Doriana Mary Jones v Mauro Poletti

Case •

[2014] NSWSC 715

•

04 June 2014

Supreme Court


New South Wales

  • Amendment notes
Medium Neutral Citation: Doriana Mary Jones & Anor v Mauro Poletti [2014] NSWSC 715
Hearing dates:31 March 2014 & 1 April 2014
Decision date: 04 June 2014
Jurisdiction:Equity Division
Before: Slattery J
Decision:

Order for provision made in favour of the plaintiffs; such that they should each receive a legacy of $450,000 from the deceased's estate, together with forgiveness of the minor debts owed by each to the estate.

Catchwords: SUCCESSION - family provision - application under Succession Act 2006, s 59 - deceased divorced during his lifetime leaves five children, three sons and two daughters - deceased conducts successful business conglomerate in which some of his sons were involved - deceased leaves the whole of his estate to two sons, with 85 percent to one of them - nothing left to either daughter - lengthy period of estrangement between each daughter and her father arising out of deceased's divorce from their mother - plaintiffs owe minor debts to the estate - whether adequate provision made for the proper maintenance, education and advancement of life of the plaintiffs - whether an order for provision should be made in the plaintiffs' favour, and if so in what form.
Legislation Cited: Succession Act 2006 (NSW), ss 59, 100
Cases Cited: Drury v Smith [2012] NSWSC 1067
Evans v Levy [2011] NSWCA 125
Hogan v Hogan [2013] NSWSC 1405
Lloyd Williams v Mayfield (2005) 63 NSWLR 1
Palmer v Dolman; Dolman v Palmer [2005] NSWCA 361
Singer v Berghouse (No. 2) (1994) 181 CLR 201
Category:Principal judgment
Parties: First Plaintiff: Doriana Mary Jones
Second Plaintiff: Patrizia Mary Caterina Becker
Defendant: Mauro Giuseppe Poletti
Representation: Counsel:
Plaintiffs: Mr L. Ellison SC
Defendant: Dr C. Birch SC; Mr P. Silver
Solicitors:
Plaintiffs: Pamela Gaibrielle Suttor, L. Rundle & Co
Defendant: Peter Baltins, Willis & Bowring
File Number(s):2012/294443
Publication restriction:No

Judgment

  1. John Ubaldo Poletti died on 10 May 2012, survived by his former wife Teresa and five of their six children. Ubaldo left an estate valued at approximately $3.16 million to his two elder sons Mauro (as to 85 per cent) and Marco (as to15 per cent).

  1. Ubaldo's two daughters, Doriana and Patrizia now apply as plaintiffs under Succession Act, s 59 for an order for provision out of their father's estate. Mauro the estate executor opposes their application.

  1. Two factors complicate the contest between the parties. The first is the relationship between the plaintiffs and their father: both daughters were estranged from the deceased for the final 21 years of his life. The second complicating factor is that the defendant claims he is effectively the source of all the net worth in the deceased's estate. Ubaldo became heavily indebted in the 1990s and faced financial ruin. Mauro claims that through his financial support alone, Ubaldo was able to maintain ownership of the principal assets in his final estate.

  1. Ubaldo's estate was sworn for probate purposes at a gross value of $3,165,223.70. But after administration including the sale of a Potts Point property and the commencement of these proceedings the estimated value of the estate as at 18 March 2014, shortly before hearing, was $2.8 million.

  1. All the parties to these proceedings are members of the one family. For convenience and without disrespect to any of them, these reason will refer to them by their first names only.

  1. These proceedings were efficiently conducted over a three-day period between 31 March and 2 April 2014. Mr Ellison SC appeared on behalf of both plaintiffs. Dr Birch SC and Mr Silver appeared on behalf of the defendant.

The Poletti Family

  1. Ubaldo Poletti, was born in Italy on 24 October 1931. He married Teresa Bacci in the Italian province of Borgo Tossinani in Bolonga, on 4 December 1954. The couple emigrated to Australia in November 1955. That same year their first child, Mario, died at birth. Between 1956 and 1962, the Polettis had five more children. The other children in birth order were two boys, Claudio and Mauro, two girls, Patrizia and Doriana, and the youngest a son, Marco.

  1. Ubaldo proved himself a skilled entrepreneur. In 1960 only five years after arriving in Australia with no assets, he formed a partnership with two others known as S.P.F. Formwork (SPF), to carry out construction work and supply construction sites. The three partners incorporated in 1961. But by July 1963 the deceased had become the sole operator of the company they had formed. Ubaldo's business operations soon diversified from SPF's original business into a range of businesses that became known collectively as the Poletti Group, which conducted operations in New South Wales, Western Australia, Victoria and the Australian Capital Territory.

  1. The expanded Poletti Group business operations included large-scale construction projects; formwork hire; bloodstock racing; and motel, bar and restaurant businesses. The Group also owned real estate, construction equipment and materials. It enjoyed great success. At the height of its business activities the Poletti Group had in excess of 260 employees generating an annual turnover of almost $15 million. At one time or another all members of the Poletti family worked for one of the Group's constituent companies. The Group holding company was Murralin Holdings Pty Limited.

  1. Some family members were more involved than others. The Poletti daughters, Doriana and Patrizia, married early and moved in and out of the Group's businesses, mostly in a casual capacity. They assisted from time to time, as and when they were needed. But neither Doriana nor Patrizia ever became a long-term Group employee. Their work was mostly paid. But sometimes it was not. In contrast, over time the Poletti sons, especially Mauro, became central to Group operations. By his own reasonably accurate estimation, Mauro eventually became his father's 'right hand man'. Although Marco and Claudio were less involved than their brother, they were nevertheless important permanent Group employees.

  1. In 1968 Ubaldo designed and built the Poletti family home in Murralin Lane, Sylvania, on the banks of the Georges River (the Sylvania property). The deceased was deeply attached to this home. Its design was ahead of its time: none of the internal walls were load bearing and a spiral staircase spanned its three levels; and, the swimming pool was suspended some 60 feet above ground level. The house displayed Ubaldo Poletti's achievement in the construction industry.

  1. But Poletti business success contrasted with a strained family life. The marriage between Teresa and Ubaldo was troubled. The witness accounts differ as to the extent this turbulence affected the home environment and the children. I accept that from an early age, Doriana and Patrizia both became wary of their father's behaviour within the family and especially towards their mother. Doriana claims that over the years the deceased was physically and verbally abusive to herself, her siblings and to Teresa. I accept her evidence as to this. Patrizia's evidence, which I also accept was similar to her sister's. Mauro's evidence was defensive of his father on the domestic front. His account of his parents' marital problems tended to suggest that Ubaldo's long working hours were the cause of perhaps predictable domestic friction that could not be wholly blamed on Ubaldo. But the troubles within the marriage filtered through the family.

  1. In 1988 the marriage reached breaking point. The couple separated under the same roof. The following year particularly acrimonious family law proceedings commenced. They became progressively more acrimonious as the Poletti children took sides in their parents' divorce. But the family dispute was also being fought against the backdrop of the family business, intensifying family friction.

  1. Widespread family hostilities broke out in 1989. Mauro wrote a letter on 4 March 1989 as an employee of the Poletti Group to his parents as the Group's Principal Directors. The letter complains that:

"It is quite obvious, that there is to be a considerable period of 'Limbo' regarding prospects and future development of the Companies resulting directly from your impending divorce".

  1. Mauro stated in this letter that if his parents were unable to 'sort out' their differences by 31 December 1989, he would have to reconsider his position as an employee of the Poletti Group. His letter indicates how fraught relations had become within the family. In November 1989, almost eight months after this correspondence, and only days before his end of year deadline, Mauro became the first of the Poletti siblings to intervene by filing process in their parents' Family Court proceedings.

  1. Mauro's intervention provoked a response from other family members. In March 1990 Patrizia, Doriana and Marco also lodged an application to intervene, which the Family Court granted on 2 April 1990. The Poletti children, with the exception of Claudio, were now enmeshed in their parents' legal conflict. Doriana and Patrizia supported Teresa. Mauro supported his father. Claudio opted out. Although Claudio and Marco were employees of Poletti Group and worked with their father, their allegiances to him were never as pronounced as Mauro's. Both brothers navigated their way through the dispute without joining either Ubaldo's or Teresa's family faction.

  1. The Family Court proceedings settled on 16 August 1991. By then relations between the two daughters and their father had collapsed. The signing of the deed of settlement in August 1991 was the last contact that either daughter ever had with her father. They each remained estranged from him from that point until his death in 2012. For example neither Doriana nor Patrizia attended their father's funeral.

  1. Throughout the rest of his life there were periods of estrangement between Ubaldo and his other children, save for Mauro. Ubaldo's professional and personal relationship with Mauro endured. Business partners, Mauro and his father also shared interests in horse training and racing.

  1. Mauro's relationship with the deceased was also of financial importance. Mauro intervened at key moments in the last twenty years of Ubaldo's life to secure him against financial distress. I accept that Mauro's interventions ensured that the deceased was able to maintain both his lifestyle and the Sylvania house. Between 1998 and 2012 Mauro claims that either personally or through or his companies he contributed over $3 million to maintain his father's assets and way of life.

  1. Ubaldo's final will of 15 June 2010 named Mauro as Executor and gave him 85 per cent of his estate, with the residual 15 per cent being given to Marco. The deceased's Succession Act, s 100 statement cited his daughters' estrangement as a key factor in his making no provision out of his estate for them.

The Issues in Contest

  1. It was not disputed: that the plaintiffs as daughters of the deceased were both "eligible persons" within Succession Act, s 57(1)(c), and thus able to make a claim for provision out of the deceased's estate under Succession Act, s 59; and, that neither had received any benefit under Ubaldo's will. The plaintiffs claim that adequate provision has not been made for them. Claudio brought no claim against the estate.

  1. The defendant disputes their claim. He argues that no provision should be made for his sisters out of the estate as: sufficient provision was made for them during their lifetime; they exhibit no pressing financial need; and their estrangement from their father in the final 21 years of his life should disqualify them from making any claim.

  1. Mauro also argues he is the effective source of the assets in the deceased's estate. He contends that it was only as a result of his personal intervention that his father maintained financial solvency during the 1990s. Mauro submits the deceased felt morally obliged to repay him for that extensive financial support, as was reflected in his appointment as Executor and the gift to him of 85 per cent of the estate.

The Poletti Group and Family - 1989 to 2012

  1. The Poletti Group businesses were successful prior to 1989. Just how successful is difficult to tell. In the absence of any year-on-year financial statements for the Poletti Group the Court must reconstruct the history of the Group from a number of financial snapshots at various moments.

  1. But the Group's structure is reasonably well understood, as appears from a 1991 receiver's report, for the Group. In 1991 it comprised: (1) Murralin Holdings Pty Limited, the holding company; (2) JU Poletti Tiles Pty Ltd (JUP Tiles); (3) Marrickville Plant and Equipment Hire Company Pty Ltd (Marrickville Plant); (4) SPF Formwork Pty Ltd (SPF); (5) Italo Australia Construction Pty Ltd (Italo); (6) JU Poletti Pty Ltd (JUP); and (7) System Form Pty Ltd (System Form). The Poletti Family Trust held 98 per cent of the shares in Murralin Holdings Pty Limited. Ubaldo was appointor of the trust and held the voting shares in Rehalo Pty Limited, the trustee of the Poletti Family Trust.

  1. Without underlying information about the individual corporate members of the Group, it is difficult to gain a sense of the Group's growth, then its contraction in the 1990s. Dr Birch SC for Mauro candidly acknowledged that the defendant was not in a position to deliver a complete financial picture but said that the available fragments of the Group's financial history provided a sufficient account. Personal histories follow later.

The Polettis Encounter Two Crises - 1989

  1. With other businesses in the building and construction industries the Poletti Group was exposed to the full impact of the financial recession of the late 1980s and early 1990s.

  1. The recession was not the only challenge facing the Poletti Group. The 1989 divorce proceedings between Teresa and Ubaldo Poletti present a starting point for financial analysis. A 1989 valuation for the divorce proceedings shows the net assets of the Poletti Group, for Teresa and for Ubaldo at $14 million, with some $9.8 million in borrowings.

  1. Shortly after the commencement of the 1989 divorce proceedings, one of the Poletti Group companies, J U Poletti Pty Ltd (JUP), which was constructing a building on land at Maroubra (the Maroubra property) had the land owner/developer go into liquidation, owing JUP in excess of $1.85 million.

  1. Mauro and Ubaldo dealt with this financial crisis. They proposed to the Group's major financier, the State Bank, to borrow $10 million to purchase the Maroubra property, to use the additional capital to pay out JUP's debts on the Maroubra project, to complete the development of the property, and then to sell it with the aim of generating a profit. The State Bank required security over all Poletti Group companies, and over any properties then owned by Ubaldo and Teresa Poletti, as collateral for this $10 million increase in the Group's loan facility. For the first time the bank also required personal guarantees from Ubaldo, Mauro and Claudio.

  1. Ubaldo wanted System Form Pty Limited, a company run by the deceased and Mauro, but not then a part of the Poletti Group, to purchase the Maroubra property. Teresa resisted this course. She was perhaps concerned that matrimonial assets may be jeopardised, mid-divorce, by such a scheme. She refused to provide her assent to the Ubaldo/Mauro plan. So Ubaldo and Mauro were forced to negotiate a compromise to satisfy both Teresa and the State Bank: System Form would be absorbed into the Poletti Group by Ubaldo and Mauro transferring their shares in the company to Murralin Holdings, the Group's holding company. If System Form then purchased the Maroubra property, it would do so as part of the Poletti Group.

  1. On 30 November 1989 Teresa, Ubaldo and Mauro settled this part of the proceedings. System Form became part of the Poletti Group. The State bank made a further $10 million secured advance to the Group. The immediate crisis had been averted. But the Group's debt had almost doubled. And Ubaldo, Mauro and Claudio Poletti were now personal guarantors of the Group's substantial liabilities to the State Bank.

A Receiver appointed to Murralin Holdings - 1990

  1. In 1990 both the business environment and Poletti Group operations worsened, at the same time as personal relationships in the family continued to sour. Teresa Poletti filed a Summons and Notice of Motion in the Family Court in September 1990 to wind up Murralin Holdings and to appoint a provisional liquidator. Mauro, Claudio and Ubaldo opposed the application. They tried to keep the Poletti Group operating, even at the cost of appointing a receiver to deflect a winding up order. On 5 October 1990 Ubaldo lodged a cross application inviting the State Bank to appoint a receiver to Murralin Holdings, save for certain of the companies.

  1. The cross-application was successful, as it turned out perhaps too successful. On 17 October 1990 Anthony Sherlock was appointed Receiver and Manager of the companies in the Poletti Group, with the exception of SPF, Italo and JUP. I accept Mauro's evidence in these proceedings that the carve-out of these three companies was an attempt to preserve the valuable contracts they held. But a receiver was later appointed to JUP on 5 November 1990.

  1. Appointing a receiver proved costly. The appointment caused Murralin Holdings to default under the terms of the State Bank's loan. Penalty interest was accrued on all the State Bank's loans from the date of the receiver's appointment, 17 October 1990. The annual interest rate the State Bank imposed at one point reached 23 per cent.

  1. Without SPF, the full Poletti Group financial statements as at 7 May 1991 showed a net deficiency of $4.221 million. SPF's net worth may perhaps have added back about $3.5 million to $4 million, to reduce this deficiency. But the three personal guarantors of the State Bank debts were liable for a potential contingent debt of up to $24.2 million. And the Sylvania property was mortgaged to the State Bank on 7 May 1991 during the receivership.

  1. The parties contested the extent to which Poletti Group's finances suffered during this period. But for understandable reasons neither side wanted to re-litigate events of this difficult time in these proceedings. Nor does the Court find it necessary to do so. But it was certainly an expensive time for the Poletti Group; the value of Group business holdings diminished significantly.

The Divorce Settlement - August 1991

  1. The divorce proceedings settled on 16 August 1991. The terms of the settlement reflected the complexity and length of the proceedings. Their main structure was: (1) Teresa would terminate any interest she had in the Poletti Group and be indemnified by the deceased in respect of any exposure arising from her involvement; (2) the deceased would pay Teresa weekly spousal support of $525, CPI indexed; (3) the deceased would make a lump sum payment of $600,000 to Teresa; and, (4) the deceased would make a further lump sum payment of $120,000 to Teresa, pursuant to an earlier Family Court order.

  1. Upon the settlement Teresa and Doriana were instructed to move out of the Sylvania property. The State Bank was granted vacant possession under its mortgage.

  1. The settlement declared that some of the Poletti children, Doriana, Patrizia and Marco owed their father money. Doriana and Patrizia had previously borrowed money from the deceased through the Group to purchase their family homes. Repayment of these obligations was formalised in the August 1991 family law settlement. Doriana was to repay her father $39,930 in weekly instalments of $12, and Patrizia $15,000 in weekly instalments of $2.50. The settlement required that these respective amounts should be repaid in full by the time each child reached the age of 55. At the time of the hearing some of these amounts were still outstanding.

  1. The divorce settlement fundamentally altered the deceased's financial position. And it severed what for him had already become a bitter relationship with his daughters. Accounts of the events at this time differ markedly. Mauro contends that at the conclusion of signing the settlement papers Patrizia said to her father: "And you will never see your grandchildren again", to which Doriana is claimed to have added: "That goes for me too". Patrizia and Doriana both refuted this in cross-examination. I entirely accept their evidence as to this. I found them to be much more satisfactory witnesses than their brother Mauro. And I assess neither of them as persons who would be likely to aim such an emotional reprisal at their father no matter what they thought he had done. But neither Doriana's or Patrizia's children did see Ubaldo after this. The reasons for this were more complex than just the carrying out a threat that Mauro claims was made at this time.

  1. The estrangement between the plaintiffs and their father certainly became effective from this time. This lengthy estrangement has led Mauro, in my view, to reconstruct the words he says he remembers at the conclusion of the settlement meeting, as an explanation for it. Neither the deceased nor his daughters initiated reconciliation between them. There certainly were later opportunities for reconciliation but Mauro did not promote Ubaldo having any engagement with Doriana and Patrizia. By later times the deceased had become very dependent on Mauro. And if Mauro was not supportive of the deceased initiating a reconciliation, as in my view he was not, then it was unlikely ever to be initiated from Ubaldo's side.

The Receiver retires - 1991

  1. Within six months of the August 1991 divorce settlement, the Poletti Group was finding it difficult to secure new work because of the receivership, especially given the difficulties that the construction industry was then facing.

  1. The Group could not afford the receivership. In late 1991 or early 1992 Mauro and Ubaldo approached the State Bank to retire the receiver and to facilitate a return to the Poletti Group's regular business operations. The State Bank agreed. Murralin Holdings took proceedings against the bank for recovery of penalty interest charged during the receivership. The matter ultimately resolved in arbitration and Murralin Holdings gained a $600,000 set off against its existing obligations to the bank.

The Poletti Group's Financial Position Deteriorates - 1993 to 1995

  1. Perhaps not surprisingly, in the midst of the Poletti Group's financial troubles in the early 1990s, Ubaldo's health failed. The deceased underwent a major heart operation in 1993. By then the Poletti Group had managed to marginally reduce Group debt. But its liabilities were about $23 million. Against this financial backdrop Ubaldo was now unwell and struggling to be able to work.

  1. Mauro used 1993 to 1994 to negotiate a new agreement with the State Bank. On 14 November 1994 Mauro and Ubaldo signed an accord with the State Bank, which: (1) restructured the bank's loan; (2) retained Mauro and Ubaldo as loan guarantors; and, (3) included a provision that if the interest payments of $120,000 per month were repaid without fail each month, the Bank would release Ubaldo from his personal guarantee when he reached the age of 65 (having been born in October 1931, he had just turned 63).

  1. Over the early 1990s Ubaldo's and the Poletti Group's financial position had worsened. In a pattern that would continue for the rest of the deceased's life, Mauro began to give his father and the Group financial assistance. Having seen Mauro in the witness box I assess his motivation for this financial assistance as an amalgam of filial loyalty and self-interest. Mauro did not present to the Court as a person over whom the ties of family affection had much influence. He was a self-absorbed, self-confident, and self-reliant individual with little obvious capacity for human empathy. And he showed distain for opinions other than his own. But he was very attached to his father and wanted to look after him as he grew older as much as he could. But in the early 1990s Ubaldo was still useful to Mauro, as something of an elder statesman figure contributing to Mauro's guiding and promoting the fast growing Poletti Corp. By nature and motivation Mauro was not a unifying force within the Poletti family.

  1. But Mauro was certainly generous to Ubaldo within this framework. One example of the assistance Mauro gave Ubaldo was in his living arrangements. In 1991 the receiver had sold Victoria Towers, an apartment complex in Potts Point, on behalf of the business. Mauro purchased one of the Victoria Towers apartments, together with two associated car spaces. In 1993 the deceased decided that he wished to keep an apartment in Potts Point. So Mauro arranged with Ubaldo that: (1) Ubaldo would sell his existing Victoria Road property in Potts Point for $280,000; (2) Ubaldo would purchase the Victoria Towers apartment from Mauro for $186,000; and, (3) the existing $80,000 NAB mortgage over the Victoria Towers apartment would be transferred to the deceased.

  1. An objective financial assessment of the Group is available from 1994. Rost & Kitchener Accountants' submitted an auditor's report for the 1994 financial year for Murralin Holdings, which described the mountain of debt that then faced Mauro and the deceased. At the end of the 1994 financial year Murralin Holdings had accumulated losses of $8,922,502 and total current liabilities of $23,048,969.

  1. Ubaldo's personal guarantee for Poletti Group liabilities remained. On 19 April 1995, in a Family Court Statement of Financial Circumstances Ubaldo indicated that his total liabilities (including contingent liabilities) then amounted to $23,152,000. He listed his assets at $1,055,700 and claimed both his properties were fully encumbered. With income of only $9,728 for the year ended 30 June 1994, and expenses of approximately $152,420, Ubaldo's financial position seemed poor. His affidavit declares that he was at this time dependent upon Mauro, saying: "I am able to meet my expenses from borrowings from my family". But it was in Ubaldo's interests at this time to emphasize the weakness of his financial position. He was about to face a revival of Teresa's Family Court proceedings.

  1. The Poletti Group attempted a recovery in the 1993 to 1995 period. Major contracts were secured. Mauro and Ubaldo tried to rebuild and to drive down Group debt. As a result of his father's ill health, Mauro had by then taken over management of the Group. Mauro remembers, and I accept, that Ubaldo only worked about half each day at this time due to his illness. Despite his reduced workload, Ubaldo continued to contribute his expertise to the business, and to help pass over control to Mauro.

  1. But in October 1996 a financial stand off with the State Bank developed: despite requests, the bank refused to release Ubaldo from his personal guarantee, or to surrender the still-mortgaged Sylvania property deeds. In February 1997 the State Bank appointed an administrator to Murralin Holdings and a receiver was appointed to all other companies in the group. Interest repayments had apparently ceased from the Group by the time the bank took this action. Claudio, Marco and Mauro ceased working for the Poletti Group upon this appointment. Ubaldo had now effectively retired.

  1. This was the end of the old Poletti Group. The Group could not be salvaged. In 1998 Ubaldo instituted proceedings against the State Bank for the release of his guarantee and for damages flowing from the failure to sell the assets of the Poletti Group in a proper and efficient manner. But that litigation did not resolve for years.

Mauro Incorporates and the Divorce Proceedings Revive - 1997

  1. A month after the administration of the Poletti Group commenced, Mauro incorporated two companies, on 6 March 1997. He became the sole director and shareholder of Retail Formwork Pty Limited, which he operated between 1997 and 2001. He also incorporated City Formwork Pty Limited, which later became Poletti Corp Pty Limited and which continues to operate under that name. Mauro wanted a new start for the Poletti construction business. But these new companies maintained a significant link with the old Poletti Group.

  1. In the mid 1990s Ubaldo had fallen into arrears on his weekly spousal support payments. On 24 March 1997 Teresa filed an application in the Family Court seeking: (1) orders for the payment of lump sum spousal maintenance; (2) interlocutory injunctive relief, for particulars of discovery and answers to specific questions; and, (3) enforcement of the original orders for payment of spousal maintenance made on 16 August 1991.

  1. I accept Mauro's recollection that Ubaldo's problem in making spousal support payments was a growing issue in the mid 1990s. In late 1996 or early 1997 Mauro had a conversation with Ubaldo in which they agreed: (1) to pay Ubaldo's divorce settlement obligations with Poletti Corp funds; and (2) to make such payment as a lump sum, rather than as weekly spousal support. Ubaldo was becoming more dependent on Mauro.

  1. On 2 May 1997 Teresa and Ubaldo entered into two deeds, designed to complete the severance of their financial relationship and to discharge each other's estate from any potential claim. Under the terms of the deed of agreement Ubaldo was to pay Teresa a lump sum of $50,000; and clause 26(a) of the deed recognises that he would "be assisted or supported by the Husband's son, Mauro Poletti, in providing these funds".

  1. By this time Ubaldo's financial position was demonstrably weaker. As the May 1997 deed of agreement with Teresa recited, he held combined assets of $1,102,300 of which $1,060,000 represented his real property. But both his properties were encumbered: with a $23 million business liability owed to the State Bank and, with an $80,000 liability to the NAB for the Potts Point apartment. Other than real estate, the May 1997 deed disclosed that the deceased held few assets: a $30,000 interest in a horse stud; personal effects and belongings amounting to $12,000; and monies on deposited of $300.

  1. The renegotiation of Ubaldo's settlement obligations to Teresa coincided with Ubaldo apparently refocussing his attention on the settlement obligations Doriana and Patrizia in turn owed him. Mauro recalls that late 1996 or early 1997 his father said to him:

"The amounts owing to me by Doriana and Patrizia have not been paid for many months now. They have not said why. I have no alternative but to take them to court to get them to honour their obligations".

  1. Although this was a one-to-one conversation between Ubaldo and Mauro I do not accept Mauro's evidence that Ubaldo said to Mauro "I have no alternative but to take them to Court to get them to honour their obligations." The objective facts speak against Ubaldo being much interested in suing Doriana or Patrizia. It is difficult to understand the personal or financial logic of Ubaldo suing his daughters for such a small amounts of money: $39,930 for Doriana and $15,000 for Patrizia less anything that had been paid. Sums of this character could make no appreciable difference to his overall financial position and they are a little over 1% of the money Mauro says he advanced to his father over time. The Poletti daughters had indeed ceased making their regular repayments some time in 1992 or 1993. But Ubaldo had done nothing about it for 4 or 5 years. And a lawsuit was bound to add stress to his poor health and to worsen relations between father and daughters. The lawsuit certainly did the latter. These reasons later consider the circumstances surrounding the cessation of Doriana's and Patrizia's payments when dealing with the relationship between the plaintiffs and the deceased: there were some impracticalities in the repayment structure to which they had agreed.

  1. So why did Ubaldo sue his daughters? It is difficult to tell. But the action is important in the family history. It at least shows that the deceased either still had a committed hostility towards Doriana and Patrizia or that Mauro influenced him in that direction. Mauro's influence over the deceased by this time was undoubted. Both Doriana and Patrizia speak of it and I wholly accept their evidence of that influence. Mauro did not act as a restraining influence to slow his father from taking this course. Mauro had to become Ubaldo's legal next friend for these debt recovery proceedings to commence. So his active co-operation was necessary for Ubaldo to launch this hostile act. He co-operated. The probable inference is that Mauro encouraged his father to take this destructive course.

  1. Ubaldo sued Patrizia and Doriana for the outstanding amount. On 18 September 1997 they both received a letter demanding the payment of arrears within 14 days. But those arrears would not have been significant. Assuming a four-year lapse at their weekly repayment rate, Doriana's outstanding amount would have been $2496; Patrizia's would have been only $520. Moreover, there was no accleration clause included in the deed of settlement designed to recover the full debt in the event of a default in repayments. The deed simply required that the "sum shall be repaid at $12 per week [for Doriana and $2.50 per week for Patrizia], or as otherwise agreed, provided the debt is paid in full on or before her 55th birthday". The deceased's health at this time was poor. A concern existed that the stress associated with additional litigation might cause his condition to further deteriorate. So real was this consideration that Mauro says it was decided between Ubaldo and himself that Mauro would act as 'next friend' on behalf of his father in the proceedings that were to be commenced. After already nearly six years of estrangement between themselves and their father, the plaintiffs found the pursuit of the debts to be deeply upsetting.

The State Bank Proceedings Resolve and Mauro Contributes - 1997 to 2012

  1. In 1998 Ubaldo decided to sue the State Bank to release his guarantee. Mauro's newly-created companies, primarily, Poletti Corp, funded this new litgation, which continued from 1998 to 2002, when the parties settled.

  1. The statement of Ubaldo's financial position presented to the Family Court in 1997 is the last available comprehensive account until Ubaldo's death. Mauro provided in evidence an apparently comprehensive list of expenses paid to, or on behalf of, his father between 1998 and 2012. These total more than $3 million. They include payments for the deceased's: health and personal care; training and maintenance of racehorses; and tax and property expenses. But given the level of detail the defendant provides to evidence hundreds of individual payments from receipts and transaction records, it is unfortunate that they are not positioned within a broader reconciliation of all Ubaldo's assets and liabilities. Although Mauro has had access to his father's financial records as executor, the Court is left with little information on this important larger question.

  1. The most sizeable of the payments Mauro made was pursuant to the settlement of the proceedings between the State Bank and the deceased in 2002. The deed of settlement dated 18 March 2002 required Ubaldo to pay $500,000 to the bank to avoid future claims over the Sylvania property and other real property encumbered to secure the bank's debt. This would have offered the deceased an opportunity to end the ongoing litigation with the State Bank once and for all. But Ubaldo did not have the $500,000.

  1. Through Poletti Corp, Mauro paid the $500,000 to secure the arrangement on offer from the State Bank. Poletti Corp was not yet in a position to fund such a large outlay on its own. So Mauro in 1997 negotiated with Grocon Limited, a building company, for Poletti Corp to transfer materials together with the contracts with certain of its employees (other than Mauro) to Grocon, for a consideration of $500,000. The defendant also entered into a non-compete clause for a period of several years, generating the $500,000 Mauro required to apply for Ubaldo's benefit.

  1. The transfer of the $500,000 also meant that the mortgage over the Sylvania property was fully discharged, leaving the property unencumbered.

  1. Mauro claims that Poletti Corp was responsible for paying the outstanding mortgage to NAB on the Potts Point apartment for his father, in the amount of $80,000. He says the Poletti Corp had been responsible for making the mortgage repayments to the NAB until then. No timeframe is provided for how long those repayments had been made.

  1. In the decade between 2002 and 2012 it seems that Ubaldo's financial position remained relatively constant. And 2002 was certainly the end of the deceased's debt exposure. Throughout this decade he maintained his principal assets: the Sylvania property and the Potts Point apartment, which together ultimately comprised $2,895,000 of the approximately $3.16 estate left at his death in 2012.

  1. But the deceased's expenses during this time exceeded his known income. Mauro's contributions to his father therefore facilitated much of his life: his interest in horses, his personal care; and his property-related costs. A fuller analysis of those contributions and their effect on the estate is outlined below.

Current Financial Position of the Estate

  1. As executor, Mauro swore an affidavit on 20 November 2012 estimating that the estate would be valued at approximately $3,000,000 after funeral, testamentary expenses and the costs of these proceedings. He deposed that the deceased's estate had a gross value of $3,165,223.70. It comprised: (1) two real estate properties valued at $2,200,000 and $695,000; (2) furniture, personal effects and jewellery to the value of $50,000; (3) deposited monies in bank or financial institution accounts of $210,223.70; and (4) a motor vehicle worth $10,000.

  1. In his later affidavit of 18 March 2014 Mauro's account as executor of the deceased's estate was updated. The Potts Point property and associated car spaces had been sold by Mauro in October 2013 for a combined total of $786,000. As a result at the time of the hearing, the estate comprised:

Category

Description

Estimated or Known Value

Real Estate

The Sylvania property

$2,200,000

Furniture, Watches and Jewellery

Furniture, personal effects and jewellery

$50,000

Money in Banks and Financial Institutions on Deposit

Various Accounts

$649,872.86

Motor Vehicles

Honda Accord

$10,000

Total

$2,909,872.86

  1. Mauro as Executor anticipated that the cost to realise the Sylvania property, including all marketing and sales expenses would be not more than $100,000, leaving a net estate of approximately $2,800,000, before the costs of these proceedings are taken into account. The plaintiffs' legal costs for these proceedings were estimated prior to the hearing as being $129,586, of which each plaintiff has so far paid $46,979.86. The defendant estimated that his legal costs would be $350,000 by the conclusion of the hearing.

Mauro's Financial Contribution to Ubaldo's Estate: Analysis

  1. These reasons have already referred to the significant financial contribution that the defendant or his companies made to the deceased during the final fifteen year period of his life from 1998 to 2012. Mauro's evidence was of hundreds of payments, amounting to over $3 million. The plaintiffs did not dispute that such contributions were made. But the characterisation of these payments was in contention.

A General Breakdown of the Contributions

  1. Mauro's financial contributions to his father can be broadly gathered into three initial categories: (1) the $50,000 lump sum spousal support payment made in 1997 in the final Family Court maintenance settlement with Teresa; (2) the discharge of the $80,000 mortgage over the Potts Point apartment in 1997, after Ubaldo acquired it from Mauro in 1993; and, (3) ongoing ancillary expenses paid over the fifteen year period from 1998 to 2012, but including the single 2002 $500,000 payment to the State Bank to unencumber the Sylvania property. These reasons have already explained the circumstances surrounding the payment of the amounts of $50,000, $80,000 and $500,000.

  1. Mauro also presented detailed records to evidence the hundreds of smaller payments which, apart from the $50,000, $80,000 and $500,000, form the bulk of the third category of Mauro's claimed contribution. These smaller payments fell into a limited number of different further categories of expenditure. Some higher level analysis of these smaller payments is useful, first by category of expense, then by the period in which the expense was incurred.

  1. The expense totals by category over the full fifteen-year period (FY98 to FY12), were the following.

Expenses Totals:

STSS

$1,124,293.90

Legal fees

$192,718.18

Consultancy fees

$1,267,365.40

Property & expenses

$72,810.53

State Bank debt

$500,000

Formwork consultancy fees

$242,000

Motor vehicle

$34,445.01

Training fee

$46,200

Private care for JUP

$182,999.31

Horse expenses

$111,330.16

Expenses for JUP

$17,334.74

Total:

$3,791,497

  1. These categories of expenses need a little explanation. Sylvan Thoroughbred Stud Syndicate ("STSS") was a stud that Mauro set up through Poletti Corp to provide a business within which his father could train horses, which his father did. Many of these categories of expenses are self explanatory, such as legal fees. Consultancy fees were paid for Ubaldo's general consultancy services for the business of Poletti Corp. The property and expenses were monies spent on the Sylvania property. The State Bank debt was a single payment already discussed. The formwork consultancy fees were other consultancy fees related to Poletti Corp's business. All the remaining expenses were private expenses paid for Ubaldo's domestic support and assistance and are self explanatory.

  1. Expenses - 1998 to 2001. Between 1998 and 2001, when Ubaldo was still quite physically active, most of the payments were for general consultancy fees ($298,500) for Poletti Corp and for STSS ($596,634) for Ubaldo's interest in training horses. But the Court has no figures for any revenue or profits derived for STSS, or Poletti Corp, so it is difficult to asses the extent to which Mauro derived back any financial benefit from these payments. There was a steady increase in legal expenses during the 1999-2001, explained by the need for increasing legal assistance in the lead up to the 2002 State Bank settlement.

  1. Expenses - 2002 to 2006. In the financial years 2002 through 2006, the nature of Mauro's contributions changed. Between 50 and 90 per cent of each year's total payment during these years represents payments Mauro made for general consultancy fees (totalling $1,257,780 during this FY02-FY06 period) and some lesser amounts for STSS for horse training work Ubaldo performed for Mauro. The pattern was that Mauro would prepare invoices on his father's behalf for minor services and then cause Poletti Corp to pay them. The invoices that Mauro created in this way for Ubaldo to give to Poletti Corp would be charged out at higher than market rates and deducted against Poletti Corp's taxable income. These were all financial year based calculations, so the relevant years will be described in that way in the rest of this section of these reasons.

  1. For example, in FY06 Mauro prepared tax invoices to an amount of $141,000 for Consultancy Fees, and gave them to Ubaldo so Ubaldo would in turn present them back to Mauro or to Poletti Corp. Mauro typed these invoices up for his father. The standard procedure Mauro adopted at the end of each financial year was he would analyse his own taxable income and his own liability for income tax and that of Poletti Corp and then work out what he could afford to give to his father "to operate his [Ubaldo's] business". Mauro would then ask his father "a bit about the business so that it's a consultancy fee" and then would "give him that big amount". The fees paid were above market rates. As Mauro explained "I had one racehorse which was trained by [Ubaldo]. One racehorse costs about 8 to 10 thousand dollars a year. I would pay him nearly 30 [thousand dollars]". This procedure did not just apply in 2006 but was the standard procedure for consultancy fees and STSS expenses through all the fifteen years covered by Mauro's table, FY98 to FY12.

  1. I infer from the pattern of expenditure in this FY02 to FY06 period that Ubaldo was still giving active and useful assistance as a consultant to Poletti Corp to assist its business.

  1. Expenses - 2007 to 2009. The expenses pattern in these three years shows a period of transition for Ubaldo. The large amounts of consultancy fees relating to the business and STSS were no longer being paid but what appear only to be private horse expenses (not through STSS) increased, to a total of $83,412.29. Ubaldo appears to have retired from any semblance of active work for the Poletti Corp but was being paid for horse training activities of a more recreational nature. The general consultancy fees in this period are only $3,085.43. Ubaldo was still physically active in this period, but not enough to be contributing directly to Mauro's business. From here on it weighs significantly in Mauro's favour that most of what was paid to Ubaldo could not possibly give any financial benefit back to Mauro, but still gave pleasure to Ubaldo. It was in the last six years of Ubaldo's life (FY07-FY12) that the payments made for Ubaldo's benefit could more readily be characterised as unqualified acts of charity. But of the total of $3,791,497 claimed only $623,617.93 was spent in these last six years, approximately 16 per cent.

  1. Expenses - 2010 to 2012. In the final three years of the deceased's life, FY10 to FY12, the bulk of the payments made are for Ubaldo's personal expenses. Mauro spent about $235,000 between 2010 and 2012 on a combination of Ubaldo's health care ($173,069.83), the Sylvania Waters property ($51,383.87) and his living expenses ($10,575.29). As Ubaldo's health worsened his horse training or consultancy work reduced to nil and his other expenses increased. Again, this is a period where Mauro's payments to Ubaldo were essentially charitable in nature.

The Defendant's Submissions

  1. Dr Birch SC's submissions characterised Mauro's contributions as a form of charity. He argued that the defendant had, albeit through his companies, personally intervened to assist his father in retaining his principal assets and in sustaining in retirement his previous lifestyle. He submitted that Ubaldo had incurred a moral debt to Mauro as a result: one which he was unable to repay during his life, but which he could discharge through the gift of his estate upon death.

  1. Dr Birch SC grounded his submission in Succession Act, s 60(2)(b), part of a statutory list of the matters which may be considered by the Court in deciding whether to make a family provision order and the nature of such an order. Relevantly, the Court here may have regard to:

"the nature and extent if any of obligations or responsibilities owed by the deceased person to the applicant, to any other person in respect of whom an application has been made for a family provision order or to any beneficiary of the deceased person's estate".

  1. The defendant's submission is that the moral debt associated with the financial contributions Mauro made to his father qualifies him as a "beneficiary" to whom Ubaldo owed "obligations or responsibilities" within s 60(2)(b). I accept Dr Birch's analysis. Mauro's contributions to the deceased's financial wellbeing should be taken into account as a moral debt. But the question is still to assess the quantum of that moral debt and weigh it in light of the deceased's other obligations and the other s 60 relevant considerations.

  1. Dr Birch SC also relied on Succession Act, s 60(2)(h), another matter with relevance for the Court's consideration, and which provides as follows:

"(2) The following matters may be considered by the Court:
...
(h) any contribution (whether financial or otherwise) by the applicant to the acquisition, conservation and improvement of the estate of the deceased person or to the welfare of the deceased person or the deceased person's family, whether made before or after the deceased person's death, for which adequate consideration (not including any pension or other benefit) was not received, by the applicant,"

  1. But on the information Mauro has provided, the practical application of s both s 60(2)(b) and 60(2)(h) is difficult in this case. Generally the gross value of Mauro's contribution to Ubaldo's financial position can be seen. The full dollar value of what was paid can be accepted. With the payment of the $500,000 mortgage debt, legal fees, health care costs and personal expenses the value to Ubaldo and the lack of any consideration back to Mauro can be reasonably well accepted. But assessing whether adequate consideration was "not received" by Mauro or Poletti Corp for the rendering of deceased's services is quite a different question. The Court will not infer that Mauro was engaged in some kind of fraud upon the Australian Taxation Office ("ATO"). Particularly with respect to the gross amounts paid between FY98 and FY12 of consultancy fees ($1,267,365.40), Formwork Consultancy fees ($242,000) and STSS expenses ($1,124,293.90). It is difficult to accept that Mauro did not get something like an adequate return for those payments and they are over two thirds of the total amount paid. It is not appropriate in my view simply to add up the total expenses between FY98 and FY12 and take them all into account for Mauro's benefit.

  1. Rather, the realistic overall approach in my view is to treat the payments from FY07 to FY12 as wholly of a charitable nature for Ubaldo, and those up to FY06 as a mixture of the charitable and pure business expenses. Without the full accounts for Poletti Corp accurately assessing the mix is impossible. But given that Mauro claimed tax deductions for all the pre FY07 expenditure in my view the purely charitable element of these smaller payments must be a fairly low proportion of the overall FY98 to FY06 expenditure. The major payments, such as the $500,000 payment to the State Bank are excluded from this assessment.

  1. Three other factors need comment in this context: Mauro's tax benefits; the horse business; and goodwill.

  1. Tax benefits. As indicated the bulk payments Mauro claims were made to Ubaldo from Poletti Corp. It is notable that Mauro had not the slightest doubt that these payments were tax deductible to Poletti Corp. Mauro was challenged about the appropriateness of treating many of these payments as tax deductible business expenses:

"Q. Why were the property expenses in the third line deductible? What purpose of the business did they serve?
A. Are you asking me.
Q. Yes?
A. Yeah, they were just expenses for my father; pool cleaning, gardening, all that sort of stuff, council rates, et cetera.
Q. Why were they deductible in the hands of Poletti Corporation? Why were they expenses of that corporation for it to earn revenue?
A. Well, I put all the things together and give it to the accountants, and the accountants put down what is deductible and what is not. I am just when I give it to them, I say it is all deductible. What they come back with is what they come back with. They check every nook and cranny of what's been deducted and what hasn't.
Q. But presumably you only claim as a deduction expenses of the corporation that are reasonably incurred in the earning of its revenue?
A. Correct. On the advice of my accountants, that's what I would be doing.
Q. To the best of your recollection, what was the basis on which you claimed the property and expenses that are set out in the third line? I just want to know what they are for, basically?
A. It was for maintenance of the swimming pool and gardening, maintenance of the property itself, and council rates and things, I think, I don't know, whatever else. That's what they are for."

  1. Mauro represented to the ATO that Ubaldo provided valuable professional services for which he was appropriately compensated by Poletti Corp. If so, there can be only a small charitable element at work, perhaps accounted for by what is to be reasonably expected from non-arms length transactions such as these. The deceased was being paid commensurately for services rendered. Mauro's decision to use a corporate vehicle to transfer money brought him financial benefits. But as indicated they are difficult to assess.

  1. The STSS business. During the proceedings the defendant conceded that many of the contributions he made were for what was described as the deceased's STSS horse business. At approximately 33 per cent of the overall payments, these expenses constituted over $1.2 million. Mauro stated in evidence that the horse enterprise cost approximately $400,000 per year to run but that its only income was "from a little bit of prize money". But whether or not that is right is unclear. And I do not just accept Mauro's word for it in the absence of proof from its financial statements. The STSS horse business appears on Mauro's evidence less of a business and more a hobby. But I do not accept that a man as financially streetwise as Mauro would endure losses of this order without deriving some other tax or personal benefit for himself.

  1. Mr Ellison SC raised an important issue at this point. For all the $1.2 million poured into this STSS pursuit, no lasting vestige of the assets associated with the business comprise any part of the deceased's estate at his death. More broadly, a similar question arises in respect of the bulk of the money paid to the deceased that is not accounted for by obvious personal expenditure, such as home care. The Court has no way of assessing whether the deceased himself retained at all the value of these payments.

  1. Goodwill. Finally, the other arm of Mauro's case is that any value now found in Ubaldo's estate is attributable to Mauro's efforts, and that the remaining assets of the Poletti Group were lost in March 1997 through the receivership. Despite the Poletti Group's receivership the real picture is not that simple.

  1. Approximately $1.7 million worth of goodwill attributed to SPF was not sold by the receiver appointed to Murralin Holdings. Dr Birch SC submitted that this value effectively dissipated as its worth was not realised by the bank. But Mr Ellison SC contended that was not strictly the case. I accept Mr Ellison SC's submission. Much of this unsold goodwill was deployed in the commencement of Mauro's new ventures - both incorporated within weeks of the receivership in 1997. Although Mauro gave evidence to the effect that he had not used any of his father's accrued goodwill, I conclude that there must have been some degree of external recognition by the market place that Ubaldo Poletti's construction pedigree was one of the underlying assets of Mauro's new ventures.

  1. The probabilities and some of Mauro's own evidence support the inference that Mauro's new companies City and Retail took the benefit of some of this goodwill. They were incorporated quickly. City completed some of the work that the old Poletti Group companies had been doing. City and Retail took over about 110 to 120 employees from the old Poletti Group company SPF Formwork. The two contracts that these companies finished off were worth about $1 million. City and Retail purchased over $300,000 in the Formwork from the receiver, to continue their own, I infer, similar business to that of SPF.

  1. Although Mauro downplayed any assistance his father gave him after March 1997, I infer that it was substantial. Although Ubaldo had undergone heart surgery, he could still do valuable work for the new companies, as evidence by the level of consultancy fees he was paid in FY02 to FY06, in excess of $1.2 million. Mauro admired his father and valued his expertise. I do not accept that Mauro did not find very useful Ubaldo's expertise, which had built up a business for well over 30 years from the early 1960s to the early 1990s.

  1. The better view of all of this evidence is that Mauro was neither his father's patron nor a source of charity for Ubaldo after March 1997 and until about 2006. But rather Ubaldo was someone who was very useful to the continuation of Mauro's businesses. I do not accept Mauro's contention that the value of Mauro's estate was obliterated in 1997. Although in his mid 60s Ubaldo, who was plainly a driven man, still had something to contribute. Mauro saw that value in his father and Mauro used Ubaldo's services to advance Mauro's wealth, whilst caring for his father's interests as well.

The Deceased's Wills

  1. Ubaldo made several wills that between 1998 and 2010. The Court was presented with seven of his wills in this period, several of which are accompanied by s100 statements (or formerly, section 32 statements under the Family Provision Act, 1982).

  1. There is no material difference between the first two wills, dated 18 July and 17 August 1998. Both documents: (1) grant probate to Mauro as executor; (2) leave to him the entirety of the deceased's estate; and, (3) are adjoined by Family Provision Act, s 32 statements.

  1. The third will of 10 April 2006 appoints Mauro as executor and sole beneficiary. But a new provision was included; in the event that Mauro predeceased Ubaldo and died without children, then the estate was to be shared in equal parts between the four remaining Poletti children: Claudio, Doriana, Patrizia and Marco.

  1. On 22 February 2007 Ubaldo Poletti executed a will representing a departure from his previous intentions. This will appointed a solicitor, Simon Bennett of the firm Willis Bowring, as Executor. Mauro would receive nothing under this will. The estate was to be divided between the children of Claudio, Patrizia, Doriana and Marco in equal shares.

  1. Ubaldo prepared no Family Provision Act, s 32 document for this will. But he did discuss his intentions with his solicitor and newly-appointed Executor, Simon Bennett. Mr Bennett recalls, and I accept, that in January 2007 Ubaldo came to see him for further instructions on the will and to obtain the Certificates of Title for his properties.

"I recall at this stage that Ubaldo raised concerns that he feared his son Mauro had stolen the Certificates of Title and other items from a safe at his property in Potts Point. Due to these alleged thefts, Ubaldo wished to have his son removed as a beneficiary under the will"

  1. On 16 November 2007 the deceased returned to Willis Bowring to re-sign an identical version of that will. Mr Bennett provided evidence to the effect that the deceased was concerned that he may have signed an additional will post-February 2007 that did not reflect his intentions.

  1. By mid 2009 Ubaldo had decided to alter his bequest again. He approached a new firm to prepare what would be the sixth version of his will in just over a decade. On 25 June 2009 the deceased signed a will in the offices of The Conveyancing Shop in Chatswood that named Marco Poletti as Executor and divided the estate equally between Marco and Mauro.

  1. The deceased's final will, now in contest, was signed on 15 June 2010. It was accompanied by a Succession Act, s 100 Statement, which specifically addressed the estrangement between himself and his daughters:

"In relation to my daughters Patrizia and Doriana I say that:
My daughters intervened in the family law proceedings in respect of the property settlement with my former wife as set out above.
There was a huge financial drain of the family assets, as a result of the delay and increased costs that this caused. Patrizia and Doriana's husbands were both employed by the family building company at this time. They were both assisted with gifts and loans and helped to buy properties and establish themselves. A house was bought for Doriana to live in at the time of her marriage and Patrizia was given assistance in building and renovating her property.
Since my separation over 20 years ago neither Doriana nor Patrizia have called or visited me nor assisted me in any whatsoever. They both have children and I have not seen them since my divorce.
It is also my understanding that both Doriana and Patrizia are financially able to support themselves for their proper maintenance and advancement in life and due to their conduct over the years, do not wish for them to receive benefit from my Estate."

  1. Mr Bennett notes he had no reason to suspect that the deceased did not understand the decisions he made or the instructions that he gave with respect to the wills Mr Bennett oversaw. And Mr Bennett noted that Ubaldo "appeared to be a somewhat eccentric person"...and that "whilst I may not have always thought his decisions were wise or even possibly correct, I do believe that he understood the instructions he was providing to me".

  1. Mr Bennett recalls that on 10 September 2008 Ubaldo visited him to discuss changing his will to leave everything to Mauro. Ubaldo's statements on that occasion indicated a degree of unsubstantiated prejudice on Ubaldo's part against his children other than Mauro and Marco.

The Relationship Between the Plaintiffs and the Deceased

  1. Doriana and Patrizia bring two separate claims to this Court as plaintiffs. But their life experience with their father was shared. Therefore it is logical to deal with the plaintiffs' relationships with their father in the same section of these reasons, making reference to any differences where appropriate. The narrative in this section represents the Court's findings about these relationships between Ubaldo and the plaintiffs. I accept all their evidence on this subject.

Childhood and Early Adulthood

  1. Doriana and Patrizia enjoyed a relatively normal, if at times frustrating, relationship with their father during their childhood and early adulthood. Both plaintiffs recall aspects of the deceased's parenting that they found to be disappointing or upsetting. Patrizia recalls that she clashed with her father over his attitude toward his daughters as contrasted with that toward his sons, particularly noting that he did not encourage her attendance at university. Doriana remembers that the deceased directed physical and verbal abuse to her mother and siblings. Each daughter recalled physical punishment as a feature of their father's interaction with them, often in response to arguments about gender roles and expectations.

  1. But these early experiences of occasional friction were in no way fatal to the relationship between the deceased and his daughters. Whilst they may have been frustrated at times, or perceived a degree of unfairness in relation to their father's treatment of the Poletti sons, they otherwise maintained a reasonably functional relationship with the deceased.

  1. Both Poletti daughters married relatively young and received financial support from their parents, when it came time to purchase their respective family homes. In 1982 the deceased had loaned Doriana and her then-husband money through the Poletti Group to purchase an $84,000 house in Gymea. She recalls her father telling her:

"You are the only child in the family who is not getting any benefit. You are not living at home and you do not have a loan from the company for a house. Go ahead and buy a home through the company and you can pay it back".

  1. Doriana and her husband contributed $9,000 to the purchase price and paid monthly rent of $320 to the Poletti Group, of which 11 percent was deemed to be a reduction of the overall debt.

  1. In 1987 Doriana's family moved to Brisbane. In addition to the transfer of the $9,000 deposit on the Gymea house, the Poletti Group loaned Doriana and her husband a further $35,000 to purchase a house in Brisbane. The remainder of the purchase price was achieved through a loan from the Westpac Bank.

  1. Returning to Gymea in 1989, the family continued to pay the Group $250 in rent per week. The Gymea house was eventually sold in 1990 when Doriana separated from her husband, at which point she and her three children moved into the Sylvania property with Teresa. There were other occasions of financial support from her parents: Doriana also recalls receiving two separate one-off payments from the Poletti Group - one for $5,000 and one for $15,000.

  1. Patrizia similarly received a contribution toward her family home. In 1986 her father loaned her $25,000 to assist her and her husband to purchase their house in Engadine. The amount was due to be repaid in monthly instalments of $250.

  1. As young parents, Doriana and Patrizia took obvious pleasure from their father's relationship with his grandchildren. Doriana describes her relationship with her father as at its best when she had young children, recalling times that the deceased would help look after and play with them. It was her estimation that until the breakdown of her parents' marriage and the family law property settlement proceedings she had a normal child/parent relationship with the deceased.

The Family Law Proceedings

  1. But the plaintiffs' relationship with the deceased changed dramatically in the lead up to, and over the course of, the family law proceedings between 1989 and 1991. It represented what I assess as something like a seismic event within the Poletti family, during which relationships were irreversibly ruptured and the family unit split. This judgment has already made reference to the contested version of events from the signing of the deed of settlement. It was the defendant's evidence that both daughters told the deceased that he would never again see his grandchildren, although both refute that claim. Irrespective of what was said and by whom, it is clear that the signing was a watershed moment.

  1. It was put to the Court by Dr Birch SC that at the end of the family law dispute in 1991 both plaintiffs had made a conscious and deliberate decision to permanently cut ties with the deceased. Yet that position is not consistent with their evidence, which I accept. Moreover it risks oversimplifying the nature of the estrangement. The following exchange between Dr Birch SC and Patrizia, in which I accept her evidence, shows that her view was that she thought that her relationship with her father could continue despite the divorce:

"Q. What I asked you was whether you were angry on that day when you came to sign that because of what you thought about the way your father had struck that bargain?
A. Not particularly on that day. We knew about what was happening before that so we came to terms with that so on that day I wasn't particularly angry.
Q. Did you sign it wishing that in fact you had been able to do and sign a better deal?
A. I would have liked to have seen my mother get more out of it but that was what she agreed to so we agreed to it.
Q. Right. Do you recall after the document had been signed saying to your father, "You will never see your grandchildren again"?
A. No, I did not say that.
Q. But you do agree with me about this, do you, that you were angry with your father on that occasion?
A. Not on that day.
Q. Not on that day. Was it the case that you had decided on that day when you signed that document or at some time before it that you were not going to continue your relationship with your father?
A. No, I didn't actually think of it that way. Glen was still working for the company. I didn't know at that stage that I wasn't going to be seeing Dad ever again."

  1. At that stage neither Doriana nor Patrizia anticipated that it would be their final interaction with Ubaldo. Rather the parties, in my judgment, temporarily retreated from the emotional turmoil of the previous three years, as they probably felt they had to, and perhaps expecting that in time contact would be restored.

  1. But what began as a temporary situation slowly crystallised into a more permanent form over the years, as estrangement and became the default position from which neither the plaintiffs nor the deceased departed. But two subsequent events not of the plaintiffs' doing entrenched the separation.

Glenn's Dismissal from the Poletti Group

  1. In 1992 Ubaldo dismissed Patrizia's husband Glenn from his role with SPF Formwork after four and a half years with the company. Glenn's continuing employment with the Poletti Group after the divorce proceedings, had been the remaining active link between Patrizia and her estranged father. She presented evidence that although she was not in contact with the deceased during this period, there was a degree of interaction between her family and Mauro, since they moved in a shared social circle. But Glenn's dismissal further divided the family and provided another obstacle to any form of reconciliation between the plaintiffs and the deceased. Although the defendant gave evidence to the Court that Glenn's dismissal was not designed as an instrument of retaliation, it was perceived as such.

Ubaldo Pursues his Daughters for Repayment of their Loans

  1. Some time in 1992 or 1993 the plaintiffs had ceased to make the loan repayments to their father that had been ordered as part of the family law settlement in 1991. There was no evidence to suggest that this was a deliberate move on either plaintiffs' behalf to evade payment. But given the small sums involved there appeared to have been impracticality in making the weekly repayments. Patrizia's weekly sum was only $2.50. Although the detail of the situation is unclear, it may have been the case that cheques for such a small amount were either not being cashed by the deceased regularly or that the administrative costs involved in transferring such small amounts acted as a deterrent. Both daughters say, and I accept, that they understood their debt to be repayable in full by their 55th birthday and so they simply stopped making the smaller, regular repayments.

  1. Ubaldo decided to pursue Patrizia and Doriana for the outstanding amount by issuing a summons for them to attend Court. Mauro's role in this decision has been considered earlier in these reasons. After several years of silence between the plaintiffs and their father, this course of action affected both daughters deeply. This was the only contact they had from their father since 1991. And the sums of money involved were minor.

  1. From that point on estrangement between the plaintiffs and their father remained. The only time when the parties came close to contact was at the funeral of Patrizia's husband Glenn in 1999. Although both Mauro and Ubaldo were in attendance to pay their respects to Glenn as a former colleague, neither took the extra step to speak with Patrizia or Doriana.

Ubaldo's death

  1. When Ubaldo Poletti died in May 2012, Teresa and her two daughters were visiting relatives in Italy. They received news of their father's death via Marco but decided not to return to Australia for the funeral. Although both plaintiffs made clear that they continue to regret the estrangement with the deceased, neither felt compelled to attend his funeral. When asked if she would have attended had she been in Sydney at the time, Doriana responded in these proceedings that she probably would not have. Patrizia was unsure.

  1. One particular aspect of the plaintiffs' estrangement from their father emerged very strongly throughout their oral evidence: they perceived Mauro's role in preventing any reconciliation between themselves and the deceased. Both daughters struggled to articulate the influence that Mauro held over his father. But they clearly believed it existed. Doriana explained her perception this way:

"Q. What do you mean by saying, and your words were "Mauro was always in his life" when you were asked about whether you could visit or something like that?
A. I just felt he controlled him.
Q. In any particular way or-
A. In every way.
Q. If your father had sent out a message that he wanted to see you, how would you have reacted?
A. I would have loved it.
Q. Would you have followed it up?
A. I believe so."

  1. Doriana was right. The Court's assessment of Mauro is that his financial support of and living arrangements with Ubaldo gave him a permanent controlling presence in Ubaldo's life as his father grew weaker. Mauro's hostility to the plaintiffs was palpable in the courtroom. Their perception that Mauro would have made them unwelcome with Ubaldo was genuinely felt and accurate.

  1. Several elements of Mauro's relationship with the deceased led them to feel that, even if it were possible for them to re-establish contact with their father, Mauro would constitute a significant obstacle to that process. They cited Mauro's physical presence as a potential issue, since he both lived in and worked from the deceased's house for extended periods of time. And both plaintiffs were obviously upset by Mauro's role as 'next friend' during the 1997 pursuit of their debt repayments.

  1. Both plaintiffs regret the estrangement between themselves and their father. The emotional toll that it has taken on their lives was quite apparent in the course of their evidence.

Doriana's Present Financial Circumstances

  1. Doriana's financial need is considerable and can be partially attributed to difficult circumstances in early adulthood. She left the family home in 1979 at 17 years of age when she married her husband Ian. But the marriage ended in divorce 11 years later. Doriana found herself as a single mother of three young children. Adding to those financially trying circumstances, in 1991 Ian lost his job and became unable to make child support contributions for the two years following.

  1. Throughout this period Doriana was resourceful. She made ends meet by combining full time employment as a branch manager at Colonial State Bank, with two additional part time waitressing jobs. These years presented financial setbacks for her, whilst she dealt with the parallel Poletti family law proceedings.

  1. Doriana has remained an employee of the bank since that time. But in 2011 her sense of job security was shaken. Her employer brought disciplinary proceedings against her with an internal investigation. Although she was ultimately cleared of any wrongdoing. Nonetheless the incident understandably impacted upon her emotional wellbeing and her confidence within her employment. Doriana experiences ongoing anxiety as a consequence of the proceedings. She would prefer to leave her present employment. But she worried that her lack of experience outside the bank will limit her other employment options.

  1. Doriana's taxable income until 2013 was approximately $105,000 but for the reasons indicated she has since opted to work a five day fortnight at the bank, nearly halving her salary which is now $40,350 per annum. Her partner's 2010/2011 taxable income was $86,583. In these proceedings she seeks a sum of money to discharge her present mortgage of $120,000 and to supplement her superannuation benefits. Explaining in her affidavit that she feels emotionally and physically exhausted, her preference would be to retire upon reaching the age of 55 or earlier if possible. She is concerned that her mortgage would not be discharged by that time.

  1. I accept the account Doriana gives of her assets and liabilities, as well as her income and expenditure:

Doriana Jones: Assets & Liabilities

Assets (Doriana)

Assets (Partner)

Liabilities

Solely owned assets

Superannuation

$152,428

Shares

$12,818

Bank accounts

$1,799

Total

$275,719

Sole liabilities

Credit cards

$1,487

Balance of loan from Ubaldo Poletti

$25,000

Total

$26,487

Jointly owned assets

Residential property

$245,000

$245,000

Home contents

$NCV

$NCV

Total

$245,000

$245,000

Joint liabilities

Mortgage

$130,000

Total assets minus liabilities

$180,000

$180,000

Partner solely owned assets

Mitsubishi Lancer 2006

$10,000

Bank accounts

$5,000

Superannuation

$365,000

Total

$380,000

  1. Doriana's yearly household expenditure amounts to $147,274, although this figure represents those expenses jointly incurred by both her and her partner. In the past this expenditure was met by their joint taxable income of approximately $190,000 but their financial position has recently changed to her disadvantage given Doriana's move to part-time employment at the bank in 2013.

Doriana Jones: Household Expenditure

Item

Amount

Mortgage repayment

$30,960

Doriana income protection

$3,487

Rob income protection

$4,500

Car insurance

$1,200

Car registration

$1,000

Contents insurance

$277

Mobile phone, Doriana

$720

Council rates

$748

Water rates

$580

Strata levies

$2,236

Electricity

$1000

Doriana health fund

$1949

Rob health fund

$1,500

Medical/dental/pharmacy

$5,000

Doriana gym membership

$780

Rob gym membership

$980

Groceries

$18,600

Clothing

$5,000

Hair/beauty

$1,000

Gifts

$3,000

Holidays

$10,000

Restaurants/outings

$4,000

Repairs/maintenance

$1,000

Loan repayment to Ubaldo Poletti

$624

Income tax self

$29,849

Income tax partner

$17,284

Total

$147,274

Patrizia's Present Financial Circumstances

  1. Patrizia's financial need is considerable. Her family's financial difficulties began in 1998 when her husband Glenn underwent surgery to his shoulders. As a result of the procedures he was unable to work, and the family's only income was disability payments.

  1. In 1999 Glenn died. Patrizia was forced to raise her two young children (then 8 and 10 years of age) alone. It was a most difficult time for her. Patrizia returned to work, raising her children alone.

  1. Although both of Patrizia's children now live away from home, they still require ongoing financial support. Her daughter Lauren completed a Bachelor of Psychology degree and hopes to become a clinical psychologist, which may require a further three or four years of study. Both children experience health problems, which risk the depletion of Patrizia's already limited financial resources.

  1. Patrizia herself suffers from a chronic knee injury. Based on medical advice it appears that the condition will require future operative treatment which will result both in the cost of the procedure and lost future earnings during her period of recovery. There are no presently available costings for such potential expenses.

  1. Patrizia seeks provision from the estate to enable her to discharge her debts which presently total $240,000 including her mortgage. She also seeks additional sums to supplement her existing superannuation and to provide for contingencies in the event of house repairs, medical costs, her children's health, etc.

  1. Patrizia's taxable income from the NSW Judicial Commission for the 2011/12 financial year was $100,597. I accept the account she provides of her assets and liabilities, as well as her income and expenditure:

Patrizia Becker: Assets/Liabilities

Solely owned assets

Sole liabilities

Residential property

$650,000

Jewellery

$5,000

Home Contents

$NCV

Superannuation

$110,000

2004 Mazda 3 motor vehicle

$10,000

Shares

$3,500

Bank accounts

$1,180

Mortgage

$242,000

Credit cards

$4,585

Balance of loan from Ubaldo Poletti

$12,500

Income tax

Total

$779,680

$259,085

  1. Patrizia's annual expenditure is close to her annual income. She could not be expected to save much or provide for her future on this household budget. I accept the expenditure figures she has given in the table below.

Patrizia Becker: Annual Expenditure

Item

Amount

Mortgage payments

$16,182

Life insurance/superannuation (no tax benefit)

$2,400

Credit Card fees

$489

Bank account fees

$186

Car insurance

$2,083

Car registration

$1,961

Car repairs/maintenance

$2,548

Petrol

$1,500

Home and contents insurance

$1,348

Household repairs and maintenance

$732

Furniture/appliances

$1,631

Computer/printer

$1,116

Internet

$675

Home phone

$491

Mobile phone

$582

Council rates

$1,232

Water rates

$931

Electricity

$2,992

Private health insurance

$2,797

Medical/pharmacy

$1,600

Dental

$2,719

Train fares

$1,794

Groceries

$12,700

Clothing/shoes

$1,795

Hair/beauty

$1,200

Gifts

$1,500

University/study expenses (daughter Lauren)

$1,000

Restaurants/outings

$2,500

Movies/books

$300

Holidays

$5,000

Loan repayment to Ubaldo Poletti

$120

Income tax

$25,170.89

Total

$99,274.89

  1. I accept Patrizia's evidence that she and her sister have each paid $46,979.86 to their solicitors in respect of this litigation up until 28 February 2014.

Applying Relevant Legal Principles

"Eligible Person" Succession Act, s 57

  1. The applicable legal principles are not in contest. For an order for provision to be made under Succession Act, s 59 in favour of an applicant, the Court must be satisfied that the applicant is an "eligible person" within Succession Act, s 57. Succession Act, s 57 provides:-

"Section 57 Eligible persons
(1) The following are "eligible persons" who may apply to the Court for a family provision order in respect of the estate of a deceased person:
(a) a person who was the wife or husband of the deceased person at the time of the deceased person's death,
(b) a person with whom the deceased person was living in a de facto relationship at the time of the deceased person's death,
(c) a child of the deceased person,
(d) a former wife or husband of the deceased person,
(e) a person:
(i) who was, at any particular time, wholly or partly dependent on the deceased person, and
(ii) who is a grandchild of the deceased person or was, at that particular time or at any other time, a member of the household of which the deceased person was a member,
(f) a person with whom the deceased person was living in a close personal relationship at the time of the deceased person's death."

Adequate Provision

  1. The final questions now relate to whether an order for provision should be made in Doriana and Patrizia's favour. The test of whether provision should be made in any case is set out in Succession Act s 59(1)(c):-

"(1) The Court may, on application under Division 1, make a family provision order in relation to the estate of a deceased person, if the Court is satisfied that:
...
(c) at the time when the Court is considering the application, adequate provision for the proper maintenance, education or advancement in life of the person in whose favour the order is to be made has not been made by the will of the deceased person, or by the operation of the intestacy rules in relation to the estate of the deceased person, or both."

  1. There are many judicial statements summarising the operation of what is said to be a two-step provision. For example in Singer v Berghouse (No. 2) (1994) 181 CLR 201 at 209, the High Court of Australia said of the test under the previous legislation:-

"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 Co8. The determination of the first stage in the twostage process 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.
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 Leeder9, 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."

  1. Whether the two-step test operated with the same full vigour in the current legislation has been discussed in the Court of Appeal: Evans v Levy [2011] NSWCA 125. But such considerations are not an issue in this case, which is a very clear one on the question of whether or not adequate provision has been made for Doriana and Patrizia once they have been shown to be eligible persons.

  1. Some other authorities have explained in more detail the meaning of the words in the legislation "adequate", "proper", and "advancement in life". Some of these authorities have been conveniently collected in the decision of Hallen AsJ in Drury v Smith at [153], [154], [155], [158] and [160], which relevantly provides:-

"[153] Master Macready (as his Honour then was) in Stiles v Joseph (NSWSC, 16 December 1996, unreported) said, at 14-16:
"Apart from the High Court's statement that the words 'advancement in life' have a wide meaning and application ... there is little (if any) case law on the meaning of 'advancement' in the context of family provision applications. Zelling J in In The Estate of Wardle (1979) 22 SASR 139 at 144, had the same problem. However, commonly in decisions in which the Applicant's 'advancement in life' has been in issue, the Court has looked only at the material or financial situation of the Applicant, and there is nothing to suggest that provision for the Applicant's 'advancement in life' means anything more than material or financial advancement. For example, in Kleinig v Neal (No 2) [1981] 2 NSWLR 532, Holland J, discusses the financial assistance which an applicant may need for his or her maintenance and advancement in life in the following terms:- If the court is to make a judgment as to what a wise and just testator ought to have done in all the circumstances of the case, it could not be right to ignore that the particular testator was a wealthy man in considering what he ought to have done for his widow or children in making provision for their maintenance, education or advancement in life. There are different levels of need for such things. In the case of maintenance and advancement in life they can range from bare subsistence up to anything short of sheer luxury. A desire to improve one's standard of living or a desire to fulfil one's ambition for a career or to make the fullest use of one's skills and abilities in a trade or business, if hindered or frustrated by the lack of financial means required for the fulfilment of such desire or ambition, presents a need for such assistance and it would seem to me that it is open to a court to say, in the case of a wealthy spouse or parent who could have but has failed to provide such financial assistance, that ... [the deceased] has failed to make adequate provision for the proper maintenance and advancement in life of the spouse or children who had such need. (at 541)
In Pilkington v Inland Revenue Commissioners [1964] AC 612, Viscount Radcliffe defined 'advancement', in the context of a trustee's powers, as 'any use of ... money which will improve the material situation of the beneficiary' (at 635), and this definition was cited with approval by Pennycuick J in Re Clore's Settlement Trust; Sainer v Clore [1966] 2 All ER 272 at 274...
In Certoma, The Law of Succession In New South Wales (2nd Ed) at 208, it is said:
'Although 'maintenance' does not mean mere subsistence, in the context of the New South Wales Act, it probably does not extend to substantial capital investments such as the purchase of a business, an income-producing property or a home for the Applicant because these forms of provision are more likely to be within the power of the Court under 'advancement in life'. Maintenance is rather concerned with the discharge of the recurrent costs of daily living and not generally with substantial capital benefit.'
The Queensland Law Reform Commission, in its Working Paper on Uniform Succession Laws: Family Provision (Working Paper 47, 1995) ... notes ... that:
'Whereas support, maintenance and education are words traditionally associated with the expenditure of income, advancement has been associated with the expenditure of capital, such as setting a person up in business or upon marriage.'"
[154] In Mayfield v Lloyd-Williams [2004] NSWSC 419, White J at [114] noted:
"In the context of the Act the expression "advancement in life" is not confined to an advancement of an applicant in his or her younger years. It is phrase of wide import. (McCosker v McCosker (1957) 97 CLR 566 at 575) The phrase "advancement in life" has expanded the concept used in the Victorian legislation which was considered in Re Buckland permitting provision to be made for the "maintenance and support" of an eligible applicant. However Adam J emphasised that in a large estate a more extravagant allowance for contingencies could be made than would be permissible in a small estate and still fall within the conception of maintenance and support."
[155] In Bartlett v Coomber [2008] NSWCA 100, at [50], Mason P said:
"The concept of advancement in life goes beyond the need for education and maintenance. In a proper case it will extend to a capital payment designed to set a person up in business or upon marriage (McCosker v McCosker (1957) 97 CLR 566 at 575; Stiles v Joseph, (NSW Supreme Court, Macready M, 16 December 1996); Mayfield v Lloyd-Williams [2004] NSWSC 419)."
...
[158] Dixon CJ and Williams J, in McCosker v McCosker (1957) 97 CLR 566 at 571-572, after citing Bosch v Perpetual Trustee Co Ltd, went on to say, of the word 'proper', that:
"It means "proper" in all the circumstances of the case, so that the question whether a widow or child of a testator has been left without adequate provision for his or her proper maintenance, education or advancement if life must be considered in the light of the competing claims upon the bounty of the testator and their relative urgency, the standard of living his family enjoyed in his lifetime, in the case of a child his or her need of education or of assistance in some chosen occupation and the testator's ability to meet such claims having regard to the size of his fortune. If the court considers that there has been a breach by a testator of his duty as a wise and just husband or father to make adequate provision for the proper maintenance education or advancement in life of the applicant, having regard to all these circumstances, the court has jurisdiction to remedy the breach and for that purpose to modify the testator's testamentary dispositions to the necessary extent."
...
[160] In Vigolo v Bostin [2005] 221 CLR 191, at 228, Callinan and Heydon JJ said:
"[T]he use of the word "proper" ... implies something beyond mere dollars and cents. Its use, it seems to us, invites consideration of all the relevant surrounding circumstances and would entitle a court to have regard to a promise of a kind which was made here...The use of the word "proper" means that attention may be given, in deciding whether adequate provision has been made, to such matters as what use to be called the "station in life" of the parties and the expectations to which that has given rise, in other words, reciprocal claims and duties based upon how the parties lived and might reasonably expect to have lived in the future.""

  1. The Court was helpfully referred by counsel in closing submissions to the principles the Court should take into account in respect of adult children, comprehensively summarised by Hallen J in Hogan v Hogan [2013] NSWSC 1405 at [130]. And given the lack of evidence on the subject from Mauro, I also have had regard to the principles that are brought to bear where in a claim of an adult child a relatively large estate is in issue with no evidence of competing need: Lloyd Williams v Mayfield (2005) 63 NSWLR 1 per Bryson J at [29] to [39].

  1. The parties put extensive submissions on the law applicable on the issue of estrangement. Dr Birch SC took the Court to the authorities in the area and submitted that whilst there are definitely authorities that might suggest that as a usual principle estrangement alone would not lead to a plaintiff failing against an estate, they are always qualified statements. But the current law is well stated in Palmer v Dolman; Dolman v Palmer [2005] NSWCA 361 at [88] to [94] and in Buggle v Buggle [2012] NSWSC 1009 at [109] to [110]. I do not see any need to reproduce those principles in this judgment or to discuss them any further. The issue in this case is really one of characterisation of the conduct of the parties and understanding the nature of the estrangement.

  1. That then leaves the Court to decide whether provision should be made and what is appropriate provision in this case.

  1. The plaintiffs were estranged from the deceased. But that estrangement continued partly because of the conduct of the deceased himself and that of the defendant, Mauro. The Court's findings show that neither plaintiffs thought that the estrangement would be permanent at the time of the Family Court settlement but that the deceased, assisted by Mauro, launched legal proceedings which were calculated to and had the effect of alienating the plaintiffs further. Combined with the sacking of Patrizia's husband Glenn, Mauro's growing control over Ubaldo's life and his own hostility to the plaintiffs, I accept that any attempts of reconciliation would have been reasonably perceived by the plaintiffs as likely to be fruitless. They are not absolved of responsibility for the estrangement and they clearly regret it, but they are certainly not the author of the estrangement and the Court will assess them on this basis. The estrangement does not prevent these plaintiffs from obtaining an order under the Act. But the estrangement exists and must be taken into account. I have reduced what I would otherwise have given these two plaintiffs by reason of the estrangement.

  1. The Court's findings also put Mauro's financial case into better perspective. I do not accept that Mauro is to be credited with all the value that remained in the deceased's estate at the time of his death. Mauro received significant benefits from the receivership of the Poletti Group companies and from the deceased's continued assistance in the business of Poletti Corp, which in a practical sense took over much of the undertaking of the Poletti Group companies that had gone into receivership. And although he was in his mid 60s in 1997, Ubaldo's own efforts assisting his son Mauro were an important component in Ubaldo maintaining his own wealth.

  1. Finally, the Court is prepared to infer that Ubaldo owed a significant moral debt to Mauro, particularly for Mauro's support in the last six years of his life and for Mauro's efforts to preserve the Sylvania property from being sold by the State Bank and securing the Potts Point property for Ubaldo. But the extent of the moral debt is nothing like the $3 million of expenditure that Mauro has identified.

  1. Doriana and Patrizia are plaintiffs with demonstrable needs that are in my view quite similar. They both have mortgages. They both face financial risks in the future. They are both near retirement. They both have limited financial options at this time of their lives. They both have real need of capital to guard them against life's vicissitudes. Adequate provision has not been made out of the deceased's estate for either of them. They should each receive a legacy of $450,000 from the estate, and have their debts to the estate extinguished.

Conclusions and Orders

  1. The Court's orders are as follows:

(1) Order that there be provided out of the estate of the deceased Ubaldo Poletti to each of the plaintiffs the sum of $450,000, and their respective debts to the estate should be extinguished.

(2) Order that the plaintiffs' costs of these proceedings be paid out of the estate on the ordinary basis.

(3) Order that the defendant's costs be paid out of the estate on the indemnity basis.

(4) Exhibits and subpoenaed material may be returned forthwith; any exhibits returned must be retained intact by the party or person that produced the material until the expiry of the time to file an appeal, or until any appeal has been determined.

(5) Grant liberty to apply in relation to the implementation of these orders and any other claimed outstanding issues on which any party moves the Court within 28 days of the date of these orders.

**********

Amendments

05 June 2014 - deletion of last two sentences referring to medical condition.


Amended paragraphs: 141

Decision last updated: 05 June 2014

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Cases Cited

6

Statutory Material Cited

1

Singer v Berghouse [1994] HCA 40
Evans v Levy [2011] NSWCA 125
Hogan v Hogan [2013] NSWSC 1405