Damevski v Hope

[2016] NSWSC 1231

Supreme Court

New South Wales

Medium Neutral Citation:	Damevski v Hope [2016] NSWSC 1231
Hearing dates:	29 August 2016
Date of orders:	06 September 2016
Decision date:	06 September 2016
Jurisdiction:	Equity
Before:	Pembroke J
Decision:	Summons dismissed
Catchwords:	FAMILY PROVISION – claim for additional provision by son and daughter-in-law of deceased – deceased died intestate FAMILY PROVISION – proceedings commenced out of time – whether sufficient cause for making an order extending the time for the making of the plaintiffs’ application – sufficient cause not established EQUITY – equitable estoppel by encouragement alleged – whether the plaintiffs acted to their detriment in reasonable reliance EVIDENCE – caution required when relying on uncorroborated statements said to have been made by the deceased
Legislation Cited:	Family Provision Act 1982
Cases Cited:	Sidhu v Van Dyke [2014] HCA 19 Steria Ltd v Hutchison [2007] ICR 445 Wilcox v Wilcox [2012] NSWSC 1138
Category:	Principal judgment
Parties:	Nick Damevski – first plaintiff Rada Damevski – second plaintiff Darko Damevski – third plaintiff Nada Hope – defendant
Representation:	Counsel: D Liebhold M Southwick   Solicitors: D Stanefska & Associates – for the first, second and third plaintiffs Grahame Howe & Co – for the defendant
File Number(s):	2015/195212

Judgment

Introduction

1. This case has its origin in the plaintiffs’ understandable desperation to continue to live in a property at Rockdale where they have resided continuously since 1994. But desperation is not enough to justify their claims and I have reached the conclusion that they must fail. The plaintiffs do not have an equity based on the principles of estoppel and constructive trust. Nor do they have a statutory right to additional provision out of the estate of the late Gurga Damevski. And they do not seek an equitable charge to secure the recoupment of any monies expended by them on the property of the deceased.

2. The first plaintiff (Nick) and the defendant (Nada) are the only children of Tome and Gurga Damevski. Tome died in 2002. His will dated 21 January 2000 left the whole of his estate to his wife Gurga. She died intestate in 2006. The only substantial asset of Gurga’s estate was the Rockdale property, of which she was entitled to be the registered proprietor at the date of her death. The consequence of her intestacy is that Nick and Nada are entitled to share equally in the proceeds of sale of the property. Its estimated value is approximately $1,350,000.

3. Nick lives in the Rockdale property with his wife (Rada) and son (Darko). He is not satisfied with his statutory entitlement on the intestacy of his mother. Rada and Darko are his co-plaintiffs, although Darko’s Family Provision claim was abandoned during the hearing. The primary factual substance of their claim is that promises were made and expectations raised that led Nick and Rada to believe that the Rockdale property would remain their home after the deaths of Tome and Gurga; that they relied on those promises and changed their position to their detriment; and that the appropriate equitable relief is that their assumption should be made good.

4. If successful, the plaintiffs seek an order that title to the property be conveyed to Nick and Darko, notwithstanding that to do so would necessarily and entirely deprive Nada of her valuable statutory right to a half interest in her mother’s estate. In the alternative, they seek an order for additional provision pursuant to the Family Provision Act 1982, notwithstanding that these proceedings were commenced many years after the expiry of the statutory period during which such claims are required to be brought.

The Facts

5. Tome and his son Nick came to Australia in 1963. Gurga and her daughter Nada arrived the following year. In 1975, Tome and Gurga purchased the Rockdale property. Nada married young and in 1979 purchased a property nearby with her husband. Nick returned to Belgrade in 1987, met Rada, married her and then returned to Australia in 1990 with her and their son Darko. They lived for approximately a year in the Rockdale property with Tome and Gurga before moving to their own home.

6. In his evidence, Nick insisted that his mother and father said to him in 1990, after he returned to Australia, that the Rockdale property ‘belongs to me and my son’. I doubt that very much. The conversations were in Macedonian and I suspect that much has been lost, or exaggerated, in the translation. In cross-examination, Nick agreed that his mother said something like ‘treat this house as if it was your own’. That is a far more likely characterisation of what was said – especially having regard to the balance of probabilities.

7. In any event, there is no evidence of any reliance or change of position by the plaintiffs based on any such supposed promise in 1990. In 1991, they moved to their own home and stayed there until 1994. Tome and Gurga had made them welcome but no more. There was no assurance by them that they intended to create legal rights in their favour in relation to the Rockdale property at a future date. And there was no reasonable basis for persons in their position to so conclude.

8. In 1994, Tome requested the plaintiffs to return to the property. He did so because he sought the assistance of Nick and Rada in looking after Gurga. She had begun to suffer from dementia, with which she was formally diagnosed in 1997. The symptoms had been apparent for a number of years. The reason why Nick and Rada returned to the property was to assist Tome –out of a sense of duty and affection, not because of any promise or inducement that the property would one day become theirs. Naturally, they clearly hoped and expected that it would do so.

9. By 1998, Gurga was beyond meaningful communications. And the burden of caring for her was becoming intolerable. She would soon be admitted to an aged care facility from which she would never return. Nick and Rada both contended in their evidence that in 1998, and again in 1999, they provided money to improve the property. The monies were said to have been received from Rada’s father in Serbia and brought out of Belgrade in cash. There was no proof of the expenditure for which Nick and Rada contended other than their assertions. There was no documentation and no corroboration.

10. The expenditure in 1998 was said to relate to the kitchen and certain doors and flooring. The evidence of the amount of that expenditure was opaque. The expenditure in 1999 was said to relate to what was called a ‘granny flat’. In fact, it seems to have been no more than a ‘non-habitable outbuilding’, according to the council documents granting approval. Nick was adamant that the expenditure for the construction of the granny flat was $35,000, reflecting cash received from Rada’s father. Rada said it was more like $80,000. Then she said it was $60,000. And she criticized her husband for the evidence he gave.

11. It seems probable that Nick and Rada spent at least $35,000 and possibly as much as $50,000 on improvements to the Rockdale property. They were prepared to do so because of an assumption on their part that they would have an indefinite right of residence in the property and that they might possibly inherit it. There was little more to their assumption than hope and aspiration, mingled with optimism. They took a risk. Both knew that they had no guaranteed entitlement. And both were acutely aware that Nick’s sister, Nada, might also have a claim on the property. Although from their perspective at the time, Nada was then currently better off than they were and there was reason to think that the Rockdale property would eventually come to them entirely, without the need to share its proceeds with Nada. The risk of expenditure was therefore worth taking. But as will become clear, circumstances changed.

12. I formed the view that Nick and Rada were substantially telling the truth about expending their own monies on the property, even if they differed as to the amount, despite some speculation that Tome may have provided the monies for the granny flat but Nada could provide no evidentiary support for that proposition.

13. In other respects, the evidence of Nick and Rada was not so plausible. I reject their evidence that Tome said to Nick or Rada that they should proceed with the granny flat because he had ‘fixed up his will’ or that ‘it is all sorted and Nick and Darko will get the house’. There never was any clear or unambiguous promise by Tome, certainly not one that could be relied on reasonably. And in any event, Tome was a joint owner and could not bind his wife as to her interest. Further still, there was no will in 1998 or 1999. And when Tome made his will in January 2000, he left the whole of his estate, in the first instance, to his wife, as long as she survived him by one month. If she did not survive him for one month, the residue was to go to Nick and Darko on certain conditions.

14. The will was drawn by a solicitor and there is no suggestion that Tome was not properly advised. The solicitor who took his instructions and drafted the will also happened to be the plaintiffs’ solicitor on the record in these proceedings. The terms of the will do not sit comfortably with the plaintiffs’ case. It is more consistent with an expectation, but not a commitment, that Nick and Rada might well inherit the property eventually but subject to the contingencies of a claim by Nada and the order of death as between Tome and his wife Gurga.

Credibility of Witnesses

15. Neither Nick nor Rada were plausible on the central questions of representation, encouragement, reliance, detriment and reasonableness: Steria Ltd v Hutchison [2007] ICR 445 at 467 [129], approved in Sidhu v Van Dyke [2014] HCA 19 [59]. I formed the impression that Rada, in particular, was astute to the issues in the case and that, whether consciously or subconsciously, her evidence reflected her perceived self-interest and could not be relied on safely. As I said at the outset, the plaintiffs’ desperation to retain the home where they have lived for a long time is understandable but legally insufficient. There was no tangible corroboration of the plaintiffs’ case and every reason to be sceptical.

16. As I said in Wilcox v Wilcox [2012] NSWSC 1138 at [9]-[10]:

[9] … First, it is a matter of ordinary human experience that where a party relies on the uncorroborated recollection of statements made many years ago, on an issue in which that party has a self-interest, the evidence must be treated with caution. In the absence of some reliable contemporaneous record or other satisfactory corroboration, it is often difficult for such evidence to achieve the requisite level of reasonable satisfaction. The most well-known statement of this principle is by McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 319:

Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed.

[10] Second, the need for caution is even greater in relation to uncorroborated statements attributed to a deceased person where the deceased is, or would have been, the only person in the world capable of rebutting the accuracy of what is attributed to him or her. Here again, self-interest is an important factor reinforcing the need for caution and sometimes scepticism. A recent statement of this principle was made by Brereton J in Ashton v Pratt (No 2) [2012] NSWSC 3 at [18]:

In the case of a claim against a deceased estate founded on the oral utterances of the deceased, which only the deceased could have denied, the court scrutinises the claimant’s evidence closely (Plunkett v Ball (1915) 19 CLR 544 at 548-549 (Isaacs J); Bovaird v Frost [2009] NSWSC 337, [45]; Varma v Varma [2010] NSWSC 786, [418]-[422]), and although there is no absolute legal requirement for it, ordinarily looks for some corroboration (Re Hodgson (1886) 31 Ch D 177; Weeks v Hrubala [2008] NSWSC 162, [20] (Young CJ in Eq)).

17. It follows that the equitable claim must fail. I am not satisfied at the factual level that the requisite ingredients of a claim based on estoppel or constructive trust – namely representation, encouragement, reliance, detriment and reasonableness – have been established. The more probable explanation, as often happens in a family context, is that the monies were expended in hope and expectation, with an eye to the future, knowing of the risks involved, but taking a gamble as to the legal outcome. This is one of those cases. The situation is compounded in this case by the absence of credible foundational evidence of any clear representation or encouragement by Tome. The uncorroborated assertions of Nick and Rada do not provide me with the requisite level of reasonable satisfaction.

Family Provision Claim

18. I should turn to the statutory claim. The summons was filed in July 2015, almost 9 years after the death of Gurga. The period prescribed by the Family Provision Act 1982 is 18 months after the death of the deceased. Section 16(2) requires the Court to have regard to ‘all the circumstances of the case’ and Section 16(3)(b) requires the plaintiffs to establish ‘sufficient cause’ for the application not having been made within the specified period.

19. Several aspects of the conduct of Rada and Nick in relation to this claim are troubling. I have reached the conclusion that I should refuse the plaintiffs’ application to extend the time within which the claim may be brought. Even if I granted leave, I would dismiss the claim. Each of Nick and Nada is already entitled to a half-share of the estate of their mother. The plaintiffs’ counsel put his case no higher than that the estate should be split 75:25 in favour of Nick.

20. One of the consequences of the delay is that the plaintiffs have enjoyed the entire benefit of the estate since Gurga’s death in 2006. Indeed, they have effectively done so since 2002 at which time Tome died and Gurga was in an aged care facility. They had no justification for believing that the property was theirs. They knew it was not but they have behaved as if it was. They have had the title documents since 2006. I do not accept Nick’s evidence on this issue. And I do not accept that he did not have a copy of his father’s will. He knew it was held at the Commonwealth Bank. Not only was his evidence implausible but his conduct was discreditable. He said:

When my mother died I did not do anything about the Property. The title deeds were at the bank. I went and got the title deeds from the Bank but I did not know I had to do anything more. I thought it had been taken care of by my father.

21. For the last 10 years, the plaintiffs have received rate notices and other documents issued in the name of the deceased. Not only have they not retained any financial or other records relating to any payments made by them in connection with the property, they have concealed the true position from Nada. Nada naturally wanted to know to whom the house had been left. She had fallen on hard times, to which I will return. Rada misled her deliberately and dishonestly. She told Nada that ‘Nick and Darko get the house’. She had no basis for making such a statement, except self-interest.

22. The immediate practical result was that, since the death of Gurga in 2006, the plaintiffs have lived rent-free in the Rockdale property while Nada has paid rent and worked long hours doing menial work in order to afford her own flat. Her counsel estimated that she had paid approximately $250,000 in rent during that period. The plaintiffs compounded Nada’s ignorance by doing nothing to formalise the estate after the death of Gurga. And they appear to have spent, or used for their own advantage, whatever cash and other personal assets formed part of the estate.

23. Eventually, in July 2015, Nada herself obtained letters of administration, after she began to understand what had happened. Her investigations and doubts about what Rada had said to her appear to have commenced in 2014. She consulted a solicitor and obtained copies of her father’s will and the two death certificates. In April 2014, her solicitor wrote to Nick, pointing out that the consequence of Gurga’s intestacy was that the whole of the estate should have been divided equally between the children of the deceased, namely Nick and Nada. There was no response.

24. The plaintiffs have limited means. But the position of Nada is hardly any better. She is 61 years of age with no significant assets and is near the end of her working life. Her marriage has broken down; she is working long hours; and she provides rooms in her flat for her unemployed husband and her son. She and her husband are in all material respects emotionally and financially separated. Her son receives a carer’s pension for looking after his father. Nada pays all the expenses and outgoings of the flat and the household, subject to minimal and irregular contributions from her son.

25. Nada was once in a better financial position. But it ended in tears and she has lost everything. A development project in which she and her husband were involved commenced to unravel in 2002, in the year of her father’s death. In 2008, Perpetual Trustee Company took possession of her home and sold it. Her husband has not worked since that time.

26. In the circumstances the behavior of the plaintiffs has been inexcusable. There are no grounds for allowing them to bring a claim out of time for additional provision from Gurga’s estate. And there is every reason to exercise the discretion against them. They have done their best to deprive Nada of her entitlement and to conceal the true position from her. I do not accept that they genuinely believed that, after Gurga’s death, Nick and Darko became entitled to the Rockdale property. Their mendacious and self-interested behavior deserves censure rather than the exercise of the court’s discretion in their favour.

27. Even if I granted leave, the facts and circumstances would not lead me to make an order for additional provision, notwithstanding the money that appears to have been expended by the plaintiffs on the supposed granny flat. That expenditure is more than outweighed by the benefit that the plaintiffs have received in the 10 years since 2006 and by the detriment that Nada has endured by being deprived of her legal entitlement to a half-interest in her mother’s estate for such a long time. Nada has struggled to provide accommodation for her husband and son during a prime time of her life. Her circumstances would have been immeasurably improved had it not been for the conduct of Nick and Rada. She has endured emotional stress, physical strain and financial hardship – all because of the greed and dishonesty of the plaintiffs.

Orders

28. I make the following orders:

1. I refuse the plaintiffs’ application to extend the time within which an application for additional provision out of the estate of the deceased may be brought pursuant to the Family Provision Act 1982.

2. I dismiss the summons.

3. I order the plaintiffs to pay the defendant’s costs.

Decision last updated: 06 September 2016