COUNSEL: L J Ellison SC; D Liebhold (Appellant) D M Flaherty (First and Second Respondent) J C Pentelow (Third Respondent)
SOLICITORS: Blacktown Legal (Appellant) John R DE. Mattia & Co (First and Second Respondents) Bell Lawyers (Third Respondent)
CATCHWORDS: SUCCESSION - family provision and maintenance - failure by testator to make sufficient provision for applicant - appeal - small estate - whether provision should be made for portable life estate based upon Crisp v Burns Philp Trustee Company Ltd - whether widow's claim has automatic primacy - whether error in exercise of trial judge's discretion - whether matters of weight in the exercise of discretion may constitute error. PROCEDURE - costs - separate representation of defendants - where no conflict of interest between defendants.
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
Milillo v Konnecke [2009] NSWCA 109
Case
[2009] NSWCA 109
Decision Date
CaseChat Overview and Summary
The appeal concerned a family provision claim brought by Rosa Milillo against the estate of her deceased husband, Luigi Borazio. The dispute centred on whether the testator had made sufficient provision for Rosa in his will, given her circumstances and the terms of their pre-nuptial agreement. The case was heard in the Court of Appeal of New South Wales.
The primary legal issues before the court were whether the trial judge had erred in the exercise of their discretion in determining the adequacy of provision for Rosa, and whether the weight given to certain factors constituted an error. Specifically, the court considered whether a "portable life estate" was an appropriate form of provision in a small estate and whether a widow's claim for provision automatically held primacy over other beneficiaries. The court also had to determine the appropriate orders for costs, particularly concerning the separate representation of the executors and another beneficiary, Gina.
The Court of Appeal dismissed the appeal, upholding the trial judge's decision. The court reasoned that the testator's agreement with his former wife, Marlene, and his subsequent agreement with Rosa to keep their assets separate, were significant factors. These agreements had conferred substantial benefits on Rosa and her children, enabling her to make significant gifts. The court found that the testator had made provision for Rosa in his will by granting her a life estate in the matrimonial home, and that this provision, in light of the circumstances and agreements, was not demonstrably insufficient. The court applied the principles governing family provision claims, emphasising that the court's discretion must be exercised having regard to all relevant factors, and that an error of law or fact must be demonstrated to overturn the trial judge's exercise of discretion.
The court ordered that Rosa pay the executors' costs of the appeal. The executors were entitled to be reimbursed from the testator's estate on an indemnity basis for the balance of their costs not paid by Rosa. No order was made as to Gina's costs, meaning she was to bear her own costs of the appeal.
Orders
Orders of the court
(a) The appeal is dismissed. (b) Rosa to pay the executors costs of the appeal. (c) The executors are entitled to be reimbursed from the the testator's estate on an indemnity basis for the balance of their costs to the extent to which those costs are not paid by Rosa. (d) No order is made as to the costs of Gina (the intent being that she pay her own costs of the appeal).
19/05/2009 - Incorrect spelling of Mr D Leibold corrected to D Liebhold - Paragraph(s) 3
Background
Background to the litigation
Gina wishes to sell her house in order to pay off her debts and reduce her outgoings. She wishes to purchase a small villa or townhouse. It is estimated that a house of the kind she desires will cost her about $345,000 (that is, $180,000 more than the nett $165,000 to which I have referred).Factual background to the will When the testator separated from Marlene, he and Marlene agreed, as the trial judge noted, that:“Marlene would not make the claims against the testator that she might be entitled to make on the basis that the Blacktown house would be devised to her four daughters.” That agreement led to Marlene making concessions to the testator concerning assets that she might otherwise have been able to claim from him. She made those concessions as she believed that, in return, the testator would give the Blacktown home to her daughters. The testator kept his promise to Marlene, at least, subject to Rosa’s right to the Blacktown home during her lifetime. Later, when the testator and Rosa were living together (and before they were married), they agreed that they would keep their own properties separate. They regarded the Blacktown home as more suitable than Rosa’s house and so they lived there. This allowed Rosa to sell her house and give most of the proceeds to her children by her first marriage. On 17 October 2004, the same day as he made his last will, the testator signed the following document:“TO MY EXECUTORS AND DAUGHTERSI have not left any provision in my will for Rosaria Milillo who I married in 2002, of any asset, but have left her a life estate in our home at … . This is because Rosaria sold her house prior to us marrying and she kept the proceeds from the sale for herself together with her other assets.In addition to the life estate in (address of house), it is my wish that you will allow Rosaria Milillo to say at our holiday house at … Callala Beach when she wants to.It is also my wish that our home at … Blacktown always remain in our family and if it must be sold that either one of you buy the others out so that our home always remains in our family.” Consistently with her agreement with the testator, when Rosa made a will on 17 March 2004, she provided:“IN MAKING THE PROVISIONS OF THIS MY WILL I have given full consideration to the claims on me of my Husband Luigi BORAZIO, however, I have made no provision for him because we have retained separate assets during our lifetime and I have no expectation of receiving any benefit under the Will made by him.” Uncontested evidence was led to the effect that, during his lifetime, the testator often stated that he would comply with his agreement with Marlene and devise the Blacktown home to Angela, Vittoria, Luisa and Gina. Rosa did not object when these statements were made. The agreement between the testator and Rosa that they would keep their property separate conferred material benefits on Rosa and her children. In particular, Rosa became able to make relatively substantial gifts to her children by her first marriage. Young CJ in Eq said in this regard:“Rosa has made large gifts to her children. She sold her house to her son it would seem for $340,000 though she says $250,000 and gave a substantial part of the price to her daughters. Most of the proceeds were spent as ‘gifts’. The evidence suggests that she was only able to do this because of her agreement that she would live in the testator’s house and that they would keep their assets separate.”Rosa’s objections to the Blacktown home
Evidence
Evidence Before The Court
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Decision
Reasons for decision
The executors resisted Rosa’s claim in accordance with their duty to defend the will. There is no suggestion that they acted otherwise than honestly and with propriety. An order should be made entitling them to be reimbursed from the estate on an indemnity basis for the balance of their costs to the extent to which those costs are not paid by Rosa. Such an order reflects the general rule in matters of this kind (being probate or trusts or Family Provision Act claims); see, for example, Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42 (where a similar order was made), Re Hodges; Shorter v Hodges (1988) 14 NSWLR 698 at 709-710 per Powell J, Drummond v Drummond [1999] NSWSC 923 per Austin J, Wilson v Knight [2009] NSWSC 230 per Macready AsJ.Conclusion I propose the following orders:(a) The appeal is dismissed.(b) Rosa to pay the executors costs of the appeal.(c)The executors are entitled to be reimbursed from the testator’s estate on an indemnity basis for the balance of their costs to the extent to which those costs are not paid by Rosa.(d)No order is made as to the costs of Gina (the intent being that she pay her own costs of the appeal). MACFARLAN JA: I agree with Ipp JA. SACKVILLE AJA: I agree with Ipp JA.*********