Palma and Caleffi and Anor
[2010] FMCAfam 1023
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PALMA & CALEFFI & ANOR | [2010] FMCAfam 1023 |
| FAMILY LAW – Property proceedings – husband dies after proceedings commenced – small pool – whether Italian law or Australian law applies to the provisions of the deceased’s Will – property in Australia and Italy – long marriage – section 75(2) factors. |
| Family Law Act 1975 (Cth), Part VIII |
|
| Applicant: | MS PALMA |
| Respondents: | MS CALEFFI & MS FALCO |
| File Number: | NCC 737 of 2007 |
| Judgment of: | Coakes FM |
| Hearing dates: | 26 & 27 August 2009; 24 February 2010 |
| Date of Last Submission: | 24 February 2010 |
| Delivered at: | Newcastle |
| Delivered on: | 24 September 2010 |
REPRESENTATION
| Solicitors for the Applicant: | Mr T Reeve Marsdens Law Group |
| Counsel for the Respondent: | Mr A M Gruzman |
| Solicitors for the Respondent: | Paul Gowran & Co |
ORDERS
That within 14 days of the date of these orders the Respondents are to do all things necessary to transfer to the Applicant any interests they may have in the property situated at and known as Property [B] in the State of New South Wales and provide a transfer in registrable form of such property.
That no later than 31 January 2011 the Respondents are to pay to the Applicant the sum of $49,227.00
That all other items of property, financial resources, shares, superannuation and liabilities presently in the name, possession or control of the Respondents shall remain theirs absolutely to the exclusion of the Applicant.
That all other items of property, financial resources, shares, superannuation and liabilities presently in the name, possession or control of the Applicant shall remain her property absolutely to the exclusion of the Respondents.
That the Applicant is to sign all documents required under Italian law to forego any interest she may have in real property in which the husband or his estate have an interest in Italy, namely the home in
Property F and any parcel of Property P owned by the husband.
That the Applicant is to sign all documents required under Italian law to transfer the interest she has in the property at Property V to the estate of the late husband, or as the executrices direct.
In the event that the Applicant or the Respondents refuse or neglect to execute any deed or instrument to give effect to these orders then a Registrar or a Deputy Registrar of the Court shall be empowered pursuant to section 106A of the Family Law Act 1975 to execute such deed or instrument in the name of the Applicant or the Respondents as the case may be and to do all acts and things necessary to give validity and operation to the said deed or instrument provided that such Registrar or Deputy Registrar shall be satisfied upon affidavit evidence of the party alleging the refusal or neglect that the other party is in breach of these Orders.
That both the Applicant and the Respondents shall do all acts and things and give all consents in executing documents to give effect to these Orders.
In the event that either party wishes to make an application for costs, such application is to be filed no later than Friday 22 October 2010 supported by an affidavit setting out the costs being claimed and the basis of the calculation of those costs.
IT IS NOTED that publication of this judgment under the pseudonym Palma & Caleffi & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT NEWCASTLE |
NCC 737 of 2007
| MS PALMA |
Applicant
And
| MS CALEFFI & MS FALCO |
Respondents
REASONS FOR JUDGMENT
Introduction
The applicant wife filed her application for final orders in the Family Court of Australia on 12 March 2007 seeking orders that the husband and the wife place their home at Property [B] on the market for sale by private treaty or auction after a certain period, and that the whole of the net proceeds of sale be paid to the wife after discharge of a mortgage, any outstanding rates and taxes and real estate agents costs and legal fees. The wife also sought the return of specific personalty.
The wife asserted in her application that separation occurred in March 2001.
The husband in his response filed 24 April 2007 sought orders that within 28 days he pay the wife $144,000.00 and that she be declared to have no interest in the property at Property [B] and that each party be declared to have no further interest in items of personalty in their respective possession including superannuation.
The husband asserted that separation did not occur until July 2005.
On 12 May 2008 the proceedings were transferred to the Federal Magistrates Court and on 15 May 2008 the respondent husband died.
On 8 December 2008 an order was made by consent that the respondents, as the executrices of the estate of the late Mr Palma in probate number 111669/08 granted in the Supreme Court of New South Wales be substituted for the husband as respondents.
The husband owned land in Italy. It emerged during cross examination of the executrix Ms Falco that the land in Italy had not been included in the inventory of assets submitted to the Supreme Court at the time application was made by her and her sister for the grant of Probate. I find on the evidence that this was not a deliberate omission but an oversight on the balance of probabilities.
Since the real property in Italy was an asset to be taken into account in these proceedings it became necessary to obtain expert evidence from an appropriately qualified and available expert in relation to issues arising from both Italian succession and land law flowing from the husband’s death and these proceedings. There was some difficulty obtaining and agreeing upon such valuer and payment of his fees.
The wife had left the former matrimonial home at Property B at the time of separation, leaving the husband in occupation. The property became vacant upon the husband’s death.
In late October 2008 the wife filed an application pending determination of the final property orders that she have exclusive occupation of the home at Property B. That application was opposed by the respondents.
I made interim orders on 8 December 2008 that pending determination of her application, the wife have exclusive occupation of the former matrimonial home and that she be responsible for payment of municipal rates to [N] City Council and water rates to [omitted] as each became due with the respondents to pay the premiums in respect of the building insurance and ensure that the improvements were kept adequately insured. Arrangements were made for the respondents to leave furniture within the home and for the wife to take up occupation not later than 19 December 2008. An order was made that the wife maintain and carry out such repairs to the home having regard to its then present state of repair and condition.
The matter was listed for a final hearing on 26 August 2009.
There were further difficulties obtaining an appropriately qualified valuer but ultimately, pursuant to orders made on 14 May 2009 Mr P was appointed the single expert.
Following the matter being part heard in August, a further adjournment became necessary until February 2010 to enable evidence to be given by Mr P by telephone.
The applications
In her amended application filed 13 January 2009 the wife sought orders to the effect that the respondents transfer to her any interest they may have in the real property as Property [B] and that the estate pay her the sum of $100,000.00.
The wife sought further orders that all other items of property, financial resources, shares, superannuation and liabilities presently in the name, possession, or control of the respondents remain theirs absolutely to the exclusion of the wife, and the wife sought an order that all other items of property, financial resources, shares, superannuation and liabilities presently in her name, possession or control remain hers to the exclusion of the respondents.
The wife also proposed that she sign all documents required under Italian law to forego any interest she may have in real property in which the husband or his estate have an interest in Italy, namely the home in Property F and a parcel of land in Property P owned by the husband.
The wife sought that the respondents pay her costs of the proceedings including those related to the exclusive occupation application of
8 December 2008 in the amount of $5,940.00.
The respondents sought orders in accordance with the husband’s response filed on 24 April 2007 and to which I have referred above.
During the course of the hearing, the respondents modified their position to seek the following orders:
a)That within 28 days of the making of these orders, the estate do all things necessary to transfer to the applicant wife all of the deceased’s interests in property situated in Italy.
b)That the property at Property B be sold and the proceeds be divided as to 40% to the applicant wife and 60% to the estate of the late Mr Palma.
Background
The wife was born [in] 1925 in Italy and is now 85 years of age.
The husband was born [in] 1923 in Italy and was aged 85 years at the time of his death.
The parties were married [in] 1944. There is no evidence put before me as to the nature and value of any assets introduced by either party to the marriage. Consequently, it is open to me to infer, and I do so infer that nothing of any significance was introduced by either party to the marriage.
There were eight children of the marriage, all of whom were born in Italy. Save for Ms M who now resides in Italy, the remaining seven children now live in Australia.
The real property owned by the husband at Property F was purchased by him in 1960 and the home then built upon such land was subsequently occupied by the husband and wife and the children as their home in about 1963.
The husband migrated to Australia in early 1967 with the eldest child and the wife migrated to Australia in early 1970 with the remainder of the children.
The wife gave evidence that she and her husband returned to Italy in about 1990 and lived in their old home at Property F for about twenty months. It was during this period that the wife’s cousin, Ms T transferred to the wife a 2/9 interest in the property at Property V following the wife looking after her cousin whilst she stayed with the husband and the wife in the Property F home during a period of illness when it was expected that the cousin would not live for more than about three months. The cousin transferred such interest to the wife in return for caring for her. It was the wife’s recollection that the husband paid about 2000 lira for the costs entailed in transferring the cousin’s interest in the Property V property to the wife.
The wife asserts that separation under the same roof occurred in early 2001 with the wife subsequently leaving the home in early 2005. The husband asserts that separation did not occur until July 2005.
On the evidence before me, the wife has not repartnered.
On 13 March 2006 the husband executed his last Will and Testament in New South Wales and following his death on 15 May 2008 the respondents as executrixes of his estate obtained a grant of Probate in the Supreme Court of New South Wales on 5 August 2008.
At the conclusion of the hearing on 24 February 2010 when judgment was reserved, an order was made by consent that the executrices of the estate of the late Mr Palma and the respondents be restrained from encumbering, mortgaging, placing a charge upon, offering the land as security or in any other way dealing with real estate known as Property [B] New South Wales pending delivery of judgment in these proceedings.
It was agreed that both the deceased and the wife retained Italian citizenship and that neither took Australian citizenship.
The issues
It seems to me the matters I am required to consider and determine are these:
a)Given the terms of the deceased’s Will, is it the Italian law of succession or Australian law which is to apply to his Will;
b)If it is Italian law, what is the effect on the present property proceedings between the wife and the estate;
c)If it is Australian law, what is the effect upon the proceedings between the wife and the estate;
d)Given that the most valuable single asset is real estate in Australia, i.e. the former matrimonial home at Property [B] and the other significant assets are real property situated in Italy which, with one exception, had belonged to the husband at the time of his death, it is necessary to determine:
i)Does the Family Law Act 1975 apply to the property relationship between the deceased and his wife or is it Italian law?
ii)Does this Court have jurisdiction to make orders in relation to the Italian property?
iii)If so, is the Court able to make orders that are enforceable in Italy?
iv)If not, what adjustment is to be made, if any?
e)If the Family Law Act 1975 applies, what are the relevant section 75(2) factors and what adjustments are required, if any, in favour of either party.
The evidence
In the wife’s case I read the following documents:
a)Financial statement of the wife sworn 26 April and filed 29 April 2009;
b)Her affidavit sworn 27 June 2009 and filed 21 July 2009;
c)The affidavit of Dr S sworn 17 July and filed 21 July 2009;
d)Her affidavit sworn 9 August and filed 12 August 2009.
In the husband’s case I read the following documents:
a)The affidavit of Ms Caleffi sworn 5 December and filed 8 December 2008;
b)The affidavit of Ms Falco sworn 5 December and filed 8 December 2008;
c)The affidavit of Ms Caleffi sworn 14 August and filed 17 August 2009;
d)The affidavit of Ms Falco sworn 14 August and filed 17 August 2009.
I read the following additional documents:
a)Valuation report of Mr C of the property at Property [B] as at 16 June 2005;
b)The affidavit of Mr N sworn 17 March 2008 and filed 15 April 2009;
c)The affidavit of Mr P sworn 6 August and filed 12 August 2009;
d)The affidavit of Mr P sworn 15 February and filed 18 February 2010.
I heard and ruled upon a number of objections to affidavit material.
The witnesses who gave evidence in chief and in cross examination were the parties and Dr S, the wife’s Doctor and Mr P (by telephone from Rome).
On the evidence before me I find that there were very few factual issues in dispute that would have any significance likely to affect the outcome of the proceedings, and I will refer in more detail later in these reasons to the health of the wife.
I was left with the distinct impression that both the wife and the respondents did their best to tell the truth and were able to recall with some degree of accuracy those matters about which their recollection was tested.
Submissions
Subject to matters to which I refer below Counsel were agreed as to the value of realty both in Australia and Italy, which assets together comprised by far the most significant assets.
The thrust of the wife’s submissions is that it is appropriate for her to receive the former matrimonial home in Property [B] together with some cash and with the properties in Italy to remain as part of the estate of the husband and which would be a just and equitable division of property, taking into account the fact that the estate has incurred some expenses for which the estate should be responsible, and recognising the significant section 75(2) factors in favour of the wife.
The respondents submit that a payment to the wife of 40% of the proceeds of sale of the Property B property, and the transfer to the wife of her deceased husband’s interest in realty in Italy is just and equitable, and that the section 75(2) factors in favour of the wife are limited given her age and the fact that prior to being enabled by the court order to live in the former matrimonial home she lived in rented accommodation appropriate for and within her means.
The relevant law
The respondent husband’s death and the substitution of the executrices of his estate brings into operation section 79(8) of the Act which permits the continuation of proceedings by or against, as the case may be, the legal personal representative of the deceased party.
Section 79(8)(b) and (c) are in the following terms:
(8) Where, before property settlement proceedings are completed, a party to the marriage dies:
(b) if the court is of the opinion:
(i) that it would have made an order with respect to property if the deceased party had not died; and
(ii) that it is still appropriate to make an order with respect to property;
the court may make such order as it considers appropriate with respect to:
(iii) any of the property of the parties to the marriage or either of them; or
(iv) any of the vested bankruptcy property in relation to a bankrupt party to the marriage; and
(c) an order made by the court pursuant to paragraph (b) may be enforced on behalf of, or against, as the case may be, the estate of the deceased party.
Neither Counsel submitted that this was a case in which it was not appropriate to make an order with respect to property save that
Mr Gruzman submitted that if the Court were to find Italian law applied then there was no property of the parties for the reason that the deceased’s property had been dealt with in accordance with Italian law. Subject to my findings in relation to whether it is the law of Australia or the law of Italy which is to apply, I am of the opinion that if the Australian law is to apply then the circumstances of this case are such that the Court would have made an order with respect to property if the deceased party had not died and that it is still appropriate to make an order with respect to property.
The approach by the Court to determine property disputes is well established. In Hickey & Hickey[1] the Full Court of the Family Court described the approach in the following terms:
“The case law reveals that there is a preferred approach to the determination of an application brought pursuant to the provisions of section 79. That approach involves four inter-related steps. Firstly, the court should make findings as to the identity and value of the property, liabilities and financial resources of the parties at the date of the hearing. Secondly, the court should identify and assess the contributions of the parties within the meaning of sections 79(4)(a), (b) and (c) and determine the contribution based entitlements of the parties expressed as a percentage of the net value of the property of the parties. Thirdly, the court should identify and assess the relevant matters referred to in sections 79(4)(d), (e), (f) and (g), (“the other factors”) including, because of section 79(4)(e), the matters referred to in section 75(2) so far as they are relevant and determine the adjustment (if any) that should be made to the contribution based entitlements of the parties established at step two. Fourthly, the court should consider the effect of those findings and determination and resolve what order is just and equitable in all the circumstances of the case”.
[1] [2003] Fam CA 395
On the evidence before me there is no superannuation to be brought into account when I come to consider the assets. The assets comprise essentially real property and personalty.
The property of the parties at the date of the hearing
At the commencement of the hearing there was no issue as to the identity of the assets and values which were as follows, with Mr Reeve for the wife conceding such from the case outline paragraphs 1-8 prepared by Mr Gruzman:
| Asset | Wife | The Estate | Agreed Value |
| Property [B] | $350,000.00 | ||
| Realty in Italy-Property F | $287,863.00 | ||
| Realty in Italy-Property P | $7,576.00 | ||
| Realty in Italy-Property V | 2/9 interest | $13,585.00 | |
| Greater Building Society Account | $2,289.00 | ||
| ANZ Account | $700.00 | ||
| CBA Account | $23,000.00 | ||
| NPBS | $16,000 | ||
| ANZ Account | $700.00 | ||
| ANZ Account | $70.00 |
The outline of case document prepared by Mr Reeve included the following liabilities.
Liabilities
| Liability | Wife | Estate |
| Wife's legal costs | $40,000.00 | |
| Estates Costs | $40,000.00 | |
| Costs of repair to Property V (2/9 interest) Italian property | $73,240.00 (Euro)42,862.30 | |
| Inheritance Tax Italy |
The case outline prepared by Mr Gruzman included a liability of $40,000.00 for the costs of the estate.
Discussion as to assets and liabilities
At the time of the resumed hearing in February 2010 and as a consequence of changes in rates of exchange, it was agreed by Counsel that the property at Property F was then worth AUS$255,096.00, and that for the same reason the value of Property P had decreased to AUS$7394.00.
As to the assets and the CBA account in the name of the late husband, it was agreed at the commencement of the hearing that this was an amount of $23,000.00.
During the course of the evidence, it was established from the executrices that in the affidavit sworn by them and filed in support of the application for grant of Probate that there was a credit balance of $34,753.00 in such account prior to payment of funeral and some other expenses. The evidence establishes that the amount of the funeral was $7,844.00, which was paid and a further amount of $3,800.00 reimbursed to Centrelink for an overpayment, thus leaving a balance of $23,109.00. It seems likely that is how the amount of $23,000.00 said to be an agreed asset for the purposes of these proceedings was calculated.
Perhaps not surprisingly, the evidence of the respondents was vague as to the financial transactions relating to payment of the debts of the estate. However, it is established that on 2 December 2008 a cheque for $19,066.46 drawn on the Commonwealth bank on the account of the deceased was deposited to the trust ledger of the Solicitors acting for the estate of the late husband[2]. I am satisfied on the evidence that this was the balance of the husband’s account with the Commonwealth Bank following payment of the funeral expenses. Whilst oral evidence was given by the respondents of a payment of $9,000.00 for a crypt, in addition to the funeral expenses, deduction of that amount together with funeral expenses does not result in a credit balance of $19,066.46 but rather something in the order of $17,909.00.
[2] See Exhibit W5
The trust ledger shows a number of deposits prior to 2 December with equal outgoings relating to various estate expenses. Following the deposit of $19,066.46 there are a number of outgoings including:
a)Edstein Creative Stone $1,625
b)[N] City Council rates $683.65
c)[water] rates $281.40
d)Energy Australia $122.18
e)Refund to Ms Falco $1100.00
f)Refund Centrelink $3,826.38
The balance of the withdrawals relates to legal fees and less than $500.00 for a combination of translations and Energy Australia.
It was urged upon me during submissions that the proper approach was to treat the balance of $23,000.00 shown in the respondent’s outline of case document as the correct amount to be bought into account as an asset of the estate. I do not except that submission. It seems to me that the proper approach is to include the amount of $19,066.46 which I will round down to $19,066.00 as the appropriate asset.
In relation to Property P with a value of $7,394.00, Mr Gruzman during submissions correctly reminded me based on material in Mr N’s affidavit that whilst this asset is shown as an asset of the deceased, it comprises 27 separate titles to which the estate is entitled as to portions varying between a half, a third, a sixth, a half, an eighth, and five eighth. The evidence of Mr P is to the effect that to realise such assets there would be considerable costs in relation to stamp duty, taxes and death duties.
During submissions, Mr Reeve told me, and I accept that the wife had deposited into his trust account an amount of $14,000.00 on account of Mr P’s fees which Mr P had required be paid prior to his affidavits being prepared and filed. At about the time of the commencement of the hearing, the wife had on deposit in the Newcastle Permanent Building Society an amount of about $16,000.00. Mr Reeve, quite rightly in my view, conceded it was appropriate to credit the wife with an asset of $10,000.00 rather than showing a debit of $14,000.00 for legal costs. I propose to adopt that approach.
Where parties have paid legal costs, it is often appropriate to add back to the list of assets such legal costs when they have been paid from assets which otherwise would be available for division between the parties. It is not appropriate that I adopt such procedure in this case for reasons to which I refer below.
As to liabilities, it seems to me appropriate that I not bring into account any liability for legal costs either on behalf of the applicant or the respondents. Both the wife and the respondents have incurred costs in relation to these proceedings, and there was some limited evidence adduced during the course of the hearing as to payment of some costs. No accurate evidence has been adduced before me as to the calculation of or quantum of these costs, rather they are general assertions. Doing the best I can, it seems to me that I should take into account that both parties will have costs to pay. As indicated during the course of the hearing, it is likely there will be applications by both parties for costs consequent upon the conclusion of these proceedings. I note that the wife proposes to seek costs for the successful application she brought in October 2008 for exclusive occupation of the home.
I do not propose to bring into account the liability for costs of repair to the property at Property V. The evidence does not establish whether such costs are necessary and neither party adduces evidence in an acceptable form which establishes a liability for such costs of repair.
As to the apparent liability of the estate to reimburse authorities in Germany and France for a pension overpayment of about $4,000.00, there is no evidence before me that such liability exists and I do not propose, for that reason, to include such amount as a liability.
It seems to me therefore that the correct approach is to consider the following assets as the subject of the proceedings;
| Asset | Wife | Estate |
| Property [B] | $350,000.00 | |
| Realty at Property F, Italy | $255,096.00 | |
| Property P, Italy | $7,394.00 | |
| Property V, Italy (2/9 interest) | $13,260.00 | |
| [N] savings | $10,000.00 | |
| Greater Building Society account | $2,589.00 | |
| CBA account | $19,066.00 | |
| ANZ account | $700.00 | |
| Personal belongings | $2,000.00 | |
| Personal property | $2,000.00 | |
| Total | $27,849.00 | $634,256.00 |
| Combined total $662,105.00 |
Financial resources
There is no evidence before me that either the wife or the husband’s estate has any financial resources.
Discussion
By his last Will and Testament made on 13 March 2006, in clauses 2 and 3 the husband appointed his daughters Ms Caleffi and Ms Falco the executors of his will and gave the whole of his estate to four of his children namely Ms Caleffi, Ms Falco, Ms R and Ms P in equal shares as tenants in common, and all of whom have survived.
In his Will the husband made a declaration that he specifically made provision only for those beneficiaries named above and had considered carefully the interests of all persons who may be “eligible persons” under the Family Provision Act 1982 and the Property (Relationships) Act 1984 (as amended). The husband in his Will, clause 6, said this:
“I have not made provision for my children Ms N, Mr E and Ms X as they have caused problems for me for quite sometime and I have made no provision for my daughter Ms M as she is living in Italy and I have made sufficient provision for her during my life”.
In clause 4 the husband set out the powers he gave his executrices to realise and deal with his estate only for those beneficiaries named in paragraph 65 above.
Clause 5 is in the following terms:
“5 I DECLARE that I have had advice from my Solicitor as to the definition of “eligible persons” under the terms of the Family Provision Act 1982 and the Property (Relationships) Act 1984 (as amended), AND I DECLARE that I have specifically made provision in this my will only for those beneficiaries named herein AND I DECLARE that I have carefully considered the interests of all persons who maybe “eligible person” under the said Acts, AND that it is my express and unequivocal direction that only those persons named in this my will as beneficiaries (and no others whatsoever)shall benefit herein”.
Whilst the husband does not say in as many words in clause 5 that it is the Family Provision Act 1982 and the Property (Relationships) Act 1984 (as amended) of New South Wales, and I emphasise the State, I infer that it is those Acts of New South Wales to which the husband referred, and I am fortified in drawing such inference from the fact that the husband referred to receiving advice from his Solicitor, identified as Paul Kevin Gowran in these proceedings from whom he received such advice. It was not contended during the course of the hearing that it was the law of any other state of the Commonwealth to which the husband was referring.
The husband died [in] 2008 and on 5 August 2008 Probate of the husband’s last Will was granted in the Supreme Court of New South Wales to the executrices who are the respondents in these proceedings.
Both the defendants gave sworn evidence in their affidavits of December 2008 that it was their intention to sell the property if vacant at Property [B] and distribute the funds in accordance with their late father’s Will thus fulfilling one of their duties as executors. Both deposed to not having let the property to tenants on the premise that it would be easier to sell the property if vacant. Both opposed their mother moving into the home on the premise it would cause delays to the sale of the property and inspections would be difficult to arrange for prospective purchasers.
Given that one of the most significant matters I am required to determine is whether the Family Law Act 1975 applies in relation to the real property in Italy, or whether it is Italian law, the evidence of Mr P is significant. Such evidence is found in his two affidavits to which I have referred. He was also cross examined extensively by both Counsel. It seems to me that Mr P is well qualified to give expert evidence, and indeed it was in this capacity he was retained by the applicant with the consent of the respondents.
Mr P is a partner in a law firm in Rome, he is a registered advocate admitted before the Italian Courts and he has also been admitted to practice as a Solicitor by the Supreme Court of England and Wales and by the Supreme Court of New South Wales, Australia.
Mr P confirms that the husband is the sole owner of the property at Property F which was acquired in 1960 and that the wife has no inter vivos ownership interest. Mr P deposes the property will remain registered in the name of the deceased until the four named heirs in the Will publish the Will in Italy before a Notary, file an Italian declaration of succession for the purposes of paying taxes and enter into formal deeds of acceptance of the Italian estate which he suggests should be done without delay[3].
[3] Paragraph 2.1 of the affidavit of Mr P sworn 6 August and filed 12 August 2009
Mr P deposes to the husband’s sole ownership of this property being subject to any rights the wife may have to a one half share under Italian law, and to the rights of the wife and those children not taking a share under the Will to claim their reserved share pursuant to the Italian law of succession which can be done only if Italian law is found to apply. Mr P emphasises that if Italian law applies, the rights of those heirs not included in the Will, are to a share of the entire estate of the deceased and the Italian court would allocate to all eligible heirs the total property in accordance with the shares indicated, based on the property values at the date of death. This means that the potential heirs not taking under the Will, if successful, would not necessarily obtain a share in any particular property but the division of the property would be carried out having regard to the total estate.[4]
[4] Paragraph 2.1 of the affidavit of Mr P sworn 6 August and filed 12 August 2009
Mr P also confirms the proprietary interest of the husband in the rural lands – Property P and the extent of those interests with the other joint owners being other members of the Palma family[5].
[5] Paragraph 2.3 of the affidavit of Mr P sworn 6 August and filed 12 August 2009
Mr P deposes to deed of purchase dated 28 July 1991 pursuant to which the wife acquired a twenty percent share in real property (at Property V) under a “common matrimonial property regime” and, therefore, pursuant to Article 177 of the Civil Code such twenty percent share is owned jointly by the wife and her late husband. Consequently, the estate has a ten percent ownership share in this property but it is held subject to the usufruct rights of Ms T whose interest is recorded, and means that she has the right to use and occupy the property for the duration of the usufruct interest and that, upon her death or expiration of the term of duration, full ownership automatically reverts to the wife and the other co-owners[6].
[6] Paragraph 2.2 of affidavits of Mr P filed 18 February 2010 and 12 August 2009
During his oral evidence Mr P acknowledged that twenty percent was an error on his part and confirmed the correct share to be 2/9, and therefore the estate has a 1/9 interest. Mr P confirmed during cross examination by Mr Reeve that even if Australia law applies to the Will, the estate has a 1/9 interest in the Property V property as a consequence of the Civil Code as to common ownership of real property acquired following 1975, and the wife retains a 1/9 interest based on the private international rule applicable to ownership of real property[7].
[7] See part 2 of the affidavit of Mr P sworn 15 February 2010 and filed 18 February 2010
In his first affidavit Mr P deposes that the general rule in considering whether Italian law or New South Wales law applies is that the applicable or governing law of the succession is the national law of the deceased (i.e. the law of his or her citizenship) at the time of death.
Mr P expressed the view that given that the information before him was that the deceased was an Italian citizen at the time of his death and never took Australian citizenship, it followed that the Italian law of succession would apply to the rights of the heirs to take the real property situated in Italy in the estate of the husband, following the referral to Italian law by New South Wales law.
Mr P deposed to noting that Italian law recognises as valid a Will which, inter alia, is recognised as valid under the law of the place where it was made or under the law where the testator was domiciled or resident either at the time of making the Will or at the time of his death. Mr P concluded therefore that in the present case, Italian law recognises the validity of a Will made in the state of New South Wales and declared in New South Wales pursuant to the grant of Probate dated 5 August 2008.
Mr P referred to the exception to the general rule referred to above in that a person in making his or her Will has limited possibility to choose the law applicable to his or her succession by making a declaration that the succession is subject to the law of that state in which he or she resides.
Mr P then set out the provisions of Article 46(2) of Law 218/1995 which is in the following terms:
“The deceased, by making an expressed declaration in a form valid for a Will, may subject his or her entire succession to the law of the State where he or she resides. The choice does not have effect if, at the time of death, the deceased no longer resides in that State. In the case of the succession of an Italian citizen, the choice shall not prejudice the rights which Italian law attributes to legitimate heirs residing in Italy at the time of the death of the deceased”.
Mr P refers to the terms of clause 5 of the deceased’s Will and the declarations made by the deceased in relation to the application of New South Wales law to the succession, commenting that he was unable to find any relevant Italian case law on the meaning of Article 46(2) to assist in determining whether the declarations in the Will of the deceased would be considered sufficiently clear to be caught by the provisions of Article 46(2).
Mr P then deposed as follows[8]:
“Legal commentators are divided on the issue of whether the declaration of the choice must be either expressly made in the Will itself or in a declaration taking the same form as a Will, or, alternatively, may be implied from the wording contained in the Will or the declaration. An authoritative opinion approved by the Italian Commission of European and International Affairs dated 10 September 2005 and published by the Italian Council of Notaries considers both possibilities but appears to lean for an interpretation that the choice may also be implied from the wording used in the Will or declaration. The issue is still under debate and requires additional specific research if considered a decisive issue in the present legal proceedings”.
[8] Paragraph 1.1(ii) of Annexure B to the affidavit of Mr P filed 12 August 2009
In the same paragraph Mr P said this:
“For the moment, assuming that New South Wales were found to apply based on the application of Article 46(2) this law would apply to determine both the identity of the rightful heirs and their shares of ownership of the immovable property situated in Italy, subject only to the rights of Italian resident legitimate heirs at the time of death, to receive the share which Italian law reserves to them”.
When I come to consider the whole of Mr P’s evidence, including that given in cross examination, I find that Mr P was unable to express a concluded view as to whether Italian law or New South Wales law applies to the provisions of the deceased’s Will.
I find on the evidence that the effect of Mr P’s evidence was that if Italian law applies then the wife benefits from one quarter of the whole of the estate both in Italy and in Australia, one half is divided in equal shares between all the children and the remaining one quarter passes to the beneficiaries in accordance with the provisions of the deceased Will.
It follows that if Italian law applies then section 79 of the Family Law Act has no application.
If New South Wales law applies to the provisions of the deceased’s Will, the provisions of the Will would apply in relation to the deceased’s estate subject to the matters I am required to consider under section 79 of the Family Law Act.
Conclusion as to whether Italian law or New South Wales law applies to the provisions of the Will
Both Counsel made very useful submissions as to the complex and difficult issue in deciding which law is to apply given both Mr P’s evidence and the lack of any judicial authority or precedent.
I conclude on the whole of the evidence before me that it is the law of New South Wales that applies. My reasoning is that I find on the evidence that the deceased remained an Italian citizen and did not take up Australian citizenship but lived in Australia from the time he migrated in 1967. I find on the evidence that at the time of his death the husband was resident in Australia and domiciled in Australia, but more particularly in New South Wales.
I find that it is open to me to consider the whole of the provisions of the deceased’s Will in determining whether the deceased made an express declaration that his estate be the subject of the law of the State where he resided (within the meaning of Article 46(2) of Law 218/1995) or, in the alternative, whether that intention may be implied by the wording in the deceased’s Will.
Mr Reeve submits that it is open to the Court to find that by implication the law of New South Wales has been adopted evidenced by clause 5 of the deceased’s’ Will which refers specifically to New South Wales law in relation to potential challenges to the Will.
Mr Gruzman submits that clauses 5 and 6 of the Will amount to a consideration of the interests of all persons who may be eligible persons under the terms of the Family Provisions Act (1982) and the Property (Relationships) Act 1984 of New South Wales and submits that the Court could find in the circumstances of this particular Will that it amounts to an express declaration that the testator’s entire succession is subject to the laws of New South Wales where he had lived for a long time as an Italian citizen. Mr Gruzman submits that whilst the wording may not be perfect it would amount to a declaration. I accept that submission.
I find on the whole of the evidence before me that the provisions of clauses 5 and 6 of the deceased’s Will amount to an expressed declaration that the deceased intended the law of New South Wales to apply to his estate.
Contributions
When the hearing commenced, Mr Reeve on behalf of the wife, quite rightly in my view, conceded that contributions were equal to the time of separation, and continued to be equal post separation until the time of the husband’s death and until the time of the hearing.
Mr Gruzman on behalf of the estate made the same concession on the second day of the hearing.
The other matters in section 79
I turn now to the matters identified in clauses (d) to (g) of section 79(4) set out below.
Section 79(4)(d)
This subsection requires me to take into account the effect of any proposed order upon the earning capacities of the parties, and has no application in the circumstances of this case.
Section 79(4)(e) – The matters referred to in sub-section 75(2) so far as they are relevant
It is conceded by Mr Gruzman, Counsel for the late husband’s estate that there are no relevant factors of this nature in his case.
Section 75(2) factors
The relevant matters to be taken into consideration so far as the wife is concerned seem to me to be sub sections (a), (b), (d), (f), (g), (ha) and (o):
(a) The age and state of health of each of the parties.
The wife is 85 years of age. She suffers from diabetes and takes medication for cholesterol. She has had a triple bypass operation and wears spectacles. Whilst she is able to shop at a filling station close to her home for immediate necessities she relies upon members of her family unaligned to the beneficiaries of the husband’s estate to take her shopping.
Her General Practitioner, Dr S gave evidence and was cross examined as to her health, and in particular that she exhibited signs of distress and upset consequent upon the division between her children which, whilst not amounting to clinical depression requiring medication, left her distressed and extremely upset.
Dr S was also of the view that the ability to have a bath, which she can now do in the home at Property B but which she did not have in her previous rented flat, enabled her to benefit from relaxation for her back following previous back surgery and for relief of pain.
Dr S considered if the wife was forced out of the home at Property B as a consequence of these proceedings whilst he could not be exactly sure what would happen, he would expect her depression to escalate and to become at least moderate, if not severe depression probably requiring medication. She would certainly be distressed psychologically and would experience a lot of grief.
Dr S was subjected to a testing and appropriate cross examination by Mr Gruzman as to the wife’s health and in particular, the dispute between members of the family and the effect of such disputes upon her mental and psychological state. In particular, Dr S was asked about the effect of proceedings apparently instituted by one of the sons in the Supreme Court of New South Wales in late 2005 claiming a half interest in the house at Property B and later dismissed in October 2006 and in which the mother gave evidence on behalf of her son Mr E against the husband. Dr S did not know whether those proceedings would have had some impact upon the wife’s mental health or anxiety.
Dr S continues to see the wife about once per month on average for a check up and described the medication he prescribes for her and the cost.
In relation to the wife’s life expectancy, Dr S was unable to give any accurate prediction. He said that given she is a diabetic, has coronary vascular disease and coronary heart disease and in the past has had cancer, there are number of variables which could bring about her demise at any time but could equally live for many years.
(b) The income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment.
The wife relies upon Centrelink benefits of about $278.00 per week by way of income. The wife has no property, subject to her 2/9 interest in Property V, Italy and has no financial resources. I find on the evidence before me the wife has no physical or mental capacity for appropriate gainful employment.
Evidence concerning the husband’s assets now standing in the name of the estate are set out earlier in these reasons.
(d) Commitments of each of the parties that are necessary to enable the party to support;
(i) himself or herself;
(ii) a child or another person that the party has a duty to maintain.
The wife has necessary commitments for her self support and has relatively modest needs in that respect. Some of these are set out in her statement of financial circumstances. If she retains the home she will have additional costs relating to maintenance of the home, keeping it insured and repaired and paying rates and the other inevitable costs of keeping a home.
(f) subject to subsection (3), the eligibility of either party for a pension, allowance or benefit under:
(i) any law of the Commonwealth, of a State or Territory or of another country; or
(ii) any superannuation fund or scheme, whether the fund or scheme was established, or operates, within or outside Australia;
and the rate of any such pension, allowance or benefit being paid to either party;
The wife receives a Centrelink benefit.
(g)where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable;
The evidence before me establishes that the wife currently has a very modest standard of living. There is very little evidence before me in relation to the standard of living of the parties during the marriage but I infer it was modest.
(ha) the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant;
It is clear on the evidence before me that the executrices of the estate have incurred costs in relation to the administration of the estate and the continuation of these proceedings on behalf of the husband’s estate. It is not possible to determine on the evidence before me the quantum of such liabilities. I note from exhibit W5 the trust ledger maintained by Mr Gowran on behalf of the estate that some costs in relation to the home have been met in relation to council and water rates and electricity and reimbursement to Centrelink for an overpaid amount. It is likely that there are legal costs incurred by the executrices on behalf of the estate. I take these matters into account but at the end of the day, there are assets which the executrices will be able to realise to pay the creditors of the estate.
(o)any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account;
There is ample evidence of a very significant rift between the children of the deceased and his wife. There is no doubt on the evidence before me that the executrices feel bound to put into effect their late fathers’ wishes expressed in his Will. The wife is estranged from four of her children and their families.
I would like to think the orders I make will bring about a cessation of the present hostilities between the children. This of course is not a factor which by itself affects my final decision but it is proper that I express this view in the hope that all of the children together can bring their mother some peace before it becomes too late.
If I accede to the orders proposed by the respondents it will result in the sale of the home at Property B and the necessity for the wife to find other accommodation. The wife would receive about one hundred and forty thousand dollars less her proportion of the costs of sale and real estate agent’s commission. She would also receive the whole of the property in Italy subject to the executrices making the appropriate applications which on the evidence before me from Mr P would be a complicated procedure involving some expense and taxes. There would also be on the evidence of Mr P some considerable delay in realising such outcome. In the mean time, the wife in all probability would be obliged to rent accommodation pending receipt of the proceeds of sale of the Property F property, the most readily saleable asset in Italy.
There is no evidence before me of whether the wife would be able to afford to purchase appropriate accommodation for herself or whether accommodation suitable for her needs is available.
I am not able to ignore the affect upon the wife’s health given Dr S’s evidence if she were required to again leave the home in which she is now settled and which was her home for many years. I give that evidence significant weight. In my view, the risk of adversely affecting the wife’s health is not warranted and is to be avoided.
Against that, it seems to me that if I accede to the wife’s application it is a relatively simple procedure for the estate to transfer Property B to her and for the wife to transfer her interest in the Property V property to the estate.
The wife has no interest in the property standing in the name of the husband in Italy and it is open to the estate to deal with those properties by way of sale if the estate so wishes, or otherwise.
Given my decision that New South Wales law applies to the estate it nevertheless remains open to the estate’s beneficiaries until 2018, on Mr P’s evidence, for them to bring any proceedings they think appropriate in Italy for a proportion of the deceased estate. That is a complicated procedure and would no doubt involved considerable expense. I would like to think that some common sense would prevail once I reach my final conclusion.
Mr Gruzman submits that the Court should not ignore the husband’s wishes to leave his estate to certain of his children. I do not accept that submission.
It is clear from the evidence before me that there are a number of issues in relation to costs, particularly those of Mr P. I declined to make an order as sought by Mr Reeve at the end of the hearing that such costs be paid should be paid as to fifty percent by the wife and fifty percent by the estate. There is a further issue in relation to the costs of the 2008 proceedings when the wife secured an order for exclusive occupation of the home, and I surmise that there will be other issues in relation to costs. It seems to me that the most appropriate remedy is to enable each party to bring any application for costs within twenty eight days of these reasons for judgment being published to enable me to hear that as a discrete issue in relation to the whole of the costs being claimed by each party.
Conclusion
I do not accept the submissions of Mr Reeve that the section 75(2) factors in favour of the wife warrant an adjustment of somewhere between fifteen and twenty percent. I am not able to ignore the fact that the wife is 85 years of age and her needs are modest. If she retains the home at Property B then she will have proper accommodation and she has the means to pay, to some extent, the ordinary costs of maintaining such home. There are the additional costs of her self support. In my view, there should be an adjustment of 12.5% for the matters referred to in section 75(2). This will result in an overall division of property of 62.5% in favour of the estate.
62.5% of the total assets is $413,816.00. The wife can retain the property at Property B, her notional savings of $10,000.00, monies in the GBS account and her personal property worth together $364,589.00.
This leaves a balance of $49,227.00 due to the wife from the estate.
After payment to the wife the estate benefits from 37.5% of the total assets with a value of $248,289.00 reflected in the balance of the CBA account, the husband’s properties in Properties F & P and the wife’s interest in Property V which the wife will be required to transfer to the estate, but subject to the usufruct interest. There is nothing in the evidence before me to suggest that the principle asset in Italy at Property F with a value of $255,096.00 is other than readily realisable which thus provides monies to the estate to pay the wife and meet its liabilities and distribute the balance in accordance with the deceased’s wishes. It seems to me that Property P and the 2/9 interest in Property V need not be sold but can pass to the deceased’s beneficiaries as he wished.
Section 79(2) – just and equitable
The last step is that the Court “stands back” to look at the reality of the percentage division which I have determined is appropriate and to be satisfied that it is just and equitable. When I consider the actual assets to be retained by the wife and the estate, I conclude it is an appropriate division and does not require any further adjustment.
For these reasons, I make the following orders.
I certify that the preceding one hundred and thirty-two (132) paragraphs are a true copy of the reasons for judgment of Coakes FM
Date: 24 February 2010
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