Smilevska v Smilevska (No 2)

[2016] NSWSC 397

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Smilevska v Smilevska (No. 2) [2016] NSWSC 397

Hearing dates:

9, 10, 11, 12 November 2015

Date of orders:

02 May 2016

Decision date:

02 May 2016

Jurisdiction:

Equity

Before:

Slattery J

Decision:

Declaration made that the plaintiff is entitled to an irrevocable licence to occupy the property until the death of the first defendant and thereafter to a half share with the second defendant as tenants-in-common.

Catchwords:

CONTRACT – plaintiff migrates to Australia from Macedonia and lives with her parents-in-law in a property in Port Kembla – plaintiff alleges that she and her husband, the second defendant, agreed to make contributions to household expenses and to support the welfare of the plaintiff’s parents-in-law in exchange for a promise that the survivor of the parents-in-law would leave the property to the plaintiff and her husband by will – whether an intention to create legal relations – whether the alleged bargain is sufficiently certain to constitute an agreement– plaintiff’s father-in-law deceased - plaintiff’s mother-in-law, the first defendant, places the property on the market for sale and demands that the plaintiff vacate the property to facilitate its sale – whether the second defendant is in breach of the contract alleged.

 

ESTOPPEL – promissory estoppel– plaintiff performs household duties pays household bills, borrows money to pay for renovations and nurses her father-in-law during ill-health – acts allegedly done on the faith of promises made to her or on the faith of an expectation created in her that she would inherit the property herself, or would have the benefit of her husband inheriting it – whether the first defendant or her husband intended the plaintiff to rely on the promises allegedly made or the expectation allegedly created – whether the plaintiff relied upon the promises or expectation alleged – whether it would be unconscionable for the first defendant now not to fulfil the promises or the expectation alleged – what form of relief, if any, should be granted in favour of the plaintiff and/or the second defendant.

  CONSTRUCTIVE TRUSTS – failed joint venture - plaintiff alleges she and the first defendant entered into a joint venture with the second defendant and her late husband for the maintenance and development of the Port Kembla property, which joint venture has now failed – failure of the joint venture is not said to be due to the fault of any one party – whether it would be unconscionable for the first defendant to retain the benefit of the plaintiff’s contributions to the alleged failed joint-venture – whether a constructive trust thereby arises over the property to enable the plaintiff to recover her contributions to the joint venture – if a constructive trust is found over the property, what form of relief should be granted.

Legislation Cited:

Conveyancing Act 1919, s 54A
Real Property Act 1900, s 42
Uniform Civil Procedure Rules, rr 6.24, 7.13

Cases Cited:

Allen v Snyder [1977] 2 NSWLR 685
Ashton v Pratt (2015) 88 NSWLR 281
Austin v Keele (1987) 10 NSWLR 283
Bahr v Nicolay (No. 2) (1988) 164 CLR 604
Balfour v Balfour [1919] 2 KB 571
Brandling v Weir [2003] NSWSC 723
Breskvar v Wall (1971) 126 CLR 376
Butler v Craine [1986] VR 274 at 284-7
Delaforce v Simpson-Cook [2010] NSWCA 84; (2010) 78 NSWLR 483
Director of Public Prosecutions v Ali (No. 2) [2010] VSC 503
Duic v Duic [2013] NSWCA 42
Ermogenous v Greek Orthodox Community of South Australia Inc (2002) 209 CLR 95
Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89
Gerard Cassegrain & Co Pty Ltd v Cassegrain [2013] NSWCA 453
Grant v Edwards [1986] Ch 638
Green v Green (1989) 17 NSWLR 343
Grgic v Australian and New Zealand Banking Group Ltd (1994) 33 NSWLR 202
Jones v Padavatton [1969] 1 WLR 328; 2 All ER 616
Logue v Shoalhaven Shire Council [1979] 1 NSWLR 537
Maddison v Alderson (1883) 8 App Cas 467
Milling v Hardie [2014] NSWCA 163
Muschinski v Dodds (1985) 160 CLR 583
Newbon v City Mutual Life Assurance Society Ltd (1935) 52 CLR 723
Rasmussen v Rasmussen [1995] 1 VR 613
Regent v Millett (1976) 133 CLR 679
Ryan v Brain [1994] 1 Qd R 681
Shepherd v Doolan [2005] NSWSC 42
Sidhu v Van Dyke [2014] HCA 19; 251 CLR 505
Smilevska v Smilevska [2015] NSWSC 1794
Snowlong Pty Ltd v Choe (1991) 23 NSWLR 198
Waddell v Waddell [2012] NSWCA 214; 292 ALR 788
Wantagong Farms Pty Ltd as Trustee for the Bulle Family Trust v Bulle [2015] NSWSC 1603

Texts Cited:

JW Carter, E Peden and G Tolhurst, Contract Law in Australia (5th ed 2007, Butterworths)
LB Moses and B Edgeworth, “Taking it Personally: Ebb and Flow in the Torrens System's In Personam Exception to Indefeasibility" [2013] 35 Sydney Law Review 107

Category:

Principal judgment

Parties:

Plaintiff: Temjana Smilevska
First Defendant: Blaguna Smilevska
Second Defendant: Blagoja Smilevski

Representation:

Counsel:
Plaintiff: D. Liebhold; A. Stevens
First Defendant: T.G.R. Parker SC
Second Defendant: submitting appearance

  Solicitors:
Plaintiff: Chris Nikolovski, Nikolovski Lawyers
First Defendant: David Sachs, Sachs Gerace Lawyers

File Number(s):

2014/301448

Publication restriction:

No

Judgment

1. The plaintiff, Temjana Smilevska, arrived in Australia from Macedonia 46 years ago. On her arrival she entered into what was essentially an arranged marriage with the second defendant, Blagoja Smilevski. Thereafter she and her husband lived continuously in her husband’s family home in Port Kembla (“the Port Kembla property”) together with her mother-in-law, Blaguna Smilevska, the first defendant, and her father-in-law, Ivan Smilevski. Temjana and Blagoja brought up their two children in this household. But by late 2014 Ivan had died, Blaguna was in a nursing home, Blagoja was seeking to divorce Temjana in the Family Court and demands were being made for Temjana to vacate the Port Kembla property to facilitate its sale.

2. Temjana lodged a caveat to prevent the sale. She now seeks a declaration that her mother-in-law, Blaguna Smilevska, holds the whole, or part, of the Port Kembla property on constructive trust for Temjana and her husband, Blagoja, as tenants-in-common in equal shares; and in the alternative, she seeks an order that Blaguna pay her equitable compensation or damages.

3. This is the Court’s second judgment in these proceedings. Events, matters and things are referred to in this judgment in the same way as they were in the Court’s first judgment. In the first judgment the Court decided that Blaguna, who is now 95, is a “person under legal incapacity” within the Uniform Civil Procedure Rules 2005 (“UCPR”), r 7.13 and that these proceedings should be stayed, until a tutor was appointed for her: Smilevska v Smilevska [2015] NSWSC 1794. The Court appointed Blaguna’s son-in-law Mitre Sarafoska to be her tutor on 7 December 2015.

4. All the parties and witnesses in these proceedings are from the one family and during the proceedings referred to one another by their first names. Without intending disrespect to any family member and for convenience, the Court will also use their first names in these reasons.

5. All the parties spoke the Macedonian language and required the assistance of Macedonian-English interpreters when giving evidence. In Macedonian tradition a common family surname stem adapts differently to describe the women and men of the family. The second names used in these proceedings, Smilevska and Smilevski, are respectively the feminine and masculine versions of the same Macedonian surname.

Outline of the Issues

6. Temjana pleads her claim against her mother-in-law Blaguna in contract, in promissory estoppel, and in constructive trust.

7. As to Temjana’s contract claim, she contends that in about April 1970, when she migrated to Australia from Macedonia to marry Blagoja, that she and Blagoja moved into the household of her parents-in-law, Ivan and Blaguna, at the Port Kembla property. She alleges she and Blagoja agreed at that time to make contributions to household expenses and to maintain the welfare of Ivan and Blaguna. She further alleges that in exchange for these promises Ivan and Blaguna both undertook that upon the death of one of them that the survivor would leave the Port Kembla property to Temjana and Blagoja. Temjana’s case is that she has upheld her side of that bargain but she contends that in August 2014 Blaguna’s legal representatives advised her that Blaguna intended to sell the Port Kembla property and requested Temjana to vacate it, thereby breaching this contract. Temjana has protected her claimed interest in the Port Kembla property by a caveat that has now been extended until further order.

8. Temjana relies in her promissory estoppel claim on the same facts as for her contract claim. But she claims in addition that she performed household duties, paid household bills, borrowed, and mostly repaid, a $40,000 loan to renovate the Port Kembla property, and nursed Ivan during the ill health of his later years, all relying upon Blaguna and Ivan’s promises or alternatively, upon an expectation that she claims that Blaguna knowingly induced in her, that she, Temjana, would one day inherit the house, or would enjoy the indirect benefit of Blagoja inheriting it. Temjana contends that it would be unconscionable for Blaguna now to renege on that alleged promise or expectation.

9. Temjana contends on her constructive trust claim that she, Blagoja and Blaguna (and Ivan until his death in 1993) together contributed to a joint enterprise, namely the maintenance and improvement of the Port Kembla property, which joint venture has now failed. Its failure is not due to the fault of any one party, and in the circumstances it would be unconscionable for Blaguna to retain the benefit of Temjana’s contributions to that failed joint venture. Temjana alleges that a constructive trust thereby arises over the Port Kembla property for Temjana’s benefit in respect of her contributions.

10. Blaguna seeks to meet these various claims in several ways. First, she denies that she made the promises alleged or that she created any of the expectations alleged. Next, Blaguna argues that Temjana sues upon an unenforceable oral contract for the disposition of an interest in land, which is not evidenced in writing in conformity with Conveyancing Act 1919, s 54A. To this Temjana replies that she has partly performed the contract on which she relies.

11. Further, Blaguna contends that even if an equitable claim were otherwise available against Ivan as a result of his making these promises that any such equity does not bind Blaguna’s conscience. Ivan, not Blaguna, was the registered proprietor of the Port Kembla property at the time of the alleged promises to Temjana. Blaguna’s case is that upon the transmission of the property to her after Ivan’s death, she is protected from such equitable claims by Real Property Act, s 42, even if she had notice of them before then. Finally, in answer to the constructive trust claim, Blaguna contends that there was no joint enterprise of the kind alleged and that there could be no unconscionability in Blaguna retaining the benefit of Temjana’s financial and non-financial contributions to the Port Kembla proeprty.

12. Temjana seeks a declaration that Blaguna holds the Port Kembla property on constructive trust for herself, Temjana, and for Blagoja on the following terms:

1. during Blaguna’s lifetime, Temjana and Blagoja have, free of any liability for payment of a licence fee, an irrevocable licence to occupy (and, at their own cost, improve) the property as a residence for themselves and their children; and

2. on and from Blaguna’s eventual death, Temjana and Blagoja are entitled to have legal title to the property as tenants in common in equal shares.

13. Temjana seeks equitable compensation and, in the alternative, damages.

14. Temjana initially brought these various claims only against Blaguna. She did not join her former husband Blagoja as another defendant. At a pre-trial directions hearing on 23 October 2015 the Court raised with the parties that under Uniform Civil Procedure Rules (“UCPR”), r 6.24 the Court considered that Blagoja was a “person who ought to have been joined as a party” to the proceedings, as Temjana was making claims for relief that either could only be realised through an estate that he might hold in the Port Kembla property, or that represented rights to an interest in the Port Kembla property that she would only enjoy jointly with Blagoja. To avoid multiplicity of proceedings, the Court required Temjana to file an amended statement of claim joining Blagoja as a second defendant. This was done before the trial commenced. In response Blagoja filed a submitting appearance and still gave evidence in Blaguna’s case. Consistently with his submitting appearance, he took no active role as a party during the proceedings.

The Credit of Temjana and Blagoja

15. The plaintiff was a credible witness. I accept her evidence except in relatively minor details specified later in these reasons. Mr Parker SC thoroughly and effectively cross examined her but the criticisms of her performance in evidence did not in my view undermine her credibility.

16. In closing submissions, Mr Parker SC pointed to qualifications on the plaintiff’s affidavit evidence that emerged in cross-examination in comparison to what was in her affidavits. And there certainly were differences. But in my view such differences as there were are to be accounted for by the difficulties of attempting to cross-examine a person of limited education through an interpreter. The same kinds of problem occurred with Blagoja’s evidence and allowance in his case was made for that too in the Court’s consideration of his evidence. But as Mr Parker SC pointed out the plaintiff bears the onus of proof. That being said, Court found the plaintiff’s affidavit and oral evidence to be generally reliable.

17. The second defendant was a witness of no credit. His evidence about Temjana was consciously exaggerated so as to disparage her. In my view this was the result of his demonstrable antipathy towards her. He painted an utterly improbable picture of Temjana doing nothing at all within the household at the Port Kembla property. A woman who had worked virtually continuously as a seamstress outside the household between 1970 and 2002 and had brought up two children within the household is hardly likely in my view to have done nothing to assist her parents-in-law and husband at the Port Kembla property. If she did not help to make the household work at the practical level, I do not accept that Blagoja did. Blagoja came across as a sneering and detached individual who was an unlikely volunteer around the Port Kembla house.

18. Blagoja seemed to adhere to an equally improbable picture that Ivan, Blaguna and he had all always disliked Temjana. I do not accept this evidence. It is difficult to accept that such dislike could permit the survival of a marriage of nearly 45 years, during which Temjana lived with Ivan, Blaguna and Blagoja in the one very close household. I accept that Blagoja and Temjana’s relationship had deteriorated very badly over the last ten or more years and by the time of the trial they were divorced. But for the reasons which will be subsequently explained, I do not accept that Temjana’s relationships with her in-laws were always poor.

19. I accept Temjana’s evidence that Blagoja led a dissolute life drinking and gambling and having difficulty in maintaining stable employment. His lifestyle and his failure to work over an extended period were hardly conducive to testimony upon which the Court could depend. He was not a reliable witness.

20. At one point in his closing submissions Mr Parker SC submitted that it would perhaps be demeaning to these parties and witnesses to go into issues of whether they had good or poor relationships and whether some, such as Blagoja, may have behaved poorly to others. Regrettably though such findings are not avoidable in this case. The closeness or otherwise of the relationship between Temjana on the one side and Ivan and Blaguna on the other side bears directly on the probability that: the statements Temjana claims were made, were actually made; Temjana made financial and non-financial contributions to the running of the household at the Port Kembla property; and, Temjana was motivated to and decided to stay in the household despite Blagoja’s drunkenness.

Blaguna and Zaklina’s Evidence

21. The Court’s first judgment has already assessed the quality of Blaguna’s evidence: Smilevska v Smilevska [2015] NSWSC 1794 at [23] – [26]. She is in her early 90s and gave evidence in a nursing home. She was a very difficult witness to follow. She had trouble understanding questions. She could follow some simply expressed questions, spoken slowly. She expressed views of strong dislike of the plaintiff. She seemed to think the plaintiff was plotting against her. At times it took an immense effort from counsel and the interpreter to ensure that Blaguna even comprehended the questions which were asked of her. But as the Court’s earlier judgment states, the transcript of the morning of 10 November 2015 is accurate; it gives a clear picture of a witness struggling to comprehend and provide a sensible answer to most of the questions which were asked of her. In my view Blaguna’s reasoning capacity was severely diminished by the time of the trial. She had a series of emotional responses to Temjana’s presence and claim against her. But the Court was not confident of the quality of her memory of any important events relevant to these proceedings. Only a very short handwritten affidavit (of some five paragraphs of evidence) was presented on her behalf. The highly generalised statements in this document were about all that she was probably capable of comprehending and conveying. But the process of her cross-examination caused the Court to doubt that she really comprehended the subject matter of her own affidavit.

22. Zaklina’s affidavit was read but she was not cross examined. No medical evidence was adduced as to her disability. The lay evidence adduced about her situation was vague but nevertheless indicated she had a substantial disability. Temjana’s evidence is that when Zaklina was not yet one year old, and the family was visiting Macedonia, she fell ill and developed a high temperature. In consequence she was hospitalized in Macedonia for two weeks.

23. This episode of illness left her permanently mentally impaired. Despite receiving further medical treatment back in Australia, her illness left her with a residual learning disability and affected her speech. She attended special schools for children with disabilities. She has lived in the Port Kembla property all her life. She is currently employed by Flagstaff and is in receipt of a pension on account of her disabilities.

The Smilevski Family – 1969 to 2015

24. The Court’s narrative of findings is set out in this section of these reasons. This narrative represents the Court’s findings in relation to both contested and uncontested factual matters, except where the context indicates that the narrative only records the allegations of one or other party. For reasons of economy this narrative does not always include the evidence of witnesses that either was not preferred or was rejected or was regarded as of less significance when the Court’s findings were made.

The Smilevski Household in Port Kembla from 1969 – the early years

25. Temjana was born in 1949 in the State of Macedonia, which was then within the former Republic of Yugoslavia. In 1969, at the age of 21, she first met Blaguna Smilevska and Blaguna’s son, Blagoja Smilevski in the local regional Macedonian town of Prilep. Blaguna and Blagoja, together with Blagoja’s sister Gorica Saraforoska, were visiting that area, where both Blagoja’s aunt and Temjana’s aunt lived. Temjana and Blagoja briefly got to know each other, playing cards, conversing and taking walks in the town’s shopping mall. According to Temjana’s account of these early events, which I accept, about three weeks after the couple met, their older relatives decided that they should marry and made arrangements for them to migrate to Australia from Macedonia for that purpose. The older generation’s plan was that the couple would live with Blagoja’s family in Australia.

25. The plan went into effect. Blagoja arrived in Australia with his mother Blaguna and his sister, Gorica Saraforoska in late 1969. His father, Ivan was already here. He had arrived in 1966. He had purchased the Port Kembla property in January 1969 and had taken out a mortgage to pay it off over time. Temjana arrived shortly afterwards. In March 1970, Temjana flew from Macedonia to Naples in Italy, and boarded a ship to Australia. After her voyage of about a month, Temjana arrived at Sydney’s Circular Quay on 13 April 1970. Blagoja and the Smilevski family greeted her at the wharf and drove her back to the Port Kembla property to celebrate her arrival. From then on she lived as part of the Smilevski family household in the Port Kembla property.

26. Blagoja’s sister, Gorica, explains that she, Blagoja and Blaguna only themselves arrived in Australia in 1969 and moved straight into the Port Kembla property, which Ivan had purchased. In 1970 Gorica married her husband Mitre Sarafoski and initially they too lived at the Port Kembla property. But by the end of 1970 they had found their own home at Mangerton in the Wollongong area, and not far from the Port Kembla property. She continued to see Ivan and Blaguna and rest of the family on almost a daily basis and spent a substantial amount of time with them on weekends. From 1970 she and Mitre moved house generally staying in the Wollongong/Illawarra area until about 2004 when they first moved to Queensland.

27. On 11 June 1971, Temjana and Blagoja were married in a civil ceremony at the Wollongong Court House, where their marriage was also registered. Before the ceremony Temjana visited a jewellery store in Port Kembla with her father-in-law-to-be, Ivan and her husband-to-be, Blagoja. Blaguna was not present on this occasion. Ivan purchased two wedding rings for the couple. Temjana says, and I accept, that as he presented the rings as a gift to her, Ivan said to her words to the effect:

“We will all live together as one family. When Blaguna and I die, you and Blagoja will get the house. Everything is for you”.

29. Temjana’s evidence is, and I accept, that on many subsequent occasions Ivan repeated to her words to the same effect as those that he said when the rings were presented. Temjana claims, and I accept, that Ivan also repeated the phrase “everything is for you” often over the years, and most frequently over meals around the Smilevski family dinner table. She said as much in her affidavit and repeated it under cross-examination.

30. I also accept Temjana’s evidence that she took these words to mean that Blagoja would ultimately inherit the Port Kembla property and the balance of her parents-in-law’s estate for the benefit of both himself and Temjana, and that she felt comforted that she would have somewhere to live later in life. In my view this was a reasonable interpretation of the words that were spoken. But it is apparent from the context that Blaguna was acquiescing in her husband’s statements.

31. Temjana worked full-time as a sewing machinist. She and Blagoja had two children together: Robert Smilevski, born in June 1971, and Zaklina Smilevska, born in December 1972. Temjana took a break for several years from her work to raise Robert and Zaklina when they were young. Temjana has always needed to provide Zaklina with special care and support, as since she was a baby she has suffered from disabilities, which will be further described below.

Assurances and Expectations in the Port Kembla Household

32. Temjana claims that she and Blaguna enjoyed a close relationship, akin to that of a mother and daughter. This is inherently likely, given that Temjana was so far away from her own mother back in Macedonia. In the context of that relationship Temjana says, and I accept, that over the years Blaguna would often say to her in relation to the Port Kembla property, “this is for you”.

33. It is true that Temjana’s recollections of these oral promises are quite general. Temjana cannot particularise them to specific times, locations or events. Temjana was criticised for this. But in my view this failure on her part is understandable. Temjana was not very sophisticated and in my view Blaguna did make statements sufficiently often that they probably tended to blend in with one another so that it would be hard to separate out specific times, locations and events.

34. Temjana says she felt comforted in relying on these alleged statements by also having heard Blaguna separately tell Blagoja that his sister, Gorica Sarafoska, would be able to rely upon a similar expectation of inheritance from her own husband, Mitre.

35. Temjana claims that these various assurances from each of Ivan and Blaguna instilled in her a belief that upon the eventual deaths of her parents-in-law, their Port Kembla property would pass down for her benefit in a way that she submits is consistent with traditional Macedonian culture. Temjana says that this Macedonian cultural norm operates in practice as follows: as a Macedonian wife, Temjana would adopt Blagoja’s parents as her own, and contribute domestically and financially to their household; and then on the parents’ death, her husband Blagoja would inherit the parents’ home and the balance of their estate for the benefit of himself and Temjana.

36. Temjana says apart from what Ivan and Blaguna had said to her directly, that she also inferred from Blaguna’s assurances to her to the effect that Gorica would inherit from her husband Mitre, that Blaguna held a strong belief in this traditional Macedonian cultural practice. Temjana says that she thought that Blaguna must have been accepting and relying on that cultural norm for her to have expressed that she was satisfied about the welfare of her daughter Gorica. Temjana’s case is that Blaguna’s 1998 will, in which Blaguna gave the Port Kembla property solely to Blagoja, is consistent with Blaguna believing in this cultural practice.

37. What exactly did Temjana expect? Mr Parker SC, counsel for Blaguna, distinguished the expectation that Temjana claims - inheriting an indirect benefit through Blagoja - from an expectation that Temjana would herself directly inherit an interest in the property. This describes a nuance in Temjana’s expectation as to the interest she would derive from the Port Kembla property, of which in my view she was unconscious. In my view, Temjana had a lay-person’s expectation of receiving some interest in the Port Kembla property, when her parents-in-law passed away. What was important to her was that this interest would give her a stake in the value of the property and security in where she lived. She had no ability to characterise the interest she expected to receive as being a tenancy-in-common or a right of residence.

Relationships within the Port Kembla household

38. Blagoja gave the somewhat startling evidence under cross-examination that he had never liked Temjana. He said that he disliked her from the time he met her and throughout their marriage. Indeed he seemed quite keen to share this evidence with the Court, and he delivered the evidence without shame and with something of an odd smile. Temjana attests that their relationship lacked intimacy, affection, support and respect. Given Blagoja’s eager public declaration of non-affection, Temjana’s evidence that her marriage was emotionally arid is hardly to be doubted.

39. Temjana claims that Blagoja is an alcoholic and had gambling problems during the marriage. It is probable in my view that Blagoja had exactly these problems. Evidence from a number of quarters supports Temjana’s case that their marital relationship was very poor. The general credibility of Temjana’s evidence is sufficient basis for the Court to accept her account of drunken rages on Blagoja’s part, of his inability to maintain a stable job and of his perpetual request for money from her and other family members to go out to the local RSL club and play poker machines. I accept her evidence that before 1993 Ivan used to say to her words to the effect, “My son is a gambler and a drinker, a drunk. Blagoja never contributed any money to the house”. Temjana says, and I accept, over the years she cried many times over the fact that she received no financial or emotional support from Blagoja.

40. The evidence of Temjana’s sister-in-law, Elizabeth Ivanos (Elizabeth), gives some confirmation of Blagoja’s drunken behaviour. At the time of the trial Elizabeth had been married to Temjana’s brother Danny for 39 years. She and Danny lived in Queanbeyan for most of this time. On average they would journey to Port Kembla to see Temjana and another sister-in-law 3 to 4 times a year, and probably even more frequently in earlier years. She was in a reasonable position to observe aspects of behaviour in the household at the Port Kembla property. She was not cross-examined and I accept her evidence.

41. She says in her affidavit that in the many visits over the years to the Port Kembla property that she never personally witnessed any argument between Temjana and Ivan or Blaguna. Moreover, she detected a number of indications in conversations with Blaguna and Blagoja that Blaguna thought that Blagoja had a drinking problem. She recounts an incident in the early 1990s when Blagoja telephoned her one evening about 9.00pm and said “come and get your sister. She is on the street”. Elizabeth and her husband closed their shop in Queanbeyan and drove straight to Port Kembla arriving at about midnight. They were greeted by Ivan who said that Temjana was in his family’s care and assured them in substance that there was nothing to worry about. And he declared to Elizabeth “My son is a drunk and I am sorry that he rang you but she is in our family now”. Reassured by these words Elizabeth and her husband left without seeing Temjana.

42. And on another occasion Elizabeth recalls sitting with Blaguna in the Port Kembla property living room, when Blaguna confided in her “If it wasn’t for Zaklina and Temjana there would be nobody to look after me. It would be sorrowful to complain. My son is like he is but what can I say. He is my son.”

43. Blagoja’s brother-in-law, Mitre Sarafoska, also confirms some of what Temjana says. He described a deteriorating relationship in which Temjana and Blagoja argued constantly. For the last 8 to 9 years of their marriage I accept that Temjana and Blagoja slept separately. But despite this their marriage lasted for over four decades.

44. Temjana explains the longevity of their apparently poisonous relationship in three ways. First, given her traditional cultural beliefs, she says, and I accept, that it would have been socially unacceptable and shameful for her to divorce Blagoja. Secondly, she says, and I accept, that despite the marriage’s problems she nevertheless felt she was a secure part of the Smilevski family and particularly that she was close to Ivan and Blaguna. She says and I accept that this closeness reassured her that she could always expect to be able to treat the Port Kembla property as her home. In my view, she did treat it in this way and for this very reason. It is difficult to explain her continuation in the household any other way.

45. But Temjana says, and I accept, that there was a third factor in play. She was not just contributing her income to the running of the household and her labour to making their domestic Port Kembla life smooth and to make everyone happy. I accept that she was undertaking domestic chores and making a financial contribution to the house on the strength of what Ivan had said to her on her wedding day and what he continued to say in Blaguna’s presence and what Blaguna continued to say to him over the years: Blagoja and she would always have a place to live at Port Kembla and that she was making all the contributions that she did because she thought it was her home.

46. She says, and I accept, that she thought at least she would be able to reside in the property until her death on the strength of what Ivan and Blaguna had said to her. I accept her evidence that she would have left the property a long time ago and would not have lived with Blaguna for the whole of her life if these things had not been said to her. Her relationship with Blagoja was so bad that this part of her evidence is very compelling. I do not accept that she would freely have chosen to stay and live with a drunkard and devote herself to keeping his and his parent’s household running smoothly, unless she had some other expectation of future financial stability.

47. She had alternatives. She had other relatives in Australia, siblings and an uncle. She had some prospects of collecting her relatively meagre resources to try and make another life for herself.

48. Blaguna’s case, supported by Mitre and Gorica’s evidence, is that it is unlikely that Ivan would have made any promises to Temjana, of the kind she alleges, from early in her time in Australia. They say that soon after her arrival she ran away from the Port Kembla property to neighbours’ houses in a way which distressed Ivan and Blaguna, causing them both worry and embarrassment. Gorica says that on one occasion Temjana even hid underneath the Port Kembla property and that Ivan had to call Temjana’s uncle Milan to come and convince her, successfully as it turned out, to come out from under the house. Gorica says that her parents were very embarrassed by this incident and thereafter were far less friendly towards Temjana. Gorica says, and I accept, that they shared with Gorica their confidence about the event, “We are worried about Temjana. There is something wrong”. Mitre’s evidence is to similar effect. There certainly was something wrong: Blagoja was the cause of these odd events.

49. I accept that such incidents occurred. But I do not accept that they occurred when Mitre and Gorica say they did. And I do not accept that they were spontaneous examples of antisocial behaviour on Temjana’s part. Temjana says that she did go to her neighbours’ places but not to run away from the family. Her recollection, which I accept, is that she was very close to the neighbours who were also of Macedonian descent and she and the rest of the family liked to visit them from time to time. She also says, and I accept, that there was indeed an occasion where she had to hide under the house at the Port Kembla property and had to be convinced to come out. But she says that this was many years after she arrived at Port Kembla. Her explanation for her action was that she had just been threatened by Blagoja who said to her words to the effect, “I’m going to kill you”. I accept her account of this and her account that Blagoja was at this time in one of his “drunken states” and she felt she had to escape from him somewhere.

50. Temjana accepts that Ivan and Blaguna were concerned about her well-being. The picture she gives, which is in my view is inherently probable, is that Ivan and Blaguna were managing their son’s drunken behaviour and were concerned about its effect on Temjana. She says, and I accept, that when Blagoja was drunk and angry it was not uncommon for Blaguna to say to Temjana words to the effect, “I will speak to him [Blagoja]. Don’t you say anything”. This appears objectively to be an attempt by Blagoja’s parents, Temjana’s parents-in-law, to keep the peace.

51. I accept Temjana’s evidence that when Blagoja would turn up in a drunken state and that noticing his condition, Blaguna would touch Temjana on the arm and direct her to leave the scene, saying to her, “You go. I’ll deal with him”. Blaguna’s son’s drunkenness was obviously a continuing embarrassment to her. I infer that she felt a continuing responsibility as a mother to set him on the right path and felt that it was unfair that her daughter-in-law should have to manage his drunkenness on her own.

52. A proper insight into the dysfunctional nature of Blagoja and Temjana’s marriage helps explain some of the differences between Temjana’s evidence on the one side (that she had a good relationship with Ivan and Blaguna) and Gorica and Mitre’s evidence on the other side (that she had a “strained and unhappy” relationship with Ivan and Blaguna). Their evidence is advanced in support of a case that it is improbable that Ivan or Blaguna would have made the statements that Temjana claims. Temjana says, and I accept, that her parents-in-law provided some of the only support that she ever received to protect her from her husband’s fits of anger and drunkenness. This naturally made her feel close to her parents-in-law. It also makes far more probable that Ivan and Blaguna did repeat the promises that Temjana says each of them made to her about Blagoja and her inheriting the house. I infer that Ivan and Blaguna both knew that Temjana would need such assurances to give her a sense of stability and to neutralise some of the effect of their son’s wanton and dissolute behaviour. Despite Blagoja’s conduct, Temjana continued to care for two children and needed encouragement to keep the family environment stable. And Gorica and Mitre were not at the Port Kembla property sufficiently often to see the worst of Blagoja’s misconduct on a daily basis. To the extent that they witnessed occasional unhappiness between Temjana and her parents-in-law they are probably right: Blagoja’s inconsiderate behaviour seems to have generated an atmosphere of disagreement and unhappiness across the whole household.

53. Blagoja denied Temjana’s evidence that she enjoyed a good relationship with Blaguna or Ivan. Blagoja was not a witness upon whom the Court could place any reliance. His own evidence on this subject is of no assistance to the Court. I accept that his relationship with his parents was very difficult and I accept Temjana’s evidence of his insulting behavior, especially towards Blaguna, when he was drunk.

54. But the relationship between Temjana and Blaguna had certainly soured by the time of the hearing. To the extent that Blaguna’s wishes could be discerned through the at times incoherent evidence that she gave, she demonstrated antipathy to Temjana. But in my view, this was just her fundamental instinctive loyalty to her own son trumping her previous supportive relationship with Temjana. I accept that Temjana’s claim in these proceedings had changed their relationship for the worse. But I infer that before the relationship changed in recent years they were indeed quite close. Apart from my acceptance of Temjana as a witness of credit, it is probable that Temjana, given that she had such a poor relationship with Blagoja, would have attempted to create closer bonds with the other members of the household, so that she had someone to talk to and support her.

Temjana’s Financial and Non-financial Contributions to the Port Kembla Household

55. Temjana says she made financial and non-financial contributions to the Port Kembla property and to the welfare of the Smilevski family over the whole of her time in the household. The Court accepts that about two weeks after arriving in Australia, Temjana began full-time work as a sewing machinist first for Bonds and then for King Gee. As earlier indicated, apart from breaks after she had each of the children, she worked full-time until her retirement in 2002, at age 55.

56. She claims and I accept, that during that period, she contributed almost all of her income to the running of the household, contributing to meeting its day-to-day expenses. She said, and I accept, that she used her income to buy food, pay for electricity, pay water and telephone bills, cover household insurance and buy clothing for her children and gifts for her parents-in-law, Ivan and Blaguna. I accept that she was far more generous to the household with these financial contributions than if she were saving to set herself up elsewhere.

57. Temjana’s work patterns are to be contrasted with Blagoja’s. He initially worked in the steel mill at Australian Iron and Steel as a shift worker but he was only there for a short period before he was sacked. He then worked in a number of other small factories and at the local council. Temjana says, and I accept, that none of these positions lasted for very long. Finally he did work for about 15 years for John Lysaghts. I infer from his work patterns that he was not a very reliable income earner for the Port Kembla household.

55. Both sides in this case point to the lack of precise evidence about income and property values. The evidence is certainly vague on both sides. But in my view, despite the lack of financial detail, Temjana’s evidence about financial and non-financial contributions to the Port Kembla property household is compelling.

56. Blagoja denies that Temjana made any domestic or financial contribution to the household. He says that Temjana kept most of the money she earned as a sewing machinist for herself, spending it on trips to Macedonia and sending remittances to her parents there. But I accept her evidence that she did make these contributions. Apart from my preference for her as a witness over her husband, Blagoja, a case that she diverted her income to her own parents and on trips to Macedonia and otherwise on herself, is not compelling. Temjana did not appear to the Court to be someone prone to wasting money. She seemed dedicated to ensuring a stable environment at Port Kembla for her children and for herself. She was especially conscious in my view of Zaklina’s future needs in Australia and was therefore likely to have concentrated her financial resources in the Port Kembla household for Zaklina’s longer term benefit.

57. The nature of Temjana’s evidence on this subject is also persuasive. She describes in considerable detail doing housework, preparing traditional Macedonian food, making sweets, pickling and preserving foods, and maintaining the vegetable garden.

58. On the issue of the plaintiff’s non-financial contributions, the evidence of her sister-in-law, Elizabeth is also revealing and begins to explain the differences between Blagoja and Temjana’s evidence. Elizabeth says that during Elizabeth and her husband’s visits they would sit down to dinner with Ivan and Blaguna. Temjana would wait on the table and serve them. It was Macedonian custom to be respectful and to allow the elders to sit and be waited upon. During these visits, Elizabeth would also go out to the back of the Port Kembla property in the garage and would see Temjana attending to the laundry or the garden, as they would chat together. Elizabeth says that the Port Kembla property “has always been spotless” and that on the occasions that she visited she witnessed Temjana and Zaklina cleaning and tidying it up.

59. Why is Blagoja’s evidence so different? In my view, Temjana’s household work was invisible to Blagoja. There is little doubt from evidence such as Elizabeth’s, that Temjana was constantly making the house as presentable as possible when she was not at work and did so more generally after her retirement. I accept this is what she did. She says so herself and I accept her evidence to that effect. Apart from Blagoja’s evident antipathy to Temjana, he did not strike the Court as a man with the slightest sensitivity to the contributions that others made to the comforts of his life. The best explanation for Blagoja’s statements that Temjana did little housework is that he simply did not notice it.

60. One point on which Blagoja and Temjana’s evidence appears to agree is in relation to Zaklina’s contribution to the Port Kembla household. Blaguna had a stroke in 2012. After that she was unable to bathe herself. Because Temjana had an injured shoulder, Zaklina rather than Temjana undertook this task, before Blaguna went into a nursing home in 2014. Zaklina also slept in the same room as Blaguna and was very supportive to her. Even before Blaguna’s stroke Zaklina had given special care to her as she became more frail. But the impression that Blagoja’s evidence on this subject gives is that Zaklina was the only person who was caring for Blaguna in the household. That in my view is a wrong impression.

61. Temjana’s contrasting account of Blagoja’s lack of contribution to the house is equally compelling. She says, and I accept, that Blagoja contributed little of his own employment income towards the running of the Port Kembla household. As indicated earlier, Blagoja held itinerant jobs over the years, usually as a shift worker at the Port Kembla steel mills and other factories. Temjana says that she and Ivan and Blagoja would shop for the household food together. I accept that Blagoja would drive them to and from the shops and then he would go to the hotel or the local club. But rather than Blagoja giving them money to do the shopping, I accept Temjana’s evidence that she often gave him money to go to the club.

62. In about 1998, I accept Blagoja developed back problems. By 2000 his back trouble had caused him to cease all paid employment. Temjana says that, claiming to suffer the effects of these back problems, he assisted less, and ultimately not at all, with the housework. Prior to 2000 Blagoja had helped mow the lawns and tend the gardens of the Port Kembla property. But from about 2000 he ceased all such work. From then a local council welfare helper performed those tasks for the family. I accept Temjana’s evidence that once Blagoja’s back problems dominated, she had to pay for the lawns to be mowed.

The 1989 Renovation

66. Some time shortly prior to January 1989 Temjana and Blagoja decided to renovate the Port Kembla property. Their basic plan was to repair the roof, build a driveway and footpath, fix windows and build a garage. To finance this work Ivan needed to mortgage the property. Ivan told Blagoja and Temjana that he had no objection to a loan for this purpose being secured against the Port Kembla property. But he explained to Blagoja and Temjana that, as pensioners, he and Blaguna would be unable to take responsibility to repay the loan.

67. Temjana and Blagoja promised to meet the repayments on the loan. On 20 January 1989, a mortgage was registered against the Port Kembla property, securing an advance of $40,000 that the Commonwealth Bank of Australia lent to Ivan, Blagoja and Temjana at an interest rate of 14.9%. The loan initially required monthly repayments of principal and interest of $643.

68. When the loan was taken out Temjana and Blagoja received the advance into a bank account that was held in their joint names. Temjana claims that she made the majority of the repayments on this loan. She says that after making some initial repayments, Blagoja ceased to contribute anything to repaying the loan. Blagoja’s evidence directly contradicts this. He says that “I made the repayments and the plaintiff did not”. Now over 25 years later, there is no objective evidence to confirm which of these versions is correct. But I prefer Temjana’s evidence over Blagoja’s on this subject. But apart from the Court’s preference Temjana was the more reliable worker and the more conservative spender and it is inherently probable that she would have made most of the loan repayments.

69. The renovations were done. Over a period of about a month and a half, Blagoja and Temjana paid tradesmen to renovate the house at the Port Kembla property. Temjana produced some documentary evidence from this period of renovation works to the Port Kembla property: this included building plans, invoices, receipts and other similar documents relating to re‑roofing, wall cladding, carpeting and the purchase of a garage roller door and a refrigerator for the house.

70. Why these renovations were done, who repaid the loan and what the transaction indicates for the agreement that the plaintiff now alleges, were in contest.

71. I accept Temjana’s evidence that Blagoja and she jointly decided that that they wanted to fix up the Port Kembla property and that they approached Ivan and spoke to him about this subject. I accept her evidence that the following conversation took place between her, and Blagoja and Ivan, as follows:

Temjana:   “Ivan we would like to fix up this house. We would like to repair the roof, build a driveway and footpath, fix the crooked window and build a garage”.

Ivan:   “If you want to do up the house we will need a loan. We are on a pension, so we can’t make any repayments. However we can arrange a loan against the property and you could make the repayments. Let’s go to the bank.”

72. They then went down to the Commonwealth Bank. On this occasion I accept that Ivan extracted a promise from Blagoja in Temjana’s presence. Their conversation was to the following effect.

Ivan:   “If you promise to make all the mortgage repayments we will arrange the loan. If you don’t, the bank will take our house. Tell me now if you can’t make the repayments, otherwise there will be six of us out on the street.”

Blagoja:   “I promise”.

73. I accept Temjana’s evidence that she would physically go down to the bank and make the repayments from her own income but Blagoja was not making any contribution. Ivan attempted without success to see if a direct debit for the repayments could be taken from Blagoja’s account.

74. I accept Temjana’s evidence that she made “the large majority of the repayments” and that Blagoja “only contributed on very few occasions”. And I accept Temjana’s evidence that she was strongly motivated to fix up the Port Kembla property as she was proud of it and considered it her home.

75. In final submissions Mr Parker SC contended that there was no evidence that Ivan wanted these particular works to be done himself and the evidence does not establish reliably that all this money was spent on the house. There were certainly differences in Temjana’s affidavit and oral evidence about what the money was spent on. In her oral evidence she mentioned that cladding work was done at about the same time. The documentary evidence (Exhibit 4) backs up her oral evidence. I accept that substantially all of this advance was spent on doing up the property. Apart from my preference for Temjana’s evidence she was houseproud and in my view was keen to ensure that this expenditure did make the house look better. That was the reason that she wanted the mortgage to be taken out in the first place.

76. But Mr Parker SC says this was just an arrangement for Temjana and Blagoja’s convenience and there is no evidence that it provided any increase in value in the Port Kembla property. And he points out there was no express further assurances from Ivan or Blaguna that Blagoja and Temjana would have an interest in the property as a quid pro quo for doing those works. Mr Parker SC submits that as far as the evidence goes that all it shows is that Ivan did not want to pay for the renovations.

77. In my view this submission takes too narrow a view of the significance of the renovation works. In my view, the subtext of this fundraising and the works that were done was the assurances from each of Ivan and Blaguna that the property would be for Blagoja and for her after their deaths.

Temjana and Blagoja’s Investment Property - 1991

78. In September 1991 Temjana and Blagoja decided to purchase a property in Lake Heights, west of Port Kembla, bordering Lake Illawarra (“the Lake Heights property”). The documentary evidence reveals the purchase was for a consideration of $105,000 and was funded with a mortgage advance of $80,000 from the ANZ Bank. This was almost 80% of the purchase price. But the parties contested which of them funded the equity of $25,000 they invested in the Lake Heights property. The couple eventually sold the Lake Heights property in November 2001 for $132,000.

79. I accept Temjana’s evidence that she and Blagoja sold the Lake Heights property for two main reasons: firstly, because the property had drainage issues and became too expensive to maintain; and secondly, because Blagoja was contributing minimally to the mortgage repayments on the property. She claimed that when Blagoja did contribute, it was usually only an amount of about $50 or $60 a week, while her own contribution to the mortgage was of the order of $100 to $150 per week, a position which she seems to have regarded as either unfair or unsustainable in the longer term.

80. But much of Temjana’s evidence about the Lake Heights property was inconsistent with the objective documentary evidence concerning its acquisition and sale. Curiously, her recollection was that she and Blagoja purchased the house in 1982 or 1983. That was plainly wrong. The Real Property Act transfer of the Lake Heights property into their names is dated 13 September 1991. She could not remember the purchase price. She said that the house was sold within approximately 4 years of its purchase. That is also wrong. They sold it in 2001. The Court is satisfied that the documentary evidence is accurate and Temjana’s evidence to the extent it is inconsistent with the documents should be rejected.

81. Inaccuracies must be expected when witnesses seek to recollect details from prior decades. But the demonstrated error in Temjana’s evidence in respect to this property meant that the Court was somewhat cautious about accepting as accurate the rest of her evidence about the Lake Heights property.

82. That being said, Temjana’s account of having contributed most of the repayments of the loan on the Lake Heights property is likely to be correct. Temjana’s reliability as an income earner and a saver tend to indicate this. I accept this is what happened.

83. The purchase of the Lake Heights investment property in Blagoja and Temjana’s joint names is significant at several levels. It shows that despite their marital differences Blagoja and Temjana were making some attempt to build an independent store of financial value by investing in real estate. The Court has little doubt that Temjana was an important driving force behind this investment. It reflected her conservative saving philosophy. But it shows clearly that there was some realistic alternatives available to Temjana to living with and sinking her earnings into the Port Kembla household.

84. Mr Parker SC criticises the plaintiff’s case, asserting that it is lacking in financial detail with respect to this investment property. There is no evidence about the borrowing facility taken out with the ANZ bank to fund the acquisition. But I infer from her generally conservative financial behaviour that the plaintiff contributed substantially to the deposit and was principally responsible for the repayments. It is likely, in my view, that Temjana’s explanation for the sale is accurate. Temjana was unable to fund a non-contributing husband both with respect to the Lake Heights property and with respect to the Port Kembla property. And despite the lack of financial evidence one can understand why this was so. By 2001, Ivan had been dead for eight years; Blagoja was unable to work and his work payout said to be over $300,000 was unaccounted for; and Blaguna was getting older. Reason suggests that Temjana would have consolidated her financial ambitions in one place. In my view she probably let go of the Lake Heights property in part because she understood that he would in due course have an interest in the Port Kembla property.

Ivan’s Death - 1993

85. Temjana claims she took care of Ivan in his old age. It is common ground that he was unwell during the last 10 – 12 years of his life. In 1991 he had a pacemaker device fitted to support his heart function. Ivan died on 24 June 1993.

86. Temjana says that with Blaguna’s help, she cared for Ivan, doing his washing and cooking and looking after him, as though he was her own father throughout this whole last period of his life. Blagoja claims never to have observed Temjana performing such tasks and says that Blaguna took care of the house quite independently of Temjana. But if this evidence were to be accepted the proper inference from it would be that Temjana did nothing for Ivan. In my view this is a baseless exaggeration. The proper explanation for Blagoja’s evidence is that he did not notice what Temjana was doing for his father.

87. Blagoja also claims that Ivan said to him words about Temjana to the effect: “Temjana is not for my house. She said to me that she wanted my bank books and she wanted to look after all my money. I told her I wouldn’t do this”.

88. Blagoja says that Temjana did not get on well with Ivan. Blagoja says that Temjana never assisted Ivan in his business of making ‘tulumbi’, or traditional Macedonian sweets, and selling them, a small business in which he engaged in addition to his full-time work at the Port Kembla steel mills.

89. To somewhat complicate the picture of what Ivan really intended and represented to family members, Zaklina, Temjana’s daughter, deposes to a conversation with him. She says that not long before Ivan died he said to her words to the effect “this house is not for your father, not for your mother, not for Robert, but for you.” Zaklina was not cross-examined. The Court is not confident that this was said by Ivan.

90. Following Ivan’s death, the title to the Port Kembla property was transmitted under the Real Property Act to Blaguna.

Blaguna’s Wills

91. Blaguna made a number of wills after Ivan died. In a will she made in February 1997 she gave the whole of her estate to Blagoja and Gorica.

92. Then in April 1998 she made another will which is quite consistent with the case that Temjana makes. This will gave the Port Kembla property to Blagoja and the rest of her estate to Blagoja and Gorica. It is unclear that Temjana was even aware that Blaguna’s will provided for this during the next 12 years. Blaguna appears to have had an interest in other property in Macedonia which was subsequently transferred to Gorica and Blagoja in any event. But this will specifically isolates the Port Kembla property for Blagoja and would have allowed Temjana to enjoy the property with her husband after Blaguna’s death without interference from Gorica. This gift is consistent with Blaguna apparently respecting the Macedonian traditions and assuming that her daughter Gorica would be taken care of by her husband Mitre’s family.

93. She made her final will in November 2010. This will follows the pattern of the 1997 will in giving the whole of her estate to Blagoja and Gorica. As the Court’s reasons below make clear, Gorica and Mitre seem to have taken some role in the making of the November 2010 will. By November 2010 it was probably quite apparent to Blaguna that the marital separation of Temjana and Blagoja was on the cards either before or after her death. Her own evidence throws no light upon the motivation for this change. But I infer that it is probable that in these circumstances she focused her testamentary intentions more directly on Gorica.

Temjana Retires - 2002

94. In 2002, Temjana retired from her job as a sewing machinist. By then she had accumulated the modest sum of approximately $20,000 in superannuation. I accept that she exhausted that small fund paying for: the installation of a kitchenette in the garage of the Port Kembla property, tiles in the kitchenette area, a new roller door for the garage, new guttering and downpipes for the garage and a new water tank.

95. In my view she expended this money on the Port Kembla property once again because she believed that she and her husband Bagoja would enjoy the benefit of occupying the property in the long term after Blaguna’s death. She fully committed her then available financial resources to improving the Port Kembla property. She did not perceive she should do otherwise, given the promises that had been made to her about the property. And she had already been helping to build and maintain the household at the Port Kembla property for over 30 years on the strength of early promises to the same effect. By this time attempting to find separate premises to rent hardly seemed a realistic option for her. And she had no reason then to believe that the assurances she had been given would not be fulfilled, so she sank her superannuation into the Port Kembla property at this time.

96. Blagoja denies that Temjana ever was Blaguna’s carer “or remains her carer”. He says in part that this is because Temjana never got on well with Blaguna. Temjana says that since 2002, being at home full time, she has performed all the household cooking, cleaning and washing at the Port Kembla property, and has paid for all the household’s food, as well as administering medicine to Blaguna and helping her to and from the bathroom as she became more frail.

94. Blagoja’s account that Temjana did not take care of Blaguna is consistent with statements he claims that Blaguna made to him about Temjana in this later period. He says that Blaguna said to him words to the effect, “I don’t like Temjana: She pushes me all the time”; “Temjana doesn’t help around the house or do any cooking”; “Temjana doesn’t belong in this family”; “It would have been better if you had found another wife rather than her”; and, “I don’t like her”. It can be accepted that ordinary domestic frustrations will have arisen from time to time in a household where Temjana and her family were living with her parents-in-law and that Blaguna may perhaps on occasions have made statements such as these, which she may in retrospect have regretted. But I do not accept that this was Blaguna’s predominant attitude to her daughter-in-law throughout the time that they lived together at Port Kembla.

95. I accept Temjana was caring for Blaguna on a daily basis in the later stages of her life at the Port Kembla property before she went into the nursing home, where she resides now. I not only accept this because Blaguna was a witness of credit but it seems highly probable that Temjana did give such assistance to Blaguna. Ivan was dead. Blagoja was unlikely to be a reliable support to his mother. Gorica was not living at Port Kembla. But Temjana is not the only person who was likely to be her carer at this later time.

96. Zaklina became more heavily involved in Blaguna’s care in Blaguna’s last few years in Port Kembla. There was a natural bond between the two of them, which is attested to by a number of witnesses on both sides of the case. But I do not accept the impression given in Blaguna’s case that Zaklina had taken over Blaguna’s care entirely. Whilst Zaklina is involved in Blaguna’s close personal care Temjana was still co-ordinating that household for Blaguna’s benefit.

97. Temjana and Blagoja’s marital relationship continued to deteriorate. I accept that by about 2005 they had ceased to live together as husband and wife. I accept Temjana’s evidence that Blagoja would come home at night during this last period often drunk and would sleep on the couch in his clothes and would leave the house by 7.00am the next day.

Dealings with the Port Kembla Property – 2010 to 2016

101. Temjana says that in late 2010, Gorica Sarafoska and her husband Mitre Sarafoski visited Wollongong from Queensland where they lived, and said that they would take Blaguna to the doctor. Temjana says that Blaguna told her later that in fact she was taken to a lawyer to change her will, in a way that she did not understand. As the documents show, Blaguna did change her will at this time.

102. Temjana attempted to discuss what Blaguna had said to her about the will with Blagoja. Blagoja rebuffed these attempts. Fearing she might lose the Port Kembla property as a pIace where she could live when Blaguna died, Temjana sought legal advice. As a result of this advice Temjana ultimately lodged a caveat over the title to the Port Kembla property on 27 September 2013.

103. Almost a year later, on 5 August 2014, Blaguna’s solicitors sent Temjana a letter informing her that:

“Mrs Smilevska’s health has deteriorated. Mrs Smilevska can no longer care for herself... As a result Mrs Smilevska must be placed into a nursing home. This means that the [Property] in which you live must be sold in order to pay the accommodation costs of a nursing home … [which are] very high. … If you fail to vacate within the time required, the locks will be changed without giving you any notice.”

104. In 2014 Blaguna lodged a lapsing notice against Temjana’s caveat. On 17 October 2014 the Court extended the caveat until further order, pending the trial of these proceedings. On 14 October 2014 Blagoja filed an application for the dissolution of his marriage with Temjana.

Blaguna’s Health Deteriorates and she Suffers a Stroke

105. On Blagoja’s account, Blaguna’s health began to deteriorate by the beginning of 2014, following her suffering a stroke. But Temjana claims Blaguna became increasingly unwell from about 2002, following which, as she had retired, she says that she looked after Blaguna and took all over the household chores. But Blagoja says in contrast that until Blaguna suffered the stroke she managed to look after herself. Since the stroke he says that he has assisted Blaguna together with Zaklina, who is Blaguna’s main carer and shares a room in the Port Kembla property with Blaguna. I do not accept Blagoja’s evidence on this. But I do accept that Zaklina performs personal tasks such as bathing Blaguna.

106. In August 2014 following the stroke, Blaguna was hospitalized and was subsequently moved to a nursing home in Warilla, a little south of Port Kembla. After about a month Gorica brought Blaguna back home to the Port Kembla property. But by the time of the hearing in November 2015, Blaguna was once again a full-time resident of the nursing home.

107. Zaklina deposes in her affidavit that when Blaguna moved into the nursing home for a period in 2014, she repeated to Zaklina words similar to those that Ivan had once told her: that the Port Kembla property was not meant for her father, Blagoja; nor for her mother, Temjana; nor for her brother, Robert; but for her, Zaklina.

108. Temjana’s evidence supports this. She says that in the previous four to five years she has heard Blaguna saying to Zaklina words to the following effect:

“You are not married. I worry about you. You pain me. I can't die because of you. If I give it (the house) to your father, he will sell it. You are clever even though you cannot talk.”

“You are the one I worry about.”

“It is you that I worry about. The others are married and they can talk.”

“If I gave the house to your father, we would all have been on the street and he would have drunk and gambled it away. While I'm alive he can't do that.”

109. I accept that Blaguna said these words or something like them. But these statements were made very late. Two observations about them are necessary. In the first place they were made only a few years before the Court witnessed Blaguna giving evidence. She appeared to the Court to have suffered mental deterioration for some time. It is to be expected that her memory was no doubt quite poor for some years before she gave evidence. It is quite likely that she had forgotten the earlier assurances that she had given to Temjana, when she made these statements. Secondly, these statements were made very late, long after Temjana had relied upon the earlier assurances.

Analysis of the Plaintiff’s Claims

Proprietary Estoppel

110. Temjana claims in proprietary estoppel alleging “estoppel by encouragement”. Such an estoppel may be established by showing that the claimant has been induced by the owner of property to alter his or her position detrimentally in the belief that the claimant would obtain an interest in that property: Ashton v Pratt[2015] NSWCA 12; 88 NSWLR 281 (“Pratt”)at [108]; Milling vHardie [2014] NSWCA 163 (“Hardie”)at [36], [50]; WantagongFarms Pty Ltd as Trustee for theBulleFamily Trust vBulle [2015] NSWSC 1603 (“Bulle”)at [60]. The inducement or encouragement of the expectation of a proprietary interest, and its subsequent desertion, found the equity upon which the Court may grant relief and compel the owner of property in good conscience to give effect to that expectation, in whole or in part.

111. The principles of equitable and proprietary estoppel have recently been restated: Sidhuv Van Dyke[2014] HCA 19; 251 CLR 505 (“Sidhu”); Pratt; Bulle; Hardie; Duic v Duic[2013] NSWCA 42 (“Duic”); Waddell v Waddell[2012] NSWCA 214; 292 ALR 788 (“Waddell”); andDelaforcev Simpson-Cook [2010] NSWCA 84; (2010) 78 NSWLR 483 (“Delaforce”).

112. The necessary elements of a proprietary estoppel are well established. The plaintiff must show: (1) the owner of property encouraged or induced in the plaintiff an expectation of obtaining an interest in property; (2) the expectation has arisen reasonably from the defendant’s conduct; (3) knowledge by the defendant of the plaintiff’s expectation or belief; (4) the plaintiff altered his or her position in reliance on the expectation; (5) the plaintiff would suffer an identifiable detriment from his or her change of position were the expectation not fulfilled; (6) the circumstances render it unconscionable for the defendant to disappoint the expectation.

113. Temjana submits that each of the sequential owners of the Port Kembla property, both Ivan while he was alive and Blaguna following Ivan’s death, either directly or by acquiescence, encouraged Temjana to believe that she and her daughter Zaklina would be be able to live securely in the Port Kembla property. In her encouragement case, she relies upon the words of the alleged assurances to the effect that she says Ivan and Blaguna either together or separately made to her. The Court has found that statements, such as the following were indeed made

“We will all live together as one family. When Blaguna and I die, you and Blagoja will get the house. Everything is for you.”

“Everything is for you.”

“This is for you.”

“This property is for you two.”

114. Temjana’s case is that Blaguna’s conduct in permitting her to expend money on the Port Kembla property and the family and to expend substantial labour over a period of 45 years encouraged in the expectation she alleges. Based upon Macfarlan JA’s statements in Hardie, Temjana submits that, irrespective of whether the representations were made, where a plaintiff’s expectation is reasonably capable of being derived from the defendant's conduct, by correlation the defendant should have realised that conduct would give rise to the expectation and so the Court may grant relief. In my view the expectation arose reasonably here from Ivan and Blaguna’s conduct.

115. Temjana submits that Blaguna conducted herself as to permit Temjana to act as she did, so causing Temjana reasonably to expect to have the interest in the Port Kembla property that she now claims. Blaguna should therefore in my view have realised that her conduct would create that expectation. This suffices to establish the third element, knowledge by Blaguna of Temjana’s expectation or belief.

116. But Blaguna submits that even if the promises were made, which she denies, the Court should not accept that Temjana in fact interpreted those comments as promises or assurances. On various occasions in her oral evidence Temjana described her state of mind as being a “hope” that Blagoja would inherit the Port Kembla property. But in my view her affidavit evidence and most of her oral evidence is to the effect that she had more than a hope, she had an expectation of inheriting the Port Kembla property. And the length of time of her reliance is not consistent with her just entertaining a mere hope.

117. Temjana has, for the last four decades, altered her position by conducting her life in reliance on her expectation of receiving an interest in the Port Kembla property. She says in her evidence, and I accept:

“If I had known that I might be evicted from my home in the future, then I would have acted differently. I would have saved far more money for myself and contributed much less to the household. I thought I was contributing to my home.

I put aside very little money over the years. As far as I was concerned, there was no need to. I was contributing to my family home and I would always have a place to live.”

118. It is not necessary that Blaguna’s conduct should be the sole inducement operating on the mind of the party setting up the estoppel: Sidhu at 526. Citing Newbon v City Mutual Life Assurance Society Ltd (1935) 52 CLR 723 at 735, French CJ, Kiefel, Bell and Keane JJ held in Sidhu that it is sufficient that the “supposed belief” of the representee was “a contributing cause” of the representee’s conduct and that there was a “sufficient connection between the assumption and the position of detriment”. The Court’s narrative of findings above shows that Blaguna’s statements were at least one contributing cause of Temjana’s conduct.

119. Blaguna denies that the alleged representations made to Temjana made any difference to the course of action that Temjana took. Blaguna submits that in cross-examination Temjana conceded that she and Blagoja lacked the financial resources to live anywhere else, even if they had wanted to do so. Temjana and Blagoja arrived in Australia without savings of their own. Temjana accepted that when her and Blagoja’s children were born, she could not probably have afforded to set up her own household, but instead relied upon Blaguna to help to look after the children so that she could return to work. This is understandably right. But in my view by the time that she and Blagoja bought a property in Lake Heights in 1991, the pair were then for a period of 10 years able to afford the upkeep of the mortgage. They were ultimately forced to sell that property but after a long period of sustaining payments on it. Temjana conceded that after Ivan’s death in 1993, she did not have enough money to buy another property. But she was already investing in one at Lake Heights.

120. I accept that in arranging her affairs, Temjana has altered her position in reliance upon the promise of continued security of tenure in the Port Kembla property. Besides those positive actions that she says she has taken, such as contributing financially to the Smilevski household, she points to the actions she has not pursued for the same reason. I accept that Temjana has not taken any steps to make provision to safeguard herself from the possibility that she might one day find herself without secure accommodation in her old age. Nor has she taken steps to help to secure Zaklina’s position, which for the mother of a disabled child is an even more pressing concern. The Court has found that she is the kind of person who would have taken such steps and she would have done so if Ivan and Blaguna had not given her the assurances she says.

121. Temjana clearly identifies the detriment she would suffer from her change of position, were her expectation of an interest in the Port Kembla property not be fulfilled. Temjana lives with her daughter Zaklina, and acts as her guardian, carer and companion. They are both at risk of eviction from the Port Kembla property if the expectation is not fulfilled. Zaklina has been employed for some 20 years at a business called Flagstaff, a food provider to hospitals, under a sheltered workshop arrangement. She earns about $300 to $600 a fortnight. Temjana’s only income is her Centrelink pension. If Temjana is evicted from the Port Kembla property, she will be required to find a new home for herself and Zaklina, using her pension and Zaklina's nominal wage to support both of them. Temjana has a brother and sister who live in Australia, but neither could accommodate her and Zaklina.

122. In proving detriment, Temjana can rely upon not only positive actions she has taken but also actions she has omitted to take. As Campbell JA explained in Waddell at [66]:

“In accordance with the judge's enumeration of factors derived from those that Brennan J gave in Walton's Stores, the relevant detriment is one that the plaintiffs action or inaction (ie, what the plaintiff has done or not done in reliance on the assumption or expectation) will bring about if the assumption or expectation is not fulfilled. I have earlier referred to how equitable estoppel looks backwards from the moment when a promise falls due to be performed and asks whether, in the circumstances which have actually happened, it would be unconscionable for the promise not to be kept.” (Citation omitted)

123. Temjana has not led evidence that if she had not acted in reliance of her expectation of an interest in the Port Kembla property she would be financially better off than she is currently. She has not undertaken a hypothetical financial calculation to show that if she had separated from Blagoja many years ago and left the Port Kembla property she would actually have been financially better off than she is now. Mr Parker SC was critical of the absence of such evidence in her case. But the law does not require Temjana to go that far at the risk of failing in her action, if she does not. As Allsop P said in Delaforce at [5]:

“That the party encouraged cannot show that he or she would have been better off in the posited alternative reality is not fatal to the making out of the estoppel. Indeed, the inability to prove such things reveals a central aspect of the detriment: being left, now, in that position.”

124. The Court’s findings in the narrative of events above make clear there were several opportunities for and a capacity for her to save a nest egg for her to start again elsewhere away from the Port Kembla property. The investment in the Lake Heights property was one such example. The Court’s findings already about Temjana’s conservative financial habits support the inferences that she would have taken advantage of such opportunities rather than committing her funds to household expenditure at the Port Kembla property.

125. Temjana submits that it would be unconscionable for her to now be denied an interest in the Port Kembla property, contrary to the representations that she says that she relied upon to her detriment. For the reasons given in my view it would be unconscionable, especially given Blaguna’s repetition of the assurances over the years.

126. For the following reasons Temjana’s proprietary estoppel case is made out, subject to consideration of the defence based on the Real Property Act.

Section 42 Indefeasibility

127. Blaguna contends that any interest in the Port Kembla property arising by way of proprietary estoppel would only have been enforceable against Ivan as registered proprietor up to the date of his death. Blaguna’s title as registered proprietor, she contends, is protected by Real Property Act, s 42 from any interest that Temjana claims. Blaguna submits that Temjana has no in personam right as against Blaguna, even though Blaguna may be a volunteer, as Blaguna has undertaken no action that would bind her conscience to any transaction and give rise to any personal equity against her: Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 at 167-172 [190] – [198].

128. Against this, Temjana submits that her claim is brought against Blaguna in personam, in that it is based upon interactions that took place between herself and Blaguna. Temjana says that her case does not rely upon any unregistered estate or interest in land (within the meaning of ss 42 or 43) extant in 1994, subject to which Blaguna took title to the Port Kembla property.

129. The starting point for analysis is s 42 of the Property Law Act, which provides:

“42   Estate of registered proprietor paramount

(1)   Notwithstanding the existence in any other person of any estate or interest which but for this Act might be held to be paramount or to have priority, the registered proprietor for the time being of any estate or interest in land recorded in a folio of the Register shall, except in case of fraud, hold the same, subject to such other estates and interests and such entries, if any, as are recorded in that folio, but absolutely free from all other estates and interests that are not so recorded except:

(a)   the estate or interest recorded in a prior folio of the Register by reason of which another proprietor claims the same land,

(a1)   in the case of the omission or misdescription of an easement subsisting immediately before the land was brought under the provisions of this Act or validly created at or after that time under this or any other Act or a Commonwealth Act,

(b)   in the case of the omission or misdescription of any profit à prendre created in or existing upon any land,

(c)   as to any portion of land that may by wrong description of parcels or of boundaries be included in the folio of the Register or registered dealing evidencing the title of such registered proprietor, not being a purchaser or mortgagee thereof for value, or deriving from or through a purchaser or mortgagee thereof for value, and

(d)   a tenancy whereunder the tenant is in possession or entitled to immediate possession, and an agreement or option for the acquisition by such a tenant of a further term to commence at the expiration of such a tenancy, of which in either case the registered proprietor before he or she became registered as proprietor had notice against which he or she was not protected:

Provided that:

(i)   The term for which the tenancy was created does not exceed three years, and

(ii)   in the case of such an agreement or option, the additional term for which it provides would not, when added to the original term, exceed three years.

(iii)   (Repealed)

(2)   In subsection (1), a reference to an estate or interest in land recorded in a folio of the Register includes a reference to an estate or interest recorded in a registered mortgage, charge or lease that may be directly or indirectly identified from a distinctive reference in that folio.

(3)   This section prevails over any inconsistent provision of any other Act or law unless the inconsistent provision expressly provides that it is to have effect despite anything contained in this section.”

130. The concept of indefeasibility under the Real Property Act prevents the assertion of unregistered interests in land directly against a registered proprietor, but it is silent as to personal rights, whether or not they have proprietary effects: see LB Moses and B Edgeworth, “Taking it Personally: Ebb and Flow in the Torrens System's In Personam Exception to Indefeasibility" [2013] 35 Sydney Law Review 107 at 132. As Beazley P held in Gerard Cassegrain & Co Pty Ltd v Cassegrain [2013] NSWCA 453 at [17]:

“The indefeasibility conferred on a registered proprietor “in no way denies the right of a plaintiff to bring ... a claim in personam, founded in law or in equity, for such relief as a court acting in personam may grant”: Frazer v Walker at 385. This is so notwithstanding the fact that an in personam claim is not an exception contained in s 42 of the Real Property Act: see Farah Constructions v Say-Dee at [193] ff and Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd [2013] HCA 11; 247 CLR 149at [31].”

131. The principles applicable to the Breskvar v Wall (1971) 126 CLR 376 at 385 “personal equities” exception to indefeasibilty may be shortly stated. A personal equity may arise out of the conduct of the registered proprietor personally or persons for whom the registered proprietor is responsible: Logue v Shoalhaven Shire Council [1979] 1 NSWLR 537 at 563 and Bahr v Nicolay (No. 2) (1988) 164 CLR 604. To acquire title with the mere notice of an unregistered interest is not enough to raise a personal equity, for that would be inconsistent with the protection against notice afforded by Real Property Act, s 43: Ryan v Brain [1994] 1 Qd R 681. But a personal equity may be raised where additional factors exist that indicate that the person taking title under the Torrens system agrees to be bound by the unregistered interest: Snowlong Pty Ltd v Choe (1991) 23 NSWLR 198. A plaintiff cannot assert a personal equity unless a known legal or equitable cause of action is enforceable against the registered proprietor: Grgic v Australian and New Zealand Banking Group Ltd (1994) 33 NSWLR 202 at 222 and Say-Dee at [193].

132. To the extent that Temjana’s claim relies upon a constructive trust that arose against Ivan during his ownership of the Port Kembla property, she concedes that a constructive trust would not ordinarily be enforceable against a defendant who received registered title from the original constructive trustee. But Temjana claims that Blaguna’s conscience is also bound by her own conduct, both before and after she received title to the Port Kembla property. She submits, persuasively in my view, that Blaguna’s conscience is bound, in respect of the period prior to the transfer to her in 1994.

133. First, Blaguna herself did represent regularly to Temjana that the Port Kembla property would ultimately be for Temjana and Blagoja. Secondly, Blaguna acquiesced in representations regarding the future ownership of the Port Kembla property that Ivan repeatedly made in her presence and Temjana’s presence, and she never took any steps to disabuse Temjana of the expectations those representations evoked, even though she must have anticipated that she, Blaguna, was likely to be the future owner of the Port Kembla property. Thirdly, Blaguna was as aware, as Ivan was, that Temjana was relying to her detriment on her expectation of an interest in the Port Kembla property. Their affairs and family finances would all have been well known is such a small household. Fourthly, Blaguna acquiesced in Temjana’s continued financial contributions to the common household in preference to persisting in an attempt to acquire equity in real property in her own name. Fifthly, Blaguna was present at the bank when Temjana became jointly liable under the 1989 loan agreement with the CBA, default on which loan would have meant the sale or foreclosure of the Port Kembla property affecting Temjana, Blaguna and the rest of the family. Moreover, Blaguna would have known in my view that Temjana made the majority of the repayments on that loan, which was ultimately discharged in 1994. Sixthly, Blaguna personally benefitted from the both financial and non-financial contributions that Temjana made to the Smilevski household over a period of 45 years, both before and after Blaguna became the registered proprietor of the Port Kembla property.

134. Blaguna submits that no such personal equity arises. But I do not find her contentions persuasive. Blaguna contends that the evidence Temjana cites to support the submission that Blaguna herself said that the Port Kembla property was for Blagoja “lacks any particularity or context”. She denies that a failure to interrupt Ivan’s alleged representations to Temjana regarding the Port Kembla property means that she somehow adopted such statements as her own. But the Court has already found that lack of some particularity is to be expected.

135. Blaguna submits that to the extent that Temjana participated in family activities and contributed to household chores and expenses, such participation and contribution is exactly what would be expected given that Temjana was living at the Port Kembla property (rent free) with her husband and her in-laws. But the Court has found she had other financial options and did not pursue them because of the assurances given to her.

136. In relation to the CBA mortgage, Blaguna submits that even if the monies borrowed were applied to upgrading the Port Kembla property by arrangement with Ivan, the evidence does not establish that Blaguna was a party to that arrangement, as the discussions preceding the loan were only undertaken between Temjana, Blagoja and Ivan. But the Court has found that Temjana was present. Blaguna submits that even if Temjana is correct and Blaguna attended the bank when the mortgage documents were signed, there is no suggestion that she played any part in (or even was aware of the full details of) that transaction. But in my view Blaguna must have been aware in this small household as much as Ivan of the renovations being done and their financial sources. And she must have been vitally interested in knowing that Blagoja and Temjana were talking responsibility for the mortgage repayments.

Relief

137. What form of relief should be granted in relation to the proprietary estoppel claim? The Court should prima facie enforce a reasonable expectation which the party bound has created or encouraged: Delaforce, per Handley AJA at [63]. It is now no longer necessary to mould a remedy to reflect the minimum relief necessary to remove the detriment but enforcement should not be out of all proportion to the detriment: Ashton v Pratt (2015) 88 NSWLR 281; NSWCA 12 at [142].

138. The principal relief claimed in the Second Further Amended Statement of Claim, paragraph 1, is as follows:

“Contract/estoppel/constructive trust

1.   A declaration that the first defendant holds the property located [address not published], Port Kembla in the state of New South Wales 2502 register folio 8/17804 (‘the property’) on constructive trust for herself, the plaintiff and the second defendant on the following terms:

(a)   During the lifetime of the first defendant, the plaintiff and the second defendant have, free of any liability for payment of a licence fee, an irrevocable licence to occupy (and, at their own cost, improve) the property as a residence for themselves and their children.

(b)   On and from the death of the first defendant, the plaintiff and the second defendant are entitled to have legal title to the property as tenants in common in equal shares. ”

139. Mr Parker SC submitted that there was a degree of inconsistency between this relief and the case pleaded in paragraph 9 of the Second Further Amended Statement of Claim, which is a plea that Temjana and Blagoja would inherit the Port Kembla property after the death of the survivor of Ivan and Blaguna. But in my view there is no real inconsistency. The relief sought especially in prayer 1(b) does much the same, and prayer 1(a) only seeks security of occupation of the property during the life of Blaguna, before the property is inherited.

140. In my view the declaratory relief sought in the Second Further Amended Statement of Clam, prayer 1 is appropriately moulded to give effect to the expectation created in Temjana as found by the Court and is not out of proportion to the detriment suffered and should be granted.

141. But there may be issues as to whether any part of the value of the Port Kembla property can be used for Blaguna’s benefit during her lifetime even though she cannot enjoy it in person now she is in a nursing home. Liberty to apply will be granted for that purpose, if required.

Contract

142. Temjana claims a contractual right as against Blaguna to an interest in the Port Kembla property. She says that her marriage to Blagoja, an arranged marriage, was the product of a ‘marriage contract’ between the members of her family and Blagoja’s family. Her submissions rely upon the marriage arrangement being legally enforceable and binding as between the parties to it: not only as between Temjana and Blagoja, but also between the wider family members, including Blaguna. Temjana claims that an implied term of the “marriage contract” to which Temjana, Blagoja, Blaguna and Ivan were all parties, was that Temjana as daughter-in-law would not be excluded from the family home at any time except by reason of necessity (natural, political or financial) or due to a serious breach of the marriage contract on Temjana’s part.

143. Temjana says that she performed her part of the contract for more than four decades, by providing for the household in the manner described in the narrative of facts above, but Blaguna is in breach of the agreement in now seeking to expel her from the Port Kembla property. She accepts that there is a legal presumption that husband – wife, or parent – child agreements are not intended to create legally enforceable relations and so are not legally binding: JW Carter, E Peden and G Tolhurst, Contract Law in Australia (5th ed 2007, Butterworths) at [8-03]. But she submits that there is no such recognized presumption in relation to agreements made between a woman and her parents-in-law.

144. Blaguna’s primary argument against Temjana’s contract claim is that any contract that might exist in relation to the ownership of the property was an oral contract, and that purely oral contracts are not competent to pass title in real property: Conveyancing Act 1919, s 54A.

145. In rejoinder Temjana contends that she has partly performed the oral contract alleged by making contributions to the renovation and repair of the Port Kembla property and by contributing to the running of the household. Section 54A does not affect the law relating to part performance in enforcing an oral contract disposing of land: s 54A(2). But Blaguna contends that none of the alleged acts of part performance are acts “unequivocally and in their own nature referable to some contract of the general nature of that alleged”, that is, unequivocally referable to the oral contract for which Temjana contends: Regent v Millett (1976) 133 CLR 679 (“Regent”) at 683.

146. Secondly, Blaguna disputes that any promises were made that would constitute any such contract.

147. Lastly, Blaguna contends that under Real Property Act 1900, s 42 any interest in the Port Kembla property arising under a contract would only have been enforceable against Ivan as registered proprietor up to the date of his death. Against this, Temjana submits that her claim is brought against Blaguna in personam, in that it is based upon a contractual agreement to which both Temjana and Blaguna were parties.

148. Conveyancing Act, s 54A represents an obstacle to Temjana’s contract claim, one that in my view her plea of part-performance cannot readily overcome. It provides:

“54A   Contracts for sale etc of land to be in writing

(1)   No action or proceedings may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action or proceedings is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto lawfully authorised by the party to be charged.

(2)   This section applies to contracts whether made before or after the commencement of the Conveyancing (Amendment) Act 1930 and does not affect the law relating to part performance, or sales by the court.

(3)   This section applies and shall be deemed to have applied from the commencement of the Conveyancing (Amendment) Act 1930 to land under the provisions of the Real Property Act 1900.”

149. The modern foundation of the doctrine of part performance is the decision of the House of Lords in Maddison v Alderson (1883) 8 App Cas 467. In that case Lord Selborne LC explained at 474–6 that the Statute of Frauds 1677 (Imp) prevented a person from being charged upon an oral contract concerning land only, but it did not so prevent a claim based upon “equities resulting from res gestae subsequent to and arising out of the contract”. But those equities may only result where the acts relied upon as part performance are “unequivocally, and in their own nature, referable to some such agreement as that alleged”. The High Court of Australia affirmed that requirement for the efficacy of the doctrine holding in Regent at 682-3, that it “is enough that the acts are unequivocally and in their own nature referable to some contract of the general nature of that alleged”.

150. Temjana’s acts of part performance of the contract she alleges, share the factual substratum of her proprietary estoppel claim. The acts take the form of her conduct in helping to maintain the household, care for Ivan and Blaguna and contributing financially to the family budget. But Blaguna submits, this time with more force in relation to the contract pleaded that such conduct may be readily explained as conduct not uncommonly performed in a domestic household, without reference to any contractual obligations. The Vice-Chancellor in Grant v Edwards [1986] Ch 638 (“Grant”) at 657 explained that conduct of this type “may all be referable to the mutual love and affection of the parties and not specifically referable to the claimant's belief that she has an interest in the house”. For similar reasons, the conduct Temjana relies upon as part performance is not obviously specifically referable to the contract that she alleges. No reliance on those acts as part performance of any contract is permissible. Section 54A is in my view an answer to Temjana’s claim in contract.

151. But there is an anterior problem with the contract claim. The Courts do not generally recognize as enforceable agreements reached between relatives, on the basis that the parties to domestic agreements do not intend them to be contracts. In Jones v Padavatton [1969] 1 WLR 328; 2 All ER 616 Salmon LJ explained the basis for this (at 332; 621):

This is not a presumption of law, but of fact. It derives from experience of life and human nature which shows that in such circumstances men and women usually do not intend to create legal rights and obligations, but intend to rely solely on family ties of mutual trust and affection. …

152. Gaudron, McHugh, Hayne & Callinan JJ’s statements in Ermogenous v Greek Orthodox Community of South Australia Inc (2002) 209 CLR 95, cast doubt on the use of presumptions as to the intention to create legal relations. In that case at 106 their Honours held that:

“For our part, we doubt the utility of using the language of presumptions in this context. At best, the use of that language does no more than invite attention to identifying the party who bears the onus of proof. In this case, where issue was joined about the existence of a legally binding contract between the parties, there could be no doubt that it was for the appellant to demonstrate that there was such a contract. Reference to presumptions may serve only to distract attention from that more basic and important proposition”

153. Their Honours described the difficulty of the task of finding whether parties had an intention to create legal relations at 105:

“It is of the essence of contract, regarded as a class of obligations, that there is a voluntary assumption of a legally enforceable duty’. To be a legally enforceable duty there must, of course, be identifiable parties to the arrangement, the terms of the arrangement must be certain, and, unless recorded as a deed, there must generally be real consideration for the agreement. Yet ‘[t]he circumstances may show that [the parties] did not intend, or cannot be regarded as having intended, to subject their agreement to the adjudication of the courts’. Because the inquiry about this last aspect may take account of the subject-matter of the agreement, the status of the parties to it, their relationship to one another, and other surrounding circumstances, not only is there obvious difficulty in formulating rules intended to prescribe the kinds of cases in which an intention to create contractual relations should, or should not, be found to exist, it would be wrong to do so.” (Citations omitted).

154. Here Temjana bears the onus of proof to show that there was an intention to form contractual relations at least between Blaguna and herself. In submissions, Temjana relies upon an implied term for the content of the contractual obligation. She submits that the implication of that term can be inferred from “the shared culture of the parties”. But it is hard to see how, through the mere sharing of cultural expectations, contractual rights and obligations might arise. This aspect of Temjana’s case was underdeveloped. She relied on no authorities for the propositions that (a) the shared cultural expectations of family members could, without more, result in legally binding contractual rights and obligations; or (b) those expectations could require that terms be implied into a contract between members of a family.

155. And well-known authority points against those propositions. For example, in Balfour v Balfour [1919] 2 KB 571 (“Balfour”) at 579–80, Atkin LJ described why the Courts often find there is no intention to create legal relations in husband – wife relationships:

“All I can say is that the small Courts of this country would have to be multiplied one hundredfold if these arrangements were held to result in legal obligations. They are not sued upon, not because the parties are reluctant to enforce their legal rights when the agreement is broken, but because the parties, in the inception of the arrangement, never intended that they should be sued upon. Agreements such as these are outside the realm of contracts altogether. The common law does not regulate the form of agreements between spouses. Their promises are not sealed with seals and sealing wax. The consideration that really obtains for them is that natural love and affection which counts for so little in these cold Courts. … I think the onus was upon the plaintiff, and the plaintiff has not established any contract.”

156. Balfour was a case of an express arrangement between the husband and wife. If every unspoken family arrangement relying on a family’s cultural expectations for the implication of its terms was to be legally enforceable, domestic life would become perilous. Even putting aside the s 54A answer to Temjana’s contract claim, the facts here do not in my view disclose an intention to create legal relations. I would not find that the alleged contract came into existence between these parties.

Common intention constructive trust

157. In the alternative to her proprietary estoppel claim, Temjana propounds a case of “common intention constructive trust”, alleging that she contributed to a “joint enterprise” at the Port Kembla property, “from 1970 onwards”. Given the Court’s findings in relation to the proprietary estoppel claim it is not necessary to analyse this claim far.

158. Blaguna submits, correctly in my view, that there cannot have been any ‘joint enterprise’ with respect to the acquisition of the Port Kembla property. Ivan acquired the Port Kembla property in January 1969, having migrated to Australia from Macedonia in 1966. The purchase took place before Temjana or Blagoja arrived in Australia respectively in 1970 and 1969, and without the agreement of or any assistance from the pair. Indeed, it appears likely that Ivan purchased the Port Kembla property in 1969 prior to Temjana’s introduction to the Smilevski family in Prilep, Macedonia later that same year.

159. The legal principles in relation to a constructive trust that arises from a common intention between the parties, are those that Deane J set out in Muschinski v Dodds [1985] HCA 78; 160 CLR 583 at 619:

“Like most of the traditional doctrines of equity, it operates upon legal entitlement to prevent a person from asserting or exercising a legal right in circumstances where the particular assertion or exercise of it would constitute unconscionable conduct. The circumstances giving rise to the operation of the principle were broadly identified by Lord Cairns L.C., speaking for the Court of Appeal in Chancery, in Atwood v. Maude: where ‘the case is one in which, using the words of Lord Cottenham in Hirst v. Tolson, a payment has been made by anticipation of something afterwards to be enjoyed (and) where ... circumstances arise so that future enjoyment is denied’. 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 of 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 specially provided that that 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 so to do.” (Citations omitted).

160. As indicated in the final sentence of Deane J’s statement of principle above, unconscionability is the touchstone of the creation of such a constructive trust. As White J held in Shepherd v Doolan [2005] NSWSC 42 (“Doolan”) at [30]:

“The ultimate basis for the imposition of a constructive trust is that it would be unconscionable for the holder of the legal title to the property to assert that he holds it free of any beneficial interest in the claimant. However, although “unconscionability” is the underlying basis upon which equity will intervene, it is not itself a sufficient description of the principles upon which equity does so. Equitable rights do not arise merely because the Court considers it fair in all the proven circumstances that the legal owner of property should hold it, or a portion of it, for the benefit of another.” (Citation omitted).

161. Temjana relies upon a statement that Gleeson CJ cited with approval in Green v Green (1989) 17 NSWLR 343 (“Green”) at 357: Sir Nicolas Browne-Wilkinson VC’s statement in Grant, as noted earlier in these reasons, in relation to the principles of contract, at 657:

“In many cases of the present sort, it is impossible to say whether or not the claimant would have done the acts relied on as a detriment even if she thought she had no interest in the house. Setting up house together, having a baby, making payments to general housekeeping expenses (not strictly necessary to enable the mortgage to be paid) may all be referable to the mutual love and affection of the parties and not specifically referable to the claimant's belief that she has an interest in the house. As at present advised, once it has been shown that there was a common intention that the claimant should have an interest in the house, any act done by her to her detriment relating to the joint lives of the parties is, in my judgment, sufficient detriment to qualify. The acts do not have to be inherently referable to the house ... The holding out to the claimant that she had a beneficial interest in the house is an act of such a nature as to be part of the inducement to her to do the acts relied on. Accordingly, in the absence of evidence to the contrary, the right inference is that the claimant acted in reliance on such holding out and the burden lies on the legal owner to show that she did not do so...”

162. Functionally, a common intention that the parties both hold may provide the necessary circumstance which renders it unconscionable for a legal owner of property to refuse to recognise the other’s equitable interest in that property. Barrett J (as his Honour then was) commented in Brandling v Weir [2003] NSWSC 723 at [34] that ‘unconscionability’ as a basis for a finding of a constructive trust is:

“really no more than a variant of the common intention approach I have already discussed or, more accurately, that common intention approach is but an example or aspect of the application of a wider principle as to the circumstances in which equity will intervene to redress unconscionability.”

163. The common intention relied upon need not be expressly stated by the parties, and may be inferred from their conduct. As Glass JA held in Allen v Snyder [1977] 2 NSWLR 685 (“Allen”) at 690:

“The common intention to which the Court gives effect may be expressed in such an oral agreement, or it may be inferred from the conduct of the parties. What is enforced is an actual intention, inferred as a matter of fact, not an imputed intention which they never had, but would have had, if they had applied their minds to it.” (Citations omitted).

164. As to what conduct may give rise to an inference of a common intention sufficient to justify the constructive trust, Temjana relies upon White J’s decision in Doolan at [37] – [38], where his Honour held:

“[37]   The intention may be established in various ways. There may be an agreement between the parties as to how the property should be held. There may be express statements as to their intention. Their intention may be inferred from their conduct. The question of what acts demonstrate an agreement or common intention referable to the beneficial enjoyment of the property is one of evidence, not law. A common intention that a party have a beneficial interest in a property owned by another will not be inferred merely from their joint occupation of property, nor the carrying out of household duties, nor the bringing up of children on the property, nor the doing of repairs, renovations, maintenance, decoration or improvement, nor the provision of furniture.

[38]   The intention may be inferred from financial contributions, direct or indirect, to the acquisition of property, including the paying off of mortgages, or the payment of expenses which free up funds for that purpose. This is a wider enquiry than whether a contribution was made to the purchase money such as to give rise to a presumption of a resulting trust. Whilst both enquiries address the inferences to be drawn as to the parties’ actual intentions, a contribution to the purchase price creates a presumption of beneficial ownership in the proportion which the amount contributed bears to the price. For a “common intention” constructive trust, a contribution, direct or indirect, to the costs of acquisition of the property is a matter from which an intention that the claimant have a beneficial interest in the property might be inferred. There is a difference between a fact from which an inference can be drawn, and a fact from which a rebuttable presumption arises. The significance of the difference will depend upon the strength of the presumption. In the case of the “common intention” constructive trust, there is no presumption that the beneficial interest is in proportion with the contribution to the purchase price.” (Citations omitted).

165. A common intention constructive trust can be established from an agreement or common intention that arises after acquisition of the relevant property, as was noted by Hargrave J in Director of Public Prosecutions v Ali (No. 2) [2010] VSC 503 at [75]. Other similar examples of post property acquisition constructive trusts are found in the following cases: Allen at 691; Butler v Craine [1986] VR 274 at 284-7; Grant at 651-2; Green at 355-6; Rasmussen v Rasmussen [1995] 1 VR 613 at 616; and Austin v Keele (1987) 10 NSWLR 283 at 290 (Privy Council).

166. But the Court does not have to decide this claim in light of the conclusions in relation to proprietary estoppel.

Conclusions and Orders

167. In the result the plaintiff has succeeded on her proprietary estoppel claim, failed on her contract claim, and the Court does not have to decide the common intention constructive trust claim.

168. Subject to any further submissions about the exact form of relief necessary to reserve some financial benefit for Blaguna from the Port Kembla property whilst she is in the nursing home, the Court is prepared to make a declaration in terms of prayer 1 of the Second Further Amended Statement of Claim.

169. Costs would ordinarily follow the event but one or other party may seek a special costs order.

170. The Court therefore orders:

1. Direct the parties to bring in Short Minutes of Order to give effect to these reasons.

2. List the proceedings for any further argument in relation to the form of orders or costs on Tuesday, 31 May 2016 or such other date as the parties arrange this week with my Associate.

3. Grant liberty to apply in relation to the final form of relief.

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Amendments

04 May 2016 - [111] "Principles equitable and proprietary estoppel" to "principles of equitable and proprietary estoppel"

[132] "prior the transfer" to "prior to the transfer"

[133] "Temjana' presence" to "Temjana's presence"

[165] "can be established arise from" to "can be established from"

Decision last updated: 04 May 2016