Garofalo v Capogreco

[2006] NSWSC 1116

CITATION:	Garofolo v Capogreco [2006] NSWSC 1116 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	23/10/06, 24/10/06
JUDGMENT DATE :	31 October 2006
JURISDICTION:	Equity Division
JUDGMENT OF:	Associate Justice Macready at 1
DECISION:	Paragraph 56
CATCHWORDS:	Family Provision. Application by elderly widow. Whether she should have capital to purchase aged care unit. Order for provision of capital by way of legacy.
PARTIES:	Maria Rosaria Garofolo v Joseph Capogreco (Estate of Salvatore Garofolo)
FILE NUMBER(S):	SC 6351/2005
COUNSEL:	Mr D Flaherty for plaintiff Ms D Hogan-Doran and Ms P Gormly for defendant
SOLICITORS:	Douglas Hannaway for plaintiff` Joseph G Capogreco & Associates for defendant

- 1 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

Associate Justice Macready

Tuesday 31 October 2006

6351/05 Maria Rosaria Garofolo v Joseph Capogreco (Estate of Salvatore Garofolo)

JUDGMENT

1 His Honour: This is a hearing under the Family Provision Act 1982, in respect of the estate of Salvatore Garofolo, who died on 1 August 2004. The deceased was survived by his second wife, the plaintiff, and by his seven children from his first marriage.

The last will of the deceased

2 The deceased made his last will on 8 October 1999 and he appointed the defendant, a solicitor, as his executor. In respect of the deceased's house, the will contained a provision that the plaintiff could live in the house and use the household chattels provided she met the outgoings until such time as she ceased her occupation. The plaintiff and deceased’s daughters were to receive $5,000 from a debt of $30,000 owed to the deceased. Half of that debt has been recovered and, accordingly, the plaintiff would be entitled to the $2,500.

3 The will provided for the remainder of the estate to be divided equally between the deceased’s children, in equal shares, as tenants in common.

Assets in the estate of the deceased

4 The main asset in the estate is the house at 3 Hunter Street, Strathfield. There have been a number of estimates of its value and the executor has rejected an offer of $802,000 in an effort to obtain a better price. It seems to me that a likely sale price is the order of $800,000 and the only other asset in the estate is cash amounting to $34,023. The expenses to be incurred are as follows:

Sale expenses $17,600
Defendant's costs $70,009
Plaintiff's costs $49,193

5 This means that the distributable estate will be $697,221.

Family history

6 The deceased was born on 18 September 1912 and the plaintiff on 11 March 1923. The plaintiff is now 83 years of age. The deceased had seven children by his first wife. They were: Carmel born 26 June 1944; Josephine born 6 February 1946; Teresa born 1 January 1949; Alfina born 9 May 1951; Tony born 18 January 1955; Peter born 27 June 1956; and John born 27 June 1956.

7 By the time of the birth of his last children the deceased and his first wife had come to live in Australia. In 1960 he purchased a property at Kurrjong and all the children worked on the property between that time and 1968.

8 The plaintiff had migrated to Australia from Italy in 1965 and in that same year, the deceased and his family commenced to reside at the property at 3 Hunter Street, Strathfield. In due course, some of the children left home. The deceased’s first wife died in February 1973. The plaintiff and the deceased met in 1975 and they married on 8 May 1976. The last child to leave home and marry was Tony who left in September 1982. He continued to assist the deceased with maintenance of the house, shopping and other matters. The deceased made his last will on 8 October 1999.

9 In the period between 2000 and 2004, the plaintiff was not well and from time to time and the deceased’s children visited to assist. At the request of the deceased, his son John came and resided with the him and the plaintiff in September 2001 in order to provide care and look after the house.

10 The deceased died on 1 August 2004 and on 31 August 2004, the plaintiff left the Strathfield property and went to live with her nephew, Bruno Ferrato, at Port Macquarie. In December of that year she moved to live with his parents in Sydney. In 2005 the plaintiff appointed her nephew as her attorney and gave him an enduring guardian authority.

11 Probate was granted to the defendant on 8 August 2005 and these proceedings were commenced within time.

Eligibility

12 The plaintiff is an eligible person. In applications under the Family Provision Act, the High Court in Singer v Berghouse (1994) 181 CLR 201 has set out the two stage approach that a Court must take. At page 209 it said the following:

"The first question is, was the provision (if any) made for the applicant 'inadequate for (his or her) proper maintenance, education and advancement in life'? The difference between 'adequate' and 'proper' and the interrelationship which exists between 'adequate provision' and 'proper maintenance' etc were explained in Bosch v Perpetual Trustee Co Limited . The determination of the first stage in the two-stage process calls for an assessment of whether the provision (if any) made was inadequate or what, in all the 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 Leeder where there were no assets from which an order could reasonably be made and making an order could disturb the testator's arrangements to pay creditors."

The plaintiff’s situation in life

13 The plaintiff is 83 years of age, single and has no dependants. She has savings of $13,000. The only income which she receives is an old-age pension and a small Italian pension, which she pays to the parents of her nephew in order to cover the costs of her care. Although she has been in Australia from many years, she cannot speak English and is illiterate. She is now suffering from dementia that affects her short-term memory.

14 She has been assessed by an aged care team as requiring high-level residential care. She needs assistance with personal care and uses a frame to walk. She also requires assistance with medication management. The plaintiff would not be able to manage in a hostel but she would be able to live in a supervised retirement village. She is not yet in the position where she needs full time nursing care.

15 The plaintiff did not contribute to the cost of the of the Strathfield property. However, she lived with the deceased and members of his family during the course of the marriage for 28 years. There is nothing to suggest it was not a happy marriage.

16 It is also necessary to consider the situation in life of others having a claim on the bounty of the deceased.

Josephine Moschella

17 Josephine is 60 years of age and has been married since 1971. She and her husband have two adult children living at home. She has some back problems, as does her husband, who was formerly a labourer. They survive on the pension to meet their expenses. They own their own home at Burwood, worth $400,000, which is not encumbered. They have a modest amount of superannuation and a car worth $10,000.

18 They have always wanted to go for a trip to Italy, where they have not been for 50 years. She, like her siblings, worked on the farm at Kurrajong on weekends and holidays. She speaks of picking lemons and cultivating the farm. She did not earn any money for this work. As is common with the other children, the deceased collected their earnings and managed the family finances.

19 The work done on the farm by the children continued until 1981 when it was sold by the deceased.

Carmel Vasta

20 Carmel is 62 years of age and she is married with three children the youngest of whom lives at home to help her to care for her husband. Her husband is not well. His occupation was a labourer and he suffers from diabetes, sleep apnoea and dementia. Carmel has been her husband’s full time carer for the five years.

21 They own their home which is unencumbered and worth approximately $750,000. They have a car worth $10,000.

22 Carmel, like her siblings, was not allowed to retain any of the earnings she received prior to her marriage. She also assisted the deceased and the plaintiff.

Teresa Smith

23 Teresa is 57 years of age and she is married. She and her husband have two children who are not dependent. Her husband was a clerk until he was made redundant. He currently makes $200 a week doing Avon and Home Care shopping. They own their home, worth $750,000 and they have a car worth $10,000. Teresa has had painful back and shoulders since an accident when she was a child and this restricts her activities. She would like to renovate the house and provide for her future health problems. She also suffers from diverticulitus, colitis, hernia trouble and irritable bowel syndrome. Teresa also commenced work at the age of 16 and handed over her pay to her father. Apart from a short period of estrangement she was a good daughter to the deceased and the plaintiff.

Peter Garofolo

24 Peter is 50 years of age and is in moderately good health. He is married with two children, aged 10 years and 18 years who live at home. They own their home, which is worth about $400,000, which is subject to a mortgage of $250,000. Peter is currently working in a franchise dog grooming business which provides a modest income. His wife works in accounting and receives a salary of $40,000 per annum gross. They have modest superannuation, a van and a car.

25 They would like to use any legacy to reduce their mortgage.

26 Peter also gave evidence of working on the family farm and giving his wages to the deceased. After the death of the deceased’s first wife, Peter also had to find jobs, as the deceased did not provide for them after that death. Although this caused a breach in the relationship, the relationship was re-established in 1980.

Alfina Garofolo Bugeja

27 Alfina is 55 years of age. She is not in good health. She suffers from high cholesterol and thyroid and chronic insomnia. She also has a back injury resulting from the accident in which she and her sister, Teresa, were involved.

28 Alfina is married and she and her husband have three children, one of whom is still dependent on them. Her husband is 59 years of age and he still works and receives a salary of about $32,000 per annum. At present, Alfina is not employed, although she is trying to obtain employment. They own their house, worth about $500,000 and have no mortgage. Apart from a car, they have no other assets.

29 Their house needs major repairs and if they receive a legacy they wish to apply the funds to the house.

30 Alfina was the last daughter to live at home, where she remained after the death of her mother to look after her father, until she married. Apart from a brief period, she has remained in contact with the plaintiff and has assisted with her care after she started to suffer from dementia.

Tony Garofolo

31 Tony is 51 years of age. He is married and he and his wife have three children who live with them. They own their home at Greenacre, worth $600,000, on which there is a mortgage of $84,529. Tony works as a storeman, earning $577 per week net. He has a car worth $1,000 and his wife has car worth $10,000. He has approximately $18,500 in superannuation. He has a small investment in BHP shares of $25,000. In due course, he wishes to pay off his mortgage.

32 He also describes the work he did at Kurrajong and giving his wages to the deceased. Apart from a short break, he continued to keep contact with the deceased.

John Garofolo

33 John is 50 years of age and works as a warehouse storeman. His weekly gross pay is about $600. He owns no property. He has approximately $16,000 superannuation and investments worth about $12,000. John is not married. In 2001, at the request of the deceased, he returned to look after the deceased and the plaintiff. He has stayed on in the family home from that time until the present. He currently keeps the house in good repair and meets all outgoings. He does not pay an occupation fee.

34 At one stage John owned a unit which burned down. Ultimately he lost off of his investment because he invested the proceeds of the sale of the unit in HIH insurance shares and other ventures which failed. He had a good relationship with the deceased and the plaintiff and was a great help to them.

Discussion

35 It is necessary to see how the plaintiff says she has been left without adequate and proper provision for her maintenance, education and advancement in life. In this case, the plaintiff seeks funds to purchase an aged care unit where she will receive high-level care, such as the provision of meals and assistance.

36 The plaintiff has been assessed as requiring that assistance. Until an application is made it will be difficult to ascertain what the cost of such assistance will be. This is because it is necessary for there to be negotiations between the care provider and the plaintiff on the level of bond which will be dependent upon the asset situation of the plaintiff. This is a result of the Commonwealth system for the funding residential aged care facilities. What this means is that the evidence is somewhat uncertain as to the costs. The evidence addresses three different facilities.

37 The Holy Spirit complex at Croydon referred to the maximum bond as being $500,000 but with negotiations that might fall to as low as $300,000. There is no waiting list for entry to the Holy Spirit. This is important as the plaintiff is living with her sister and husband who are quite elderly and themselves will not be old care for the plaintiff much longer.

38 Another place is the Cardinal Freeman retirement village. A single room with en-suite and the services which the plaintiff would need would require bond of $310,000. There is a waiting list for accommodation of this type.

39 The Scalabrini Retirement Village has accommodation available. They have hostel care available at a cost of $400,000 which is presently available. There seems to be an unanswered doubt in the evidence as to whether in fact an accommodation bond is required. It would be of advantage to the plaintiff as the staff speak Italian. The evidence is not clear on whether this will be suitable for the plaintiff.

40 The defendant's attitude to the claim of the plaintiff was to suggest that it would pay any accommodation bond in terms of giving an undertaking to the court in this form:

“ The defendant undertakes to the Court to pay on behalf of the plaintiff any accommodation bond required by Scalabrini Village, or such other nursing home, not exceeding $310,000 provided that any part of the cost of such bond as may be recoverable or repayable following the death of the plaintiff revert to the estate of the late Salvatore Garofolo.”

41 The question of what is the appropriate provision and whether a life estate should be awarded to persons in the situation of either a widow or a longstanding de facto partner has been dealt with in a number of cases.

42 In the 1970s and 1980s there are a number of decisions of single Judges of this Court where they have held that a life interest with particular attributes were appropriate. (See, for instance, Crisp v Burns Philp Trustee Co Ltd , Holland J 18 December 1979; Banks v Hourigan , Waddell CJ in Eq, 2 March 1989; Cameron v Hills , Needham J, 26 October 1989.) This perhaps is reflected in matters mentioned by the High Court in White v Barron (1980) 144 CLR 431 where at p 444 Mason J said:-

“A capital provision should only be awarded to a widow when it appears that this is the fairest means of securing her proper maintenance. However, the provision of a large capital sum for a widow who is not young may, in the event of her early death, result in a substantial benefit to her relatives, contrary to the wishes of the testator, when a benefit of another kind would have afforded an adequate safeguard to her personally, without leaving her in a position in which she could benefit her relatives from the proceeds of the legacy.'

43 As has been pointed out in Elliott v Elliott that statement was made in an evidentiary context where the provision was made at the expense of the children of a previous marriage who had some claim on the testamentary bounty of the deceased.”

44 A change in the High Court's attitude to the provision for widows, no doubt in response to changes in community expectations, is illustrated by the fact that in this case it disapproved of observations made in Worlodge v Doddridge (1957) 97 CLR 1, that as a general rule an order for provision in favour of a widow should be confined to widowhood. Stephen J who was one of the majority in White v Barron at pp 438-440 went to some length to point out that the jurisdiction was one which should not be unduly confined by judge-made rules of purportedly general application. By the late 1980s other Judges in this Division were taking a slightly different view. For instance, in Court v Hunt 14 September 1987, unreported, Young J said:-

“Old age is a growing problem in our community and judges who sit in Family Provision Act applications get experience, as well as their own experience in the community, as to what happens when people reach the age when they can no longer look after themselves and one judges the evidence in these sort of proceedings against that background knowledge.”

45 His Honour then went on to talk about the assumptions one could make about the fact that frequently people, once they pass 55, have to change their accommodation and locate themselves either in retirement villages or nursing homes which have different requirements for capital contribution.

46 After talking about the evidence necessary, his Honour went on to say:-

“In many cases these days a life estate will not be sufficient because it does not cover the situation of the plaintiff moving from her own home to retirement village to nursing home to hospital. Sometimes it is possible for a court to alter a life estate to a more flexible non- capital provision, such as was done by Holland J in Crisp v Burns Philp Trustee Co Ltd, 18 December 1979, unreported, but noted in Mason & Handler Probate Service at page 13206. Other times the proper provision is for a fee simple gift, realising that this property will be sold and will be turned over into the appropriate property to maintain the widow for the rest of her life. Care also has to be given by those administering the plaintiff's property to ensure that there is sufficient income being raised after tax that will provide for maintenance levies and the other payments that have to be made by the widow.'

47 More recently the Court of Appeal on a number of occasions has referred to this problem. In Golosky & Anor v Golosky, 5 October 1993, unreported, the Court summarised the proper provision for widows (and thus the plaintiff in these proceedings) in the following terms:-

“In testing the Master's decision it is appropriate to keep in mind the principles which governed the approach which he was obliged to take to the widow's application under the Act. Relevantly, these included:

(a) Proper respect was to be paid for the right of testamentary disposition which is the fundamental premise upon which the provisions of the Act are based. That premise requires the Court, out of respect for the continuing right of testamentary disposition, to limit its disturbance of the testator's will to that which is necessary to achieve the purposes of the Act, and not more. See The Pontifical Society for the Propagation of the Faith and St Charles Seminary, Perth v Scales (1962) 107 CLR 9, 19; White v Barron & Anor , above, 458; Hunter , above, 576.

(b) The purpose of the jurisdiction is not the correction of the hurt feelings of sense of wrong of the competing claimants upon the estate of the testator. The Court is obliged simply to respond to the application of the eligible person who was a member of the testator's household and to consider whether, as claimed, the provision made by the will is inadequate for that person's proper maintenance and advancement in life. See Heyward v Fisher , Court of Appeal, unreported, 26 April 1985; (1985) NSWJB 81.

(c) Consideration of other cases must be conducted with circumspection because of the inescapable details of the factual circumstances of each case. It is in the detail that the answer to the proper application of the Act is to be discovered. No hard and fast rules can be adopted. Nevertheless, it had been said that in the absence of special circumstances, it will normally be the duty of a testator to ensure that a spouse ( or spouse equivalent) is provided with a place to live appropriate to that which he or she has become accustomed to. To the extent that the assets available to the deceased will permit such a course, it is normally appropriate that the spouse (or spouse equivalent) should be provided, as well, with a fund to meet unforeseen contingencies; see Luciano (above) 69-70.

(d) A mere right of residence will usually be an unsatisfactory method of providing for a spouse's accommodation to fulfil the foregoing normal presupposition. This is because a spouse may be compelled by sickness, age, urgent supervening necessity or otherwise, with good reason, to leave the residence. The spouse provided and will then be left without the kind of protection which is normally expected will be provided by a testator who is both wise and just. See Moore v Moore , Court of Appeal, unreported, 16 May 1984, per Hutley JA.
(e) Considering what is 'proper' and by inference what is 'improper' as a provision in a will, it is appropriate to take into account all of the circumstances of the case including such matters as the nature and quality of the relationship between the testator and the claimant ; the character and conduct of the claimant; the present and reasonably anticipated future needs of the claimant; the size and nature of the estate and of any relevant dispositions which may have reduced the estate available for distribution according to the will; the nature and relative strengths of the competing claims of testamentary recognition; and any contributions of the claimant to the property or to the welfare of the deceased. See Re Fulop (deceased) (1987) 8 NSWLR 679 (SC); Churton v Christian & Ors (1988) 13 NSWLR 241 (CA) 252.'

48 When talking of the need to provide a house and a sum for contingencies, the President is clearly referring to passages in Luciano v Rosenblum and other cases. As was pointed out by the Court of Appeal in Elliott v Elliott , unreported, 29 April 1986, such a type of provision only applies where it can be said there has been a long and happy marriage and a widow has helped build up the estate of the deceased.

49 In Permanent Trustee Co Ltd v Fraser 36 NSWLR 24 at p 47, Sheller JA had the following to say:-

“Once it is accepted that adequate provision for her proper maintenance and advancement in life required secure accommodation for life as well as a capital sum to meet exigencies, this need is not met by giving her only a life interest in the home unit. Commonly people in the community need to move from their own home into a unit in a retirement village and then into nursing accommodation and then into total care accommodation. See Young J in Christie v Christie…. The need can be met if the respondent is given the home unit absolutely. She then has a greater flexibility as well as greater security.”

50 In Salmon v Blackford , 18 February 1997, the Court of Appeal was dealing with a case where the trial Judge had given a fee simple to the deceased widow. Sheller JA said:-

“The principal point according to Mr Gibb was that his Honour failed to take into account that by reason of the widow's advanced years and the probability that her adopted son would be the natural object of her bounty, the effect of the order made was likely to be that the adopted son, whom the deceased had no intention to benefit, would be the beneficiary of half the estate. I have great difficulty in seeing how a submission of this sort has any weight in the circumstances of this case.
The matter that this Court must consider is whether the order that his Honour made was in such terms that one could only come to the conclusion that in some way his discretion must have miscarried. It is well established that proper provision is not to be measured solely by the need for maintenance. It should, in the case of this respondent and in the circumstances of this case, free her mind from any reasonable fear of any insufficiency as her age increases and her health and strength fails. I may say in this regard that her life expectancy, according to the tables, was something over eleven years at the time of the hearing. If one comes to the conclusion that for her proper maintenance an order such as the present is appropriate, it seems to me to matter not at all that she has an adopted son of an earlier marriage and that he may be the ultimate beneficiary of her bounty. “

51 This seems to indicate a different approach to that referred to by the High Court in White v Barron.

52 It is plain from the evidence that has been tendered that the precise amount of any accommodation bond cannot be known with certainty and the plaintiff will need to have flexibility if she finds a particular place is not suitable and she needs to move. She needs to have the ability to choose from a number of places particularly having regard to the waiting lists. If she had a sum available to pay a bond this would help her to obtain accommodation quickly.

53 Although the plaintiff and the deceased did not have children they had a happy marriage for 28 years. The plaintiff should be entitled to have funds so that she can be properly cared for in her old age. The provision of a bond by the estate, as contemplated in the undertaking offered to the Court, does not recognise the length of the marriage and the appropriateness of the plaintiff having control over her own funds to allow her to do as she wishes and to properly care for herself in her old age.

54 There is no doubt that the children of the deceased by his first marriage are not in good financial circumstances, although most of them have their homes which are unencumbered. No doubt some provision for them will be of great assistance.

55 In the circumstances, it seems to me that an appropriate sum for the plaintiff to receive is $375,000.

56 The orders I make are as follows:

1. In lieu of the provisions for the plaintiff in the will of the deceased the plaintiff shall receive a legacy of $375,000.
2. Interest is to run on the legacy at the rate provided for under the Wills Probate & Administration Act 1898 (NSW) as and from the period the date three months after the date of this order.
3. The plaintiff’s costs on a party and party basis and the defendant’s costs on a indemnity basis to be paid or retained out of the estate of the deceased.

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27/10/2006	-	judgment not delivered on this day - Paragraph(s) not applicable
30/10/2006	-	Date of publication changed - Paragraph(s) Not applicable
06/11/2006	-	Corrected spelling of plaintiff's name - Paragraph(s) Coversheet, 31,