Smilevska v Smilevska (No 2)

Smilevska, the plaintiff, commenced proceedings against Smilevska, the first defendant, and another, the second defendant, in the Supreme Court of New South Wales. The plaintiff, who migrated to Australia from Macedonia, claimed that she and the second defendant agreed to contribute to household expenses and 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. The plaintiff's father-in-law has since deceased, and the first defendant has placed the property on the market for sale and demanded that the plaintiff vacate the property to facilitate its sale. The plaintiff alleged that the second defendant is in breach of the contract.

The court was required to determine whether there was an intention to create legal relations, whether the alleged bargain was sufficiently certain to constitute an agreement, and whether there was a breach of contract. The court also had to decide whether promissory estoppel applied, and if it would be unconscionable for the first defendant not to fulfil the promises or expectation alleged. Additionally, the court had to determine whether a constructive trust arose over the property to enable the plaintiff to recover her contributions to the alleged failed joint venture.

The court found that the plaintiff had performed household duties, paid household bills, borrowed money to pay for renovations, and nursed her father-in-law during ill-health 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. The court held that it would be unconscionable for the first defendant not to fulfil the promises or expectation alleged. The court also found that the plaintiff and the first defendant had entered into a joint venture with the second defendant and the plaintiff's late husband for the maintenance and development of the Port Kembla property, which joint venture had now failed. The court held that it would be unconscionable for the first defendant to retain the benefit of the plaintiff's contributions to the alleged failed joint venture.

The court ordered that a constructive trust be imposed over the property to enable the plaintiff to recover her contributions to the joint venture. The court also ordered that the first defendant pay the plaintiff $100,000 in damages for breach of contract and promissory estoppel.