Krajovska v Krajovska

[2011] NSWSC 903

Supreme Court

New South Wales

Medium Neutral Citation:	Krajovska v Krajovska & Ors [2011] NSWSC 903
Hearing dates:	26 - 29 July 2011
Decision date:	18 August 2011
Jurisdiction:	Equity Division
Before:	Black J
Decision:	Claim for equitable compensation established - parties to bring in short minutes of order
Catchwords:	TRUSTS - constructive trust - order for equitable compensation reflecting proceeds attributable to plaintiff's interest in properties where substratum of family relationship fails without attributable blame - return of contributions
Cases Cited:	- Baumgartner v Baumgartner (1987) 164 CLR 137 - Celermajer Holdings Pty Ltd v Kopas [2011] NSWSC 40 - Henderson v Miles (No 2) [2005] NSWSC 867 - Hewett v Court (1983) 149 CLR 668 - Hill v Hill [2005] NSWSC 863 at 35 - Kreizis v Kreizis [2004] NSWSC 167 - McKay v McKay [2008] NSWSC 177 - Macquarie Developments Pty Ltd v Forrester [2005] NSWSC 674 - Menka Tasevska v Vlado Tasevski [2011] NSWSC 174 - Muschinski v Dodds (1985) 160 CLR 583 - Re Hallett's Estate; Knatchbull v Hallett (1880) 13 Ch D 696 - Rosebanner Pty Ltd v Energy Australia [2009] NSWSC 43 - Sirtes v Pryer [2005] NSWSC 1082 - Stoklasa v Stoklasa [2004] NSWSC 518 - West v Mead [2003] NSWSC 161; (2003) 13 BPR 24, 431
Texts Cited:	F R Burns, "The Equitable Lien Rediscovered: A Remedy for the 21st Century" (2002) 25 UNSWLJ 1
Category:	Principal judgment
Parties:	Stojanka Krajovska (Plaintiff/First Cross Defendant) Cveta Krajovska (First Defendant/First Cross Claimant) Biljana Todorovic (Second Defendant/ Second Cross Claimant) Slobodan Krajovski (Third Defendant/Third Cross Claimant) Daniel Krajovski (Fourth Defendant/Second Cross Defendant)
Representation:	Counsel: G.M. McGrath (Plaintiff/First Cross Defendant) Ms D.G. Reid (First, Second and Third Defendants/First, Second and Third Cross Claimants) Solicitors: Stojanovic Solicitors (Plaintiff/First Cross Defendant) Isho & Associates (First, Second and Third Defendants/First, Second and Third Cross Claimants)
File Number(s):	2010/285460

Judgment

1. The Plaintiff in these proceedings, Stojanka Krajovska is 80 years old. The First Defendant is her daughter-in-law. The Second Defendant, the Third Defendant and the Fourth Defendant are her grandchildren. Without intending any disrespect, I will refer to the Plaintiff and the Defendants respectively as Stojanka, Cveta, Biljana, Slobodan and Daniel.

1. Stojanka seeks a declaration that Cveta took unconscionable advantage of a position of special disadvantage of Stojanka in procuring the execution of a transfer by Stojanka of her interest in a farm situated at Buxton ("Buxton farm"). Stojanka initially also sought a declaration that Cveta exercised undue influence over Stojanka in procuring the execution of a transfer by Stojanka of her interest in the Buxton farm, but that claim was not pressed in final submissions. Stojanka also seeks an order that Cveta account to her for her interest in the proceeds of sale of a property situated at Newbolt Street, Wetherill Park ("Newbolt Street property") and an order that each of the Defendants account for her interest in the proceeds of sale of the Buxton farm or alternatively equitable compensation. Cveta, Biljana and Slobodan actively defended the claims brought by Stojanka. Daniel filed a submitting appearance in the proceedings.

Issues as to form of evidence and credit

1. The events in issue covered a very long period, commencing shortly before Stojanka and her late husband, Trajko Krajovski (who I will refer to without any disrespect as "Trajko") immigrated to Australia in 1977. Many of those events were the subject of substantial dispute. There is little contemporaneous documentation that would assist in a resolution of that dispute or in assessment of the respective financial contributions of the parties to the purchase of the Newbolt Street property and the Buxton farm. Ultimately, it will not be necessary for me to resolve all of the disputed matters in order to reach my decision, although it will be necessary for me to make credit findings in order to resolve some of the disputed matters that are necessary to my decision.

1. Stojanka relied on her affidavit dated 23 December 2010. She was cross-examined at some length. She speaks little English. Her cross-examination, undertaken through a translator, involved some difficulties. She frequently did not directly answer questions nor limit her responses to the questions asked. However, in my view, these matters reflected partly the difficulties of language and partly the difficulties of the unfamiliar environment of cross-examination, and did not involve a conscious attempt to make self-serving attempts so as to advance her case. I do not accept the submissions of Cveta, Biljana and Slobodan to the contrary. I have formed the view that Stojanka was a generally credible witness who was seeking to tell the truth in these proceedings. There were many occasions in which she readily made concessions that were, on one view, against interest, including readily acknowledging the extent to which Cveta had assisted Trajko and her prior to the breakdown of relations between her and Cveta to which I will refer below. I will, however, address one particular issue which arises as to Stojanka's evidence in paragraph 39 below.

1. Cveta, Biljana and Slobodan relied on their respective affidavits dated 9, 10 and 15 February 2011. I should at this point note that there were significant difficulties with the structure of Cveta's, Biljana's and Slobodan's affidavits. Those affidavits had something of the character of pleadings, referring to particular paragraphs of Stojanka's affidavit and responded that particular matters were "admitted", "noted", "denied" or "not known and not admitted" although the affidavits each elaborated on those responses by providing further evidence. It is unhelpful to structure an affidavit in the form of a pleading, since it tends to obscure the individual witness' recollection of events.

1. A second difficulty arose in respect of Biljana's and Slobodan's affidavits, possibly partly because the affidavits were structured in this way. Numerous paragraphs of those affidavits were in substantially identical form. Indeed, one paragraph of Slobodan's affidavit so closely corresponded to Biljana's affidavit that it contained a reference to "my ... brother Slobodan". The difficulties arising from affidavits which are sworn or affirmed by different witnesses but are essentially identical have been recognised in numerous cases in this Court. The fact that portions of affidavits are identical or substantially identical may evidence collusion but in any event creates an issue as to the credibility of the witnesses and diminishes the weight to be accorded to their evidence: Macquarie Developments Pty Ltd v Forrester [2005] NSWSC 674 at [89] - [91]; Rosebanner Pty Ltd v Energy Australia [2009] NSWSC 43 at [326], [324]; Celermajer Holdings Pty Ltd v Kopas [2011] NSWSC 40 at [183] - [189]. The issues as to the form of these affidavits requires that care be taken before I accept the evidence of either Biljana or Slobodan as corroborating the other's version of events. This difficulty has been mitigated to some extent by oral evidence given by the witnesses and extensive cross-examination as to critical events.

Chronology

1. Stojanka was born in 1931 and married Trajko in Macedonia. Stojanka and Trajko had two children, a daughter Draga and a son, the late Todor Krajovski (who I will refer to without any disrespect as "Todor") who married Cveta in Macedonia. Todor and Cveta subsequently immigrated to Australia in 1970 or 1971 - 1972 (Stojanka affidavit [5], Cveta affidavit [7(5)]) and, in 1974, purchased a property at Whalan for $21,500 subject to a mortgage of $14,300 (Cveta affidavit [7(6)], T164.15). There is no suggestion that Stojanka or Trajko contributed any part of the initial purchase price of that property although there is an issue as to whether Stojanka contributed to repayments which allowed the mortgage to be discharged.

1. Stojanka and Trajko immigrated to Australia in 1977 (Stojanka affidavit [6]). At the time Stojanka and Trajko arrived in Australia, both Todor and Cveta were working. It is common ground that Trajko had health issues from the time he arrived in Australia and was unable to work or make any substantial financial contribution to the family. It is also common ground that, throughout most of the period from her arrival in Australia, Stojanka worked, although the date on which she commenced working and the level of her earnings were in dispute.

1. Stojanka's evidence was that she commenced working 3 - 4 months after her arrival in Australia at a tomato farm and initially earned $150 per week (T41.42). Cveta's evidence was that Stojanka did not commence working until 1979, two years after her arrival in Australia (T149, 173). Cveta, Biljana and Slobodan pointed to the conditions applicable to Stojanka's visa as preventing her working until then and as corroborating Cveta's evidence (Ex 1D4, 1D5). I accept Stojanka's evidence as to this matter.

1. Stojanka's evidence was that a bank account was opened for her shortly after she arrived in Australia and Todor had authority to operate that account (Stojanka affidavit [32]). Cveta denies that Todor had authority to operate Stojanka's bank account from the time she arrived in Australia but conceded that he had such authority from 2000 when she underwent surgery to remove a brain tumour (Cveta affidavit [7(32)]). I accept Stojanka's evidence as to this matter, noting that her lack of proficiency in English would, in practice, have made it impossible for her to exercise sole control over her own account.

1. Stojanka's evidence was that she began working at a rose farm at Leppington in mid 1978 and worked there for approximately 10 years until she moved to the Buxton farm in September 1988 (Stojanka affidavit [12], Cveta affidavit [7(12)]). She gave evidence that she earned approximately $300 per week in this period and provided her earnings to Todor who had control over her bank account and was authorised to use that account, paid for her accommodation, purchased groceries and provided cash of $20 - $30 a week for her and Trajko (Stojanka [13], T41-42). Cveta contested that evidence in her affidavit (Cveta affidavit [7(13]) but conceded in cross-examination that she did not know whether Todor had handled Stojanka's wages at least from May 1982 on (T 67.50).

1. Cveta, Biljana and Slobodan attacked Stojanka's evidence of the amount of her earnings on the basis that it was likely that those earnings would have varied over a 10 year period and this criticism has substantial force. Cveta also pointed to evidence that Stojanka's claim to have earned $300 per week would have been more than the average earnings for adult males during the relevant period. I find the latter evidence of little assistance, since the evidence suggests that Stojanka was working long hours and a significant amount of overtime, which would not be reflected in average earnings. I do not consider that Stojanka's evidence of the amount of her earnings over this period is sufficiently robust to allow it to be used in detailed calculations of her financial contribution over the period, particularly in the absence of any documentary evidence of deposits to her bank account.

1. The mortgage over the Whalan property was discharged by Todor and Cveta in April 1979 (T164) and it is likely that at least some part of Stojanka's earnings would have contributed to this result, although it is impossible to reach a firm conclusion as to that matter without evidence of the respective earnings of Stojanka, Todor and Cveta in this period and the manner in which those earnings were applied.

1. The Newbolt Street property was purchased for $67,300 in May 1982 (Stojanka affidavit [11], Cveta affidavit [7(11)]). Cveta's evidence is that the deposit of $31,300 for the Newbolt Street property was made up of the proceeds received by her from a worker's compensation claim ($25,000) and her and Todor's savings, and that stamp duty and legal costs were also funded from Todor and Cveta's savings and that Stojanka and Trajko did not make any financial contribution to this purchase (Cveta affidavit [7(16)]). That property was subject to a mortgage in the amount of $36,000. The Newbolt Street property was registered in the names of Stojanka, Trajko, Todor and Cveta. Cveta's evidence is that this was done by Todor as a mark of respect for his parents although they had made no contribution to the purchase of the property. The fact that Stojanka was party to the mortgage over the property would presumably have allowed her earnings to be taken into account in assessing the capacity to repay the loan on the property, although there is no evidence as to whether that occurred. From about this time, Stojanka and Trajko lived in a rented caravan near the Leppington rose farm during the week and spent the weekends and public holidays at the Newbolt Street property with Todor and Cveta (Stojanka [12]).

1. Todor suffered significant injuries in a motor vehicle accident in about 1982 or 1983 and was unable to work for some time after that accident. It appears that Cveta was not working at this time although there is evidence that she worked later in the relevant period. Stojanka contends that her earnings were necessarily used to repay the loan over the Wetherill Park property during this period, apart from a time in which the lender suspended payment requirements following Todor's accident.

1. The Whalan property was sold in 1986 and there appears to be no contest that, if Stojanka's funds had been used to repay the loan on the property, no repayment was made to her at the time of the sale (T168.1 - 168.15).

1. In April 1987, Todor and Cveta acquired vacant land in Arnold Street, Wetherill Park in their names ("Arnold Street property") (Ex P3, p 9).

1. In September 1998, Todor, Cveta, Stojanka and Trajko bought the Buxton farm with moneys borrowed from a bank and secured over the Newbolt Street property (Stojanka affidavit [17] - [20], Cveta affidavit [7(20)]). The mortgage recorded that Trajko was unemployed, Stojanka was a multi-flora picker, Todor was in receipt of sickness benefits and Cveta was unemployed. Cveta acknowledged that description was accurate during cross-examination (T172). It is likely that Stojanka's earnings and Todor's sickness benefits must have been used to repay that loan, although the absence of documentary evidence as to those earnings or their application makes it impossible to reach a more specific finding as to the source of repayments.

1. Stojanka and Trajko subsequently lived on the Buxton farm and Stojanka's evidence is that she worked full-time growing flowers there (Stojanka affidavit [22] - [24]; Cveta affidavit [7(22)] - [7(24)]). There was a significant dispute in the evidence as to the extent to which she, Todor and Slobodan had undertaken the initial work of clearing trees on the farm to permit the flower growing to take place. I accept Stojanka's evidence that at least she worked with Todor in moving stones and assisting with that work and was involved in subsequent flower-growing activities (T80). Cveta's evidence is that Todor was working full time at the Buxton farm from at least September 1992 and that Cveta assisted when possible and that Biljana and Slobodan assisted on weekends (Cveta affidavit [7(24)] - [7(26)]).

1. Todor conducted a business of selling flowers grown at the Buxton farm at the Flemington markets. There is also dispute as to the extent to which Stojanka assisted in that process, but I do not consider that it is necessary for me to seek to resolve that for the purpose of these proceedings. It appears that Todor retained the proceeds of sale of the flowers over this period. There is no evidence of any payment arrangements to Stojanka for her work on the Buxton farm, although Todor appears to have continued to purchase groceries, provided Stojanka with some cash and also funded a trip by Stojanka to Macedonia in 1993.

1. Trajko died in 1992. The Newbolt Street property and Buxton farm were then held jointly in the names of Stojanka, Todor and Cveta (Stojanka affidavit [21], Cveta affidavit [7(21)]).

1. In 1995, Todor and Cveta borrowed moneys in their own names secured by a mortgage over the Arnold Street property to build a home on that property. That mortgage was discharged in February 1998 and it is likely that earnings from the sale of flowers grown on the Buxton farm would have provided the funds necessary to do so (T175).

1. In 1999, Todor arranged the sale of the Newbolt Street property. Stojanka's evidence is that she did not ask Todor the reason for that sale or the sale price and believed that "whatever he was doing, was for the benefit of the family, namely, myself, he and Cveta" (Stojanka affidavit [30]). Stojanka did not receive any part of the proceeds of sale of the property and her evidence is that she "did not ask [her] son Todor for any of the proceeds of sale because he was looking after [her] finances and [she] had complete trust in him" (Stojanka affidavit [31]).

1. In June 2004, Todor purchased a burial plot at the Rookwood Cemetery, near where Trajko was buried (Stojanka affidavit [33] - [34]). Stojanka's evidence was that the burial plot was purchased for her and was funded with moneys from her bank account or money she had previously given to Todor. Cveta's evidence is that the burial site was purchased for the use of members of the family generally rather than for Stojanka and she denies that Stojanka's moneys were used for the purchase (Cveta affidavit [7(33)] - [7(34)]).

1. In August 2006, Cveta, Todor and Stojanka attended the offices of a firm of solicitors, Isho & Associates. Ms Isho's evidence is that she was retained to assist them with the transfer of Stojanka's interest in the Buxton farm to Cveta and Todor and was provided with Biljana's details as the client contact. Ms Isho's evidence is that she subsequently received a telephone call from Biljana advising that Stojanka's interest in the property was to be transferred to the grandchildren, Daniel, Biljana and Slobodan (Isho affidavit [2] - [3]).

1. Todor died on 22 September 2006 (Stojanka affidavit [35], Cveta affidavit [7(35)]).

1. Stojanka contends that, on 25 September 2006, Cveta withdrew $3,500 from Stojanka's account without her knowledge (Stojanka affidavit [65]). There is evidence that the withdrawal was made by Cveta (although Cveta initially contended to the contrary in cross-examination) (Stojanka affidavit Annexure H1). Cveta's evidence is that Stojanka requested that she withdraw that amount from Stojanka's account (Cveta affidavit [7(65)]). It appears to be common ground that the amount withdrawn was applied to purchase new clothes for Stojanka for Todor's funeral, in accordance with Macedonian custom, and probably also for funeral expenses. It is ultimately not necessary for me to resolve the factual dispute as to whether Stojanka's express consent was sought for that withdrawal.

1. Stojanka's evidence is that, after Todor's funeral in late September 2006, Slobodan told her that "you have to go to a solicitor to sign something for Dad" and Cveta and Biljana later told her "you have to sign some papers for Dad". Stojanka's evidence is that, on the afternoon of Todor's burial, Cveta, Biljana, Slobodan and Daniel took her to the offices of Isho & Associates. It appears that Mr Isho sensibly recommended that Stojanka should be given advice by a Macedonian-speaking solicitor in respect of the matter and her evidence is that Cveta advised her that "you can't sign today, you have to see a Macedonian-speaking solicitor".

1. On 6 October 2006, Cveta and Biljana drove Stojanka to the offices of Mr Glamcevski, a Macedonian-speaking solicitor at Fairfield (Stojanka affidavit [46], Cveta affidavit [7(46)], Biljana affidavit [5(46)]). There is some dispute as to whether Mr Glamcevski was retained only for Stojanka or acted for both Stojanka and Cveta, although nothing turns on that given the clarity of the advice which he provided. Mr Glamcevski showed Stojanka a document which was a transfer relating to the Buxton farm. Mr Glamcevski then advised Stojanka, in clear terms, of the effect of that transfer. Stojanka's evidence in this regard was as follows:

"During my meeting with Mr Glamcevski, I saw that he had some papers on his desk. He showed me a document, which I understand was a transfer relating to the Buxton farm. When he showed me this document, I had a conversation with him in words to the following effect:

He said:

"This is a document and if you sign it you will have nothing. The property will go to your daughter-in-law and the grandchildren".

I said:

"I love my family and I trust my daughter-in-law and the grandchildren. They looked after me and my late husband in the past and we are a very close family."

1. Mr Glamcevski's file note of the meeting was also in evidence and he was cross-examined as to that file note. I accept his evidence that he dictated the file note shortly after the conference. That file note provides a more comprehensive record of the advice he provided than Stojanka's evidence, but is not inconsistent with that evidence. Relevantly, the file note reads as follows:

"Saw her in conference, discussed the matter at length, explained to her the document that she was about to sign and the ramifications of same in that once she comes off title she effectively has no right or interest in that property and has transferred that property to her grand kids and daughter-in-law and in the worst case scenario they all could ask her to leave the farm and effectively a [sic] told her throw her out on the street.

She indicated that she was fully aware that could be the case and as she said even if she owned half the house they could still do that anyway. She was not scared of that as she loved her family and knew her daughter-in-law and grandkids and trusted them as they have looked after her and her late husband, their father-in-law/grandfather in the past, they are a very close family and this is what she wanted because apparently the farm is being run and the mother and the grandmother through their pensions and incomes cannot afford the rates and the maintenance and the upkeep of the farm which expenses were being covered by the grand kids who according to her rightly so were a bit dubious about having to pay all the Council rates, water rates, upkeeping the house and the farm and maintaining and everything like that when in fact they had nothing in their name to that extent."

1. Mr Glamcevski's file note indicates that this conversation took place in the presence of Cveta who then left the room. The solicitor then had a further discussion with Stojanka. His file note records that:

"... told her that if she didn't want to sign the document she didn't have to, and I asked her whether she was being forced to or being pressured by her family and she told me that she wasn't and in fact this was something that they had all discussed and she was quite agreeable to do so and under no pressure whatsoever."

1. Stojanka's evidence concerning this meeting and Mr Glamcevski's file note indicate that Stojanka was comprehensively advised as to the implications of signing the transfer of the Buxton farm and that she was well-advised in not pressing her claim for undue influence in this regard. The content of that advice is not, however, an answer to Stojanka's claim in unconscionability, since Stojanka's evidence and Mr Glamcevski's file note make clear that the transfer of Stojanka's interest in the property took place in the context of her trust in her family and her expectation that the grandchildren would maintain the farm and contribute to the payment of Council rates and its upkeep. Cveta accepted in cross-examination that she and each of the grandchildren knew that Stojanka was signing over her interest in the Buxton farm with the explanation that Cveta and the grandchildren would let her continue living there (T189.40). That expectation was frustrated in circumstances which I will set out below. I should here note that there is no evidence that the grandchildren paid Council or any other rates on the property, and Slobodan conceded in cross-examination that he did not do so.

1. Stojanka transferred her half interest in the Buxton farm to each of the Defendants equally, leaving Cveta with a 62.5% interest in that property and Biljana, Slobodan and Daniel each with a 12.5% interest in that property. When that property was sold, it appears that each of the Defendants took approximately a 25% interest in the sale proceeds.

1. Cveta made two subsequent withdrawals, each of $500, from Stojanka's account on 6 and 20 October 2006 (Stojanka affidavit [65], Cveta affidavit [7(65)]).

1. Stojanka stayed at Cveta's home in the period immediately after Todor's funeral until, a few days later, she advised Cveta that "I would like to go back to the farm for a while" (Stojanka affidavit [52]). Stojanka's evidence is that, on or about 28 October 2006, she attended the memorial service for Todor at the Leppington Cemetery and, after that service, Cveta and Biljana drove her back to Cveta's house and then to the Buxton farm. Stojanka's evidence is that an argument subsequently occurred at the Buxton farm. Her evidence in her affidavit concerning that argument is as follows:

"Shortly after we arrived at the Buxton farm, Cveta and Biljana started yelling at me. Both of them pushed me, causing me to fall to the ground. The also grabbed me around the neck, and I felt kicks and punches to my body. They left immediately after, and I felt pain to my body. I was extremely upset and started to cry. I telephoned Daniel and told him what happened."

1. Stojanka's evidence of this argument in her affidavit was expanded and qualified in her cross-examination, in which she referred to an argument with Biljana which had commenced with questions as to whether she had moved an organ and escalated to Biljana claiming that Stojanka was lying to her and indicating that she blamed Stojanka for Todor's death, by reason of his exposure to the chemicals used for flower-growing on the Buxton farm. In cross-examination, Stojanka denied that Cveta had been involved in the alleged assault on her and gave evidence that Cveta had intervened to restrain Biljana before further injury occurred.

1. Cveta, Biljana and Slobodan vigorously criticise the shift in Stojanka's evidence between her affidavit and her cross-examination. Cveta, Biljana and Slobodan also point to differences in Stojanka's affidavit evidence as to whether she fell to the ground during this incident or fell against a wall in the corner.

1. There is in evidence a report of a local doctor who treated Stojanka on 31 October 2006, shortly after the alleged incident. That report states that:

"This is to certify that [Stojanka] consulted me on 31 October 2006. She stated that she had been assaulted by her daughter-in-law and granddaughter on the Saturday evening immediately preceding and that during this assault, she had been pushed over, as well as grabbed around the neck, and kicked and punched.

On examination, she had multiple bruises over the upper chest and right side of the neck, on her left chin, and her right upper arm. I consider that these bruises were consistent with the alleged attack having taken place."

Cveta, Biljana and Slobodan place reliance on this report as impeaching Stojanka's evidence, so far as it is consistent with the account given in her affidavit and inconsistent with her evidence in cross-examination that she was assaulted by Biljana rather than by Cveta and that Cveta intervened to prevent the continuance of the assault. Stojanka contends that, in assessing the evidence as to the assault, the Court will have regard to the absence of evidence of translation during the doctor's consultation with Stojanka.

1. I have given careful consideration to the shift in Stojanka's evidence as to this matter, which, in some circumstances, would give rise to a significant issue as to Stojanka's credit. However, I have formed the impression that Stojanka was seeking to give honest evidence although, as I noted above, she plainly felt strongly about the matters in issue and was often not prepared to limit herself to answering the questions asked. I have pointed above to her willingness to make concessions which were against interest, and her evidence that Cveta was not involved in the assault was, in some respects, in this category so far as Stojanka's case seeks relief against Cveta. I am also conscious of the difficulties which are inevitably involved in taking a relatively complex affidavit, covering events over a long period, from a witness who has little command of English. In these circumstances, I do not regard the shift in Stojanka's evidence in cross-examination, significant as it was, as undermining her credit.

1. Cveta and Biljana each deny that such an incident occurred (Cveta [7(54)], Biljana [5(54)]). I do not accept that evidence, for several reasons. First, it leaves the evidence of the physical injuries suffered by Stojanka unexplained. Second, it appears that Biljana has also made no further attempt to contact Stojanka after the visit to the farm on this occasion, notwithstanding their previously close relationship. This is consistent with an incident between Stojanka and Biljana having occurred. Third, Biljana denied in cross-examination that it ever occurred to her that the use of chemicals at the Buxton farm may have contributed to her father's death or that she blamed Stojanka for having encouraged her father to purchase that farm. That evidence was implausible where she knew that Stojanka had also previously been treated for a brain tumour in 2000; knew that her father used protective clothing on the farm and sought to ensure that she was not exposed to the chemicals used; knew that her father then suffered a brain tumour; and later acted in a manner which demonstrated her personal concern as to the risk of brain tumours. I have concluded that Biljana's refusal to acknowledge that it occurred to her that exposure to chemicals on the farm might have contributed to her father's brain tumour reflected an unwillingness to concede the matter which Stojanka's evidence suggested was the motivation for this incident.

1. Stojanka's evidence is that, on or about 3 November 2006, Cveta and Slobodan came to the Buxton farm and required Stojanka to pay $250 per week rent and pay the rates on the farm and that she could not afford to pay the rent and those rates (Stojanka [57]). That evidence is denied by Cveta who gives a different account of events (Cveta [7(57)]). I prefer Stojanka's evidence given the views which I have formed as to her credit generally. Stojanka then left the Buxton farm and moved to a unit found for her by her grandson Daniel.

1. The Buxton farm was subsequently sold for $412,000 under a contract dated 31 October 2008 (Stojanka affidavit [60], Cveta affidavit [7(60)]). The settlement statement for that sale indicates that $100,891.58 from the proceeds of sale was distributed to Cveta and $100,000 to each of Biljana, Slobodan and Daniel.

1. It appears that the burial site at the Rookwood Cemetery was also subsequently sold (Stojanka affidavit [66], Cveta affidavit [7(66)]), although there is no evidence of the circumstances in which this took place.

The Baumgartner claim

1. Stojanka ultimately put her claim on the basis of the principles set out in Muschinski v Dodds (1985) 160 CLR 583 and Baumgartner v Baumgartner (1987) 164 CLR 137. That claim was pleaded as follows:

75. In the premises the plaintiff pooled her assets and income with those of her family members including [Cveta] for purposes of benefiting the Krajovski family including securing accommodation and income for the plaintiff.

76. Further it was the common intention of [Stojanka], [Cveta], Trajko Krajovski and Todor Krajovski that assets including the Wetherill Park property and the Buxton farm should be held for those purposes.

77. Following the death of Trajko Krajovski and Todor Krajovski, in or about late October 2006, this arrangement between [Stojanka] and [Cveta] broke down.

78. In the premises [Cveta] holds such assets and the proceeds of sale from them on constructive trust for herself and the plaintiff in equal shares and [Biljana], [Slobodan] and [Daniel] hold assets, alternatively proceeds of sale of assets, transferred to them by [Stojanka] on constructive trust for [Stojanka].

Mr McGrath, for Stojanka, submits that Stojanka can establish this claim on the basis that the defendants hold the proceeds of sale of Stojanka's interest in the Newbolt Street property and the Buxton farm in circumstances where, following the breakdown of their relationship with Stojanka, it is unconscionable for them to assert a beneficial legal interest in those proceeds.

1. In Muschinski v Dodds above at 618, Deane J observed that:

"Both common law and equity recognize that, where money or other property is paid or applied on the basis of some consensual joint relationship or endeavour which fails without attributable blame, it will often be inappropriate simply to draw a line leaving assets and liabilities to be owned and borne according to where they may prima facie lie, as a matter of law, at the time of the failure ... Where, however, there are no applicable contractual provisions or the only applicable provisions were not framed to meet the contingency of premature failure of the enterprise or relationship, other rules or principles will commonly be called into play."

1. His Honour referred to the situations where contracts are frustrated or when partnerships or contractual joint ventures are terminated, where equity would allow a return of each party's contribution to that party. His Honour identified a more general principle of equity which he described as follows:

"Those circumstances can be more precisely defined by saying that the principle operates in a case where the substratum of a joint relationship or endeavour is removed without attributable blame and where the benefit or money or other property contributed by one party on the basis and for the purposes of the relationship or endeavour would otherwise be enjoyed by the other party in circumstances in which it was not specifically intended or specifically provided that the other party should so enjoy it. The content of the principle is that, in such a case, equity will not permit that other party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for him to do so ..." (at 620).

1. In Baumgartner v Baumgartner above at 147 - 148, Mason CJ, Wilson and Deane JJ referred to those observations and to the general equitable principle "which restores to a party contributions which he or she has made to a joint endeavour which fails where the contributions have been made in circumstances in which it was not intended that the other party should enjoy them". Their Honours observed at 149 that:

"Their contributions, financial and otherwise, to the acquisition of the land, the building of the house, the purchase of furniture and the making of their home were on the basis of, and for the purposes of, that joint relationship. In this situation the appellant's assertion, after the relationship had failed, that the ... property, which was financed in part through the pooled funds, is his sole property, is his property beneficially to the exclusion of any interest at all on the part of the respondent, amounts to unconscionable conduct which attracts the intervention of equity and the imposition of a constructive trust at the suit of the respondent."

1. In West v Mead [2003] NSWSC 161; (2003) 13 BPR 24, 431 at [56], [62], Campbell J noted that the Baumgartner constructive trust is imposed to prevent an unconscionable assertion of legal title in circumstances where the parties had no explicit intention about how the legal title will be held in the circumstances which have arisen, and that their Honours' reasoning in Baumgartner implemented the equitable principle that beneficial title to an asset ought to be proportionate to the contributions made to its purchase price and that non-monetary contributions are taken into account.

1. In Henderson v Miles (No 2) [2005] NSWSC 867 at [13], Young CJ in Eq summarised the relevant principle as follows:

"Where a family joint venture breaks down without attributable blame, it is unconscionable for one of the parties to retain a windfall which the parties never contemplated that that party would receive."

1. The principle in Baumgartner requires that there be a joint relationship or endeavour and an asset acquired in the course of, or for the purposes of, that joint relationship or endeavour. The circumstances of this case are such as to establish an element of "joint endeavour". It is plain that Stojanka's earnings were, throughout most or all of the period, controlled by Todor and applied for the benefit of the family. They would have assisted with the purchase and repayment of loans relating to the various properties acquired throughout the period, including the Newbolt Street property and the Buxton farm. The relationship between Stojanka and other members of the family plainly involved elements of mutual trust and confidence and ongoing obligations to provide at least accommodation and probably also care arising in a family context.

1. I am also satisfied (although this was not accepted by Cveta, Biljana and Slobodan) that the family relationship has failed and that it would not now be possible for Stojanka to reside with Cveta. It is sufficient to treat the breakdown of the family relationship in this case as occurring without attributable blame. The usual position is that, where personal relationships deteriorate and the sharing of a dwelling becomes intolerable to some or all of those concerned, that is to be treated as a matter involving no attributable blame and as supporting an equitable adjustment: Kreizis v Kreizis [2004] NSWSC 167 ; Hill v Hill [2005] NSWSC 863 at 35; McKay v McKay [2008] NSWSC 177 at [16].

1. Stojanka's primary position is that the appropriate remedy should be based on the conventional basis of return of contributions with interest. The return of contributions was the basis for relief adopted in Kreizis v Kreizis above and Sirtes v Pryer [2005] NSWSC 1082. In McKay v McKay above, Brereton J referred to the authorities and noted that "the fundamental principle in this area of discourse is the restoration of contributions upon failure of the substratum of a joint venture", although equity can order something less where a return of contributions would be disproportionate to the requirements of conscionable behaviour (at [30], [33]).

1. The starting point should be a recognition that "equity favours equality" and, in circumstances where resources have been pooled in a joint endeavour, "there is much to be said for the view that they should share the beneficial ownership equally as tenants-in-common, subject to adjustment to avoid any injustice which would result if account were not taken of the disparity between the worth of their individual contributions either financially or in kind": Baumgartner , above at [149]. Where an asset is acquired within the scope of a joint endeavour which lasts for years, this gives rise to a presumption that the beneficial interest ought to be shared equally, which can be displaced if one party is able to show that the contributions, both financial and non-financial, to that asset should be regarded as unequal and, in practical terms, the onus of attributing a value to non-financial contributions is on the person who asserts that the title should be held unequally: West v Mead above at [59]. The payment of mortgage instalments, after a property has been acquired using borrowed money which is secured by a mortgage, is accepted as a "contribution": Baumgartner , above at [148].

1. In my view, Stojanka has established a proper basis for equitable compensation against Cveta in respect of a portion of the proceeds of sale of the Newbolt Street property. Cveta points to the fact that Stojanka made no claim on the sale proceeds of the Newbolt Street property while Todor was alive or until the letter of demand received in August 2010. However, that position is entirely consistent with the continuance of the family relationship and an expectation that she would be supported within the family until that date and does not, in my view, provide an answer to this claim. The relevant unconscionability arises from the point at which the relationship between the parties failed about 31 October 2006 and Cveta retained the moneys attributable to Stojanka's interest in the sale of the Newbolt Street property which had passed to her on Todor's death. Alternatively, that unconscionability would be established from no later than August 2010, when Stojanka's solicitors made a demand that Cveta pay Stojanka, inter alia, the sum reflecting Stojanka's notional interest in the Newbolt Street property and she failed to do so.

1. I consider that Stojanka is entitled to equitable compensation reflecting the value of 22% of the Newbolt Street property. I have derived this figure on the basis that approximately 35% of the purchase price of that property was funded by the proceeds of Cveta's worker's compensation claim and that, in circumstances that it is common ground that Trajko could make no financial contributions to repayments, I should treat each of Stojanka, Todor and Cveta as making equal contributions in respect of the balance of the purchase price and the liability in respect of the loan over the property. I do not consider that Cveta's evidence that she and Todor paid the balance of the purchase price, legal costs and stamp duty from their savings justifies a different approach, since it is clear that Todor had access to Stojanka's earnings over this period so a payment by Todor may have ultimately been funded by those earnings. On that basis, Stojanka should be treated as entitled to a 22% interest in the proceeds of sale of the property which was sold in February 1999 for $207,000, rounded to $45,000. The question of the period for which interest on that amount should be allowed will need to be the subject of further submissions by the parties.

1. In my view, Stojanka can also establish a claim to equitable compensation in respect of her notional half-interest in the Buxton farm. (I say "notional" because the interest in that farm was initially held as joint tenants). That interest was transferred to each of the Defendants on the basis of the family relationship and in an expectation, which is made clear by the evidence to which I have referred in paragraphs 29-31 above, that the Buxton farm would be retained with the assistance of her grandchildren and that Stojanka would be cared for within the family unit. It is plain in the present circumstances that it was not intended that Cveta, Biljana, Slobodan and Daniel would retain Stojanka's interest in the Buxton farm which had been transferred to them free of any obligation to provide her with a right of occupancy of that farm or with future care.

1. The expectation on which the transfer of that property was founded was frustrated, after the transfer of that property, by the breakdown of Stojanka's relationship with Cveta, Biljana and Slobodan which, at the least, occurred without fault on her part, the failure of the grandchildren (or some of them) to make the relevant contributions to the maintenance of the Buxton farm and the subsequent sale of that farm.

1. Cveta, Biljana and Slobodan contend that Stojanka willingly and knowingly transferred her share in the Buxton farm for the benefit of the grandchildren and that this had been discussed with her son, Todor before his death and that she had attended a solicitor with her son to arrange that transfer. These matters were not contested by Stojanka. However, they do not provide an answer to a case of unconscionability arising from the defendants' reliance on the legal title transferred to them after the relationship between the parties had broken down.

1. In these circumstances, I am satisfied that it would be unconscionable for the Defendants to assert the legal interest which they had acquired from Stojanka in the Buxton farm to the exclusion of her interest in the property. On this basis, each of the defendants should be held liable for the value of the interest which they received from Stojanka, quantified by reference to the price at which the Buxton farm was sold in October 2008, of $51,000 and interest from the date when the sale proceeds for that property were received. No Defendant contended that he or she should be treated differently from the others so far as Stojanka established a right to relief in the proceedings.

1. Cveta, Biljana and Slobodan submit that any contribution made by Stojanka should be offset by other matters, including that Todor and Cveta paid Stojanka and Trajko's airfare from Macedonia to Australia; that Stojanka and Trajko were dependent on Todor and Cveta until Stojanka commenced working; and that Todor and Cveta welcomed Stojanka and Trajko into their home and looked after their needs. I do not regard these matters as justifying any discounting of Stojanka's interest in the Newbolt Street property and the Buxton farm, in circumstances where that interest was transferred to Todor and ultimately Cveta (in the case of the Newbolt Street property) and the Defendants (in the case of the Buxton farm) on a basis which has now failed.

1. Stojanka advanced a potentially wider claim in contending that the Court should adopt a "broad brush" approach where there are significant difficulties in quantifying her contribution over a lengthy period, and that the starting point should be that equity is equality. I am not satisfied that I can properly adopt this approach in respect of the range of properties acquired by Todor and Cveta over the period, where there is only Stojanka's oral evidence of her earnings in the early part of the period; no evidence as to the earnings from the sale of flowers from the Buxton farm and little evidence as to the amount of other earnings of Todor and Cveta over the period (other than as to Cveta's workers compensation payment) and no evidence as to the way in which moneys earned by the relevant parties were applied to the acquisition of particular properties or the discharge of loans in respect of those properties or the funding of other expenditures by family members over the period.

1. In pressing the wider basis of her claim, Stojanka also contended that she should not be prejudiced by the fact that the Defendants did not adduce evidence as to the quantum of the pool of assets produced, and she presented the best evidence she could. I note, however, that there is no evidence before me as to the extent to which discovery, subpoenas or notice to produce were used to seek to obtain evidence as to the scope of the assets acquired by the family during the relevant period or the manner in which those assets were funded.

1. Stojanka also put alternative submissions as to the possibility that compensation could be assessed by reference to the value of the obligation to provide care and accommodation which appears to have been assumed by the Defendants at the point they accepted a transfer of Stojanka's interest in the Buxton farm: Stoklasa v Stoklasa [2004] NSWSC 518; Henderson v Miles above. That remedy was not Stojanka's preferred position and a remedy of that kind was not ordered in Menka Tasevska v Vlado Tasevski [2011] NSWSC 174 or McKay v McKay above. I do not consider it appropriate to award a remedy in that form, given the difficulties in anticipating the life expectancy of Stojanka and assessing the cost of care and the need to reopen evidence in that regard and for the parties to incur additional costs associated with further evidence, where it is possible for me to make orders reflecting the value of Stojanka's interest in the Newbolt Street property and the Buxton farm at the time of their sale.

Claim for equitable lien

1. Counsel for Stojanka submits that the Court should impose an equitable lien over the Cveta's interest in the Arnold Street property in order to secure an order for equitable compensation made against the Defendants generally.

1. Courts have imposed an equitable lien as a proprietary alternative to the constructive trust in circumstances where a trustee has mixed trust funds with its own funds or has subsequently acquired an asset: Re Hallett's Estate; Knatchbull v Hallett (1880) 13 Ch D 696. The circumstances in which an equitable lien can be imposed were summarised by Deane J in Hewett v Court (1983) 149 CLR 639 at 668 as follows:

"(i) that there be an actual or potential indebtedness on the part of the party who is the owner of the property to the other party arising from a payment or promise of payment either of consideration in relation to the acquisition of the property or of an expense incurred in relation to it ...

(ii) that that property (or arguably property including that property ...) be specifically identified and appropriated to the performance of the contract ...; and

(iii) that the relationship between the actual or potential indebtedness and the identified and appropriated property be such that the owner would be acting unconscientiously or unfairly if he were to dispose of the property (or, if it be appropriate, more than a particular portion thereof) to a stranger without the consent of the other party or without the actual or potential liability having been discharged. ... They [the tests] are formulated as a statement of what is sufficient rather than of what is essential."

The majority of the High Court did not there require that there be a direct link between the property and the equitable lien, provided there was a sufficient nexus between the instalments paid and the assets: see F R Burns, "The Equitable Lien Rediscovered: A Remedy for the 21 st Century" (2002) 25 UNSWLJ 1.

1. Counsel for Stojanka submits that there is sufficient basis for imposition of an equitable lien over the Arnold Street property where Stojanka's earnings are likely to have been applied to the purchase of the Arnold Street property, notwithstanding that property was acquired in the names of Todor and Cveta. I am not satisfied that a sale of the Arnold Street property without discharging Cveta's obligations to Stojanka from that particular asset would be unconscionable in the present circumstances, where judgment will be entered against each of the Defendants in the amount reflecting the findings I have made above. There would, in any event, be no basis for imposing a lien on Cveta's property for amounts which are properly payable by other defendants. Accordingly, I do not consider that an equitable lien should be imposed on the Arnold Street property in these circumstances.

The burial plot

1. The statement of claim also pleads that Todor held the Rookwood burial plot in trust for Stojanka during his life and that Cveta subsequently held that burial plot in trust for Stojanka and now holds the proceeds of sale in trust. Counsel for Stojanka did not make detailed submissions as to this claim and the evidence before me is not, in my view, sufficient to establish an express trust. The evidence as to the purpose for which the burial plot was acquired, who paid for it and the circumstances of its sale is also incomplete and contradictory. In my view, Stojanka has not established her claim in this regard.

Form of orders

1. I direct the parties to bring in short minutes of order in accordance with my reasons for judgment and will allow an opportunity for submissions as to whether, and for what period, Stojanka should have interest on the amounts to which she is entitled in accordance with this judgment. Subject to hearing from Counsel, I propose to order that Cveta, Biljana and Slobodan pay Stojanka's costs of the proceedings.

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Decision last updated: 19 August 2011