Scalone v Scalone

[2000] NSWSC 1028

CITATION:	Scalone v Scalone [2000] NSWSC 1028
FILE NUMBER(S):	SC 4507 of 1999
HEARING DATE(S):	25 August 2000
JUDGMENT DATE:	6 November 2000
PARTIES :	Anthony Scalone (Plaintiff) Peter Neil Scalone (Defendant)
JUDGMENT OF:	Master McLaughlin at 59

COUNSEL :	S. Burchett (Plaintiff) D. M. Flaherty (Defendant)
SOLICITORS:	Eakin McCaffery Cox (Plaintiff) Kells the Lawyers (Defendant)
CATCHWORDS:	Family provision - Claim by adult son - Deceased had four children - Deceased by his will divided residue into four equal parts and gave one part to each of two children and one part to children of each remaining child - Financial and material circumstances of Plaintiff - Plaintiff has demonstrated no relevant need - Competing claims of other children and of infant grandchildren of Deceased
LEGISLATION CITED:	Family Provision Act 1982
DECISION:	See paragraph 59

SUPREME COURT OF
NEW SOUTH WALES
EQUITY DIVISION

MASTER McLAUGHLIN

Monday, 6 November 2000

4507/99 ANTHONY SCALONE -V- PETER NEIL SCALONE

JUDGMENT

1    MASTER: These are proceedings under the Family Provision Act 1982. 2 By summons filed on 29 October 1999 the Plaintiff, Anthony Scalone, claims an order for provision for his maintenance and advancement in life out of the estate of his late father, Antonio Scalone (to whom I shall refer as “the Deceased”). 3 The Deceased died, aged 67, on 24 February 1999. He left a will dated 23 November 1995 (together with a codicil thereto, dated 8 February 1999), probate whereof was on 20 May 1999 granted to Peter Neil Scalone, the executor named in such will (who is the Defendant to the present proceedings). 4 The Deceased, who had been born in Italy, arrived in Australia in 1954, and worked for seven years on the Snowy Mountains Hydro-electric Scheme. Of his first marriage there were born to the Deceased four children, being Peter Neil, the Defendant (who is presently aged 36); Anthony Gerard, the Plaintiff (who was born on 15 October 1966, and is presently aged 34); Marisa Constance (now Mrs Meoli, whose age was not disclosed); Stephen John (who is presently aged 26). 5 The Deceased’s first wife died in 1987. Subsequently, on 14 February 1994 the Deceased married Gianna Bolzan, from whom he was separated a few months later. They were subsequently divorced. 6 In 1995 the Deceased entered into a de facto relationship with Ivanka Perkovic, whom he had first met in 1990. She had been born in 1946, and is now aged 54. 7 At the time of his death the assets of the Deceased consisted of a house property situate at and known as 406 Northcliffe Drive, Berkeley, near Wollongong (in which house the Deceased had been residing since about 1994 or 1995, shortly before he commenced his de facto relationship with Mrs Perkovic, and which was the matrimonial home of the Deceased and Mrs Perkovic from then until the time of his death); a house property situate at and known as 65 Fitzroy Street, Burwood (which had been the family home of the Deceased until he removed to Berkeley); money in a bank account and various investments (totalling about $528,000). 8 It was agreed between the parties that the present value of the Berkeley property was $150,000 and that the present value of the Burwood property was $500,000. 9 By his will the Deceased gave to Mrs Perkovic a right of residence in the Berkeley property, for her life or until her re-marriage (with provision for the purchase of a substitutionary residence in which she should have an equivalent interest). The will provided that upon the termination of that right of residence the house which Mrs Perkovic had occupied should be sold and “distributed amongst my beneficiaries” (clause 2.3). 10 The will then provided that the remainder of the estate, together with the income derived therefrom, should be dealt with as follows: one quarter share to the Defendant; one quarter share to be divided between the two infant children of the Plaintiff (Constance Rita, who is now aged 7, and Bianca Rosa, who is now aged 5); one quarter share to Stephen; and one quarter share to be divided equally among the three infant children of Marisa (Teresa Constance, who is aged about 12, Antony Jonathan, who is aged about 10, and Matthew Vincent, who is aged about 8). 11 It will be appreciated that no provision was made for either the Plaintiff or his sister Marisa. 12 I have earlier referred to a codicil to the will of the Deceased. That codicil merely effected a correction to what appears to have been an unnecessary (and probably unintended) obtrusion made into the will by clauses 4 and 5. 13 Since the death of the Deceased two distributions (totalling $33,031) have been made to Stephen. Apart from the two pieces of real estate the assets now consist of an amount of almost $470,000 held in a trust account with St. George Bank, together with an amount of about $2,800 in cash (in respect of rent received from the Burwood property). It will be appreciated that the Burwood property incurs ongoing liabilities, such as municipal rates. 14 The Defendant estimates that the current value of the reversionary interest in the Berkeley property, after the exercise by Mrs Perkovic of her right of residence, is a little under $50,000. Apart from that interest, the value of the distributable estate is estimated by the Defendant to be about $973,000. It will be appreciated that that amount will, however, be reduced, when provision is made for the costs of the Defendant of the present proceedings, since, irrespective of the outcome, he will be entitled to an order that his costs be paid out of the estate of the Deceased. Further, in the event that the Plaintiff be successful, he also will be entitled to an order that his costs be paid out of the estate. It is estimated that his costs will be in an amount of about $15,155. 15 If the Berkeley property be left aside from consideration, the other assets of the estate at the present time have a total value of about $973,000. Assuming that the costs of the Defendant are about $20,000, and notionally restoring to the estate the moneys (totalling about $33,000) already distributed to Stephen, it is in my calculation appropriate that the residue be treated as having a present value of about $986,000. In consequence, therefore, the effect of the provisions of the will of the Deceased would be that each of the one quarter shares in residue would have a value of about $246,500. It follows, therefore, that each of the infant children of the Plaintiff would be entitled to an amount of about $123,000, and that each of the infant children of Marisa would be entitled to an amount of about $82,000. 16 It will be appreciated that the foregoing calculations do not allow for the costs of the Plaintiff, and do not take into account the additional benefits which will accrue to the four categories of beneficiaries when Mrs Perkovic ceases to exercise her right of residence, and the Berkeley property is sold. If that property retains its present value of $150,000, each of the Defendant and Stephen will be entitled to an additional amount of about $37,500 (perhaps somewhat less, to reflect the costs associated with the sale of that property), each of the children of the Plaintiff will be entitled to an additional amount of about $18,750 (perhaps somewhat less), and each of the children of Marisa will be entitled to an additional amount of about $12,500 (perhaps somewhat less). 17 After leaving school in 1983 the Plaintiff completed a two year technical college course in refrigeration mechanics. From 1985 until about 1990 he was employed as a refrigeration mechanic. In that latter year the Plaintiff borrowed $15,000 from the Deceased in order to start his own business, Metro Cool Refrigeration. Since then he has been a self employed refrigeration mechanic. 18 The Plaintiff lived at home with his father and his brothers until his marriage in 1992. Whilst living at home the Plaintiff did not pay rent or board, or contribute to any other household expenses. 19 The Plaintiff married his present wife, Bianca Rose Mary (née Fichera) on 31 May 1992. They have two children, Constance Rita and Bianca Rosa (who are two of the beneficiaries named in the will of the Deceased, being entitled to share equally one quarter of the residuary estate). 20 The Plaintiff’s wife, who in 1994-1995 conducted a fashion business, is now presently engaged full-time as a wife and mother. 21 When in 1990 the Plaintiff borrowed $15,000 from his father in order to start his own refrigeration business, the Deceased was, in fact, overseas at that time, and the loan was made by the Defendant, who had control of the Deceased’s bank account. Apparently the Deceased subsequently approved that loan. The Plaintiff never discussed repayment, and, indeed, has never repaid any part of that loan, although, according to his affidavit evidence, he always intended to repay the amount which he had borrowed. 22 However, at the time of the Plaintiff’s wedding the Deceased said to him that, as a wedding present, he would reduce the amount of the indebtedness of $15,000 by $1,000. That was the only occasion when the Plaintiff had any discussion with his father concerning the loan. That reduced amount of $14,000 has not yet been repaid by the Plaintiff to the estate of the Deceased. It has not been included as an asset in the estate. Although the Defendant has not said so, I infer that he does not propose to attempt to recover that amount from the Plaintiff. Such an attitude might reflect the view of the Defendant and Stephen, but the interests of the infant beneficiaries should not be diminished by such an approach to this loan. It is probable that, in calculating the entitlement of the infant beneficiaries, this amount of $14,000 lent to the Plaintiff, but not repaid, should be treated as an asset in the estate. 23 The Plaintiff’s business, Metro Cool Refrigeration, is his only source of income. According to his affidavit evidence the Plaintiff’s assets consist of his interest, as joint tenant with his wife, in a house property situate at and known as 30A Stanley Street, Croydon Park (to which half interest the Plaintiff ascribes a value of $200,000), a Volvo motor car (to which he ascribes a value of $3,000), a work van (to which he ascribes a value of $7,000) and what he describes as “furniture and office” (to which he ascribes a value of $20,000). He reveals various liabilities, including a one half interest in the amount of the mortgage loan on the Croydon Park property (which one half interest is in an amount of $140,000), together with two other loans (totalling $43,000) and various other debts (essentially for credit cards, totalling $17,100). That affidavit evidence also discloses that the Plaintiff’s wife has as her only asset a one half share as joint tenant in the house property, and as her only liability a one half share in the mortgage liability. 24 In his affidavit of 28 October 1999, being the principal affidavit in support of the summons, the Plaintiff states (paragraph 31) that in 1987 he purchased an investment unit as Parramatta for about $46,000, and that in 1995 he sold that unit at a loss, and still owes the Westpac Banking Corporation about $23,000 in respect to the loan (apparently in an original amount of $21,000) which he obtained in order to assist in the funding of that purchase. However, it was revealed under cross-examination that the Parramatta unit was sold in 1995 for $97,000. Since it was purchased for $46,000, by no stretch of the imagination can it accurately be asserted that it was sold at a loss. It would appear that it was sold for a profit of about $50,000. 25 It was also revealed under cross-examination that the Plaintiff had on 5 April 1990 purchased (apparently for an amount in the vicinity of $90,000) a home unit at Parramatta, and that that home unit had been sold on 19 July 1991 for $86,000 (that is, apparently, at a small loss). No reference whatsoever to that Liverpool unit was made in the Plaintiff’s affidavit evidence. 26 The Plaintiff has prepared an application for subdivision of the land upon which his residence at Croydon Park is erected, with a view to constructing home units or town houses thereon. No information concerning that proposal was disclosed in the affidavit evidence of the Plaintiff. Neither did he offer any estimate of the profit which he expected to receive from this proposed development. 27 In May 1998 the Plaintiff suffered an accident whilst travelling in his motor vehicle. He sustained injuries to his back, neck and knee, and was off work for one week. From the evidence of the Plaintiff it would appear that that accident was caused entirely by the driver of the other vehicle. The Plaintiff has instituted proceedings claiming damages as a result of the injuries sustained by him in that accident. 28 It was part of the claim of the Plaintiff that, because of the injuries and consequent disabilities which he suffered in the motor accident, his ability to work as a refrigeration mechanic had been seriously affected. 29 Whether or not that it so, it is likely that the Plaintiff will receive some form of monetary compensation as a result of that motor vehicle accident. Further, despite the assertions by the Plaintiff concerning his ability to perform his work as a refrigeration mechanic, his earnings (which he disclosed in May 1998 in support of his claim for compensation as being in an amount of $2,100 (gross) a week) have significantly increased from then until the present time (being now in the range $3,000 - $3,500 (gross) a week). 30 Evidence was placed before the Court concerning the financial and material circumstances of Mrs Perkovic, of the Defendant and of Stephen Scalone. 31 Apart from her right of residence in the house property at Berkeley, Mrs Perkovic has no assets. She has no liabilities. Her sole income is a disability pension in an amount of $392 a fortnight. Although she was served with a notice of claim and although she has sworn an affidavit in the present proceedings, Mrs Perkovic has made no claim for any additional provision out of the estate of the Deceased. 32 The Defendant (who is unmarried and without children) is a scientific officer by occupation. He receives a salary of $650 a week. He lives in rented premises at 11/96 Burns Bay Road, Lane Cove, for which he pays rent of $805.80 a month. The Defendant’s assets consist of a home unit at 6/26 Lismore Avenue, Dee Why (to which a value of $230,000 is ascribed), from which he receives rental income of $230 a week. Upon that investment unit the Defendant pays an amount of $479 a month by way of mortgage repayment. 33 The Defendant has a share portfolio, having a value of about $60,000. He has savings of about $5,000 in an account with Westpac, and he owns a motor vehicle (to which he ascribes a value of about $11,000). There is an amount of about $47,500 presently outstanding in respect of the mortgage on the Dee Why property. 34 Stephen (who is unmarried and without children) is presently employed as a laboratory assistant. He receives a net salary of between $350 and $380 a week. His assets consist of a motor vehicle (to which a value of $24,000 is ascribed), furniture and personal effects (to which a value of about $10,000 is ascribed) and a musical instrument ($1,000). His only liabilities are loans in respect to borrowings from friends (totalling about $2,000). Stephen lives in rented accommodation, although the amount of rent which he pays is not disclosed in the affidavit evidence. 35 No evidence was placed before the Court concerning the financial and material circumstances of either Marisa, the daughter of the Deceased, or Mrs Gianna Bolzan, the former wife of the Deceased, although each of those ladies has been served with a notice of claim. There was admitted into evidence (Exhibit 1) a letter dated 30 March 2000 from a firm of solicitors acting for Mrs Bolzan, stating that she did not propose to apply for any order for provision out of the estate of the Deceased. 36 Marisa is a married lady, who lives in New Zealand with her husband and their three infant children, at a residential address which is not known to the Defendant (but whose mail address is at Parnell, a suburb of Auckland). Marisa lived at home with her parents and siblings until she married in 1987. According to the Plaintiff, Marisa and the Deceased had a falling out in about 1995, and they did not have any communication from then until the death of the Deceased in 1999. 37 It is in the light of the foregoing facts and circumstances that the Court must proceed to a consideration of the claim of the Plaintiff. 38 The Plaintiff, as a child of the Deceased, is an eligible person within paragraph (b) of the definition of that phrase contained in section 6 (1) of the Family Provision Act. As such, he has the standing to bring the present proceedings. It will be appreciated that each of the Defendant, Stephen and Marisa is also an eligible person within that paragraph of the definition, and that Mrs Perkovic, as the de facto widow of the Deceased, is also an eligible person, within paragraph (a) of that definition. 39    Evidence was placed before the Court concerning the nature of the relationship between the Plaintiff and the Deceased. It became apparent that that relationship was not as close, and the contact between the Plaintiff and his father (especially after the Deceased moved to Berkeley) was not as frequent, as the Plaintiff would, by his affidavit evidence, have had the Court believe. 40    It cannot be emphasised too strongly that it is for an applicant for an order for provision under the Family Provision Act to place before the Court as fully and as frankly as possible all information concerning his financial and material circumstances. I have already recorded that in the instant case the Plaintiff made no reference to the purchase and subsequent sale of the Liverpool home unit; made no reference to his proposal for subdivision of the Croydon Park property for the purpose of constructing home units or town houses (presumably at a considerable financial profit to the Plaintiff); and asserted, contrary to the now established fact, that he had sold the Parramatta home unit at a loss, when, in fact, he had sold it at a considerable profit. 41    Further, despite the assertion of the Plaintiff that his health problems consequent upon the motor vehicle accident in 1998 would have a detrimental effect upon his earning capacity, it is apparent that at the time of that accident the Plaintiff was receiving a substantial weekly income, and that that income has significantly increased since the accident. 42    It was submitted on behalf of the Plaintiff that a relevant consideration in the present proceedings was the desire of the Plaintiff to enable his children to have private schooling, and the fact that, so it was submitted, his present circumstances did not enable him to send them to private schools. No reference to an order for provision being required to enable him to meet school fees for his children was made in the affidavit evidence of the Plaintiff. Indeed, in his principal affidavit the Plaintiff said (paragraph 47) that if an order were to be made for him for provision out of his father’s estate he would (a) pay off all his debts and loans, including his mortgage, and (b) place some funds into a savings or investment account to be used to buy a new business, or to fund his training for a new business if in the future he became unable to continue his business as a refrigeration mechanic. 43    According to evidence elicited from the Plaintiff (ostensibly in re-examination, but in fact as evidence in chief), the Plaintiff had requested the Defendant to advance money for the benefit of his children, so that they could go to a better school; and the Defendant had replied that the Plaintiff’s children would have no money until they reached the age of 21, and that the schools which they were currently attending were adequate. The Plaintiff’s two daughters presently attend St. Joseph’s College at Enfield and the Plaintiff was desirous that they should attend either the Methodist Ladies College or Santa Sabina College. 44    However, it emerged under cross-examination of the Plaintiff on this fresh (and hitherto not referred to) evidence that the Plaintiff had spoken to the Defendant in mid-1995 and had requested, in effect, that the entirety of the benefits given to his two infant children under the will of the Deceased be transferred to him, so that the Plaintiff would replace the Defendant in managing the interests of those two children and in performing the role of trustee of their entitlement to a one fourth interest in the residue of the estate. At the time when he spoke to the Defendant the Plaintiff made no proposal concerning the schooling of his infant children, or concerning any change to some other school from the school which they were then attending. 45    It will be appreciated that the will of the Deceased expressly gives to the Defendant a power of advancement in respect to the capital funds and interest earned thereon to which any infant beneficiary is entitled. The Plaintiff has made no request to the Defendant that the Defendant should exercise this power of advancement in favour of one or both of the Plaintiff’s children. 46    I do not consider that the schooling of the Plaintiff’s children is a matter which in any way establishes any relevant need on the part of the Plaintiff. If there is a problem in meeting school fees for the Plaintiff’s children at schools of his choice (and there is no evidence at all to support the existence of any such problem and no evidence concerning the amount of the fees at either their present or desired future schools), then it is open to the Plaintiff to put to the Defendant a specific request for the exercise by the Defendant of the power of advancement, to enable those school fees to be met. 47    There is no suggestion that the Plaintiff is having any problem in meeting the payments on his mortgage, or in servicing his other debts. I am not satisfied that the evidence supports the submission that it is likely that he will not be able to continue working as a refrigeration mechanic (especially in the light of the significant increase in his income from the time of the accident to the present time). Indeed, the medical report of Dr Richard A. Evans (Exhibit A) states that the Plaintiff is able to cope with his present work as a self-employed refrigeration mechanic. Further, the circumstances of that accident were such that it is almost certain that the Plaintiff will succeed in the claim for compensation for his personal injuries which is presently on foot. The Plaintiff did not choose to place before the Court any information (for example, opinions from the legal representatives acting for him in that litigation) concerning the amount of such compensation which it is likely that he will receive. 48    It must also be recognised that the Plaintiff received from the Deceased during his lifetime the benefit of an advance of $15,000, to assist him in establishing his refrigeration business. Although that advance was originally characterised as a loan, the Deceased subsequently forgave $1,000 of that amount to the Plaintiff as a wedding present and the Plaintiff has for all practical purposes treated the balance as a gift. 49    I am not satisfied that the Plaintiff has demonstrated any relevant need which would entitle him to an order for provision out of the estate of the Deceased. That conclusion of itself is sufficient to dispose of the present claim by the Plaintiff. 50    However, if (contrary to the conclusion which I have just expressed) it were to be held that the Plaintiff had established some relevant need, the claim of the Plaintiff must, nevertheless, be approached in the light of competing claims upon the testamentary bounty of the Deceased. Those competing claims are the claims of the other two sons of the Deceased and the de facto widow of the Deceased (all of whom are eligible persons in relation to the Deceased), and the five grandchildren of the Deceased. Each of these persons was a designated object of the testamentary beneficence of the Deceased. Further, it must be appreciated that the Deceased by his will divided the residue of his estate into four equal parts. He had four children. He gave a one quarter share to each of two of those children. Although he made no provision for the other two children, he provided that the children of each of those two children should share a one quarter share. 51    All five of those grandchildren of the Deceased are infants of tender years. The Court must be absolutely vigilant and scrupulous in protecting and safeguarding the interests of persons, such as those infant beneficiaries, who are not capable of protecting their own interests. 52    In the instant case the Plaintiff has manifested a desire to take control of the management of the entirety of the benefits given to his infant children. No justification has been offered for that desire. Certainly, the interests of his children do not require it. Further, it must be appreciated that any order for provision which might be made in favour of the Plaintiff would have the practical effect of reducing, to the extent of the monetary value of that provision, the assets constituting the residue of the estate, and thus of reducing the assets to be shared by, amongst others, the Plaintiff’s own infant children and the three infant children of Marisa. 53    The only information which the Plaintiff has chosen to place before the Court concerning his two children (apart from the assertion, which emerged at the end of his oral evidence, concerning his desire that they should go to some school other than that which they are presently attending) was the statement that both of his children frequently suffer from chest infections (paragraph 45 of his principal affidavit) and the statement that his younger daughter has a problem with her left leg which requires her to wear orthopaedic shoes to strengthen her ankle (paragraph 46). It is not suggested by the Plaintiff that his present means are not adequate to deal with those health problems, or that those problems would be alleviated by a legacy to him from his father’s estate. 54    In the circumstances of this case I would not be disposed to make any order for provision in favour of the Plaintiff which would have the effect of eroding the benefit to which the Plaintiff’s own infant children are entitled under the will of their grandfather. 55    No information has been placed before the Court concerning the other three infant beneficiaries. Where, as I do, I consider that the interests of the Plaintiff’s own infant children should not be detrimentally affected by the making of an order for provision in favour of their own father, even less do I consider that the interests of the other infant grandchildren of the Deceased should be detrimentally affected by the making of an order for provision in favour of their uncle. 56    Although I do not understand the Defendant to be submitting that the financial and material circumstances of either himself or of Stephen are such as would have the effect of reducing, or even extinguishing, any order for provision an entitlement to which the Plaintiff might otherwise have established, nevertheless, it should be recognised that the income of the Plaintiff is considerably greater than that of either of his brothers, and that, apart from their respective entitlements under the will of the Deceased, the assets of each of the Defendant and Stephen are considerably less than the assets of the Plaintiff. That is especially so in the case of Stephen, who owns no real property and who has no investments, and who, since the death of his father has received a relatively modest distribution from his entitlement in the estate. 57    The Deceased who had four children, chose to treat equally each of the four branches of his issue. He gave a one fourth share in the residue to each of two of his children. He gave a one fourth share in the residue to the children of each of his other two children. 58    Even if (contrary to the conclusion which I have already expressed) I were to be satisfied that the Plaintiff had established a relevant need, I would not, in the exercise of my discretion, be disposed to make an order which would have the effect of reducing the benefit to which the infant beneficiaries (being the two daughters of the Plaintiff, and being the three children Marisa) are entitled. That would mean that the entirety of the burden of any such order for provision would of necessity be borne by the interests of either or both of the Defendant and Stephen. Neither of those gentlemen is in such affluent financial and material circumstances as the Plaintiff. Each of them had a close and loving relationship with their father (a relationship which it is apparent was considerably closer than that which obtained between the Plaintiff and the Deceased). I am not persuaded that it would be an appropriate exercise of the Court’s discretion, if such a situation arose, for the burden of an order in favour of the Plaintiff to be borne by the shares of the Defendant and Stephen. 59    It follows from my foregoing conclusions that the claim of the Plaintiff must be dismissed. Accordingly, I make the following orders:

1. I order that the summons be dismissed.

2. I order that the Plaintiff pay the costs of the Defendant, such costs to be on the party and party basis.
3. I order that the Defendant be entitled to retain out of the estate of the late Antonio Scalone (“the Deceased”) the difference between the costs of the Defendant on the indemnity basis and the amount of the foregoing costs on the party and party basis which the Defendant may recover from the Plaintiff.


4. The exhibits may be returned.

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Last Modified: 01/22/2001