Hobbs v Russo[2005] QSC 201

SUPREME COURT OF QUEENSLAND

1. This is an application by three applicants seeking an order under the Succession Act 1981 (Qld) as amended, for provision from the estate of the deceased, Michele Russo.

2. The applicants are daughters of the deceased who died on 25 January 2002.

3. The deceased was born in Italy and migrated to Australia in 1951. He and his wife, Vincenza, had eight children, two of whom had been born in Italy prior to the family emigrating to Australia and six of whom were born in Australia.

4. Details of the children are as follows:

Rosa Valastro born in Italy on 14 August 1949

Giuseppe Russo (Joe) born in Italy on 29 October 1950

Camillo Russo (Charlie) born in Australia on 21 October 1953

Angelo Russo born in Australia on 2 April 1955

Maria Herman (Mary) and Salvatore Russo (Sam) twins, born in Australia on 13 June 1957

Elisabetta Hobbs (Elizabeth) born in Australia on 10 December 1958

Alfio Russo born in Australia on 9 June 1962

5. After his emigration to Australia, the deceased worked for a time as a cane cutter and then leased a cane farm in the Ingham area. A farm was purchased in 1960. According to the evidence, the deceased also worked for Queensland Railways supplementing his income from the farm.

6. It is clear from the evidence that all of the sons worked in the farming operations. As they were growing up this work was performed without any wages being paid. Apart from Salvatore and Rosa, all of the children received a Grade 10 level education.

7. There is some dispute as between the three applicants on the one hand, and the executor Alfio and the eldest son, Joe on the other hand, as to the extent to which the three applicants assisted, both in relation to farm activities and domestic activities. Each of the applicants say that from an early age they helped their mother in the house with domestic tasks and from time to time they assisted in farming activities whilst Alfio and Joe deny this, suggesting that any role they may have played would have been simply for their own enjoyment and that their mother, Vincenza, effectively attended to all of the domestic tasks. Whilst what each of the applicants say they did will appear in a little more detail when I deal with their circumstances, I am satisfied that each of the applicants assisted their mother in domestic tasks with the eldest girl, Rosa, having to assist with her younger brothers and sisters whilst they were growing up. I am also satisfied that occasionally the girls performed some tasks around the farm but that it was the sons who were expected to perform the work assisting their father on the farm and that they did so without any remuneration. Towards the latter part of the deceased’s life, one of the sons effectively worked the family farm and received a wage for it.

8. The picture which emerges from the evidence is a familiar one in North Queensland. It is that of an Italian migrant starting without any assets of any significance and having had little education, working hard in the first instance to acquire land and then to develop it and subsequently to expand it. The sons and daughters of the family worked hard with the sons largely performing the farm work and the daughters performing or assisting in the performance of domestic work and other tasks. The family lived frugally with relatively little in the way of material comforts but with sufficient to get by and deriving strength and comfort from the family unit.

9. In time the boys (apart from the beneficiary, Salvatore) acquired their own farms with some of them acquiring other property interests. The girls obtained employment and married at a fairly young age.

10. On 1 December 1996 the deceased sold his cane farm property and plant and equipment to the five brothers. Pursuant to the contract (which is exhibited to the affidavit of Alfio Russo, the executor of the deceased’s estate) the purchase price of the land was some $720,820 and that of the plant and equipment just under $100,000. The purchase price was to be payable without interest over 10 years in accordance with a schedule of payments set out in paragraph 6 of the affidavit of the executor, Alfio Russo, sworn on 25 February 2003.

11. Each contract provided:

“In the event that Michele Russo shall die before the whole of the monies payable hereunder shall have been paid, then the purchase price shall be varied to a sum equivalent of the monies that shall have been paid on the debt of the said Michele Russo or required pursuant to these presents to have been paid up to that date whichever is the greater.”

12. Although the deceased took a mortgage to secure the payments over the land which he transferred to his sons he discharged the mortgage a year or so later. Joe Russo, who was cross-examined before me, seems not to have known of this.

13. There is some confusion as to whether all of the monies due had been paid as they fell due, although according to the affidavit of Alfio Russo, as at the date of the death of the deceased, more than was necessary under the schedules had been paid. The matter is further confused somewhat by some monies being paid to and then being returned by the deceased to some of the sons. I will refer to this in due course.

14. By his will, the deceased appointed Alfio Russo, the youngest member of the family, to be his sole executor and trustee.

15. By Clause 3 he made the following provision:

“I FORGIVE AND RELEASE unto each of them my children GIUSEPPE RUSSO, CAMILLO RUSSO, ANGELO RUSSO, SAM RUSSO, ALFIO RUSSO, ROSA VALASTRO, MARY HERMAN and ELIZABETH HOBBS any debt which may be owing by any of them jointly or solely to me up to and including the date of my death whether or not on the security of any mortgages bills bonds or other securities or otherwise.”

16. By Clause 4 he dealt with the balance of his estate in the following terms:

“I GIVE DEVISE AND BEQUEATH the rest residue and remainder of my estate both real and personal of whatsoever nature and wheresoever situate of or to which I may be seised possessed or entitled at the time of my decease UNTO AND TO the use of my Trustee TO HOLD the same (after payment thereout of my just debts funeral and testamentary expenses and the costs of the administration of my estate) UPON TRUST for the absolute use and benefit of my son SAM RUSSO and if he shall predecease me then and in that case for the absolute use and benefit of my son the said ALFIO RUSSO PROVIDED HOWEVER AND I HEREBY DECLARE that if my said son ALFIO RUSSO shall predecease me leaving children living at my death such children shall take (and if more than one equally between them) if and when he or she shall attain or shall have attained the age of eighteen (18) years any devise bequest or interest or other benefit to which such deceased parent would have been entitled under any of the provisions of this my Will had he not died.”

17. Clause 6 of the will is in the following terms:

“I DECLARE I have made no further provisions for my other children on the grounds that I have made sufficient provision for them during my lifetime.”

The payments made by the deceased to his children will appear in the course of these reasons.

18. The assets and liabilities of the estate are as follows:

Cash on deposit$421,906.65

Cash in current account$    1,400.00

Sugar Terminals Limited 10,000 @ $0.30$     3,000.00

TOTAL$426,306.65

Less estimated legal fees for Estate only$  35,000.00

NET$391,306.65

19. Sam Russo has an intellectual disability which it seems was probably associated with difficulties at the time of his birth. He spent some time at the special school at Ingham before moving to a convent school where he completed Grade 8 and 9.

20. He has never worked and receives a disability support pension. He lived with his parents until their deaths.

21. Sam has a one-fifth interest in the cane farming property but does not participate in the partnership which conducts the property and receives no income from the farm either through cane farming operations directly or by way of rental. He has not paid any monies under the contract referred to in paragraph 10 but his brothers paid his share of the debt from the monies generated from the farming operations.

22. Realistically the interest would be able to be disposed of only to the other brothers. I do not have any value of the cane farm but the evidence suggests that cane farming operations have not been profitable or have been barely profitable of recent years. The value of the land, at least as reflected in the contract of sale in 1996 was, as will have been seen, $720,000. The brothers do not have any present plan to buy Sam out.

23. At the time the deceased transferred the farm to the five brothers, he arranged for the excision of the land upon which the family house was situated from the balance of the farm and transferred it to Sam and himself as joint tenants. Sam has succeeded to this upon his father’s death.

24. Vincenza Russo died on 1 August 1995.

25. According to Sam the house is worth approximately $120,000. There is some evidence that he placed it on the market for $190,000. It appears the house is beside the Bruce Highway and he finds it noisy. It has not been sold.

26. He receives a disability support pension of $490 per fortnight. He has in the last year or so formed a relationship with a woman who receives unemployment benefits. The relationship appears to be a somewhat volatile one and she has left him twice during this time. Until he formed this relationship his sister, Maria, provided care to him and received a carer’s benefit for doing so.

27. Psychological testing places him in the bottom part of the low average and the top part of the borderline mentally retarded range. His IQ of 79 is said to fall at the eighth to tenth percentile. It is common ground that he is not employable although his intellectual disability itself would not preclude him entirely from the workforce. There are also, it appears, some physical difficulties which would, together with his intellectual impairment, preclude him from employment. No one suggested before me that he was capable of employment.

28. The psychologist’s assessment of him seems to be somewhat more optimistic than that of the applicant, Maria Herman, who says that he needs assistance to keep the house clean and also with other domestic tasks.

29. I accept that he can, by and large, do all of these things himself but that he probably needs some degree of supervision or someone to keep an eye on him from time to time.

30. It appears, from what he said in evidence, that the deceased gave him $120,000 although there is no independent evidence of this. He spent this, some of the money going in the purchase of a vehicle for $40,000 for an 18 year old illegitimate daughter who it appears is not dependent upon him and lives with her mother and grandparents. He also bought a vehicle for himself and paid bills. He lent some money to his sister, Maria and this has not been repaid and is to be regarded as due to him although he has made no attempt to seek its repayment.

31. He has an overdraft account of $10,000 and has a mortgage of $25,000. He has incurred liabilities for the renovation of the home. This involved substantial expenditure and he owes some $9,000 still in relation to this. He has no other assets apart from some electrical appliances and household goods. He makes payment of $150 a week under the mortgage and on the overdraft account.

32. It will be necessary in the future for him to meet expenditures in relation to the house and it is reasonable that he should have some funds to enable him to have a reasonable quality of life for which the pension, it might be accepted, would not be ample to provide.

33. I now turn to the three applicants.

34. Maria Herman (Mary) lived at home until her marriage on 3 January 1976. She says that from an early age she helped her mother with house duties including cleaning and meal preparation and that she also performed some tasks on the farm occasionally such as clearing debris and stripping trash from cane. She speaks also of assisting in the growing and planting of vegetables.

35. She left school at Grade 10 when she was approximately 15 and worked at Woolworths at Ingham.

36. She has three children who were born on 29 August 1979, 16 December 1982 and 25 April 1984. The youngest child still lives at home and attends a TAFE College.

37. She remained on good terms with her parents, visiting them regularly. Both of them suffered from a good deal of ill health in their later life and she would visit them and give what assistance was needed to them. Her husband works as a weighbridge clerk at the CSR Victoria Mill. This is not year round employment and he earns approximately $800 to $900 gross per week during the crushing season which varies in length from year to year. However it is hoped that he will, as a result of further qualifications he has obtained, work for the whole or a more substantial part of the year in future. She receives some income as a relief cleaner at the Bambaroo State School in the order of $400 to $500 per annum. She had been in receipt of a Centrelink carer’s allowance for her brother Sam in the sum of $85.30 per fortnight but no longer receives this. Her assets are said to consist of a joint interest in the family home with her husband (having a value of about $80,000) two vehicles and some relatively small sums of money in bank accounts.

38. Following the death of the deceased, Mary cleaned the house and cooked for her twin brother, the beneficiary, until he commenced the relationship already referred to.

39. The deceased gave her $50,000 in 1999 at the same time as he gave $50,000 to Rosa and $80,000 to Elizabeth. He also bought Mary a utility. There is a suggestion in some of the evidence that she received further assistance but I do not accept this.

40. She lent the $50,000 to her two brothers, Joe and Charlie who were at the time involved in property settlement negotiations with their wives. This has now been repaid. She has borrowed $30,000 from Sam. He has not asked her to return this but his evidence did not suggest that he had gifted it to her.

41. She is in reasonably good health although she had a tumour removed from her mouth in April 2002.

42. Her circumstances can be described as reasonably comfortable. She cannot be said to be well off.

43. Rosa is the eldest girl and says that she left school at Grade 7. This was because her mother needed her help at home and it appears that she helped with home duties and with the younger children and also assisted from time to time on the farm with planting and growing and picking vegetables. She says that she earned some extra income by helping to perform domestic tasks at another person’s home and she learnt to sew and in this way she was able to help the family by mending clothes for them so that new ones did not have to be purchased. In addition she earned some income for the family from sewing activities. The family, I accept, did not have much in the way of available money and her assistance was significant. Because of her role as the eldest daughter, a good deal of the responsibility fell upon her when the other children were young.

44. On 2 February 1966, she married. According to her affidavit this was an arranged marriage. She has had five children from the marriage, four of whom still live with her. The first child was born in 1967, the second in 1969, the third in 1977, the fourth in 1979 and the fifth in 1981. All are sons.

45. Rosa has serious health problems. Apart from suffering from blood pressure and what she describes as epilepsy, she was diagnosed as suffering from schizophrenia at the time she was admitted to the Townsville General Hospital in 1989 as a result of a nervous breakdown.

46. Difficulties had arisen in her marriage apparently because of her husband’s drinking and gambling and ultimately his cane farm was repossessed by the bank because of his debts. Rosa had left her husband on occasions and says that she was provided with assistance by her parents at these times. Although in the witness box she denied it, in her affidavit she says that her parents bought her a house in 1992 after the farm was repossessed. There is also evidence from Mary that she was present at the solicitors’ office on the occasion that the deceased completed the purchase of the house.

47. Rosa’s husband died in 1996.

48. Her second son, Michael, is intellectually handicapped as a result of meningitis. She cares for him.

49. At the time of her affidavit she was receiving $427 per fortnight as a widow’s pension and $83.50 per fortnight as a carer for her son. Her evidence suggests that there has been an increase recently. The evidence is a little confusing (as was much of her evidence) in that it refers at one time to an increase of $266 per fortnight and at another $166.

50. There is a report from Donna Drew, a clinical psychologist who administered certain tests to her. She has according to Mrs Drew, a severe level of intellectual disability which is likely to have been present all of her life although worse since the onset of schizophrenia. She is incapable of employment and will require care and supervision.

51. I assume that this is largely provided by those sons who live at home apart from Michael, who is cared for by her and the other sons. It can be expected that the other sons are likely, in due course, to eventually leave home.

52. Mrs Drew refers in her affidavit to seeing and hearing Rosa engaging in inappropriate and disorganised speech on a number of occasions whilst she was in attendance at her rooms. Much of her evidence in this case was given in a confused and non-responsive manner. She often spoke loudly and acted generally, in the witness box, in an inappropriate manner.

53. Notwithstanding that she has married and raised a family of five sons, she is plainly somebody who has serious problems and was as a result in need of special consideration by the deceased.

54. She has a home which in her affidavit is said to be worth $80,000. She received $50,000 from her father in 1999 but it appears that this money has largely gone having been spent by her son, Stephen who is a cane farmer, on his debts. He must be taken to be indebted to his mother in this amount and in her evidence she refers to him being prepared to give her $18,000, presumably as part payment. If and when this sum is ever likely to be recovered cannot be known at this time. Presumably he borrowed the monies as a result of the difficulties in his cane farming operations arising out of the generally unfavourable conditions which have applied in recent years.

55. She will require assistance and supervision in later years and whilst some of this may be able to be provided by her sons, this cannot be guaranteed. She also has the care of a disabled son.

56. Elisabetta (Elizabeth) now works as an assistant to the principal (residential) at St Ursula’s College at Yeppoon where she is in charge of boarding. She has accommodation provided for her year round in this position and receives a salary of $72,000. She has a partner who is in employment and lives in Mackay.

57. As with the other sisters, she says that she performed domestic tasks around the house assisting her mother in this regard and that when asked by her father to do so, she would occasionally help in farming operations such as picking and loading watermelons and pumpkins and other crops which were grown for sale. She also performed some tasks associated with the cane farming operations such as stripping cane and in planting operations and picking up sticks after clearing. I accept that these were, as with the other applicants, only occasional activities

58. She commenced to work when she was 16 as a shop assistant at Coles and worked there for almost four years before she was married on 9 September 1978.

59. She and her husband moved away from the Ingham area after they were married.

60. She has one son who was born in 1980. She had a number of health problems in the ten years or so after giving birth undergoing some seven operations. During this time she received some assistance from her parents with her medical expenses.

61. In 1989, she and her husband separated and she says that following this she was diagnosed with endometriosis which resulted in her being bedridden for significant periods. She formed a new relationship whilst living in Taroom and not long after developed mastitis in one of her breasts, spending some time in hospital. She was diagnosed with premature menopause in 1996 at the age of 38 years and then was found to be suffering from Crohn’s ulcerative colitis. She says that this condition is a chronic one and requires her to take medication which she will have to take for the rest of her life. She has occasional acute attacks of this condition resulting in hospitalisation.

62. In her affidavit she says that whenever she experienced medical and health problems throughout her life, her father helped her financially. In November 1999, he gave her the sum of $83,300.

63. The relationship which she had formed in Taroom came to an end in August 2002.

64. Since that time she has reached a resolution of a property dispute with her former partner and has received a net sum of $197,000 from this. She is currently on a three year contract at the College. She has a vehicle worth about $16,000. She gave evidence of having some $86,000 in bank accounts and a superannuation policy with a surrender value of $12,000. She also owns a house in Townsville with a value of $290,000. Her equity in this is some $70,000. She has a debt of $220,000 on the home in Townsville and a personal loan of $8,000. Her net assets then total about $170,000.

65. Although her health problems are significant, they do not prevent her from working and it is not suggested that she will not continue working and receiving a significant income. There is no medical evidence which would support a contrary conclusion.

66. At the time of the death of the deceased she was in a relationship with a partner and together they were, it would seem, conducting grazing operations on a cattle property in the Taroom district.

67. Some time in evidence was spent on some dealings between the deceased and his sons in 2001. It appears that the year 2000 was a particularly bad year for the cane industry. All of the sons, apart from the beneficiary, are cane farmers independently of the family cane farm and some of the sons have other interests.

68. While some confusion surrounded just what took place and the executor, when questioned, did not appear to be able to give a particularly coherent account of things, I am satisfied from the evidence of Giuseppe (Joe) as to what happened. The deceased gave $200,000 to Giuseppe and Camillo with instructions for them to distribute it between the sons as they saw fit. Later that year when payment under the schedule of payments (together with some arrears) fell due, the sum of $150,000 was paid. Within a relatively short time the deceased gave Joe a cheque for the same amount. Again it was to be distributed it would seem as the brothers saw fit. The beneficiary did not obtain any monies as a result of these dealings according to Joe and I accept this. The evidence also suggests that a motivation behind the payment under the contract at the time it was made was to facilitate the receipt of certain assistance being made available to cane farmers. I have already mentioned the fact that Joe and Charlie were experiencing financial difficulties associated with property settlements following matrimonial breakups.

69. The position facing the deceased at the relevant time for this application was that he had an estate of a little under $400,000 and he had eight children, each of whom could be regarded as having played some role in the family farming operations including domestic tasks whilst growing up. All remained on good terms with their parents throughout their lives. The sons had worked the cane farm and had not been remunerated during the time they were living there.

70. He was faced with the situation of two children who had special needs because of their disabilities. One was the beneficiary, who at the time of the deceased’s death was living with him and who would never be able to support himself. Similarly, he had a daughter, Rosa, who had special needs and in my view he had a moral duty to make some provision for her in the will. It follows that he failed to discharge this. The sum which I award is the least which in my opinion is necessary to satisfy that duty.

71. The deceased during his lifetime had been generous to all of his children. It might, with considerable justification, be said that he was more generous towards his sons than his daughters when one considers the transfer of the cane farm, the terms on which it was transferred and the forgiveness of the balance of the debt upon his death and the amounts which were paid by way of cash to the various children.

72. However it is plainly not within the power of the Court to make an order on an application of this kind to bring about what it considers is a fair distribution of his estate amongst his family or to remedy any suggested imbalance in his treatment of his children during his lifetime. See Perpetual Trustees Queensland Limited v Mayne [1992] QCA 417 at page 16.

73. Mary lives with her husband and is being supported by him and that was the position at the deceased’s death. Whilst not well off, she and her husband have a reasonable level of comfort with all of their children being, or shortly to become, self-supporting. Elizabeth, whilst having significant health problems, is in well-remunerated employment and was at the time of the deceased’s death in a relationship which involved, as I have said, the conduct of a cattle property and would have been known by the deceased to have been capable of earning a significant income. There is nothing to indicate that she will not be capable of working during the remainder of her working life although her health problems may cause some interruptions to this. She has assets of not insignificant value.

74. Any claim of a breach of a moral duty to Mary and Elizabeth has to be viewed in the light of the size of the estate and the particular claims of Sam and Rosa. I am not persuaded that Mary and Elizabeth have established a failure on the part of the deceased to discharge a moral duty to them by making provision for them in his will.

75. Even if it were accepted that such a moral duty had been made out it is difficult to see how anything more than a relatively nominal sum could be awarded when the factors mentioned in paragraph 74 are considered.

76. I order that provision be made out of the estate of the deceased for Rosa Valastro in the sum of $100,000.

77. I dismiss the claims of the applicants, Mary Herman and Elizabeth Hobbs.

78. The order in favour of Rosa Valastro is not to be taken out until I have heard submissions as to whether a protection order should be made.

79. I give the parties leave to make written submissions in relation to the issue of the costs of the applications of Mary Herman and Elizabeth Hobbs, and of costs generally, within 28 days.