Monaco v Keegan

[2006] NSWSC 825

CITATION:	Monaco v Keegan; Blight v Keegan [2006] NSWSC 825
HEARING DATE(S):	01/05/06, 02/05/06, 29/06/06 Written submissions: 04/05/06, 12/5/06, 15/05/06, 17/05/06
JUDGMENT DATE :	22 August 2006
JURISDICTION:	Equity Division
JUDGMENT OF:	Barrett J
DECISION:	Sum of $120,000 (or balance of estate, if smaller) to be held for younger son until age 21, with annual payments thereout for his benefit in the meantime
CATCHWORDS:	SUCCESSION - family provision - claims by son aged 11, former de facto wife and daughter of former de facto wife - whether there are factors warranting application by the second and third - where residuary estate divided equally among applicant son and the two middle-aged and estranged children from an earlier marriage subject to attaining age 28 - award in favour of son aged 11
LEGISLATION CITED:	Family Provision Act 1982, ss.6(1), 7, 9(1)
CASES CITED:	Churton v Christian (1988) 13 NSWLR 241 Dijkhuijs (formerly Coney) v Barclay (1988) 13 NSWLR 639 Re Fulop deceased (1987) 8 NSWLR 679 Singer v Berghouse (1994) 181 CLR 201
PARTIES:	(1) Sofia Alcones Monaco as tutor for Andrew Monaco - Plaintiff Anna Maria Keegan - Defendant (2) Norma Blight - Plaintiff Sharon Joy Davidson - Second Plaintiff Anna Maria Keegan - Defendant
FILE NUMBER(S):	SC (1) 1546/05; (2) 6509/05
COUNSEL:	(1) Mrs M.A. Gilmour - Plaintiff Mr P.G. Maiden SC - Defendant (2) Mr J.S. Drummond - Plaintiff Mr P.G. Maiden SC - Defendant
SOLICITORS:	(1) Adams Leyland - Plaintiff Belbridge Hague - Defendant (2) Harris Lieberman Boyd - Plaintiffs Belbridge Hague - Defendant

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BARRETT J

TUESDAY, 22 AUGUST 2006

1546/05 SOFIA ALCONES MONACO as tutor for ANDREW MONACO v ANNA MARIA KEEGAN – ESTATE OF THE LATE PIETRO TONY MONACO
6509/05 NORMA BLIGHT & ANOR v ANNA MARIA KEEGAN – ESTATE OF THE LATE PIETRO TONY MONACO

JUDGMENT

1 The deceased, Pietro Tony Monaco, died on 8 September 2004 aged 69 years. He was at the time of his death a single man, having been divorced in 2002 from his second wife Sofia (“Ms Monaco”) to whom he had been married in 1993. He had previously been married in Italy in the 1950s. He and his first wife came to Australia in 1961 but the wife returned to Italy after about a year, taking their two young children with her. The deceased had also maintained a de facto relationship with Norma Blight (“Ms Blight”) for about twenty years from about 1970.

2 The deceased had three children – a son Andrea (now aged 48) and a daughter Anna (now aged 47) from his first marriage, and a son Andrew (now aged 11) from his second marriage.

3 Probate of the deceased’s will dated 16 August 2002 was, on 30 December 2004, granted to his cousin, Anna Maria Keegan (“defendant”), the executrix named therein. He left his estate to his three children in equal shares, subject to attainment of the age of 28 years, with a gift over to the children of any child of his who did not reach the age of 28. The two children from the first marriage are, of course, now absolutely entitled to their shares, but Andrew, the son from the second marriage, will not reach the age of 28 years until 2 April 2023.

4 The inventory attached to the probate discloses assets of almost $303,000 consisting of a house in Prune Street, Albury which was the deceased’s residence ($270,000), bank accounts ($22,515), IAG shares ($2,265), furniture ($2,000), a motor vehicle ($5,000), a sum owing by Ms Monaco for child support ($538) and cash on hand ($638). The value of the estate, after the impact of actual and possible financial consequences of these proceedings, is small: see paragraph [35] below.

5 In two proceedings consolidated and heard together, applications are made under s.7 of the Family Provision Act 1982 by Andrew, by Ms Blight and by Sharon Joy Davidson (“Ms Davidson”), one of Ms Blight’s children from a previous relationship who went with her to live with the deceased when their de facto relationship began. Ms Blight is aged 72. Ms Davidson is aged 49.

6 It is convenient to begin with the claims of Ms Blight and Ms Davidson. Ms Blight and the deceased maintained a de facto relationship of about 20 years’ duration. Her evidence is imprecise as to dates – even years. The scenario that seems most likely is that they cohabited from 1969 or 1970 or 1971 until about 1989. The relationship ended in acrimonious circumstances, with the deceased, according to Ms Blight, threatening her harm if she took steps to obtain any financial award in consequence of their relationship.

7 Ms Blight was about 37 when cohabitation with the deceased began. They first lived at Swan Hill then moved to East Parramatta where the deceased bought a self-service grocery shop. He retained that business for about 12 or 15 months. Ms Blight worked in it with him, seven days a week, and also attended to household duties. They then moved to Wentworthville and the deceased obtained employment as a gardener. There was later a move to Westmead. During that period, Ms Blight did some casual work. In or about 1979 (probably somewhat earlier in view of evidence yet to be mentioned concerning Ms Davidson), they moved to Albury. The deceased bought a house in Sackville Street. He worked first with Borg-Warner and later as a gardener with Albury City Council where he remained for about 20 years until his retirement. Ms Blight worked sometimes as a casual cleaner.

8 Ms Blight received the deserted wife’s pension throughout her time with the deceased. She had four children from her earlier relationship. Three of them (including Ms Davidson) came with her to live with the deceased. In her evidence, Ms Blight gave details of financial arrangements between the deceased and her. It is fair to say that they kept their finances fairly separate and that each contributed to the household expenses, although after the purchase of the Albury property, the deceased alone kept up the mortgage payments. During that time, the deceased grew vegetables and Ms Blight bought some other food from her pension cheque.

9 The deceased and Ms Blight separated at one stage and she went to live in a rented flat with her daughter, Ms Davidson, who was then still living with her. After about six months, there was some form of reconciliation with the deceased. Ms Blight went back to Sackville Street. Ms Davidson, then aged about 22, went to live with a lady from the Church of Christ. This would place these events in about 1979. The deceased later sold the Sackville Street property and bought a dilapidated house in McDonald Road. Ms Blight provided some money towards renovation. They lived there for about nine years.

10 The final break between the deceased and Ms Blight came, according to her, when she challenged him about a sexual relationship which she believed he had commenced with her daughter, Ms Davidson. It was suspicions about that, she said, that had earlier caused her to leave the Sackville Street house and go to a rented flat, taking Ms Davidson with her. When she was persuaded by the deceased to go back to Sackville Street, she ensured that alternative living arrangements were made for Ms Davidson. At the time of the final break, Ms Blight said, the deceased, who had been drinking wine, admitted to Ms Blight that he had had a sexual relationship with Ms Davidson and taunted Ms Blight about it. It was that episode which caused her to leave.

11 Ms Davidson’s affidavits were read but she was not cross-examined. Her evidence does not refer to any sexual contact between the deceased and herself. It appears from her own affidavit that she is unable to read. From this it may be assumed that she did not read Ms Blight’s affidavit. Nor was she in court when Ms Blight gave relevant evidence. Ms Davidson testifies to being affected by mild intellectual impairment. She also has hearing, sight and other health problems. Her evidence confirms that she lived with the deceased and her mother at Sackville Street for about seven years.

12 Because the eligibility of Ms Blight and Ms Davidson arises from paragraph (d) of the definition of “eligible person” in s.6(1), it is necessary to have regard to s.9(1):

“Where an application is made for an order under section 7 by an eligible person who is such a person by reason only of paragraph (c) or (d) of the definition of eligible person in section 6 (1), the Court shall first determine whether, in its opinion, having regard to all the circumstances of the case (whether past or present), there are factors which warrant the making of the application and shall refuse to proceed with the determination of the application and to make the order unless it is satisfied that there are those factors.”

13 There is here a distinction between factors warranting the making of an application and factors warranting the making of an order. As Priestley JA suggested in Churton v Christian (1988) 13 NSWLR 241, the task here is really to distinguish those paragraph (d) applicants who may be considered natural objects of testamentary recognition from those who may not, having regard to the whole of the circumstances of the relationship. The question is, in essence, that posed by Mahoney JA in Dijkhuijs (formerly Coney) v Barclay (1988) 13 NSWLR 639: whether, the applicant stood in such a position in relation to the deceased as to suggest that the deceased owed a duty to the applicant – or, as McLelland J put it in Re Fulop deceased (1987) 8 NSWLR 679, whether the applicant is someone who would be generally regarded as a natural object of testamentary recognition by a deceased.

14 Ms Blight’s and Ms Davidson’s respective relationships with the deceased – both at the time he made his will and at the time of his death – were extremely remote: Ms Davidson’s even more remote than Ms Blight’s. Ms Davidson had lived as part of the deceased’s household with her mother for about ten years. Ms Blight had lived with the deceased for about 20 years. Ms Davidson had left the household in about 1979 and Ms Blight in about 1989 – in one case 25 years before the deceased’s death and in the other 15 years before. There was no relevant contact or interaction between either of them and the deceased in the period after leaving. Ms Blight considered the possibility of a claim under the Property (Relationships) Act 1984 but did not see fit to pursue it. She says that this is because the deceased threatened her. But there were legal processes to which she could have resorted in order to pursue a claim free from intimidation, had she so chosen.

15 In Ms Davidson’s case, the deceased was no more than a species of de facto step-father figure between the ages of about 12 and about 22. She had had nothing to do with him for about 25 years before he died. Her mother had made arrangements for her to live away from the deceased. It cannot be said that the deceased owed her any form of moral duty or that she would be generally regarded as a natural object of testamentary recognition by him.

16 Ms Blight was the deceased’s de facto wife for a period of about 20 years which ended some 15 years before his death. They parted in acrimonious circumstances. On her evidence, it was she who decided to withdraw from the relationship. She says that he admitted having had an earlier sexual relationship with Ms Davidson. Assuming that he did make such a confession to her, one cannot know whether he had in fact had such a relationship or whether he merely said that he had done so to spite and taunt Ms Blight – a possibility well open on her evidence about the alleged admission and the circumstances and terms in which it was allegedly made.

17 At all events, Ms Blight chose to end the relationship and to depart without making any property claim. Claims of that kind had long been barred by the time the deceased came to make his will. She made a new life apart from the deceased. He made a new life away from her, marrying and having a son by Ms Monaco. Having regard to the whole of the circumstances of the relationship and subsequent events, Ms Blight could not be considered a natural object of testamentary recognition by the deceased.

18 Even if the question posed by s.9(1) had been answered favourably to Ms Blight or Ms Davidson or both, I am not persuaded that either would have succeeded at the first stage of the twofold inquiry made necessary for the purposes of claims such as this by the decision of the High Court in Singer v Berghouse (1994) 181 CLR 201. I quote from the joint judgment:

“The determination of the first stage in the two-stage 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.”

19 In my opinion, the estrangement between Ms Blight and Ms Davidson on the one hand and the deceased on the other – a complete estrangement of significant duration, by the time of the deceased’s death – points to a conclusion that zero provision was the proper level of provision.

20 I consider next the circumstances of the other plaintiff, the deceased’s son Andrew. The deceased and Ms Monaco were married in 1993 but, because she then did not have resident status, they did not begin living together until mid-1994. The deceased at that time owned a home unit at Lavington. Andrew was born in April 1995.

21 At the time of the marriage, the deceased had been a gardener with Albury City Council for a considerable period. He made successful claims for workers compensation in 1995 and 1997. He retired in 2000 at age 65 and soon afterwards the deceased and Ms Monaco acquired a house in Prune Street, Lavington for $139,000. The deceased provided the funds, including the proceeds of the sale of the unencumbered home unit. It may be inferred that part of the workers compensation awards was spent on the house. The two of them became registered proprietors of the Prune Street property as joint tenants.

22 The deceased and Ms Monaco separated in December 2001. The deceased was a difficult man. He had tended to be remote from Andrew but acknowledged and supported him as his son. Ms Monaco obtained an apprehended violence order against the deceased in February 2002. The deceased was later convicted on a charge of assaulting Andrew and was placed on a 12 month good behaviour bond.

23 When Ms Monaco and the deceased separated, Andrew accompanied his mother. They went to live in a rented flat. Ms Monaco had sole care of Andrew until July 2003, at which time he went back to live with the deceased. It appears that Ms Monaco worked at the Visy factory on the night shift and it was for that reason that Andrew went back to his father. It was when the deceased became too ill to look after Andrew that Andrew went back to live with Ms Monaco. She gave up her full time job at that time.

24 After the separation of the deceased and Ms Monaco, certain orders were made by consent under the Family Law Act 1975 (Cth). Orders with respect to Andrew entailed his spending time with both parents but these were overtaken, in practical terms, by the arrangements I have described. As to property, Ms Monaco received a lump sum payment of $30,000 and transferred to the deceased her interest as one of two joint tenants of the Prune Street property. She executed a transfer. It is dated 18 October 2002.

25 Both in her affidavit and in oral evidence, Ms Monaco said that she had been told by the deceased, at the time of the property settlement, that he was going to have the house transferred from the names of himself and Ms Monaco into the names of himself and Andrew. She said that it was because of this that she accepted the $30,000 lump sum and agreed to give up her interest in the property. This matter was emphasised in submissions made on behalf of Andrew, as was evidence from which it might be inferred that the deceased had secreted money away in some manner before the property settlement. Against any such inference stands evidence that the deceased was a regular gambler.

26 There were competing submissions as to the connotations that should be attached to Ms Monaco’s evidence about her belief or understanding that the deceased would put the title to the Prune Street property into the names of Andrew and himself. In the end, I do not think this matters. It is relevant only to the circumstances in which Andrew is now placed and the extent of the support he can expect to enjoy from his mother. I must take the property settlement as I find it. The settlement gave Ms Monaco $30,000 and left her without any interest in real estate. Whether she could have obtained a better outcome, whether she should have tried to have the consent orders reviewed, whether the deceased concealed assets and whether Ms Monaco was misled by the deceased about his intentions regarding longer-term ownership of the home are questions I do not need to address.

27 As things now stand, Andrew is wholly dependent on his mother and will inherit one-third of his late father’s estate at age 28. Ms Monaco, who was described by Mrs Gilmour of counsel as “a relatively young woman struggling to give her son a good upbringing and a sound education”, is currently in a relationship with Mr Smith. She has known him since 2003. He is a builder. He lives on a remote property out of Seymour in Victoria. Ms Monaco went to live with him there early in 2006, taking Andrew with her. Ms Monaco sees the future of this relationship as uncertain. She and Mr Smith had planned to marry in March of this year but were advised by the pastor at their church to wait until certain issues confronting them had been resolved. Ms Monaco does not get on with Mr Smith’s daughter who also lives on the property and is likely to remain there indefinitely. She is not sure she wants to live in the remote location or that the living arrangements are suitable for Andrew, who has to share a bedroom with Mr Smith’s son. Andrew is missing his friends and activities in Albury.

28 Ms Monaco is in unskilled employment at a poultry farm. She earns $15 per hour, representing, for a 35 hour week, $525 per week (say, $27,000 per annum – or roughly $22,000 after tax). Her previous jobs have been factory jobs. Working on the night shift at Visy, she was able to earn $40,000 per annum. She has referred to a wish to undertake TAFE studies with a view to obtaining a position caring for aged persons. Her general expectation is that she might earn $40,000 or more per annum from such work.

29 Ms Monaco has not received Centrelink support since beginning to live with Mr Smith. She receives $52.30 per fortnight for family tax benefit (A) and (B). She is unable to meet Andrew’s school fees at St Mary’s College, Seymour, and his other living expenses from this benefit. She put the annual cost of keeping Andrew at $9,600. Mr Smith is helping her support Andrew. The cost of support will no doubt increase as Andrew becomes older.

30 In summary, therefore, Andrew is in a position where he is dependent upon a mother who is currently in a relationship which may or may not lead on to marriage, and which keeps her in a rural location where she works at the poultry farm earning less than she might receive if still living in the large regional centre of Albury-Wodonga providing both factory employment and opportunities for TAFE study. At age 11, Andrew may be expected to remain at school for something like five to seven years. He may wish to undertake further study. His mother’s earning capacity is barely sufficient to ensure that he is adequately maintained and insufficient, in my view, to see him provided with anything beyond the barest of necessities.

31 In addition, of course, Andrew will inherit one-third of the estate at age 28. In the meantime, the trustee has the powers conferred by clauses 5.4 and 5.5 of the will:

“5.4 apply for the maintenance, education, advancement or benefit of a beneficiary the whole or any part of the capital and income of that part of my estate to which that beneficiary is entitled or may in future be entitled;
5.5 for the purposes of preceding paragraph make a payment or payments to a minor beneficiary’s parent or guardian or a person with whom the minor beneficiary resides (and the receipt of that payee shall be an absolute discharge of my executors;)”

32 I turn now to the circumstances of the Italian beneficiaries. Statements by them have been put into evidence by the defendant executrix. The son, Andrea Monaco, lives with his mother in a rented apartment in Florence. He is 48 years of age and has worked in a variety of positions since leaving school at 18, principally as a freelance writer. He says he is unemployed, has no income and owns only a few pieces of furniture, his books, his computer and a scooter. He is unmarried. The daughter, Anna (aged 47), is married and has a son aged 9. The family lives in a house bought by Anna and her husband with mortgage finance. Both she and her husband work. They have a combined annual income of 22,000 Euros. She lists annual outgoings of 19,400 Euros.

33 The evidence suggests that, when Ms Monaco married the deceased in 1993, he had not been in contact with either of the Italian children since their mother took them back to Italy more than 30 years earlier. Ms Monaco said that she had encouraged the deceased to contact the Italian children and that he had had a small amount of contact with the son, Andrea, by telephone. It appears that the daughter, Anna, did not wish to be in touch with him. It was pointed out on behalf of the defendant that the deceased was not proficient in reading and writing English. It may be that he also had limited ability in his native language and was accordingly unable to correspond with his children in Italy. There is some suggestion that, when the defendant made a trip to Italy towards the end of the deceased’s life, she took small gifts from the deceased to his Italian children.

34 A comparison between the circumstances of Andrew and those of the Italian children, Andrea and Anna, shows that, while each was fathered by the deceased, Andrew lived with or in the near vicinity of the deceased from his birth until the deceased’s death, was acknowledged as his child and was supported by the deceased; whereas Andrea and Anna had little or no contact with the deceased for the period of more than 40 years after they returned to Italy with their mother and thereafter made lives of their own as if the deceased did not exist. And the deceased, for his part, was content to keep Andrea and Anna out of his life altogether except for some very limited and apparently superficial communication (with Andrea, at least) in the few years before he died.

35 In approaching, in relation to Andrew, the first stage of the two stage inquiry mandated by Singer v Berghouse (above), I need to have regard to the value of the estate and the financial implications for Andrew. I have referred at paragraph [4] above to the probate inventory. The defendant executrix provided updated information in her affidavit of 24 May 2005. By that time, the house had been sold for $243,192.66 (compared with an estimate, for probate purposes, of $270,000) and debts and expenses of over $30,000 had been paid, including some costs of these proceedings. There is an estimate of a further $88,000 for costs of the proceedings (assuming that costs of all parties are met out of the estate). The net estate may be taken, for the moment, to be of the order of $140,000.

36 If this is distributed according to the will, each of Andrea and Anna will receive some $46,666 immediately and an equivalent sum will be held in trust for Andrew for the next 17 years. At an assumed rate of return of 5% per annum, Andrew’s share will produce income at the rate of $2,333 per annum, pending his receipt of the corpus and accumulated income at age 28. He will not have the income applied to his benefit unless the trustee elects to exercise the power under the will. If the $46,666 were invested in an annuity for seven years until Andrew reached the age of 18, the annual sum (assuming a return of 5% per annum) would be of the order of $7,700. Investment in an annuity for 14 years (to age 25) would, on the same assumption, produce an annual sum of about $4,500. On either such annuity approach, the corpus would be exhausted at the end of the term.

37 One-third of the net estate in 17 years time does not represent a proper level of provision for a young son with whom the deceased was closely in contact, even allowing for both the fact that the mother has some modest measure of ability to support him from her earnings and the existence of the trustee’s power to apply income or capital or both for his benefit.

38 I move therefore to the second stage of the inquiry and the question of the provision that should be made for Andrew. Adequate provision has, in my view, two aspects to it. First, there is a need for financial support while Andrew is still a child so as to ensure that he has all that he needs, allowing for the fact that his mother must continue to make a contribution to his support and ensuring that she, who asserts no claim on the deceased’s bounty, does not become indirectly a beneficiary of the estate. Second, there is a need for a reasonable fund to assist Andrew in setting himself up in life.

39 The case advanced on Andrew’s behalf was that he should have a lump sum sufficient to permit the purchase for him of a small residence in the Albury-Wodonga-Lavington area. The evidence about property values in the region leads to the conclusion that this would represent virtually the whole estate. I do not consider this to be a reasonable approach because, in the circumstances, it would be an award which benefited Ms Monaco as much as Andrew, given that he will, in the normal way, continue to live with his mother until he is old enough to leave home and make his own way in life.

40 Appropriate provision for Andrew will be by way of a specific fund. In my opinion the fund should be $120,000 (or, if smaller, the whole of the estate) and should be set aside and invested for Andrew’s benefit on the following basis:

1. Until Andrew reaches the age of 21 years, there will be an annual allowance of $7,500 (slightly more than 75% of the sum of $9,600 referred to in paragraph [29] above) out of the fund towards his maintenance, education, advancement and benefit, such allowance to be paid by quarterly instalments and to be met in the first instance out of income and only as to any deficiency out of corpus.
2. While Andrew is under the age of 18, the quarterly instalments will be paid to his mother or, if she dies, to his guardian or the person who is his carer, without any obligation of the trustee to superintend application. Once Andrew reaches the age of 18, the instalments will be paid to him.
3. The trustee should have, in respect of moneys not required to pay the allowance (and as to both corpus and income), a power equivalent to that in clauses 5.4 and 5.5 of the will.
4. Upon Andrew’s attaining the age of 21 years, the balance of the fund will be paid to him.
5. If Andrew should die under the age of 21 years, the balance of the fund will:
(a) be held for any child or children of Andrew living at Andrew’s death (in equal shares, if more than one); and
(b) if no child of Andrew is living at his death, pass equally to such of the deceased’s son Andrea and daughter Anna as are living at Andrew’s death, but if either of them has died before Andrew leaving a child or children, that child or those children shall take (in equal shares, if more than one) in place of the deceased parent.

41 Any balance of the estate not absorbed by the creation of this fund should pass according to the will as it stands, but with the references to Andrew excluded.

42 If the defendant, Mrs Keegan, is unwilling to undertake gratuitously (that is, without claiming ongoing commission) the trusts I have outlined, she and Ms Monaco should attempt to agree on a person or persons of relevant experience and responsibility to hold the fund in trust. Failing that, the court will direct that a trustee company be retained and, in that event, the fund (if it does not represent the whole of the balance of the estate) will be augmented to make provision for the expected impact of the trustee’s charges.

43 As to costs, I am of the provisional opinion that the defendant’s costs of both proceedings should be paid out of the estate on the indemnity basis and that the plaintiff’s costs in Andrew’s proceedings should also be paid out of the estate on the indemnity basis; and that there should be no order as to the costs of the plaintiffs in the proceedings brought by Ms Blight and Ms Davidson. I shall, however, hear submissions on costs should any party so wish.

44 I shall make directions for the filing of short minutes to dispose of both proceedings.

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