Karabagias v Katopodis

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2021 0109

THEODORAS KARABAGIAS	Applicant
v
GEORGIA KATOPODIS	Respondent

---

JUDGES:	SIFRIS, KENNEDY and WALKER JJA
WHERE HELD:	Melbourne
DATE OF HEARING:	9 August 2022
DATE OF JUDGMENT:	8 September 2022
MEDIUM NEUTRAL CITATION:	[2022] VSCA 191
JUDGMENT APPEALED FROM:	[2021] VCC 1120 (Judge Burchell)

---

PROPERTY, EQUITY AND TRUSTS – Alleged representations made to applicant by parents of ex-wife – Applicant expended majority of sole asset renovating parents’ property prior to separation from ex-wife – Judge held alleged representations not made and dismissed claim for constructive trust and equitable compensation – Whether judge gave sufficient reasons for finding that representations not made – Judge’s reasons do not reveal basis on which findings made – Reasons do not reveal why respondent’s evidence preferred over applicant’s – Hunter v Transport Accident Commission [2005] VSCA 1, applied – Appeal allowed – Matter remitted for rehearing.

---

Counsel
Applicant:		Mr JD McKay
Respondent:		Mr RA Edmunds
Solicitors
Applicant:	Lennon Lawyers
Respondent:	Dimos Lawyers

SIFRIS JA
KENNEDY JA
WALKER JA:

Introduction and summary

The applicant, Theodoras Karabagias (‘Theo’) claims he has an equitable interest in land in Kew (‘the Land’) owned by the respondent, Georgia Katopodis (‘Georgia’).[1] His claim is based on an allegation of proprietary estoppel or common intention constructive trust. There are two separate residences on the Land (Unit 1 and Unit 2), but the Land has never been subdivided.
[1]Without any disrespect to the parties, first names are used because of the common surname of Georgia and her daughter Chrysoula.
Georgia is the mother of Theo’s former wife, Chrysoula Katopodis (‘Chrysoula’ or ‘Sue’). Theo contended that he had a conversation with Georgia, her husband Petros (now deceased), and Chrysoula in mid-July 2012, during which a promise was made by Georgia and Petros to the effect that, if Theo and Chrysoula funded renovations to Unit 1, the unit would be theirs. Theo said that, in reliance on this promise, he withdrew the whole of his superannuation in the sum of $92,956.02 from his superannuation account (which was his only asset of substance) and expended a substantial part of that money — approximately $56,000 — on funding a renovation of Unit 1. Theo now has no assets and is on a disability pension.
Georgia denied Theo’s allegations. Georgia’s and Chrysoula’s evidence was to the effect that no discussion took place with Theo in July 2012. Their evidence was that Georgia and Petros had told Chrysoula that she and Theo could live rent-free at Unit 1 for as long as they wanted, provided they paid the rates and outgoings for Unit 1. Georgia and Chrysoula also said that, in response to a request by Chrysoula that she and Theo be able to do some renovations, Petro and Georgia told Chrysoula that she and Theo could do so at their own cost. Georgia and Chrysoula denied that there was a promise to Theo to the effect that Theo and Chrysoula would own Unit 1 or any interest in the land if they completed the renovation.
Each party’s case was that, whatever the arrangements between Theo, Chrysoula, Petros and Georgia, they were entirely oral in nature; there were no documents evidencing how or on what basis Theo and Chrysoula came to reside in Unit 1, nor on what basis Theo came to spend a substantial part of his superannuation payment on renovating Unit 1.
The trial judge held that no representation of the kind alleged by Theo had been made by Petros and Georgia. Her Honour thus refused the relief sought by Theo and ordered that a caveat he had lodged over the Land be removed.[2]
[2]Karabagias v Katopodis [2021] VCC 1120, [9], [49], (‘Reasons’).
Theo now seeks leave to appeal from the decision at trial on four proposed grounds. In summary, those grounds concern the following issues:
(a)whether the judge erred in failing to find a representation sufficient to found an equitable estoppel (ground 1);
(b)whether the judge erred in failing to find there was a common intention sufficient to found an equitable estoppel (ground 2);
(c)whether the judge gave sufficient reasons for finding that the representations were not made, and that there was no common intention (ground 3);
(d)assuming that representations were made, whether the judge erred in the conclusions she came to concerning Theo’s reliance on the representations (ground 4); and
(e)assuming that representations were made, and reliance was established, whether the judge erred in her conclusions about the appropriate remedies to be granted (ground 5).
The applicant accepted that if ground 1 fails then grounds 2, 4 and 5 must also fail; whereas ground 3, concerning the trial judge’s reasons, falls to be assessed separately.
For the reasons that follow, we are unable to resolve whether the alleged representation was made (the subject of ground 1). This is because we accept the applicant’s submission that the trial judge’s reasons were inadequate and do not reveal the basis on which she made her findings of fact. In particular, her reasons do not reveal why she preferred Georgia’s and Chrysoula’s evidence over Theo’s evidence about the conversations that took place prior to Theo’s expenditure of $56,000 on renovating Unit 1. In such circumstances, we would grant leave to appeal and allow the appeal on ground 3.
While it would usually be the case that this Court would make the orders that ought to have been made at trial, in the present case we do not consider that we are in a position to do so. That is because the trial judge did not make findings concerning the credibility of Theo and Chrysoula; and it is not possible or appropriate for this Court to resolve issues of credibility based solely on the transcript. Because this case turns on the evidence of Theo, Chrysoula and Georgia as to what was said to whom and when, questions of credibility are central to its resolution. For that reason, it will be necessary to remit the matter to the County Court for rehearing by a different judge.

The duty to give reasons

It is well-settled that, ordinarily, a judicial officer is under a duty to give reasons.[3] The content and detail of the reasons to be provided will vary according to the nature of the jurisdiction which the court is exercising and the particular matter the subject of the decision.[4] Fundamentally, the duty is an obligation to explain, however briefly, why the judge came to the conclusion that is sought to be challenged. That is, the reasoning process by which the impugned conclusion was reached must be apparent.[5] Thus, where there are issues of fact posed for judicial decision, ‘the judge has a duty, as part of the exercise of his judicial office, to state the findings and the reasons for his decision adequately for that purpose.’[6]
[3]See Wainohu v New South Wales (2011) 243 CLR 181, 213–14 [54] (French CJ and Kiefel J); [2011] HCA 24 (‘Wainohu’). The qualification ‘ordinarily’ is a recognition that the duty ‘does not apply to every interlocutory decision, however minor’: 215 [56].
[4]Wainohu (2011) 243 CLR 181, 215 [56] (French CJ and Kiefel J); [2011] HCA 24.
[5]Intertransport International Private Ltd v Donaldson [2005] VSCA 303, [18] (Chernov JA, Eames and Ashley JJA agreeing at [45]–[47]) (‘Intertransport’), citing Fletcher Construction Australia Ltd v Lines Macfarlane and Marshall Pty Ltd (No 2) (2002) 6 VR 1, 30–1 (Charles, Buchanan and Chernov JJA); [2002] VSCA 189 (‘Fletcher’); Sun Alliance Insurance Ltd v Massoud [1989] VR 8, 18 (Gray J, Fullager and Tadgell JJ agreeing at 20) (‘Sun Alliance’); Pettit v Dunkley [1971] 1 NSWLR 376, 382 (Asprey JA), 387–8 (Moffitt JA); De Iacovo v Lacanale [1957] VR 553, 557–9 (Monahan J).
[6]NRMA Insurance Ltd v Tatt (1989) 92 ALR 299, 312 (Samuels JA, Hope JA agreeing at 300).
There are several reasons for this requirement. First, and importantly, the parties, particularly the losing parties, are entitled to know the basis on which the judge came to his or her conclusion, so that consideration can be given to whether the conclusion might be challenged on appeal.[7] Further, reasons for the decision are necessary in order for an appellate court to determine if there was relevant error.[8] In that regard, reasons for judgment will be inadequate if ‘the appeal court is unable to ascertain the reasoning upon which the decision is based [or if] justice is not seen to have been done’.[9] Finally, an adequate statement of reasons provides ‘the foundation for the acceptability of the decision by the parties and the public as well as fostering judicial accountability’.[10]
[7]Intertransport [2005] VSCA 303, [18] (Chernov JA, Eames and Ashley JJA agreeing at [45]–[47]).
[8]Fletcher (2002) 6 VR 1, 31 [100] (Charles, Buchanan and Chernov JJA); [2002] VSCA 189.
[9]Sun Alliance [1989] VR 8, 18 (Gray J, Fullager and Tadgell JJ agreeing at 20).
[10]Intertransport [2005] VSCA 303, [18] (Chernov JA, Eames and Ashley JJA agreeing at [45]–[47]); quoting Fletcher (2002) 6 VR 1, 31 [100] (Charles, Buchanan and Chernov JJA); [2002] VSCA 189.
Reasons may be brief, but nonetheless adequate, if they reveal the steps in the reasoning of the court by which it reached its decision.[11] In some cases, it may be that the basis for the decision can be inferred from the whole of the judge’s reasons, having regard to the circumstances of the case. Thus, as Gray J explained in Sun Alliance:
The simplicity of the context of the case or the state of the evidence may be such that a mere statement of the judge’s conclusion will sufficiently indicate the basis of a decision. … In such cases, the foundation for the judge’s conclusion will be indicated as a matter of necessary inference.[12]
[11]Kiama Constructions Pty Ltd v Davey (1996) 40 NSWLR 639, 647–8 (Meagher JA).
[12][1989] VR 8, 19 (Fullager and Tadgell JJ agreeing at 20).
However, as Nettle JA observed in Hunter v Transport Accident Commission, a ‘mere recitation of evidence followed by a statement of findings, without any commentary as to why the evidence is said to lead to the findings’, is inadequate.[13] In that case his Honour also observed the importance of exposing the ‘path of reasoning’ as follows:
[W]hile the extent of the reasons will depend upon the circumstances of the case, the reasons should deal with the substantial points which have been raised; include findings on material questions of fact; refer to the evidence or other material upon which those findings are based; and provide an intelligible explanation of the process of reasoning that has led the judge from the evidence to the findings and from the findings to the ultimate conclusion. It should also be understood that the requirement to refer to the evidence is not limited to the evidence that has been accepted and acted upon. If a party has relied on evidence or material which the judge has rejected, the judge should refer to that evidence or material and, in giving reasons which deal with the substantial points that have been raised, explain why that evidence or material has been rejected. There may be exceptions. But, ordinarily, where a judge rejects or excludes from consideration evidence or other material which is relevant and cogent, it is simply not possible to give fair and sensible reasons for the decision without adverting to and assigning reasons for the rejection or exclusion of that material. Similarly, while it is not incumbent upon the judge to deal with every argument and issue that might arise in the course of a case, where an argument is substantial or an issue is significant, it is necessary to refer to and assign reasons for the rejection of the argument or the resolution of the issue. Above all the judge should bear steadily in mind that reasons are not intelligible if they leave the reader to wonder which of a number of possible routes has been taken to the conclusion expressed. Failure to expose the path of reasoning is an error of law.[14]
[13][2005] VSCA 1, [28] (Batt and Vincent JJA agreeing at [1]–[4]) (‘Hunter’).
[14][2005] VSCA 1, [21] (Batt and Vincent JJA agreeing at [1]–[4]) (emphasis added) (citations omitted).
This includes an obligation to give a rational and analytical explanation for preferring one witness’s evidence over another’s where there is a conflict of evidence.[15]
[15]Kelso v Tatiara Meat Co Pty Ltd (2007) 17 VR 592, 628 [190] (Dodds-Streeton JA, with whom Buchanan, Nettle, Ashley and Kellam JJA agreed); [2007] VSCA 267 (‘Kelso’); Mutual Cleaning & Maintenance Pty Ltd v Stamboulakis (2007) 15 VR 649, 662 [51] (Neave JA, Maxwell P agreeing at 650 [1], Kellam AJA agreeing at 664 [59]); [2007] VSCA 46.

The conduct of the trial

The trial of this matter involved a hearing over three days. It was conducted using Zoom, and it is apparent from the transcript that the Zoom connection froze and cut out not infrequently. The witnesses gave evidence-in-chief in the form of their witness statements, which they adopted, supplemented by some additional oral evidence-in-chief; they were then cross-examined. Georgia gave evidence using an interpreter, although she occasionally answered questions directly herself, in terms not entirely consistent with the answers as interpreted. It was plainly a difficult hearing.
The parties provided a list of nine agreed issues to the trial judge. Issue 1 was whether the representations to the effect alleged at paragraphs 22 to 28 of Theo’s witness statement[16] (‘Representations’) had been made by Georgia and Petros to Theo. Given issue 1 was answered in the negative the other issues largely fell away.
[16]See [18] below.
Ground 1 on the appeal related to issue 1 at trial; and the other grounds of appeal related to several other agreed issues. However, ground 3 does not relate directly to an issue identified at trial; rather, as already observed, ground 3 is that the judge failed to give any, or adequate reasons, for failing to find a representation or common intention as alleged by Theo. In dealing with this issue it is necessary to briefly set out the key evidence about the alleged representations.

The evidence at trial

The alleged representations

Theo’s evidence was that certain representations were made to him by Georgia and Petros in or about mid-July 2012, in a conversation between him, Sue, Georgia and Petros (the ‘alleged representations’). The alleged representations were set out in Theo’s witness statement and were as follows:
24.Petros said that he had discussed the arrangement regarding Unit 1 with Georgia and Sue, and was happy for Sue and I to fund the renovation of Unit 1, and to live in that unit. Georgia said that the unit was in bad shape but could be fixed up.
25. Petros said that he and Georgia were going to leave that unit to Sue anyway, and that they were happy to leave the unit to both Sue and I given that Sue and I were funding the renovations. I recall Georgia saying words in Greek to the effect that ‘if you two want to renovate the unit and live in it, you can consider it yours’. Petros agreed, and said that the property would be left in their wills to Sue and I, but that Sue and I could treat the unit as our own.
26. Petros said that Sue and I could move into Unit 2 whilst the renovations were carried out in order to save the rent we were paying on the Thornbury property. I recall that Sue and I also agreed to pay the utilities for Unit 1 once we moved in.
27. I thanked Petros and Georgia, and both Sue and I said that we agreed with the proposal and would start making the necessary arrangements.
28.In the following months I had further conversations with Petros, Georgia, and Sue in which we discussed some aspect of the planned renovations, which I took to be a confirmation [of] our arrangement discussed previously in the meeting.[17]
[17]Emphasis in original.
This evidence was supplemented by answers Theo gave in cross-examination, as follows:
MR EDMUNDS: Now, you — what do you say was the agreement in relation to a transfer of what we call unit 1 to you and Sue?
MR KARABAGIAS: What was the agreement between us?
MR EDMUNDS: What do you say was the agreement?
MR KARABAGIAS: The agreement was that we could move in, renovate it and that expense, and the property will be given to both of us.
MR EDMUNDS: Yes. And when would it be given to you?
MR KARABAGIAS: At — at the year that both parents had passed away.
MR EDMUNDS: Okay. Now, I will come to those discussions in detail later.
MR KARABAGIAS: Yes.
MR EDMUNDS: But did you ever form the view that the property would be transferred to you after the completion of the works?
MR KARABAGIAS: After the completions of the works?
MR EDMUNDS: Yes.
MR KARABAGIAS: Well, after — after they passed away - - -
MR EDMUNDS: Not after they died. But did you ever have a view that the property — well, that part of the property - - -
MR KARABAGIAS: No.
MR EDMUNDS: - - - would be transferred to you and Sue before they died?
MR KARABAGIAS: Well, I think they will — they will be ..... did the renovations they will, as they said that they were going to give us the house. They can’t — they had — would have had to change the will before they died to give us the house. So my — my - - -
MR EDMUNDS: Okay. I understand.
MR KARABAGIAS: - - - my understanding was that — that everything was getting changed.
MR EDMUNDS: So you’re not saying that there was some agreement that the property will be transferred to you during their lifetime?
MR KARABAGIAS: No. The — the property was going to — the property was going to be given to us once we did the renovations.[18]
[18]Emphasis added.
Later in cross-examination, Georgia’s counsel put to Theo that the conversation set out in his witness statement had not occurred:
MR EDMUNDS: … What I’d suggest to you is there was no discussion about leaving the property to you and Sue in the wills and that the only discussion regarding the work on the property was that — was a discussion between Sue and her parents where her parents said, ‘If you want to make changes to the kitchen and bathroom and painting, you can do it at your cost’ and that she then conveyed that to you.
MR KARABAGIAS: No, the parents told me that that will be ours. We can renovate it. We can do what we want. It’s going to – it’s our unit….[19]
[19]Emphasis added.
In cross-examination Theo accepted that, prior to the conversation at which the alleged representations were made, Chrysoula had had discussions with her parents about Theo and Chrysoula moving into Unit 1 and renovating it, at which Theo had not been present.
In contrast, both Georgia and Chrysoula denied that there had ever been a ‘four way’ conversation involving Petros, Georgia, Theo and Chrysoula. Their evidence was as follows:
(a)All discussions concerning the offer for Chrysoula and Theo to move into Unit 1 occurred between Georgia, Petros and Chrysoula only — Theo was not a party to any such discussion.
(b)The first such discussion between Georgia, Petros and Chrysoula occurred in or about June or July 2012, before Theo received his superannuation payment, and involved an offer by Petros and Georgia to Chrysoula that Chrysoula and Theo could live rent-free in Unit 1, so long as they paid for utilities and rates. Chrysoula initially said no to this offer, and said that if she accepted, she and Theo would pay rent of $50 per week.[20]
(c)Chrysoula’s evidence was that she told Theo about this offer and his response was ‘great’.
(d)The second such discussion between Georgia, Petros and Chrysoula occurred a few weeks after the first discussion, when Chrysoula told her parents that she and Theo accepted their offer, including that they would not pay rent to Georgia and Petros. Again, Georgia and Chrysoula said that Theo was not present at this discussion.
[20]In contrast, Georgia’s evidence was that Chrysoula offered to pay the same rent as the tenant had been paying, namely $200 per week. Nothing turns on this difference for present purposes.

Chrysoula’s evidence was that shortly after this second discussion she also told her parents that she would like to do some painting and works on the kitchen and bathroom. Georgia gave substantially the same evidence in her witness statement. However, in her oral evidence Georgia said that she was not told at this time of the proposed works on the kitchen, and that she only became aware of the works when they started. Both Georgia and Chrysoula said that they did not discuss the detail of the works, or the cost of the works.

Reliance

Georgia did not dispute that Theo had spent his own money on the renovation of Unit 1; the only dispute was as to the amount spent.
Theo’s evidence in his witness statement concerning his reliance on the representations was as follows:
I would never have spent money on the renovation of Unit 1 had I not been assured by Georgia and Petros that Sue and I would be the owners of Unit 1. The lump sum payment I received from CBUS represented effectively all the money I had in the world, including my superannuation. At present I have no significant assets, and live alone in a rental property. I badly needed my lump sum superannuation payout. I would never have spent that money in renovating a property in somebody else’s name had I not believed that I would acquire the interest promised by Georgia and Petros.
Theo was not cross-examined about this aspect of his witness statement.

Georgia’s and Petros’ wills

It is necessary to explain the evidence given by Georgia about her wills. This evidence is important because, as discussed further below, it was the subject of the only adverse credit finding made by the judge (save for the ultimate conclusion that Theo’s evidence was to be rejected in favour of Georgia and Sue, which may have implied an adverse credit finding).
There was no dispute between the parties that Georgia and Petros had made ‘mirror wills’ in 2004, in which they:
(a)appointed each other as executors and trustees;
(b)left their estates to each other; and
(c)provided that should either of them die before the other that they left Unit 2 to Annette and Unit 1 to Sue, and otherwise left the residue of their estates equally to their daughters.
Petros had died in 2019, after which Georgia became the sole registered proprietor of the Land.
On day two of the trial, Georgia’s lawyers provided to Theo’s lawyers a copy of a later will made by Georgia, on 15 April 2020. That will provided for all of Georgia’s assets to be gifted to Annette, and for Sue to have a life interest to reside in either Unit 1 or 2.[21] Theo’s counsel engaged in significant cross-examination about the making of the 2020 will. In particular:
(a)it was put to Georgia that she had changed her will in order to prevent Theo from potentially obtaining an interest in Unit 1 through the family law proceedings, were Georgia to die before those proceedings were resolved. Georgia denied that that was her motivation.
(b)Georgia denied discussing the new will with the lawyer who prepared the will for her, or with Chrysoula’s lawyers in the family law proceedings.
(c)Georgia also denied discussing the change to her will with Annette or Chrysoula, but then agreed that she had said to Annette that, if she died, Annette and Chrysoula should come to a fair arrangement as to the distribution of the property. In answer to the question ‘Under the previous will, Chrysoula inherited approximately half of her estate, that’s so, isn’t it?’, Georgia answered (through the interpreter) ‘Yes. And now she will get half too.’
(d)Georgia also gave conflicting evidence concerning who was present when the will was signed, and in particular whether Chrysoula was present and knew that Georgia was making a new will.

The trial judge’s reasons concerning the alleged representations

[21]There were further provisions dealing with what was to occur if Annette were to pass away before Chrysoula, or if Chrysoula were to pass away before Annette, but those provisions are not presently relevant.

The trial judge commenced her reasons by setting out the uncontroversial factual background leading up to the issue concerning the alleged representations. She then turned to issue 1, namely whether the alleged representations were made by Georgia and Petros to Theo. She observed that the events in issue had occurred over eight years ago, such that the passage of time affected the witnesses’ ability to remember details.[22]
[22]Reasons, [16].
The judge summarised some of the evidence of the three key witnesses concerning the lead up to the alleged representations. She then set out the alleged representations as reflected in Theo’s witness statement,[23] which we have set out above.
[23]Reasons, [20].
Next the trial judge turned to Georgia and Sue’s evidence concerning the alleged representations, as follows:
Georgia gave evidence that all discussions relating to the invitation for Sue to move into the Property were between Petros, Sue and herself. She says Theo was not involved and she never spoke with Theo as he claims. The first discussions took place in or about June/July 2012 at Unit 2. Georgia claims that she told Sue that they wished to let her and Theo live in the Property so they could save money on renting and they would not have to pay them any rent so long as they paid the bills for the water, electricity and rates for the Property. This evidence was corroborated by Sue.
Sue says that she discussed her parents’ offer with Theo, telling him that her parents had offered to let them live rent free in the Property provided they paid the rates and utilities for the unit. She says Theo’s response was ‘Great’.
Georgia’s evidence was that initially Sue said “No” to moving into the Property, and was adamant that if they were to move in, they needed to pay her parents the same rent they were getting from the existing tenant Brian, that is, $200.00 per week. About 1–2 weeks later, Sue told Petros and Georgia at Unit 2 that she and Theo would accept her parents’ offer. Sue also told Petros and Georgia that she wanted to paint the Property and make some other changes. She did not tell Georgia and Petros the extent of the works and Petros told her she could fix it if she wanted. Sue told them that she and Theo would pay for the works. Georgia said the first that they knew of the extend [sic] of the works was when they saw the construction works.
Sue says that when Brian moved out, she and Theo inspected the Property and she told Theo that she wanted to renovate the kitchen and bathroom. Theo says that Sue told him that the Property was in bad condition but could be fixed up. Georgia’s evidence was the Property did need a good clean and repainting once Brian vacated, but the premises was otherwise habitable. Sue later spoke with her parents and told them that she wanted to renovate the kitchen and bathroom and asked how they felt about it. Sue says her father said ‘You can if you want to, but it’s at your own expense’. Sue says that Theo was not present at this discussion.
In her evidence Georgia stated she was only aware that Sue wanted to repaint and make some minor changes, but did not know the extent of the works until the renovations were underway. She said that she saw the wall come down between the third bedroom and the living room and was very upset about it, but did not say anything at the time because she did not want to upset her daughter. Sue said that she discussed with her parents repainting, sprucing up and making some changes to the Property. Sue’s evidence was that she did not tell her parents that Theo and she intended to knock down the wall and said that her father was unhappy about it and shocked when he saw the demolition.
Georgia says that while Sue and Theo lived with them in Unit 2 during the renovations works, there was no further discussion with Theo or Sue regarding the agreement they had for them to live in the Property. She described the living arrangement in terms such ‘that they would come home and sleep.’ Georgia did not recall Theo thanking them for letting them live in Unit 2.
Georgia claims that Theo did not discuss the cost of the works with either her or Petros. She denies Theo’s claims that they told him and Sue that the Property would belong to them. Georgia went on to say that there were no ongoing discussions regarding their living arrangements in the Property.
Sue says that during the time she and Theo lived with her parents, there was no discussion with them regarding the cost of the works. She also says that there was never any statement made by her parents to either Theo or herself that they would own the Property or that it was theirs. Her parents did, however, on a number of times tell them that they could stay in it for as long as they needed.[24]
[24]Reasons, [21]–[28] (emphasis in original).
As is apparent, her Honour did not, in this part of her reasons, make any findings of fact, or any adverse credit findings.
Her Honour then came to the issue of Petros’ and Georgia’s wills. She observed that Georgia and Petros had signed mirror wills in 2004, leaving their estates to each other; and providing that, should either of them die before the other, they left Unit 2 to Annette (Chrysoula’s sister) and Unit 1 to Chrysoula; and otherwise left the residue of their estates equally to their two daughters.[25]
[25]Reasons, [29].
The judge then dealt with Georgia’s most recent will, dated 15 April 2020. As noted above, the judge did make an adverse credit finding; she concluded that Georgia’s evidence about what led her to change her will was untruthful. The judge said as follows:
Georgia denies that she changed her will after the commencement of these proceedings and the joinder application in the concurrent family law proceedings. She denied it was done to potentially provide protections to Sue against any claim by Theo in the event that she inherited an interest from Georgia’s estate whilst the family law proceedings were on foot. She claims that now that Petros has passed away, this is the way she wanted to leave her estate from the beginning. Given the amended will was made during Stage 4 COVID restrictions and Georgia’s age, I find that she was seeking to protect Sue’s interest. She decided to change her will for this purpose and that she had discussions with her estate planning lawyers to this effect.[26]
[26]Reasons, [30].
She said that she accepted Theo’s submission that Georgia had changed her will ‘in an attempt to avoid Theo making any claim on part of her estate in the event that Georgia passes away prior to the hearing and determination of the family law proceedings’.[27]
[27]Reasons, [33].
However, she held that Georgia’s conduct was ‘consistent with her version of events’ that the Land was intended to only benefit Sue, not Theo as well.[28]
[28]Reasons, [31].
After identifying that Theo needed to establish a representation, her Honour then set out Theo’s evidence about the alleged representations, as follows:
Insofar as Theo’s evidence contains relevant matters capable of constituting representations set out as follows:
(a) That Georgia and Petros were ‘happy for Sue and I to fund the renovation of Unit 1, and to live in that unit. Georgia said that the unit was in bad shape but could be fixed up.’
(b) Georgia saying words in Greek to the effect that ‘if you two want to renovate the unit and live in it, you can consider it yours’.
(c) Petros agreed, and said that the property would be left in their wills to Sue and I, but that Sue and I could treat the unit as our own.[29]
[29]Reasons, [39] (emphasis in original).
The trial judge then noted Georgia’s submissions, which relied on Georgia’s evidence that ‘all of her conversations were with Sue and not Theo’; that Georgia said that she and Petros had told Chrysoula that they ‘wished to let her and Theo live in Unit 1 so they could save money on renting and they would not have to pay us any rent, so long as they paid the bills for water, electricity and rates for Unit 1’; and that Chrysoula had denied that she told Theo that if he paid for the works that she would talk to her parents about agreeing to bequeath the property to Theo and her upon their death.[30]
[30]Reasons, [40] (emphasis in original).
The key paragraphs of her Honour’s reasons concerning the alleged representations then appear. Paragraph [41], to which considerable attention was given in oral argument, was as follows:
I accept Georgia’s submission that there was no agreement in July 2012 to the effect alleged, or as to the scope of works subsequently done, or that the works to the extent that were undertaken were going to be done. This is because:
(a)Theo was not a party to the discussions in and about mid July 2012 involving Georgia, Petros and Sue;
(b)the offer was to let Sue and Theo live rent free in the Property so they would not have to pay rent, provided they paid for the outgoings;
(c)Sue and Theo did not see the inside of the Property until Brian vacated it in August 2012;
(d)Quotes from the builder were only obtained in September 2012 and for the additional bathroom works, those were obtained on 3 December 2012;
(e)Georgia did not know the extent of the works until she saw the removal of a wall and the lost third bedroom;
(f)Georgia and Petros had discussions regarding the possibility of selling the Property to fund their aged care accommodation and Petros’ direction to Georgia ‘if he died and she went hungry’;
(g) Georgia and Petros’ 2004 wills provided for their two daughters equally;
(h)Georgia and Petros’ offer of perpetual rent free accommodation meant a savings in rent in the sum of $10,428.57 per year on the Property (or $60,840 on the Thornbury property for the period);
(i)the inconsistency of the pleaded case that it was the common intention of, inter alios, Theo and Georgia that, after Theo and Sue renovated the Property at their expense, it would belong to, and be owned by, each of Theo and his then wife vis-à-vis Theo’s evidence that the Property was to be left to him and Sue by Petros and Georgia in their wills.[31]
[31]Reasons, [41].
Within her discussion of issue 1, the trial judge later returned to the nature of the conversations that occurred in 2012, concerning Theo and Sue moving into Unit 1. In paragraph [45] her Honour concluded as follows:
I am satisfied on the evidence that in or about mid-2012, Georgia and Petros orally offered Sue the opportunity for her and Theo to move into the Property and live there rent free, subject to them paying council rates, utilities and water rates for the land. This was done so that they could save money, rather than continuing to pay rent at a rate of $1,690 a month.
Thus the judge did not accept that the representations Theo alleged had been made to him.[32]
[32]Reasons, [49].

The parties’ submissions on ground 3

Theo’s submissions on ground 3 were as follows:
The learned trial judge recited Theo’s evidence … that in discussions occurring at [the Land], assurances were given that Theo and Chrysoula could treat Unit 1 as their own. She apparently accepted that evidence at reasons [39] but then recites a submission that what was said did not amount to a statement, indication or arrangement by Georgia that Theo was to have an interest in the Land (reasons [40]). She then arrives at some conclusions in reasons [41] (including an apparent conclusion that the promise was never made at all [41](a)–(c)). A process of intelligible and logical reasoning to get to those conclusions is not revealed. If the judge rejected Theo’s evidence and accepted Georgia’s evidence she did not say so. The judge, if she rejected Theo’s evidence, was required to advert to and assign reasons for doing so. Her failure to do so and her bland statements of conclusions without reasons at [41] were errors of law.[33]
[33]Citations omitted.
In oral argument Theo submitted that there was an inadequacy of reasons in that the judge’s chain of reasoning that led to the rejection of the evidence was not apparent. That was particularly so, he said, given that the judge had in effect accepted the evidence of Georgia even though she had rejected Georgia’s evidence concerning the 2020 will.
In contrast, Georgia submitted that the trial judge’s reasons were not inadequate. Her submission was as follows:
The assertion at paragraph 16 of the Applicant’s Written Case that ‘She apparently accepted that evidence at reasons [39]’ is an incorrect interpretation of Her Honour’s Reasons. What is said at [39] are extracts of Theo’s evidence as to alleged representations made to Theo and Sue. Her Honour, at [41], was very clear in stating she accepted that Theo was not a party to discussions in or about mid-July 2012 involving Georgia, Petros and Sue. In so saying Her Honour was equally clear that she did not accept Theo’s evidence regarding the representations he alleged — see also [45] and [47].[34]
[34]Emphasis in original, citations omitted.

Consideration of ground 3

In our opinion the trial judge’s reasons for her conclusions were not adequate. We accept that the trial judge came to various conclusions, particularly as set out in paragraphs [41] and [45], which are quoted above. It is plain from those paragraphs that the judge accepted Chrysoula’s and Georgia’s evidence that Theo had not been a party to any conversations with Georgia and Petros concerning him and Chrysoula moving into and renovating Unit 1. She thus must have rejected Theo’s evidence that such a conversation did occur.
However, the key difficulty is that the judge’s reasons contain no explanation of why she preferred Georgia’s and Chrysoula’s evidence over Theo’s evidence. That omission is particularly striking given the following matters.
First, the only finding resembling a credit finding was the judge’s statement that she did not accept Georgia’s evidence concerning why she had changed her will in 2020.[35] In substance, the trial judge rejected Georgia’s evidence on that issue and there is no challenge to that aspect of the trial judge’s reasons on the appeal. Notwithstanding this finding, her Honour did not explain why she accepted as truthful Georgia’s evidence concerning the events in 2012, nor why she preferred Georgia’s evidence over that of Theo.
[35]Reasons, [30].
Secondly, it is notable that the trial judge made no findings (whether positive or adverse) concerning the credit of either Theo or Chrysoula.[36] In the absence of such findings, it is impossible to understand why the judge preferred Chrysoula’s evidence over and above Theo’s evidence.
[36]While the judge did not accept Theo’s evidence that he had spent $70,000 on the renovations, nor did she accept Chrysoula’s evidence that Theo had spent $45,000. She made no adverse credit findings in relation to these matters.
Thirdly, the judge did not address the various inconsistencies between Georgia’s witness statement and her oral evidence. Those inconsistencies included the following:
(a)In her witness statement, Georgia said that she had been told about the proposal to renovate in June or July of 2012, but in oral evidence she denied that Chrysoula had told her that Unit 1 would be renovated until the works had commenced.
(b)In her witness statement, Georgia said that she ‘used to go over to see the progress of the works’ on Unit 1. But in her oral evidence she denied that she would check the progress of the works.
While it may be accepted that the Zoom hearing, the use of an interpreter, and Georgia’s advanced age could have provided some basis for putting aside those inconsistencies, the judge simply did not engage with the inconsistencies at all. It would be speculation on the part of this Court to conclude that these were the reasons why the trial judge was not troubled by the inconsistencies in Georgia’s evidence.

Fourthly, Chrysoula’s evidence differed from Georgia’s evidence on some significant issues, including the timing of the conversation where Chrysoula had discussed the renovations with her mother.
These were all matters raised by Theo in his closing submissions to the judge. Yet they do not appear to have been considered by her Honour in reaching her conclusions.
Finally, the trial judge did not find, and in our opinion it cannot be said, that one version of events was inherently more plausible than the other. This was consistent with the general absence of objective contemporaneous documentation favouring one version over the other.
In our opinion, to adopt the words of Nettle JA in Hunter,[37] the trial judge engaged in a mere recitation of evidence followed by a statement of findings, without any explanation of why the evidence is said to lead to the findings. Although the judge made material findings of fact, she did not provide an explanation of the process of reasoning that led from the evidence to those findings.
[37][2005] VSCA 1, [28] (Batt and Vincent JJA agreeing at [1]–[4]).
This was also not a case where the basis for the decision can be inferred from the whole of the judge’s reasons, having regard to the circumstances of the case, or where the simplicity of the context or the state of the evidence was such that a mere statement of conclusion was sufficient to reveal the basis of the trial judge’s decision. Rather, the case called for an explanation of why the trial judge preferred Georgia’s and Chrysoula’s evidence over that of Theo. Such explanation also needed to deal with Theo’s arguments in his closing submissions concerning the flaws in Georgia’s and Chrysoula’s evidence.
We are therefore of the view that the trial judge’s reasons were inadequate such that ground 3 should be upheld.
It is necessary to say something briefly about an additional aspect of the trial judge’s reasons concerning issue 1 at trial (issue 1 being whether the representations were made). In the course of dealing with that issue, the trial judge observed as follows:
Alternatively, even if the alleged representations did give rise to a creation or encouragement of an expectation in Theo, the balance of the evidence does not allow the Court to conclude there has been reliance or detriment.
The judge then gave some reasons why, in her view, ‘any detriment Theo suffered was not, on his own evidence, in response to any representations made by Georgia and Petros in relation to an interest in Land’. The reference to ‘his own evidence’ was a reference to Theo’s evidence that the property was in a poor state and not fit for him and Chrysoula to live in. She said that ‘it follows that any claim of proprietary estoppel is bound to fail’.[38]
[38]Reasons, [42]–[44].
It is unclear why the judge addressed reliance and detriment in the course of dealing with issue 1, particularly since she returned to those issues in dealing with issue 4, which concerned whether Theo carried out the works in reliance on the representations in the event the judge found the representations had been made. However, we consider that the appropriate way in which to understand her Honour’s reasoning in this part of her judgment is that she concluded that there was no reliance because there had been ‘no representations by Georgia and Petros in relation to an interest in [the] Land’. That connects this passage with the topic with which her Honour was dealing, namely issue 1, whether the alleged representations had been made. It is also consistent with the manner in which the judge dealt with reliance later in her reasons, when dealing with issue 4. In that part of her reasons, the judge concluded that, because the alleged representations had not been made, there was no reliance by Theo upon them.[39]
[39]Reasons, [83].
We also note for completeness that, to the extent that this part of the judge’s reasons is properly understood as part of her reasoning on whether the alleged representations were made, it, too, was inadequate. The judge emphasised Theo’s evidence that the property was not fit to live in.[40] However, her Honour failed to advert to Theo’s evidence concerning his reliance on the representations, on which he was not cross-examined. That evidence was that he ‘would never have spent money on the renovation of Unit 1 had [he] not been assured by Georgia and Petros that Sue and [he] would be the owners of Unit 1’. Theo had pointed to that evidence in his closing submissions. If the trial judge was to reject that evidence, it was necessary for her to explain why she rejected it. Nor did the trial judge explain why, assuming the alleged representations had been made, they were not a contributing cause[41] of Theo’s decision to expend his funds on the renovations, given his unchallenged evidence.
[40]Reasons, [43]–[44].
[41]Sidhu v Van Dyke (2014) 251 CLR 505, 524–5 [66], 526 [72]–[73] (French CJ, Kiefel, Bell and Keane JJ), 531 [90] (Gageler J); [2014] HCA 19.

Conclusion

In light of our conclusion in respect of ground 3, it is not possible to resolve the other grounds of appeal. In particular, in circumstances where the case concerning the alleged representations was entirely oath against oath, with no documentary evidence, findings about credibility would necessarily be crucial to the decision as to whose evidence to accept and whose to reject. But, as observed above, the trial judge made no findings in that regard, save for her finding rejecting Georgia’s evidence concerning the 2020 will. The difficulty facing this Court in such circumstances is that it is practically impossible for us to make findings concerning credit on the basis of the transcript alone. We have not had the benefit of seeing or hearing the witnesses give evidence, nor of perceiving the ‘feeling’ of the trial.[42] In those circumstances, it is not possible for us to resolve the underlying question of fact, namely whether the alleged representations were or were not made.[43]
[42]Fox v Percy (2003) 214 CLR 118, 125–6 [23] (Gleeson CJ, Gummow and Kirby JJ); [2003] HCA 22.
[43]Regarding the need to remit the proceeding where the appellate court has not had the advantage of seeing and hearing the witnesses, see Kelso (2007) 17 VR 592, 595 [9] (Nettle JA), 595 [11] (Ashley JA), 595 [14] (Kellam JA), [205]–[207] (Dodds-Streeton JA); [2007] VSCA 267.
For that reason, we consider that it is necessary to remit the matter to the County Court for a rehearing. That course is obviously undesirable and is not undertaken lightly. In order to avoid the further expenditure of time and money the parties might be well advised to consider the possibility of a mediation in light of these reasons. However, in light of the matters discussed above, the formal order of the court will be to allow the appeal and remit the matter for a further trial.
---

[2022] VSCA 191

8 September 2022