years but no resumption of any close family connections. He, the plaintiff, did not tell the deceased about the contact with his mother because of the resentment that the deceased had to her. 11 In 1978 the plaintiff moved out of the Newtown premises and started to make his way in life. At about this time he took the deceased to Italy for a tour for six weeks so she could see her original home town. 12 In 1980 the plaintiff moved in to live with his wife but he still kept contact with Newtown because he used to use downstairs as an art studio and store, and also the storeroom as a darkroom. The plaintiff's cousin moved into Newtown in 1987 and helped the deceased from time to time. 13 In 1990 the plaintiff's father died and he left the plaintiff $80 000, which was spent mainly on repaying loans on their unit. In 1993 the plaintiff's cousin moved out of the Newtown premises and the plaintiff started to take greater part of the responsibility for looking after the deceased. The deceased's health continued to deteriorate and in 1999 she was put in a nursing home. The plaintiff continued to look after Newtown and also to attend to matters for the deceased. 14 The deceased died on 3 August 2000 and these proceedings were commenced within time. 15 Since the commencement of the proceedings, there are a number of other matters that have happened which affect the plaintiff's situation. His wife was retrenched from her job on 14 September last year and, at the beginning of February this year, she was diagnosed with breast cancer. That cancer was deep seated and required extensive treatment. His wife has had a breast removed, lymph glands removed, and she has been left now facing a very extensive period of chemotherapy for treatment. If that is successful, it is apparent there will be enormous difficulties she will have as a result of the surgery she has had. 16 On top of this, the plaintiff's sister, who looks after the plaintiff and her step father, has also been diagnosed with breast cancer. Accordingly the plaintiff has had to take over that role and look after his step father, who is very frail. 17 It is necessary, of course, for the plaintiff to show that he is an eligible person before he can claim. In this case he has clearly been part of the household of the deceased, and also has been dependent upon her for a substantial period during his childhood. Clearly he is an eligible person and this is not disputed. 18 It is also necessary under s9(1) of the Family Provision Act that the Court shall first determine whether there are factors warranting the making of the application. This expression has been dealt with by the Courts on a number of occasions. In Re Fulop Deceased (1987) 8 NSWLR 679 at 681 McLelland J described that expression in the following terms: "Secondly, the subsection appears to be premised upon a distinction between 'factors which warrant the making of the application' on the one hand, and circumstances which would justify the making of an order granting the application, on the other; otherwise the subsection would be pointless. This means that in a particular case the Court might determine that there are 'factors which warrant the making of the application' within the meaning of the subsection, and yet go on to decide that the application should fail. Since the subsection applies only to certain classes of applicant, it suggests that those classes of applicants need to demonstrate some basis for their claims additional to that required of other classes. The difference between the two sets of classes of applicant, in broad terms, seems to be that the classes not affected by s9(1) o(lawful and defacto spouses and children) are as such generally regarded as natural objects of testamentary recognition by a deceased (of the Wills Probate and Administration Act 1898, s61B), whereas the classes affected by s9(1) (former spouses, and some time dependent grandchildren or household members) are as such not generally so regarded. This suggests that the 'factors' referred to in the subsection are factors which when added to facts which render the applicant an 'eligible person' give him or her status of a person who would be generally regarded as a natural object of testamentary recognition by a deceased. That the subsection is directed at a plaintiff's status as applicant in some such sense as this perhaps finds some support in the statutory direction to the Court, in the event that it determines the preliminary question adversely to the plaintiff, not to go on to determine the application, but 'refuse to proceed with the determination of the application.'" 19 Clearly in this case the relationship between the deceased and the plaintiff was one of mother and son. As the deceased herself said, the only thing she didn't do for the plaintiff was to carry him. She was referred to in the local community as his mother and that is how she was perceived. 20 Quite clearly on the traditional approach there are appropriate factors warranting. But the alternative approach to which I have referred I will move on to see if there are prospects of success, and if there are, then the relevant factors warranting would be established. 21 In applications under the Family Provision Act the High Court in Singer v Berghouse (1994) 181 CLR set out the two stage approach that a Court must take. The Court said: "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 cir, 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." 22 It is necessary to turn to the plaintiff's situation. He is presently aged 50, married and has no children. He is, of course, in good health. However, his wife suffers from breast cancer and clearly will not be able to work for some time. Her employment is likely to be restricted because of difficulties with her arm caused by the problems she has had. 23 They presently own a unit at 4/107 Karaba Bay Road, Neutral Bay, which is worth $400 000. It is subject to a mortgage of $148 000. They have modest superannuation amounting to $34 000, furniture of $10 000, jewellery and art worth $20 000, shares worth $3 200, and two cars totalling some $17 000. 24 At the moment they have a number of debts apart from the mortgage. The plaintiff has credit card debts of $6 417.00 and his wife has a tax debt of $8 803. The plaintiff himself works as a part time teacher at East Sydney Technical College of the National Arts School, and Meadowbank College of TAFE. He also works independently as an artist in his own right. 25 His pay averages $884 per fortnight and his artwork brings in about $116 per fortnight but this income is irregular because he can only have exhibitions every few years. He thus has an income of $1 000 per fortnight. 26 His wife, of course, is not working and it is important to note his income gives him no holiday pay, sick pay or long service leave. 27 The expenses of his wife and himself after some careful reduction amount to $2 414 per fortnight. This leaves him with a deficit of $1 414 per fortnight. One of their large expenses is the mortgage, which is about $850 per month. In recent years they have had to increase the mortgage to meet their living expenses. 28 It is necessary to deal with the relationship between the plaintiff and the deceased. I have already touched on it a number of times. Clearly he was the one to whom the deceased turned for help in her later years. He spent considerable effort looking after her in those years, taking her to appointments, managing the properties and the like. 29 Some of these things included the maintenance of the Newtown property. He had to replace rotting door frames, paint the house on a number of occasions, repair furniture, carry out plumbing work. These things the deceased required done immediately and he did so. 30 There has, of course, as the history demonstrates, always been a fairly close connection with the Newtown property. The plaintiff lived there as a child and he used it as a studio after 1980. He has also done the work on the property to which I have referred. 31 It is necessary, of course, to consider the others who may have a claim on the bounty of the deceased. In this case the only relevant people are the three charities. There is evidence of the work of the Challenge Foundation before me and that, like the work of the other charities, is probably well known. They are, of course, worthy charities. There is, however, no evidence of any contact between the deceased and the charities in her life time. 32 It is necessary to look at how the plaintiff says he has been left without adequate and proper provision for his maintenance, education and advancement in life. He puts this forward in two broad ways. First, he needs to meet the substantial shortfall between his income and expenditure. 33 Secondly, he wishes to have Newtown to continue his artwork and to enable him to do exhibitions there from time to time. What he wishes to do is have Newtown downstairs as a gallery so his wife could operate it, which is something that she would be able to manage. 34 The problem with Newtown is it needs $196 000 spent on it to make it secure. It needs underpinning, new damp courses and a range of maintenance work. It is apparent it would obviously deteriorate if these things were not done and fairly quickly. 35 Notwithstanding the building in its present state, it has a rental value of $650 per week. 36 In this case the plaintiff is the only real claimant. The charities are not connected with the deceased. At the time she made her will she thought them worthy of her benefit. This, however, does not mean that the plaintiff is entitled to whatever he asks for. He is a child who has made his way in life for some time. His request of the Court is that he be left the Newtown property, which is worth $450 000, a sum to cover the repairs of $196 000, a sum of $148 000 to discharge his mortgage, and a sum for contingencies of some $50 000. 37 This is $844 000 out of an estate of $1 050 000. This, on its face, would seem an extraordinary generous provision for a son. He already has a house and effectively is asking for another one to use so that he can run his business. 38 There are, of course, to be considered the promises made to the deceased. In 1993, as the plaintiff was assuming more responsibility for Newtown, he was told by the deceased that he and his sister Angela, next of kin and blood relatives, "you will be taken care of and you will get everything." At the time the deceased was in a nursing home and she regularly said to the plaintiff if he looked after the Newtown house it would be his some day. 39 On a number of occasions she repeated her statement that he and Angela would have the whole estate. 40 The plaintiff, as I have mentioned a number of times, has put some effort into the Newtown property. Really, he needs some cash. He must pay off the credit cards and reduce his mortgage so the expenses are less. He will take some time to gather himself, address his situation with a sick wife and the need for him to increase his earning capacity. 41 If he had the use of the property that would at least give him the ability to use the ground floor for the art gallery, and he would have the income from the flat above. 42 The problem with it is it needs work. If the work is done on the property that work would not be wasted, it would be to the benefit of the property and would preserve it. 43 The plaintiff and his wife have a substantial equity in their home that is a cushion for them. They do not themselves have dependents. The plaintiff's real need is for income. A life estate in the property, provided it is put into proper repair, would solve a lot of the plaintiff's problems. It would also preserve a large part of the estate for the residuary beneficiaries; their interest will be postponed but this is not critical. 44 The appropriate orders in my view should encompass the following: (a) A legacy to the plaintiff of $70 000. (b) A direction to the executor to expend up to $240 000 for the renovation of the Newtown property, generally carry out the work in the report to which I have referred to a state where the property is capable of being used as a separate flat upstairs and a studio or gallery downstairs. (c) That the plaintiff have a life estate in the whole Newtown property with him bearing rates, taxes, insurance and outgoings. (d) That there be a power to substitute other properties for the Newtown property and in particular if at any stage the plaintiff needs specialised nursing or accommodation, that the capital can be used for that, subject to no more than 30 per cent being non-refundable. 45 I direct the parties to bring in short minutes. The exhibits may be returned. The costs should be the plaintiff's costs on a party party basis and the defendant's on an indemnity basis payable or retained out of the estate of the deceased. 46 The matter will stand over to my list at 10 o'clock on Monday 25 February 2002.

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