Stojanovski v Stoyanovski

[2024] NSWSC 1582

Supreme Court

New South Wales

Medium Neutral Citation:

Stojanovski v Stoyanovski [2024] NSWSC 1582

Hearing dates:

20-24 May, 4 December 2024

Date of orders:

13 December 2024

Decision date:

13 December 2024

Jurisdiction:

Equity

Before:

Meek J

Decision:

Plaintiffs’ claim for relief based upon proprietary estoppel by encouragement dismissed. Parties directed to bring in short minutes of order in respect of the defendant’s cross-claim.

Catchwords:

ESTOPPEL — Proprietary estoppel by encouragement — Plaintiffs (husband and wife) claimed an interest in a residential property at Illawong on the basis of a proprietary estoppel, based upon various representations made by the defendant and his wife (the first plaintiff’s parents) to them over several decades — Representations evolved over time and formed part of a larger “family arrangement” requiring the first plaintiff to get married and have a family, after which the plaintiffs were required to work and care for the defendant and his wife at home and in the defendant’s property investment business in Mullumbimby, in return for income, security and (eventually) inheritance — Held that the representations as to occupation and inheritance, employment and care were made, but the estoppel case was not made out

ESTOPPEL — Reliance — Discussion of requirements of reliance and counterfactual reasoning — Plaintiffs’ evidence of reliance included making certain life decisions (including the first plaintiff sacrificing his art career to an extent, the second plaintiff moving to Australia from North Macedonia, and both starting a family together), financial contributions, a forgone investment opportunity and caretaking duties — Held that reliance in respect of certain matters was made out, but not to the extent claimed by the plaintiffs

ESTOPPEL — Detriment and countervailing benefits — Discussion of onus of proving detriment and accounting for countervailing benefits — Whether the plaintiffs suffered detriment in circumstances where they received significant countervailing benefits which accrued to them by reason of the single “family arrangement” encouraged by the representations (including rent-free accommodation, caretaking income and proprietary interests in valuable commercial and residential investment properties) — Whether the countervailing benefits in effect subsumed or sufficiently made good the representations of the defendant so as to make it not unconscionable for him to depart from the expectation that the plaintiffs could occupy and the first plaintiff would inherit the Illawong property — Held that onus was on the plaintiffs to account for countervailing benefits in proving detriment, and that no real or substantial detriment was made out

EVIDENCE — Hearsay — Exceptions — First-hand hearsay exceptions (s 63 Evidence Act 1995 (NSW)) — Whether the defendant was not available to give evidence — Discussion of meaning of “not available” in context where the defendant had a tutor in the proceedings

EVIDENCE — Jones v Dunkel inferences — Whether inference can be drawn that the defendant’s evidence would not have assisted his case in circumstances where, between the defence being verified by him and a consent to act as tutor being filed, the defendant failed to serve any affidavit evidence despite having court directions to do so — Held that no such inference ought to be drawn

ISSUE ESTOPPEL — Orders made by consent — Whether orders made by consent in the NSW Civil and Administrative Tribunal can raise an issue estoppel

Legislation Cited:

Evidence Act1995 (NSW)

Real Property Act 1900 (NSW)

Residential Tenancies Act 2010 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Alzawy v Coptic Orthodox Church Diocese of Sydney, St Mary and St Merkorious Church [2016] NSWSC 1122

Alzawy v Coptic Orthodox Church Diocese of Sydney, St Mary and St Merkorious Church (No 2) [2016] NSWSC 1123

Blacket v Barnett [2017] NSWSC 1032

Blair v Curran (1939) 62 CLR 464; [1939] HCA 23

Chen v Chu [2024] NSWSC 1139

Daniel v Athans [2022] NSWSC 1712

Dedakis v Deligiannis; The estate of Rebecca Deligiannis(also known as Rebeka Deligiannis) [2024] NSWSC 1018

Dillwyn v Llewelyn (1862) 4 De GF & J 517; 45 ER 1285

Donis v Donis (2007) 19 VR 577; [2007] VSCA 89

Ekes v Commonwealth Bank of Australia [2014] NSWCA 336

Fiorenza v Fiorenza [2024] NSWSC 549

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22

Gan v Xie [2023] NSWCA 163; (2023) 378 FLR 418

Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10

Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641; [1937] HCA 58

Habib v Radio 2UE Sydney Pty Ltd [2009] NSWCA 231

Hampson v Hampson [2010] NSWSC 217

Isaacs v Ocean Accident and Guarantee Corporation Ltd (1957) 58 SR (NSW) 69

Jennings v Rice [2002] EWCA Civ 159

Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8

Kane’s Hire Pty Ltd v Anderson Aviation Australia Pty Ltd [2023] FCA 381

Katsoulas v Kritikakis; Katsoulas v Apostolatos [2024] NSWSC 67

Kramer v Stone [2023] NSWCA 270

Kramer v Stone [2024] HCA 48

Morris v Riverwild Management Pty Ltd (2011) 38 VR 103; [2011] VSCA 283

Newbon v City Mutual Life Assurance Society Ltd (1935) 52 CLR 723; [1935] HCA 33

Priestley v Priestley [2017] NSWCA 155

Punchbowl Casual Dining Pty Ltd v Rashays Cafes (Trial Judgment) [2024] FCA 1265

Q (a pseudonym) v E Co (a pseudonym) [2020] NSWCA 220; (2020) 383 ALR 469

Reeves v Reeves [2024] NSWSC 134

Riches v Hogben [1985] 2 Qd R 292

Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19

Singh v AKM Investments Group Pty Ltd [2024] NSWCA 268

Slade v Brose [2024] NSWCA 197

Soulos v Pagones [2023] NSWCA 243; (2023) 416 ALR 181

Steak Plains Olive Farm Pty Ltd v Australian Executor Trustees Ltd [2015] NSWSC 289

Steria Ltd v Hutchison [2006] EWCA Civ 1551

Sullivan v Sullivan [2006] NSWCA 312

Twigg v Pitcher Partners Holdings Pty Ltd (No 4) [2023] NSWSC 109

Vickery v The Owners — Strata Plan No 80412 (2020) 103 NSWLR 352; [2020] NSWCA 284

Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7

Wang v Yu [2023] NSWSC 1182

Wild v Meduri [2023] NSWSC 113

Wild v Meduri [2024] NSWCA 230

Texts Cited:

Barnes QC, Michael, The Law of Estoppel (2020, Hart Publishing)

Lindsay J, “Evaluation of a proprietary estoppel claim to a family farm: Text, Context and Purpose” (Paper), STEP Queensland Annual Conference, 6 October 2023

Category:

Principal judgment

Parties:

Dimce Stojanovski (First Plaintiff / First Cross-Defendant)
Valentina Tusevska-Stojanovski (Second Plaintiff / Second Cross-Defendant)
Rade Stoyanovski (Defendant / Cross-Claimant)

Representation:

Counsel:
G M McGrath (Plaintiffs / Cross-Defendants)
N Bilinsky with P Boyle (Defendant / Cross-Claimant)

Solicitors:
Ballantyne Law (Plaintiffs / Cross-Defendants)
O’Reilly & Sochacki Lawyers (Defendant / Cross-Claimant)

File Number(s):

2022/260736

JUDGMENT

Introduction

1. HIS HONOUR: The city of Bitola in North Macedonia ^[1]  is known as the “City of Consuls”, reputedly because it was Bitola where most of the consulates of many countries were situated. 

   1. While the country known as of 2019 as North Macedonia has undergone various changes in the last century, I will for convenience henceforth refer to it as “Macedonia”, as the parties have throughout these proceedings.

2. The defendant, the now late Rade Stoyanovski (Rade, also referred to as “Ray”), was born in Dobruševo, a village near Bitola, in 1934. Sadly, he lived his early and final years in an environment of conflict. Little is disclosed of his early childhood. However, his school-aged years coincided with contested control of the city in the early 1940s.

3. Rade married Danica Stoyanovski (Danica). Their eldest child, the first plaintiff, Dimce Stojanovski ^[2]  (Dimce, also referred to as “Jim” or “Jimmy”), was born in Bitola in September 1959. Dimce is currently 65 years old.

   2. Dimce’s surname is spelt differently to the other family members, namely with a “j” rather than a “y”. The reasons for that remain unexplained on the evidence.

4. The young family immigrated to Australia in 1960, no doubt looking for a fresh start in life, and settled in Mullumbimby, New South Wales. In 1961, Rade and Danica’s only other child, Susanna Stoyanovski (Susanna, also referred to in the evidence as “Suzie”), was born.

5. Rade and his family prospered and came to hold valuable commercial and residential property in both Mullumbimby and Sydney. One of those properties, being the family home at Palmer Close, Illawong (Illawong Property), has become the source of a dispute between the plaintiffs, Dimce and his wife Valentina Tusevska-Stojanovski (Valentina), and Rade, over the plaintiffs’ purported interest in the property.

6. In essence, the plaintiffs claim an interest in the Illawong Property on the basis of a proprietary estoppel, based upon various promises and representations said to have been made by Rade and Danica to the plaintiffs over several decades. The alleged representations evolved over time and formed part of what was said to be a larger family arrangement which essentially required Dimce to get married and have a family, after which the plaintiffs were required to work and care for Rade and Danica at home and in Rade’s property investment business in Mullumbimby in return for income, security and (eventually) inheritance, as I explain further below. While Rade is recorded as the registered proprietor of the Illawong Property, it is the plaintiffs who reside in the property with their three young children, as they have done for over two decades. From November 2021, Rade had engaged in several attempts to have the plaintiffs and their family vacate the property. Ironically, and unfortunately, the art of diplomacy though sensitive and tactful dealings, a hallmark of the consuls of their city of origin, has not been a characteristic of the interactions between Dimce and Rade in recent years.

7. For clarity, as is evident from above, I have taken the liberty, without intending any disrespect, to refer to the parties and the various members of their family (many of whom bear the same or similar surnames) by their given names.

8. On the hearing, Mr McGrath of counsel appeared on behalf of the plaintiffs and Mr Bilinsky of counsel appeared with Ms Boyle of counsel on behalf of Rade (who appeared at the hearing by a tutor). Counsel for both sides provided a written outline of submissions prior to the hearing and made oral closing submissions following the completion of evidence. Counsel for Rade also provided written closing submissions on the penultimate day of the hearing. For convenience, I will refer to the submissions on behalf of Rade as submissions by Mr Bilinsky. However, it was obvious throughout the hearing that Ms Boyle gave Mr Bilinsky considerable assistance, including in relation to the taking of objections and addressing them, which assistance should be properly acknowledged.

9. I will cite the evidence in the proceedings by reference to the Court Book (CB), transcript pages and exhibit numbers, and cite the submissions by reference to Mr McGrath’s opening written submissions dated 16 May 2024 (POS), Mr Bilinsky’s opening written submissions dated 15 May 2024 (DOS) and closing written submissions dated 23 May 2024 (DCS), and transcript pages.

10. At the time of the hearing, Rade was 89 years old. After the conclusion of the hearing, the Court was informed by the parties’ legal representatives that Rade had passed away on 16 October 2024. There was a contest over the appointment of a representative of Rade’s estate for the purposes of these proceedings, which I set out further below.

11. On the first day of the hearing, Mr Bilinsky on behalf of Rade filed in court, with leave, a cross-claim seeking vacant possession of the Illawong Property, to which he said Rade would be entitled if the plaintiffs’ claim were dismissed.

12. Quintessentially, cases of proprietary estoppel between family members give rise to difficult factual questions. As is the case here, such disputes are often founded in historic events which are undocumented, and viewed by the competing family members from different perspectives.

13. Attempting to distil reasons as to why certain things were done and whether arrangements between the parties were embarked upon and carried through because of parental expectation, storge, filial obligation, a request or an agreement, either singularly or in combination of such actuating factors, is notoriously difficult. The difficulty is compounded in circumstances where there is said to be a cultural overlay which is said to explain certain family conduct. In these proceedings, an overlay of Macedonian cultural traditions played a key part in each party’s case.

14. As will be seen below, it seems to me that the dynamics in the family relationships are at least in part explicable by reference to some elements of Macedonian tradition, or more particularly Rade’s perception of them.

15. The evidentiary focus was principally upon the relationship between Rade and Dimce as father and son, and naturally so. There appears to have been some form of estrangement in the relationship between Rade and Susanna between 2010 and 2018: CB 126[78], 312[62], 315[81]-[82]. That was not a real issue per se in the proceedings and (properly) was not explored in any great detail.

16. Part of the challenge in this case is to determine to what extent the conduct of Rade and the plaintiffs goes beyond what might be consistent with family expectations or cultural tradition and intrudes into an area where equity will bind the conscience of Rade such that he (or indeed his estate by his representative) ought to make good the alleged promises said to have been made to the plaintiffs.

17. In his paper “Evaluation of a proprietary estoppel claim to a family farm: Text, Context and Purpose” (Paper), STEP Queensland Annual Conference, 6 October 2023, Lindsay J has observed that resolving that challenge calls for an assessment of the conduct by reference to notions of reasonableness and proportionality:

52. Although equity has a broader field of operation than contract law, not all agreements, promises or representations are enforced on a claim for proprietary estoppel by encouragement.

53. And although the standard of “conscionability” applied on an equity claim can be stricter in the standards it applies than the common law’s standard of “reasonableness”, equitable principles embody guidelines which (as legal constructs) limit the enforceability of agreements, promises and representations by reference to a variety of factors not unknown to the common law:

(a) whether an agreement, promise or representation has been reasonably relied upon; and

(b) whether any expectation arising from that reliance has been reasonable[; and]

(c) whether a grant of equitable relief to a claimant would disproportionately burden the respondent; and

(d) whether a claimant who seeks equity from a respondent should be required to do equity in favour of the respondent.

Representation of Rade’s estate

18. After the parties notified the Court of Rade’s death, the matter was listed for mention before me. I was of the view that there needed to be some form of regularisation of the representation of Rade’s estate, and no party contended otherwise. I directed that the parties confer with a view to drafting an appropriate representative order in respect of his estate. Regrettably, the parties were unable to come to an agreed position on the representation of Rade’s estate in the proceedings. I subsequently directed that any party seeking to address the appointment of an appropriate representative of Rade’s estate file and serve a notice of motion returnable before me on 4 December 2024. Directions for any reply affidavits and submissions were also made.

19. On 12 November 2024, Rade’s solicitors filed a notice of motion seeking the following order:

1. Order pursuant to Rule 7.10 of the Uniform Civil Procedure Rules 2005, that John Robinson be appointed the representative of the late Rade Stoyanovski’s Estate for the purposes of the proceedings.

20. John Robinson (Mr Robinson) had been acting as Rade’s tutor in these proceedings since March 2023. He is an accountant based in Mullumbimby who knew Rade since 1974, and was appointed as Rade’s attorney in 2021.

21. The parties provided competing affidavits and submissions in respect of the application for Mr Robinson’s appointment.

22. The plaintiffs raised a number of issues, including that the order sought under the notice of motion was “not in any way restricted” and it was not clear what actions Mr Robinson proposed to take in relation to his appointment. Questions were also raised as to Mr Robinson’s remuneration and indemnity from Rade’s estate in relation to his work as Rade’s attorney and conduct of the proceedings on Rade’s behalf. Assertions were also made as to Mr Robinson’s purported role in ongoing disputes between the parties ancillary to the subject-matter of these proceedings.

23. That all being said, on the hearing of the motion, I understood the principal concern of the plaintiffs to be that, if appointed under an order akin to that in the notice of motion, Mr Robinson would be effectively authorised to enforce any judgment against the plaintiffs in relation to the cross-claim for possession of the Illawong Property.

24. My response to that concern was essentially threefold:

1. it was necessary to regularise the representation of Rade’s estate so that it would be bound by the pending outcome of the proceedings;

2. pending the delivery of reasons for judgment and the making of final orders, there was no significant active part for the representative of Rade’s estate to play in the proceedings; and

3. in those circumstances, it was necessary to bring the matter to a point where judgment could be delivered and final orders made. Beyond that point, the representation of Rade’s estate and any enforcement of final orders made would need to be dealt with based on the then prevailing circumstances.

25. Omitting notations and evidence read, the orders of the Court on 4 December 2024 were as follows:

3. Orders, pursuant to r 7.10(2)(b) Uniform Civil Procedure Rules 2005 (NSW), that the applicant John Robinson, be appointed to represent the deceased’s estate for the purposes of these proceedings and the making of final orders including any costs and ancillary orders.

4. Notes the effect of r 7.10(3) Uniform Civil Procedure Rules 2005 (NSW) is that these orders bind the deceased’s estate to the same extent as the estate would have been bound had a personal representative of the deceased been a party to the proceedings.

5. Orders that the costs of and incidental to the Notice of Motion be the applicant’s costs in the cause.

Evidence

Deponents

26. Each of the plaintiffs affirmed affidavits in chief. In addition, the plaintiffs relied upon affidavits from the following deponents:

1. Garry Frederick Newton – a property manager based in Mullumbimby who started working for Rade and Danica at the beginning of 2013 (Mr Newton);

2. Andrew Nicholas Sochacki – a principal of Elliot & Sochacki Lawyers in Mullumbimby, who gave evidence of a conversation he had with Danica after Rade had suffered a stroke (Mr Sochacki);

3. Blagojche Pishmanovski – a nephew of the plaintiffs;

4. William Donald Nicholls – an accountant who practised as W D Nicholls Chartered Accountants at relevant times in Mullumbimby, who acted for Rade and Danica between approximately 1989 and his retirement in 2014, although he had some ongoing contact with them after that time (Mr Nicholls);

5. Nina Drew – a great grandniece of Rade and daughter of Lenche Stojanovski, who deposed to discussions she had with Rade in October 2022;

6. Denise Anne Prentice – an assistant accountant with W D Nicholls Chartered Accountants since July 2013, who assisted the Stoyanovski family with accounting services since July 2014 (Ms Prentice);

7. Lenche Stojanovski – Rade’s niece-in-law and the mother of Nina, who has known Rade and Dimce for 45 years (Lenche, also known as “Lena”);

1. Zivko Trajchevski – a nephew of Danica (Mr Trajchevski);

2. Hiske Jemma Bain – a friend of Dimce who, in the 1980s, was relevantly a co-owner with Dimce and five other parties of a multiple occupancy property at Huonbrook (Ms Bain);

3. Slave Mitrovski – the son of a second cousin of Rade, who was a close neighbour of Rade and his family in Dobruševo and has known the family ever since, having also immigrated to Australia (Mr Mitrovski);

4. Simona Ilioska – a niece of Valentina (Ms Ilioska);

5. Dobrica Josifovska – the daughter of a second cousin of Rade’s mother, who was a neighbour of Rade and his family in Dobruševo and has known Rade and his family ever since, having also immigrated to Australia (Ms Josifovska); and

6. Goce Risteski – the son of a first cousin of Rade, who lives in Macedonia and knew Valentina and her family for many years (Mr Risteski).

27. Rade did not give any evidence himself in these proceedings. However, he relied upon affidavits from the following deponents:

1. Mr Robinson;

2. Gordana Dikova Bozinovska – a solicitor operating in Rockdale, who had been assisting Rade in relation to his father’s estate in probate proceedings conducted in Macedonia in February 2011 (Ms Bozinovska): CB 672; and

3. Susanna.

28. Susanna is married to Julian Moore (Susanna has no children of her own, while Julian has one child: T 186.33-.39). While Julian had been Rade’s enduring guardian since 2021, he did not give any evidence on his behalf.

29. There were other persons whom Rade, Danica and the plaintiffs had particular professional involvement with, but from whom neither side adduced affidavit evidence. Such persons included Paula Maree Fletcher and Cameron Bell, solicitors at Universal Law, Mullumbimby, who had previously acted for Rade in relation to his affairs. Ms Fletcher in particular witnessed Rade executing several significant documents in recent years, including his Will dated 14 June 2017 (CB 523-527), and corresponded on his behalf in relation to various relevant matters, including the sale of a property at Burringbar Street, Mullumbimby, referred to below. However, no point was taken at the hearing on the parties’ decisions not to adduce evidence from those persons.

30. A large number of the conversations said to have taken place between Valentina, Dimce and his parents were in Macedonian: CB 41[5], 110[5]. Attempting to reflect that fact, in their affidavits the plaintiffs have often set out a conversation with Rade or Danica in Macedonian and provided their English translation of the particular conversation immediately below. A number of the plaintiffs’ witnesses adopted a similar practice in deposing to conversations they say they had with Rade or Danica. Translation from one language into another is on one view both a science and an art. Sometimes, there are particular nuances reflected in slightly different choices of and emphasis upon words as between translators. However, no point was taken on the hearing to the effect that the English versions provided by the plaintiffs and their witnesses were other than substantially correct translations of the conversations in Macedonian to which they deposed. No other translations were proffered. Accordingly, in reciting the evidence below, I have only set out the English versions of the relevant conversations.

Susanna’s evidence

31. Initially, I was minded to reject certain evidence in Susanna’s affidavit referring to conversations with Rade (specifically, CB 305[22], 309[47], 310[54]) on the basis that it was inadmissible hearsay evidence: T 218.20-219.4. A question arose as to Rade’s availability to give evidence, given that he was appearing by a tutor in the proceedings.

32. In relation to the hearsay exception under s 63(2)(a) of the Evidence Act1995 (NSW) (Evidence Act), cl 4 of Pt 2 of the Dictionary addresses the availability of persons. Relevantly for the present purposes, cl 4(1)(c) provides that a person is taken not to be available to give evidence about a fact if the person is mentally or physically unable to give the evidence and it is not reasonably practicable to overcome that inability.

33. There does not appear to be a great deal of caselaw which bears upon the issue. During a luncheon adjournment, I reviewed a number of decisions.

34. There are at least two related decisions of Garling J which addressed circumstances in which a plaintiff had a tutor appointed to conduct litigation approximately 12 months before the hearing of the proceedings and sought to lead hearsay evidence consisting of previous representations made by her in statements made by her in conferences with her solicitor: see Alzawy v Coptic Orthodox Church Diocese of Sydney, St Mary and St Merkorious Church [2016] NSWSC 1122 (Alzawy) at [4], [18]-[22]. Garling J concluded that the plaintiff was physically and mentally capable of giving evidence “in a general sense”, which was more than sufficient for her to be called to give evidence of the accident which was the subject of the proceedings: Alzawy at [39]. The hearsay evidence was rejected. However, subsequently, when the plaintiff was called to give evidence, Garling J found it necessary to refer to the plaintiff’s previous statements in any case, as her oral evidence was mostly non-responsive: see Alzawy v Coptic Orthodox Church Diocese of Sydney, St Mary and St Merkorious Church (No 2) [2016] NSWSC 1123 at [37]-[40].

35. More recently, in Twigg v Pitcher Partners Holdings Pty Ltd (No 4) [2023] NSWSC 109 (Twigg), Stevenson J, noting that a tutor had been appointed for the first plaintiff (who had a cognitive impairment), observed that she would therefore not be available to give evidence in the proceedings: Twigg at [61]. It was common ground, in those circumstances, that his Honour should decide the application (being to dismiss the proceedings as an abuse of process) on the basis that the plaintiffs would succeed in having the first plaintiff’s affidavit and transcript evidence which had been read and heard in earlier proceedings admitted on the basis that the first plaintiff was not available for the purposes of s 63 of the Evidence Act: Twigg at [62].

36. Having had the benefit of looking at those decisions, after the luncheon adjournment I raised them with counsel.

37. As I understood him, Mr McGrath accepted that Rade was not competent to give evidence: T 225.18-.27. However, he then submitted that if Rade was not competent to give evidence directly, then “he should not be held to be competent to give it through hearsay”: T 225.33-.35. Further debate followed which I will not recite: T 225.37-228.23.

38. Eventually, I indicated that I would provisionally admit the material and give Mr McGrath an opportunity to cross-examine Susanna about her father’s capacity to give answers to questions. If, upon having cross-examined Susanna, Mr McGrath wished me to revisit the admission of the material and make a different ruling, he was at liberty to do so. On that basis, I admitted the relevant paragraphs of Susanna’s affidavit, being CB 305[22], 309[47], 310[54]: T 228.25-.33.

Assessment of evidence and the deponents

Submissions

39. Mr Bilinsky submitted that the case advanced by the plaintiffs is an exercise in revisionism and reconstruction. He stated that their case depends wholly upon informal oral representations which are vague, imprecise and made in a family context. He emphasised that the representations are not corroborated by objective evidence and the plaintiffs have an obvious self-interest in the outcome of the proceedings: DCS [1(a)-(c)].

40. In particular, to the extent that the plaintiffs and other witnesses they called in support cited Macedonian cultural practices for the context in which the alleged agreement was forged, Mr Bilinsky submitted that what emerges is an implied understanding “based upon that cultural tradition that where the eldest son comes to live with his parents, the house automatically becomes his house and will be inherited by him”, which hope and expectation has been twisted into a representation alleged to bind the conscience of Rade “for all time”: DCS [1(d)-(f)].

Approach to evidence

41. In relation to the requisite standard of proof for determining the facts in issue in this case, s 140 of the Evidence Act provides:

140 Civil proceedings: standard of proof

(1) In a civil proceeding, the court must find the case of a party proved if it is satisfied that the case has been proved on the balance of probabilities.

(2) Without limiting the matters that the court may take into account in deciding whether it is so satisfied, it is to take into account—

(a) the nature of the cause of action or defence, and

(b) the nature of the subject‐matter of the proceeding, and

(c) the gravity of the matters alleged.

42. That statutory standard requires “actual persuasion” of the occurrence or existence of a fact in issue, and not a mere mechanical comparison of the probabilities as between the competing accounts: Singh v AKM Investments Group Pty Ltd [2024] NSWCA 268 at [44]-[47] per Gleeson JA (Bell CJ at [1] and Stern JA at [62] agreeing).

43. The frailty of human recollection is well-known, particularly where the issues in the proceedings focus on events and alleged statements made many years ago.

44. Evidence should be approached and weighed having regard to objective surrounding facts which are either undisputed or established by contemporaneous documents, logic and the inherent probabilities of life as they bear upon the events: Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [30]-[31] per Gleeson CJ, Gummow and Kirby JJ. The importance of this approach has been emphasised in two recent decisions of Leeming JA sitting at first instance.

45. In Katsoulas v Kritikakis; Katsoulas v Apostolatos [2024] NSWSC 67, Leeming JA stated at [43]-[44]:

43. Given the dearth of documents which would ordinarily be available, it is all the more important to commence with the incontestably correct context, as recorded in contemporaneous documents, before turning to the almost wholly testimonial evidence which bears on whether the transactions were authorised. That approach accords with what was suggested by Keane JA in Camden v McKenzie [2008] 1 Qd R 39; [2007] QCA 136 at [34], which in turn accorded with what had been said in Goodrich Aerospace Pty Ltd v Arsic (2006) 66 NSWLR 186; [2006] NSWCA 187 at [28]-[29]:

Usually, the rational resolution of an issue involving the credibility of witnesses will require reference to, and analysis of, any evidence independent of the parties which is apt to cast light on the probabilities of the situation.

44. Two reasons for that are the notorious fragility and malleability of human memory, especially when confronted with the litigation process, and the limitations upon judges to discern reliable testimonial evidence from sincerely held but unreliable reconstructed evidence and dishonest evidence. Many authorities are collected in Arizabaleta v R [2023] NSWCCA 217 at [93]-[109]. It suffices to note what was said in Coote v Kelly [2013] NSWCA 357 at [51]:

Memory is all too fallible. McHugh J referred to ‘the everyday experience of the courts that honest witnesses are frequently in error about the details of events’: M v The Queen [1994] HCA 63; 181 CLR 487 at 534. The process of conscious and subconscious reconstruction of what was actually said in a conversation, to which McLelland CJ in Eq referred in Watson v Foxman (1995) 49 NSWLR 315 at 319, is familiar.

46. In Dedakis v Deligiannis; The estate of Rebecca Deligiannis (also known as Rebeka Deligiannis) [2024] NSWSC 1018, Leeming JA stated at [15]:

15. All of the events occurred more than a decade ago, and many occurred more than three decades ago. Memory is fallible and malleable, especially memory concerning past beliefs. One of Lord Leggatt’s first judgments contains an extensive and influential consideration of the frailties of memory, including (relevantly for present purposes) that memories of past beliefs are revised to make them more consistent with present beliefs: Gestmin SGPS SA v Credit Suisse (UK) Ltd [2013] EWHC 3560 (Comm) at [18]. It is usually desirable to start with reliable contemporaneous documents and uncontroversial facts. “Usually, the rational resolution of an issue involving the credibility of witnesses will require reference to, and analysis of, any evidence independent of the parties which is apt to cast light on the probabilities of the situation”: Camden v McKenzie [2008] 1 Qd R 39; [2007] QCA 136 at [34] (Keane JA). That is not to deprecate the potential significance of testimonial evidence. In particular, as was said by Bell P in ET-China.com International Holdings Ltd v Cheung [2021] NSWCA 24; 388 ALR 128 at [27]-[29], testimonial evidence may provide valuable assistance in explaining the context of, and omissions from, the contemporaneous documents. That is of particular pertinence in the present case, in respect of the property transactions which occurred in 1988 and 1992. Accordingly, I start with what is either uncontroversial or established by contemporaneous documents.

47. It may also be of assistance to assess and weigh the evidence not only by reference to its immediate context, but also in the context of the total evidentiary mosaic in the case: Wild v Meduri [2023] NSWSC 113 at [336] per Hallen J.

48. As often happens, a particular difficulty in this case is that there are very few contemporaneous documents that bear upon the conversations said to have occurred between the plaintiffs and Dimce’s parents, and in particular those with Rade, some decades ago.

49. In light of that, my approach has been to (a) assess the evidence of the plaintiffs having particular regard to such contemporaneous documents that exist and what appeared to be uncontentious facts, (b) glean from the totality of the testimonial evidence (whether in affidavits or as tested in cross-examination) other facts which appear to be either commonly agreed or uncontentious and then (c) otherwise address the disputed material having regard to reliable contemporaneous documents, uncontroversial facts, the apparent logic of events and the inherent probabilities of life, bearing in mind the frailties of testimonial affidavit and oral evidence.

Dimce

50. Mr Bilinsky submitted that certain of Dimce’s evidence (including in relation to his alleged investment of $25,000 in the Illawong Property, the dispute about which I set out in more detail below) was unsubstantiated by any documentation and not plausible: DCS [10].

51. He further submitted that there was inconsistency in Dimce’s evidence regarding whether:

1. he had been promised “a house”, as he had said in a previous statement in December 2021 (CB 724[21]), or specifically the Illawong Property (CB 46[47]-[48]), which Dimce tacitly accepted was different (or on one view inconsistent) evidence: DCS [11]-[12], citing T 66.46-.50;

2. he had told Valentina that part of the “arrangement” was that they would both be required to look after his parents: DCS [12], citing T 73.47-74.15; and

3. he proposed to Valentina in order to fulfil an “agreement” or because he fell in love with her and wanted to have a family: DCS [14], citing T 66.46-.48, cf T 72.12-.33, 73.19-.27.

52. Dimce gave his evidence in a relatively clear and concise way. My impression was that he was generally attentive to the questions asked. There was no obvious indication from his presentation or answers which tended to suggest that he was being dishonest.

53. At times, he made appropriate concessions. When pressed on his recollection of what Rade had said to him in conversations which occurred around 25 years ago, Dimce acknowledged that he could not remember the exact words, but he could remember the gist of the conversations: T 67.12-.24.

54. For reasons that I articulate more particularly below, there are some parts of his evidence which I accept and others which I reject. Parts of his evidence I doubted, including in relation to his use of a sum of $25,000 from the proceeds of sale of his share in a multiple occupancy property, the degree of his expenditure on the Illawong Property, the extent of his care for Rade and Danica, the extent to which he was denied investment opportunities (specifically in relation to the purchase of another property at Illawong) and the extent to which he sacrificed his artistic career. In those respects, detailed more fully below, I am not satisfied by his evidence to the standard required by s 140 of the Evidence Act. In certain respects which I detail below, I prefer the evidence of Susanna to the extent to which it conflicts with Dimce’s evidence.

Valentina

55. Mr Bilinsky submitted that Valentina’s evidence in relation to being forbidden from finding work outside the family is not credible: T 326.12-.13. He further submitted that there was inconsistency between Valentina’s evidence and Dimce’s evidence in cross-examination regarding the time they spent in Mullumbimby. Specifically, he submitted that Dimce suggested that they were “really not there at all much”, whereas Valentina “started to obviously wind‑up for a long submission that they were actively working and spending at times months up there”: T 327.1-.10.

56. In her affidavit, Valentina deposed to recalling details of lengthy conversations (at times spanning several pages) in direct speech, usually prefaced with the phrase “words to the effect”. Such conversations were said to be with:

1. Dimce, shortly after they first met each other in Macedonia in 2001: CB 110[11];

2. Rade and Danica, in the week after Valentina’s arrival in Australia in August 2002: CB 112-115[22] and CB 115-117[25]-[26] (seemingly at the same time, but in any event prior to March 2003);

3. Rade, Dimce and Danica, in 2011: CB 123[57]-124[60];

4. Danica, in early 2017: CB 129[100]-131[102]; and

5. Rade and Dimce, in around November 2020: CB 138[146]-140[150].

57. When pressed on her recollection of the first two conversations, Valentina acknowledged that they were not “real recollection” on her part or necessarily the “exact words” spoken, but she recalled “most of it” and they essentially reflected the “meaning” of what had been discussed: T 115.25-116.9, 124.34-.35. I take that to mean she essentially recalled the gist of those conversations.

58. There were other examples of Valentina “recalling” specific details of conversations without the prefatory phrase “words to the effect”. Whether the omission of that phrase in those cases was advertent was not made clear on the hearing.

59. The question of the proper form of affidavit evidence of conversations has been the subject of recent judicial comment: see e.g. Wild v Meduri [2024] NSWCA 230 at [243]-[254] per Bell CJ, [333]-[357] per Kirk JA, cf [282]-[332] per White JA; Gan v Xie [2023] NSWCA 163; (2023) 378 FLR 418 at [119] per White JA (Simpson and Basten AJJA agreeing); Kane’s Hire Pty Ltd v Anderson Aviation Australia Pty Ltd [2023] FCA 381 at [119]-[129] per Jackman J; Chen v Chu [2024] NSWSC 1139 at [262]-[269] per Hammerschlag CJ in Eq; Punchbowl Casual Dining Pty Ltd v Rashays Cafes (Trial Judgment) [2024] FCA 1265 at [27]-[32] per Jackman J.

60. The debate surrounding that question need not be delved into here. However, putting to one side the issue as to whether the conversations deposed to by Valentina were described as being a precise recollection or in “words to the effect”, particularly in respect of the conversations said to have taken place over 10 years ago, I find it difficult to accept that the level of detail employed in the direct speech (where there were often long-winded paragraphs of what were essentially monologues attributed to the particular speakers) accurately reflects the extent of her recollection of those conversations. That is so even where a prefatory phrase akin to “words to the effect” was used.

61. I am not satisfied to the standard required by s 140 of the Evidence Act of certain aspects of Valentina’s evidence, in particular her evidence in relation to the extent of the care which the plaintiffs provided for Rade and Danica and the assertion that the plaintiffs were denied an investment opportunity to purchase another property at Illawong. In the respects to which I refer below, I prefer the evidence of Susanna to the extent to which it conflicts with Valentina’s evidence.

57. However, subject to the above, I had the impression that Valentina was otherwise attempting to give evidence as best that she could recall it.

Mr Newton

63. Mr McGrath submitted that Mr Newton was “sincere, almost to a fault, and credible”: T 275.20.

64. Whilst there were some curious aspects of Mr Newton’s evidence overall, I am inclined to accept his evidence, in particular for the reasons I set out further below.

Lenche

65. Lenche was cross-examined by Mr Bilinsky. On the whole, my impression of Lenche was that she was a generally reliable and truthful witness, simply seeking to recount what she recalled and not seeking to argue a position or volunteer information unnecessarily.

Mr Robinson

66. Mr Robinson was cross-examined by Mr McGrath. He gave his evidence in a straightforward way. Generally, I accept his evidence. He was challenged by Mr McGrath on a number of points.

67. Mr McGrath sought to challenge Mr Robinson’s ability to receive instructions from Rade, essentially putting to Mr Robinson that he had extreme difficulty in communicating with or understanding Rade: T 241.29-246.47. The purpose of some of the cross-examination was not self-evident and I enquired about it. In Mr Robinson’s absence, Mr McGrath foreshadowed an issue or contention that Mr Robinson was receiving instructions from Susanna or her husband Julian: T 247.1-.19. However, Mr McGrath did not persist in that line of questioning. Ultimately, I do not accept that Mr Robinson was unable to effectively communicate with Rade in English or misunderstood instructions from Rade.

68. Mr McGrath enquired of Mr Robinson as to whether he had obtained instructions from Rade that Dimce “had not held up his part of the agreement”. This aspect of the cross-examination was somewhat messy: see T 252.5-255.1. Eventually, what emerged was Mr Robinson’s acceptance that Rade did not express any “opinion” to him “about whether Dimce held up Dimce’s part of the agreement”: T 255 .3-.4. However, when asked why he had written in an email to Dimce dated 29 November 2021 that “clearly over time [Rade] has come to believe that you have not ‘held up your part of the agreement’” (CB 687), Mr Robinson indicated that he was “simply using Dimce’s words so that it was clear, a clear response”: T 255.7-.9. That comment appeared to be referring to the email of Dimce (sent earlier on 29 November 2021) to which Mr Robinson was responding, in which Dimce stated “[m]y wife and I have held up our part of the agreement”: CB 684. Whilst in context the relevant part of Mr Robinson’s email related to the “Illawong house” (CB 686-687), the nature of the actual agreement being referred to was not clarified in cross-examination. Mr Robinson said he was not aware of “the existence of an agreement involving at least Rade and Dimce” at the time that he wrote the email: T 255.11-.13. Thus, what may be taken from it is limited. However, to the extent that it might be said to be relevant, I accept that Mr Robinson was simply relaying the effect of what Rade had told him in response to Dimce’s claims.

69. Mr Robinson had previously had a “tenant/landlord” relationship with Rade arising out of the fact that he operated his accounting practice in one of Rade’s commercial properties in Mullumbimby between 1974 and October 2003: CB 297[2]. It was initially through that relationship that Mr Robinson had contact with Rade. I accept his denial that his practice’s tenancy in the building owned by Rade ended on bad terms: T 240.32-.47.

70. Whilst Mr Robinson indicated that he had a friendship with Rade over the years (T 239.49-240.2), his affidavit evidence was directed more particularly to reciting his contact with Rade from January 2021 (which timing coincided with Rade leaving the Illawong Property). Initially, Rade came to Mr Robinson’s office alone to speak with him about his “deteriorating relationship” with Dimce: CB 297[3]. Later, on 15 January 2021, Rade made another visit after Mr Robinson had established some dialogue with Susanna: CB 297[4]. On 16 February 2021, following a further meeting between himself, Rade, Susanna and Mr Bell of Universal Law, Mr Robinson was appointed as Rade’s attorney pursuant to a power of attorney and undertook a review of Rade’s financial position: CB 298[6]-[7].

71. His investigations revealed that the plaintiffs were benefiting from the use of income from Rade’s property holdings in certain respects which I detail more fully below (in considering the countervailing benefits received by the plaintiffs). Mr Robinson was not cross-examined on his investigations as to the extent to which the plaintiffs were benefiting from the use of income from Rade’s property holdings, and I accept his evidence regarding those findings.

Susanna

72. Susanna was briefly cross-examined and her cross-examination was essentially limited to three points: see T 257-262. The first was described as a “Jones v Dunkel matter” arising out of the fact that Rade did not give evidence in the proceedings. When I noted that Susanna was not someone who was in a position to control or conduct the defence of the proceedings, the questioning was not pursued: T 257.30-258.13. I have otherwise dealt with the Jones v Dunkel issue below. The second point related to evidence of statements made by Rade to Susanna which appeared to relate only to an issue that had been abandoned. After I questioned the relevance, the questioning was not pursued: T 258.15-259.12. The third point related to a statement which Mr Trajchevski attributed to Susanna (which she denied) and the implications said to arise from it, to the effect that she considered it to her own advantage if the plaintiffs and their family were evicted from the Illawong Property: T 259.14-262.38. I have dealt this third aspect below in addressing Mr Trajchevski’s evidence.

73. Susanna presented as being frank. In my assessment, her credit was not affected by the cross-examination in relation to the above-mentioned third issue. She was not confronted with any compelling material or prior inconsistent statement suggesting that her evidence should not be believed. I accept her evidence.

Factual overview

74. Before turning to the issues in dispute, it is helpful to set out a factual overview of the key events about which I do not understand there to be any serious dispute.

Early property holdings, including purchase of the Illawong Property (1967 onwards)

75. In 1967, Rade purchased a banana and avocado plantation in Mullumbimby: CB 41[7]. Upon finishing his secondary education in 1977, Dimce began working for his father on the plantation. While Dimce worked on the plantation until it was sold in or about 1980, he studied art in his spare time and aspired to pursue a career in the art world: CB 41[10]-[12].

76. In or around 1979 or 1980, Rade and Danica purchased an historic commercial building at 39-49 Burringbar Street, Mullumbimby known as the “Nelson Building”: CB 42[14], 723[15]. The property appears to have been associated with or adjacent to another property having some frontage to Stuart Street: CB 308[43]. Dimce gives evidence that in 1984, Rade and Danica completed construction of the Mullumbimby Professional Centre (MPC) on part of this property at 97-99 Stuart Street, Mullumbimby. Seemingly in about 2016, the process was commenced to separate the land title for the Nelson Building and the MPC. The separation occurred in or about December 2018, with the Nelson Building and the MPC becoming respectively Lots X and X in DP XXXXX : CB 42[14], 170[7(c)].

77. The Nelson Building contains at least 21 shops, offices and residential apartments, while the MPC contains seven rentals plus a two bedroom family residential flat or unit (MPC flat): CB 42[14]. The MPC flat was used and occupied by the Stoyanovski family at various times when they were in Mullumbimby: CB 171[17].

78. Susanna moved to Sydney in 1980 to attend Sydney University, where she completed a degree in social work: CB 306[31].

79. In 1981, Dimce purchased a share in a multiple occupancy at Huonbrook (Huonbrook Property): CB 42[16]. The Huonbrook Property comprised approximately 14 acres of mountainous terrain and had a single dwelling on it. Dimce used the entirety of his life savings at that time (comprising of approximately $14,000) to purchase the share in the property: CB 41[13], 42[17]. While he owned his share in the Huonbrook Property, Dimce lived independently from his parents: CB 42[20].

80. In the latter half of 1984, Dimce sold his share in the Huonbrook Property for approximately $25,000 and returned to reside with his parents at their home, which at that time was on Main Arm Road, Mullumbimby: CB 42[22], 43[24]. At the time, he had been taking art lessons and had begun exhibiting in the local region: CB 43[23].

81. In around late 1987, Dimce moved out of his parents’ home and began living in various share houses in northern New South Wales for approximately the next 10 years: CB 723[13]. During this period, Dimce was largely financially independent and pursued his dream of becoming a successful artist: CB 45[43]-[45].

82. In September 1987, Rade and Danica purchased the Illawong Property as joint tenants for $180,000: CB 367; see also CB 45[38], 723[15].

83. In subsequent years, Rade and Danica divided their time between the Illawong Property and the MPC flat.

84. By 1998, Dimce had moved into the MPC flat and was receiving money (it appears in the sum of $300 per week after tax) from his parents’ business, which at that time pertained to the management of the various commercial premises in Mullumbimby: CB 46[54], 371.

85. In around 2000, Rade and Danica purchased a property in Petersham, which Susanna lived in until 2010 (Petersham Property): CB 309[50].

86. Between 2002 and 2010, Susanna visited her parents weekly at the Illawong Property (I infer when they were there and not otherwise in Mullumbimby): CB 310[52]. However, in 2010, Susanna become estranged from her parents: CB 312[62]. Susanna was given a notice to vacate and the Petersham Property was sold in 2013: CB 126[78].

Dimce marries Valentina (2001)

87. In August 2001, Dimce travelled to Macedonia and met Valentina: CB 47[59]. Valentina was born in January 1970 in Macedonia: CB 110[1]. At the time, she was 31 years old and Dimce was approximately 42 years old.

88. On that same trip, Dimce asked Valentina to marry him and move to Australia: CB 48[59]-48[60]. Dimce returned to Australia in September 2001.

89. In November 2001, Dimce had travelled back to Macedonia and married Valentina under Macedonian law: CB 48[63], [66].

90. In August 2002, Dimce and Valentina arrived in Australia and stayed at the Illawong Property with Rade and Danica: CB 48[68]-49[70]. Dimce and Valentina have resided at the Illawong Property ever since.

91. Dimce and Valentina have three children, namely:

1. Rahela, born in 2004;

2. Nikita, born in 2007; and

3. Aleksandar, born in 2012: CB 118[32].

Rade has a stroke (2011)

92. In December 2011, Rade experienced a stroke incident (or perhaps two strokes in quick succession) whilst in Mullumbimby. Following several weeks of hospital treatment, he eventually returned to live at the Illawong Property where he was cared for by Danica, Dimce and Valentina: CB 55[117]-56[124], 313[70]-[71].

93. The stroke left Rade with hemiplegia (paralysis of one side of the body), expressive dysphasia (an inability to speak clearly) and dysphagia (difficultly in swallowing): CB 55[117], 304[9], 305[19].

Burringbar Street Property

94. In early 2014, commercial premises at 78-82 Burringbar Street, Mullumbimby, more particularly described as Lot X of Section X in DP XXXX (Burringbar Street Property), were purchased as an investment for approximately $1.3 million, with Rade and the plaintiffs each owning a half share as tenants in common and the plaintiffs owning their share equally as joint tenants: CB 467, 660. It appears that the property was purchased or held by the parties in a partnership (see e.g. CB 58[142]), however no detail of any partnership agreement was provided in the evidence: T 237.45-.47. The property consisted of three shops which, after renovations in 2015, became four: CB 58[142]-[144], [146], 467, 660. The Burringbar Street Property was sold for $2.35 million and settlement was to be effected on 8 March 2023: CB 300[31].

95. For accounting purposes, it appears that the total purchase cost of the Burringbar Street Property was in the order of $1,408,306: CB 667. Despite equal ownership of the property as between Rade and the plaintiffs, at least as at 30 June 2020, the lion’s share of the cost of funding the property fell to Rade: CB 667.

96. Notwithstanding that, there has apparently been some dispute between Rade and the plaintiffs regarding the distribution of the sale proceeds. From the sale proceeds, Mr Robinson expected that: (a) a mortgage in favour of Westpac would be discharged ($70,484); (b) Rade’s loan account would be repaid ($1,070,512 as at 30 June 2021): (c) Rade’s partner account would be repaid ($308,263 as at 30 June 2021); (d) the plaintiffs’ negative loan account or debt would be repaid (- $75,910); and (e) the balance, having regard to the equal ownership, would then be divided equally between Rade and the plaintiffs: CB 300[32]-[35]. One might think that a division of the sale proceeds ought to be effected on the basis that the positive and negative loan or debt amounts would be appropriately adjusted beforehand.

97. During the course of the hearing, Mr Bilinsky stated that the net proceeds of the sale, being a sum of $2,210,167.46, are held in trust for the parties: T 237.28-.29.

98. Without further detail of the terms of the partnership, it would appear that, based on legal ownership, after appropriate deductions the $2,210,167.46 amount ought to be distributed equally as between Rade’s estate and the plaintiffs.

Appointment of attorneys and enduring guardian

99. On 14 May 2014, Rade appointed Mr Nicholls and Dimce as his attorneys (to act jointly and severally) under an enduring power of attorney: CB 468. Mr Nicholls accepted his appointment on the same day: CB 472. On 1 July 2014, Dimce accepted his appointment and, on 14 July 2014, the power of attorney was registered: CB 473.

100. Also on 14 May 2014, Rade appointed Danica as his enduring guardian, with Dimce being appointed as an alternative guardian: CB 474. Danica accepted her appointment on that day: CB 477. Dimce accepted the appointment on 1 July 2014: CB 479.

Rade’s 2017 Will

101. On 14 June 2017, Rade executed a Will (2017 Will) in which, after payment of all debts, legacies, funeral and testamentary expenses and duties, he relevantly:

1. bequeathed to Susanna a $100,000 legacy;

2. gave the rest and residue of his estate to Dimce; and

3. stated that, if any of his children fail to attain a vested interest but leave children living at Rade’s death, the share which their parent would otherwise have taken is to be distributed equally amongst them on reaching the age of 18 years.

102. In cl 5 of the 2017 Will, Rade gave his reasons for making no provision for Susanna beyond the $100,000 legacy as follows:

(i) My wife and I have made adequate provision for her during our lifetime and she enjoyed the benefit of living in my former house at [XX] Maria Street Petersham rent free for many years.

(ii) I have sought to achieve some equity in the gifts made by me and that the benefits of my estate will flow to my grandchildren;

(iii) She is estranged from me having cut all communication with me and my wife in 2011 while my son DIMCE and his wife have been of significant support to my wife and I.

Danica’s death

103. Following a diagnosis of non-Hodgkin’s lymphoma in September 2017, Danica passed away in May 2018: CB 61[184], 62[195].

Rade’s 2018 Will and Deed of Gift (2018)

104. On 19 November 2018, Rade executed another Will (2018 Will) in which, after payment of all debts, legacies, funeral and testamentary expenses and duties, he relevantly:

1. bequeathed to Dimce the Illawong Property and any assets which Rade owned in Macedonia;

2. stated his intention that the MPC is to be gifted to Dimce during Rade’s lifetime, however, in the event that the gift had not taken effect at his death, he bequeathed the MPC to Dimce;

3. stated that the balance of his estate is to be divided between Dimce and Susanna in equal shares (assuming both survive Rade);

4. stated that, if any of his children fail to attain a vested interest but leave children living at Rade’s death, the share which their parent would otherwise have taken is to be distributed equally amongst them on reaching the age of 18 years; and

5. stated that any gift under the Will which fails to take effect forms part of the residue of the estate: Exhibit P1.

105. Pursuant to a deed of gift dated 30 November 2018, Rade transferred the MPC to Dimce and Valentina as joint tenants: CB 565-571. The transfer was not ultimately effected until 6 February 2019: CB 573.

Deterioration of the relationship between the parties

106. Between 2002 and 2010, Susanna visited her parents on a weekly basis and observed the relationship between her parents, Dimce and Valentina: CB 310[52]. Susanna gave evidence, on which she was not challenged and I accept, that during those visits (CB 311[56]):

… there was often tension, with everyone on edge. Jimmy was aggressive and demanding in his communication with my parents. This continued to be a problem in his ongoing relationship with my father after my mother’s death.

107. It is apparent that between 2018 and 2021, the relationship between the parties (in particular between Rade and Dimce) deteriorated in a significant way: see e.g. CB 64[207]-[208]. This culminated in Rade moving into an aged care facility in Ballina in August 2021: CB 303[5]. Dimce and Valentina have not had any direct contact with Rade since at least then: CB 74[291]-[292], 140[151].

108. The context for the deterioration in the parties’ relationship is said to involve various allegations made by Rade against the plaintiffs, including that they stole money from him, and were the subject of what is defined below as the “abuse issue”. The plaintiffs gave evidence denying the truth of those allegations. However, as I note below, the parties indicated on the hearing that the abuse issue has fallen away and no submissions were made in relation to that issue. As the substance of the allegations were not relevant to any other issue in dispute, I will not make any further comment upon them.

Changes to attorneys and enduring guardian

109. The power of attorney executed on 14 May 2014 was revoked by Rade on 16 February 2021: CB 653. Mr Robinson was subsequently appointed as Rade’s attorney.

110. Susanna was appointed as Rade’s enduring guardian on 5 March 2021: CB 655-659. Julian was subsequently appointed as Rade’s enduring guardian on 11 August 2021: CB 303[3] (albeit that the instrument of appointment was not adduced in evidence).

Rade’s 2021 Will

111. The deterioration of the relationship between Rade and Dimce is marked by significant changes to Rade’s testamentary intentions, reflected in a further Will executed on 14 May 2021 (2021 Will): Exhibit P1. After payment of all debts, legacies, funeral and testamentary expenses and duties, Rade:

1. bequeaths to Susanna any assets and property which Rade owns in Macedonia;

2. states that the balance of his estate is to be divided such that Susanna retains a half share of his estate in Australia and the remaining half is to be held on trust to be divided equally amongst those of the plaintiffs’ children who survive Rade, upon each attaining the age of 21 years; and

3. states that, if Susanna fails to survive Rade, the share that she otherwise would have taken is to be divided between the plaintiffs’ children who survive Rade, upon each attaining the age of 21 years.

112. Significantly, cl 7 of the 2021 Will states:

7. Having considered the extent of my estate and my responsibility to provide for my children I HAVE DECIDED to make no provision for my son DIMCE STOJANOVSKI as adequate provision has been made by me for DIMCE STOJANOVSKI during my lifetime.

NCAT Proceedings 2021 (Occupancy Proceedings)

113. On 18 November 2021, Dimce and Valentina received a notice (dated 17 November 2021) to vacate the Illawong Property from Rade’s then solicitors: CB 74[293], 682-683. That notice was the catalyst for Dimce commencing proceedings in the NSW Civil and Administrative Tribunal (NCAT), which he did by an application filed on 13 December 2021: CB 705-722. The application sought (a) a declaration that the “agreement” between Rade and Dimce in respect of the Illawong Property was a “residential tenancy agreement” to which the Residential Tenancies Act 2010 (NSW) (RTA) applied, and (b) a declaration that the notice to vacate was not a valid termination notice pursuant to the RTA.

114. The application was apparently the first of two proceedings which Dimce commenced in NCAT. I will distinguish between the proceedings by referring to these proceedings commenced in 2021 as the “Occupancy Proceedings”.

115. The Occupancy Proceedings were resolved by consent on 18 January 2022 with orders stating, inter alia, that the notice to vacate was not valid and the agreement between Rade and Dimce in respect of the Illawong Property was a residential tenancy agreement to which the RTA applied: CB 740-741. I will refer to the relief in these proceedings further below.

116. There was some dispute about the orders made by NCAT and, on 9 February 2022, a “Notice to Terminate Tenancy Agreement” was sent to Dimce by Rade’s then solicitors, which required Dimce and his family to vacate the Illawong Property: CB 745-748.

117. In April 2022, Dimce and Valentina caused a caveat to be placed on the title of the Illawong Property: CB 749-750, 752.

118. On 30 August 2022, a lapsing notice in respect of the caveat was served on the plaintiffs’ solicitors: CB 13[83], 332[185]-[186]. The plaintiffs commenced these proceedings two days later on 1 September 2022.

NCAT Proceedings 2022 (Appointment Proceedings)

119. In late 2022, Dimce made an application to NCAT naming Rade as the person the application concerned, apparently seeking review of Rade’s appointments of Mr Robinson as his enduring attorney and Julian as his enduring guardian on the basis that Rade did not have capacity to make those appointments. On 23 November 2022, a notice of listing was sent to Rade care of O’Reilly & Sochacki Lawyers. The notice of listing was tendered in the proceedings and marked as Exhibit D2.

120. These proceedings appear to be the second proceedings commenced in NCAT by Dimce. However, the notice of listing document makes reference to a case number “2016/00391781”. It is not clear on the evidence whether the application made by Dimce was an application filed in earlier proceedings involving Rade, although there is no need for me to determine that. To distinguish this application from the Occupancy Proceedings, I will simply describe these proceedings as the “Appointment Proceedings”.

Rade’s 2022 Will

121. On 15 December 2022, Rade executed another Will (2022 Will): Exhibit P1. In the 2022 Will, Rade:

1. bequeaths all of his assets in Macedonia to Susanna;

2. states that the residue of his estate is to be held upon trust for sale and conversion and, after payment of funeral debts, testamentary expenses and duties, to be held upon trust to be divided in the following shares:

1. one half share to Susanna; and

2. one half share to those of Rade’s grandchildren as shall survive him and equally between them if more than one so survive;

3. states that if Susanna fails to survive him, the share which she would have taken is to be held upon trust for her husband, Julian; and

4. states that if both Susanna and Julian fail to survive him, then the share which Susanna would have taken is to be held upon trust for such of Rade’s grandchildren as shall survive him and equally between them if more than one so survive him, upon them attaining the age of 21 years.

122. Significantly, Rade explains the lack of provision to Dimce in cll 7 and 8 of the 2022 Will as follows:

7. I have not made further provision for my son DIMCE STOJANOVSKI in this my Will as I have made substantial financial provision for my son during my lifetime which has included providing him with a commercial building in Mullumbimby to provide ongoing financial support for him during his lifetime, providing him with the opportunity to live in my family home at Illawong since 2002 and providing him with substantial direct financial support for both his own support and the support of his family.

8. I have also not made further provision for my son as my son has sought to take from me prior to my death my family home at [XX] Palmer Close, Illawong and has created conflict in our relationship such that I have been unable to return to live in my home which has required me to live in nursing home care causing me great distress and expense.

Living arrangements

123. There was no great precision in the evidence regarding exactly what the living arrangements were as between Rade and Danica on the one hand and the plaintiffs on the other between the purchase of the Illawong Property in 1987 and the present. However, there was some evidence that shone some degree of light on the issue.

124. According to Ms Prentice, Rade stated to her on a number of occasions (I infer on or after July 2014) that he preferred to live in Mullumbimby whenever possible, as he felt more “at home” in Mullumbimby and liked to be there “to keep an eye on things” (I infer on his property holdings in Mullumbimby): CB 171[18]. Ms Prentice gave evidence that (CB 171[19]-[22]):

1. Rade and Danica generally resided at the MPC flat, with the plaintiffs and their children residing at the Illawong Property. Nonetheless, she acknowledged that there were many times when the family were all together in one property or the other, and other times when they swapped over, with Rade and Danica at the Illawong Property and Dimce and Valentina in Mullumbimby. This was said to be a regular and normal practice that occurred several times a year, and would generally last anywhere from a couple of weeks to three or four months;

2. after Danica became ill, Dimce spent more and more time in Mullumbimby to assist his mother with Rade, as by then Rade was himself needing constant care; and

3. after Danica’s death, the family (I infer Rade, the plaintiffs and their children) lived together at the Illawong Property, with regular visits to Mullumbimby to check on the properties there.

125. It appears that the alternating living arrangements were in place well prior to 2014. My understanding from the evidence is that, at least up until 2009, Dimce, Valentina and their children regularly travelled to Mullumbimby to live in the MPC flat. However, in or about 2009, when Rahela was starting school, it seems that the plaintiffs and their children were more often living in the Illawong Property: e.g. CB 59[165].

Commercial arrangements

126. Ms Prentice described the Stoyanovski family’s three commercial property partnership arrangements as follows:

1. the Nelson Building (which until December 2018 included the MPC) was the subject of a partnership between Rade and Danica (referred to as “R & D Stoyanovski”) in equal shares, which devolved to Rade as survivor on the death of Danica in May 2018;

2. the ownership of the Burringbar Street Property involved the partnership referred to above, whereby the property was held in a three-way arrangement with Rade having a half share and the plaintiffs each having a quarter share; and

3. after separation of title for the Nelson Building and the MPC, a further partnership was set up to manage the MPC, which was then owned by the plaintiffs in equal shares: CB 169-170[7].

127. According to Ms Prentice, whose evidence I accept (CB 172[34]):

34. The family basically ran their rental businesses as a single family concern, with the living expenses for both households paid from any of the various partnerships, generally the one with the most money in it, that being the R & D Stojanovski Partnership, at Rade’s request.

Issues

Agreed list of issues

128. In preparation for the hearing, the parties provided an agreed list of real issues which contained the following.

1. Were any of the promises or representations pleaded made by the defendant to the plaintiffs or either of them?

2. If so:

1. which promises or representations were made; and

2. what were the terms of the promises or representations made?

(Together, representation issues)

3. Were the promises or representations mere statements of revocable intention or were they of a binding nature? (Binding effect issue)

4. Did the plaintiffs rely upon the promises or representations? (Reliance issue)

5. Did the defendant know (actually or otherwise) that the plaintiffs were relying upon the promises or representations? (Knowledge issue)

6. Was the plaintiffs’ reliance on the promises or representations to their detriment? (Detriment issue)

7. Has the defendant resiled from the promises or representations or otherwise failed to act to avoid that detriment? (Resiling issue)

8. Is it unconscionable for the defendant to resile from the representations? (Unconscionability issue)

9. Are there countervailing benefits for the plaintiffs or either of them that the Court should take into account?

10. If so, what are they and how should the Court take them into account?

(Together, countervailing benefits issues)

11. Did the plaintiffs act to cause physical and emotional abuse of the defendant, misuse of the defendant’s income or creation of a hostile environment requiring the defendant to obtain alternate accommodation? (Abuse issue)

12. Are the plaintiffs estopped from claiming their occupation of the Illawong Property arises from the representations and inducements allegedly made by the defendant by the application or orders in the Occupancy Proceedings? (NCAT issue)

13. What relief, if any, should the Court provide? (Relief issue)

Abandoned issues

129. On the hearing, the parties confirmed that the abuse issue and the NCAT issue have fallen away and need not be determined: T 210, 302. While Mr Bilinsky did not press the NCAT issue on the basis of it supposedly not being “of any moment” (T 302.19), I propose to make some observations in relation to the issue.

130. I otherwise propose to deal with the remaining issues in dispute in turn, by first setting out the facts upon which each party relies in respect of each issue and their respective submissions, after which I will set out my findings.

Cross-claim

131. The matter was listed for hearing to determine the claims for relief in the plaintiffs’ statement of claim. In the DOS, Mr Bilinsky foreshadowed the filing of a cross-claim to obtain vacant possession of the Illawong Property. On the first morning of the hearing, Mr Bilinsky sought leave to file and rely upon the cross-claim: T 17.1-.4. He indicated that it was solely referable to what would transpire in the event that the Court were not to grant the relief which the plaintiffs sought: T 17.6-.9.

132. Mr McGrath opposed the filing of and reliance upon the cross-claim: T 17.14-.17. Following debate on the issue, in circumstances where no additional evidence was being relied upon and being satisfied that there was no irremediable prejudice to the plaintiffs in Rade seeking such relief, I permitted the cross‑claim to be filed for the sole purpose of formalising what is to happen with the Illawong Property in the event that the plaintiffs’ claim were dismissed: T 18.37-19.8.

Rade’s capacity, expert evidence and Jones v Dunkel submission

133. Mr McGrath foreshadowed that he proposed to make a submission based on Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 (Jones v Dunkel) in respect of the failure of Rade to file affidavits in compliance with previous directions from the Court: T 217.17-.18. He clarified that the submission did not contend that Rade could give evidence at the time of the hearing: T 217.18-.19.

134. It is true that, apart from an affidavit verifying the defence affirmed 8 November 2022, no affidavit evidence had been adduced in the proceedings from Rade himself.

135. It is clear that, in the matter’s preparation for hearing, the parties to some degree attempted to put on evidence dealing with the issue of Rade’s capacity.

136. It will be seen below that I rejected some expert evidence adduced by the plaintiffs which attempted to address Rade’s capacity. It is appropriate to set out some of the context regarding Rade’s capacity and health in order to explain my reasons for rejecting that expert evidence and also my approach to addressing the Jones v Dunkel submission made by Mr McGrath.

Rade’s capacity and health

137. As noted above, Rade suffered a stroke in 2011 and, as a consequence, had ongoing dysphasia which made it difficult for him to communicate clearly and, at least to some degree, made it difficult for others to understand him: CB 55[117], 304[9], 305[19]. Since 2014, Rade has had attorneys and enduring guardians appointed for him (albeit with some changes to those appointments).

138. There are relatively few contemporaneous documents which shed light on Rade’s medical condition. However, based on the contemporaneous medical records in evidence, I note the following.

139. On 18 March 2019, it appears that Dimce attended the Mullumbimby Medical Centre with Rade, who was presenting with hypertension. The consultation notes record that, at that stage, Rade lived “occasionally in Sydney”: CB 679.

140. On 21 May 2020, Rade applied for approval to receive aged care under the Aged Care Act1997 (Cth): CB 598-600. He underwent an assessment by the Aged Care Assessment Team (ACAT) at the South Eastern Sydney Local Heath District: CB 595. On 22 May 2020, a recommendation was made that he be approved to receive subsidised high level permanent residential care: CB 602. Approval for permanent residential care was given by the Department of Health on the same day: CB 595-596.

141. The summary generated by the ACAT assessor, Jennifer Vaessen, records a degree of background information to the matter, which information appears to have been given to the assessor by Dimce: CB 601-602. Part of the background given by Dimce was that Rade continued to manage his property business with the help of Dimce, alternating between the two family homes in Illawong and Mullumbimby over the years: CB 601. At that stage (May 2020), Dimce had indicated that Rade was reliant upon his family for transport, shopping, meals, domestic duties, finance/banking, social support, home maintenance and social interaction. Dimce also indicated that he and Valentina had been providing direct care daily while living in Illawong, and there was no indication of caregiver strain at that stage: CB 601. Rade had grown socially withdrawn and, on testing, was exhibiting significant signs of depression over the prior week: CB 602.

Directions for evidence

142. As noted above, the proceedings were commenced on 1 September 2022. On 13 September 2022, the plaintiffs approached the Court with an application to have the operation of their caveat on the Illawong Property extended pursuant to s 74D(2) of the Real Property Act 1900 (NSW). (I pause to observe that the application to extend the operation of the caveat under s 74D(2) appears to have been misconceived as that applies to the lodgement of caveats against primary applications under s 74B.) The application was supported by an affidavit of the plaintiffs’ solicitor, Kathryn Lee Rundle, affirmed on 12 September 2022. The affidavit contains a copy of the caveat that had been lodged by the plaintiffs through PEXA Exchange on 22 April 2022, which claimed an interest in the Illawong Property pursuant “an agreement” made between the plaintiffs and Rade “that the Caveator [i.e. the plaintiffs] would inherit the Land in consideration for the Caveator providing domestic and/or personal care to the Registered Owner [i.e. Rade]; (2) resulting and/or constructive trust arising from financial contribution”.

143. Kunc J made orders extending the operation of the caveat and, relevantly, orders for: Rade to file and serve a defence and any cross-claim by 30 September 2022; the plaintiffs to serve their affidavit evidence in chief by 21 October 2020; Rade to serve his affidavit evidence in chief by 11 November 2022; and the plaintiffs to serve their affidavit evidence in reply by 2 December 2022. The matter was stood over for further directions before the Equity Registrar on 12 December 2022.

144. On 8 November 2022, Rade filed his defence.

145. On 11 November 2022, it appears that Registrar Hedge was requested to relist the matter to address a default in the timetable orders. The Registrar relisted the matter for directions on 17 November 2022.

146. However, on 15 November 2022, it appears that the parties agreed to vary the timetable and Registrar Walton made orders requiring:

1. Rade to file and serve any cross-claim and to provide to the plaintiffs all reports relating to his capacity made in the prior 12 months by 24 November 2022;

2. the parties to participate in a private mediation on or before 17 December 2022; and

3. in the event that the matter did not settle at mediation: the plaintiffs to serve affidavit evidence in chief by 24 January 2023; Rade to serve affidavit evidence in chief by 31 January 2023; and the plaintiffs to serve affidavit evidence in reply by 14 February 2023.

The matter was listed for further directions before the Registrar on a convenient date after 15 February 2023.

147. On 14 February 2023, Registrar Walton directed that the time for Rade to file any affidavit material upon which he sought to rely be extended to 3 March 2023. The matter was listed for further directions in the week beginning 15 March 2023.

148. On 14 March 2023, Registrar Walton made further directions that the time for Rade to serve any affidavit material upon which he sought to rely be extended to 17 March 2023, as well as other consequential orders. It appears that the plaintiffs had sought for Rade to attend a medical examination, to which Rade had not consented. Directions were made for the plaintiffs to file and serve a notice of motion under Pt 23 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and evidence in support of the motion by 24 March 2023.

149. On 24 March 2023, the plaintiffs filed a notice of motion seeking that Rade submit to a medical examination by Professor Carmelle Peisah, pursuant to r 23.4(1) of the UCPR.

150. On 31 March 2023, Mr Robinson filed with the Court a consent to act as tutor for Rade.

151. On 5 April 2023, Registrar Walton noted that such a consent had been filed and dismissed the plaintiffs’ notice of motion whilst reserving costs. The Registrar also granted leave for the plaintiffs to file expert evidence in relation to Rade’s capacity “over time”, as well as leave for Rade to serve affidavits of Mr Robinson and Susanna by 21 April 2023. A final direction was made that Rade not file or serve any other affidavits without leave of the Court.

Professor Peisah – expert evidence

152. For the purposes of the plaintiffs’ notice of motion to seek to have Rade medically examined, they had engaged Professor Carmelle Peisah to prepare a report and had provided written instructions to her on 24 March 2023.

153. Subsequently, on 28 June 2023, the plaintiffs’ solicitors provided a letter of instruction to Professor Peisah for a “renewed engagement”: CB 219. The renewed engagement pertained to the provision of an expert opinion in relation to the following matters:

Decision-making Capacity

9. Did Rade Stoyanovski have the requisite decision-making capacity;

(a) in March 2021 to terminate the enduring power of attorney dated May 2014 granted to William Nicholls and/or Dimce Stojanovski?;

(b) in March 2021 to terminate the enduring guardianship of Dimce Stojanovski?;

(c) in March 2021 to grant an enduring power of attorney to John Robinson?;

(d) in March 2021, to grant an enduring guardianship to Susanna Stoyanovski (and later in September 2021 to Paul Julian Moore)?;

(e) to instruct Castrikum and Adams Legal, (Rade’s former solicitor), to serve an eviction notice on the plaintiff to vacate the lllawong home on 17 November 2021 and/or 11 May 2022?; and

472. While a market appraisal for the MPC performed by Cochrane Property Solutions Pty Ltd was marked for identification as MFI-1 (T 236.4), it was not ultimately admitted into evidence. After the case for Rade had closed, Mr McGrath alluded to having in his possession a 2017 valuation of the MPC and made it available for Mr Bilinsky to view, in case he sought to tender the document. In any event, however, Mr McGrath did not seek to tender it: T 263.30-.50. As such, there is no evidence before me of the MPC’s market value. However, it was contended on behalf of Rade that the MPC is of undeniably significant value (DCS [35(vi)]) and arguably is of much greater value than the Illawong Property: DCS [36].

473. As noted above, in his 2018 Will, Rade stated that “it is my intention that the [MPC] is to be gifted to my son during my lifetime however in the event that this gift has not taken effect at my death I give the [MPC] to my son DIMCE STOJANOVSKI”: cl 4(a)(ii)(A). Dimce was also specifically bequeathed the Illawong Property in that Will: cl 4(a)(ii)(B). However, no provision is made for Dimce (or Valentina) in Rade’s subsequent 2021 and 2022 Wills: Exhibit P1.

Income for notional caretaking

476. The evidence of the plaintiffs’ caretaking income was largely limited to Dimce’s tax returns from 2004 to 2020, which also contained Valentina’s taxable income as his spouse.

477. Dimce accepted in cross-examination that the income which he declared in his tax returns (bar 2019 and 2020) was limited to income from the “R&D Stoyanovski account” (which I infer is the family business account) for his work as a caretaker: T 88.30-.33. Whilst that statement is correct for most years, from 2014 onwards Dimce also received partnership distributions in addition to his caretaker salary, which I will detail below. No income was ever recorded from any sales as an artist: T 88.35-.36.

478. I set out the figures for the plaintiffs’ taxable incomes in the financial years 2004 to 2018 in the table below:

Financial year	Taxable income (Dimce)	Taxable income (Valentina)
2004	$17,867	$17,867
2005	$17,867	$17,867
2006	$17,867	$17,867
2007	$17,796	$17,796
2008	$18,092	$18,092
2009	$18,736	$18,716
2010	$18,502	$18,514
2011	$21,184	$21,184
2012	$22,188	$22,188
2013	$24,040	$24,040
2014	$59,851	$22,237
2015	$36,844	$36,843
2016	$36,845	$40,145
2017	$45,438	$48,738
2018	$52,284	$52,285

479. In 2014, the financial year in which the Burringbar Street Property was purchased by the plaintiffs and Rade, Dimce’s income included a distribution from the partnership “D & V STOJANOVSKI & R STOYANOVSKI” of $2,517 which, I infer, likely relates to the income from that property: CB 487-488. In the financial years 2015 to 2018, Dimce received similar partnership distributions of $2,309, $3,310, $11,738 and $15,982, respectively: CB 501, 517, 544 and 561.

480. In 2019, the financial year in which the MPC was gifted to the plaintiffs, Dimce’s taxable income was $48,587, which consisted of $40,519 from net rental property income from partnerships, a gross salary of $9,076 from Rade and deductions of $1,008: CB 579. The partnership income was further broken down as follows: $26,867 from the partnership “D Stojanovski & V Tusevska-Stojanovski” which, I infer, relates to the MPC (which the plaintiffs came to own as joint tenants in that financial year); and $13,652 from the partnership “D Stojanovski & V Stojanovski & R Stoyanovski” which, I infer, relates to the Burringbar Street Property (which the plaintiffs and Rade owned together): CB 583-585. Valentina’s taxable income for 2019 was $48,589: CB 580.

481. The reduction in Dimce’s salary in 2019 is consistent with the fact that the plaintiffs and Rade had agreed that their employment would cease after the MPC had been transferred to them.

482. In 2020, Dimce’s taxable income was $64,927: CB 614. Unfortunately, the version of the 2020 tax return in the Court Book has pages missing such that there is no breakdown of how that income is constituted, nor is Valentina’s taxable income included.

483. In cross-examination, Dimce indicated that, in addition to the wage which he and Valentina received and declared in their tax returns, they also received “family drawings” which were essentially monetary gifts from his parents: T 81.13-.33.

Countervailing benefits – determination

Onus

484. As noted above, Mr McGrath did not accept that the plaintiffs bore the onus of accounting for countervailing benefits in establishing detriment. To that end, Mr McGrath referred the Court to Michael Barnes QC, The Law of Estoppel (2020, Hart Publishing) at [7.249]. The extract relevantly includes the following:

There is authority for saying that as regards the requirement of detriment in proprietary estoppel the burden of proof both that the actions carried out were detrimental to the person raising the estoppel and that that person would suffer detriment if no estoppel were enforced is on the person who raises the estoppel.

485. Through a reasoning process which remains unclear to me, Mr McGrath submitted that the extract from Barnes, rather than confirming that the plaintiffs bear the burden of accounting for countervailing benefits in proving detriment, in fact confirmed the opposite: T 330.20-.22.

486. As observed earlier, the onus lies with the plaintiffs to prove the detriment alleged to have been suffered. More broadly, it is clear that, as a matter of law, the onus must be on the person alleging the estoppel to establish unconscionability, that is, to establish the three essential ingredients of representation (or some other form of encouragement), reliance and detriment: Steria Ltd v Hutchison [2006] EWCA Civ 1551 at [129] per Neuberger LJ (as his Lordship then was), cited approvingly in Sidhu at [59]. Thus, regardless of whether or not one considers countervailing benefits to be more relevant to question of the unconscionability of departure from the promise than to the question of detrimental reliance, the onus of accounting for countervailing benefits must be on the person raising the estoppel. I reject Mr McGrath’s submission otherwise.

487. Mr McGrath then submitted that even if the plaintiffs bore that onus, it had been discharged: T 332.15. For reasons which I set out below, I reject that submission.

The contended benefits

488. Ultimately, Mr Bilinsky submitted that the plaintiffs had the benefit of:

1. the rent-free accommodation;

2. the caretaking income;

3. a half share in the Burringbar Street Property;

4. the Macedonian apartment;

5. a gift of the MPC; and

6. the 2018-2021 Nelson Building rent being applied to the expenses on the MPC (now owned by the plaintiffs) as well as the Burringbar Street Property (of which the plaintiffs owned 50%).

489. As noted earlier, for a benefit to be considered as a countervailing benefit, it must have accrued to the plaintiffs under the arrangement encouraged by the representations or been received as a consequence of a change to their position in reliance on the representations: Soulos at [394]; Daniel at [218]. Mr Bilinsky accepted that proposition (T 333.28-.38) and Mr McGrath did not provide any authority otherwise.

490. With the possible exception of the Macedonian apartment, I find that the abovementioned benefits accrued to the plaintiffs under the “single family arrangement” encouraged by the fourth to sixth representations and were received as a consequence of their change of position in reliance upon those representations.

491. In respect of the Macedonian apartment, Mr McGrath submitted that there was no indication of any connection between the gift and the representations in respect of the Illawong Property: T 338.35-.37. However, Dimce’s evidence was that Rade transferred the apartment to him so that Dimce’s children would have somewhere to stay when in Macedonia in the future: CB 78[4(b)]. It is not evident that Dimce would have received the apartment other than by reason of his reliance upon the fourth to sixth representations and bearing grandchildren. In that sense, it is arguable that the Macedonian apartment was a benefit which accrued to Dimce under the family arrangement. Nonetheless, for the purposes of assessing countervailing benefits, I am prepared to put the Macedonian apartment out of the equation.

The rent-free accommodation

492. Mr McGrath appeared to accept the fact that the plaintiffs did not have to pay outgoings or household bills for more than 20 years: T 332.44-.45. However, he disputed that the plaintiffs’ rent-free accommodation (including the non-payment of outgoings) should be considered as a countervailing benefit: T 332.36-.46.

493. His basis for so disputing was unclear, but it seemed to relate to the fact that the plaintiffs had to provide some care to Rade and Danica whilst living at the Illawong Property.

494. The fact that the plaintiffs provided some care to Rade and Danica whilst living at the Illawong Property does not mean that the rent-free accommodation they received for their family was not a countervailing benefit to them. In such cases, the Court may exercise a wide judgmental discretion in assessing the receipt of such benefit against the burden of care: see e.g. Jennings v Rice [2002] EWCA Civ 159 at [51] per Robert Walker LJ. In this case, however, there are various other countervailing benefits which also have to be taken into account.

The caretaking income

495. Mr McGrath was equivocal in relation to whether the caretaking income was a countervailing benefit. He initially stated that the plaintiffs “were paid an income for what’s called notional caretaking of the commercial properties”, but then added: “That’s not quite correct. The evidence is they were paid really to do what Rade wanted and Danica wanted”: T 332.46-.49. He contended that the income related to the work done by the plaintiffs both in care of Rade and Danica and at the “two locations” (i.e. the Illawong Property and the Mullumbimby properties): T 334.1-.17.

496. I cannot see how the caretaking income is not a form of countervailing benefit to the plaintiffs. It was a benefit that had accrued to them as a direct result of the “single family arrangement” encouraged by the fourth to sixth representations. The plaintiffs enjoyed rent-free accommodation for their family and other monetary gifts from Dimce’s parents for the entire period in which they received the caretaking income. In light of that, and considering the nature of the caretaking duties which the plaintiffs actually undertook, the amount of income which they received (as evidenced in Dimce’s tax returns) was substantial.

The Burringbar Street Property

497. After some discussion, Mr McGrath’s ultimate submission appeared to be that the plaintiffs will likely end up with just over $300,000 from the sale of the Burringbar Street Property: T 298.7-.14. For his part, Mr Bilinsky contended that, for the purposes of considering countervailing benefits, it is sufficient to appreciate that, notwithstanding the plaintiffs contributed significantly less than Rade to the purchase price (on his calculation, approximately 7.75%), they have enjoyed 50% of the capital appreciation of the property: T 296.22-.26.

498. On any view of it, the plaintiffs appear to have received a capital benefit by sharing between them 50% of the capital appreciation of the property in circumstances in which they did not contribute anything near 50% of the purchase price.

499. In addition, Mr Robinson’s investigations revealed that, for some period of time prior to his engagement in 2021, Rade had not been receiving any of the rent from the Burringbar Street Property (of which he owned a 50% interest). Rather, all of that rental income was being paid to the plaintiffs, despite them only having a combined 50% interest in the property: CB 298[10], [13]-[14], 299[16(b)].

The MPC

500. In closing, Mr Bilinsky submitted that the sequence of Rade’s 2018 Will and the subsequent deed of gift illustrates that Rade had determined to replace the gift of the Illawong Property with the MPC: DCS [36]. Much was also made of the fact that, on the plaintiffs’ evidence, it appears that Danica had initially only promised the income of the MPC, as distinct from the fee simple estate, and so the ultimate gift was of much greater value than what had initially been promised: DCS [37]; T 329.1-.19.

501. Meanwhile, Mr McGrath contended that the MPC was not transferred to the plaintiffs as a replacement for the Illawong Property: POS [116]. It was put that since, at the time that the gift of the MPC was discussed, the Illawong Property was promised again, the Illawong Property was additional to the MPC and not a substitute. Rather, the MPC was intended to replace the income that the plaintiffs received from their employment: POS [117]; T 298.39-.40.

502. There was debate between myself and Mr McGrath regarding whether the capital value of the MPC could be taken into account. Mr McGrath disputed that it was correct to proceed on the basis that the plaintiffs were getting a capital asset and income: T 350.40-352.42. Despite Mr McGrath’s fervent attempts to contend otherwise, I cannot see how the capital value of the MPC could be ignored as a countervailing benefit to the plaintiffs.

503. For whatever reason, the plaintiffs did not adduce evidence in respect of the value of the MPC. Notwithstanding, it goes without saying that the various commercial and residential premises which constitute the MPC must be of significant value.

504. I reject the plaintiffs’ contention that the gift of the MPC cannot be considered a countervailing benefit because it was not transferred to them as a replacement for the Illawong Property. The plaintiffs contend that they had a “single family arrangement” with Rade and Danica which essentially encompassed their domestic and business relations. In my opinion, it would be completely artificial to say that the gift of the MPC was not made as a consequence of the plaintiffs’ change of position.

505. Even on the plaintiffs’ view of the MPC gift as a replacement for the income that the plaintiffs were receiving from their employment, the rent from the MPC after November 2018 is a form of countervailing benefit.

506. The evidence of the plaintiffs’ receipt of rental income from the MPC after it was gifted to them appears to be limited to Dimce’s 2019 tax return. (While part of Dimce’s 2020 tax return was in evidence, there was no breakdown of his taxable income to particular sources.) In the 2019 financial year, Dimce received $26,867 from the partnership with Valentina. It is reasonable to infer that Valentina received a similar payment for that year. Thus, from the limited evidence available, it is apparent that the rent which the plaintiffs have been receiving from the MPC since the 2019 financial year is not insignificant.

The 2018-2021 Nelson Building rent

507. Mr Robinson’s assessment of the financial arrangements between 2018 and 2021 were that, from the rental income which Rade was receiving from the Nelson Building (owned solely by him), Dimce had paid $147,000 towards the expenses of the Burringbar Street Property and the MPC, notwithstanding the fact that the plaintiffs were only 50% owners of the former and the sole owners of the latter: CB 298[10]-[15], 299[16(a)], [17(a)].

508. Mr Robinson asserted, and it appears to be the case, that Rade has had to pay income tax on that income he received from the Nelson Building, notwithstanding that he did not benefit from it: CB 667.

Conclusions

509. I accept that the plaintiffs had each made certain life-changing decisions over 20 years ago in reliance upon the arrangement encouraged by Rade and Danica. Those decisions were particularly significant for Valentina, as they involved moving from her home in another country to start a life and family in Australia. However, detriment requires an understanding of the disadvantage that the plaintiffs would suffer by reason of their change of position in reliance on the encouraged expectation, if it were to be departed from.

510. In respect of Dimce, he has forgone the opportunity to pursue his artistic endeavours to a greater degree, but that sacrifice has not been complete or enduring. It is clear even on his own evidence that he was at times able to resume his career as an artist and had sufficient time to do so to perform credibly and achieve prize results (particularly in the period between 2009 and 2015: see CB 51[89]-52[92]). In any case, what he has sacrificed in terms of his art he has gained multiple times over in having the opportunity to get married and raise a family, which is something he independently wanted and would not otherwise have had without his parents’ support.

511. In respect of Valentina, there was no evidence as to any opportunities in Macedonia she has forgone by moving to Australia. Once in Australia, I accept that Valentina deferred gaining tertiary qualifications in order to have children earlier than she otherwise would have wished, but she has not been denied educational opportunities completely. Essentially what has occurred is that she has had the benefit of having children, been given “employment” by Dimce’s parents and deferred her education. In 2021 she gained professional accreditation and at least from April 2022 has been working most days of the week at a number of schools as a teacher’s assistant.

512. I accept that there is detriment established in the plaintiffs’, and in particular Dimce’s, provision of assistance and care to Rade and Danica over the years, and their caretaking of the family’s properties in Illawong and Mullumbimby. However, as I have explained earlier, I do not consider that the extent of that care and assistance was as extensive as the plaintiffs claim.

513. On balance, the countervailing benefits received by the plaintiffs are so significant as to lead to the conclusion that no real or substantial detriment has been suffered by them. They have lived and raised their family in the Illawong Property for over 20 years rent-free. While the plaintiffs have maintained the property and undertaken occasional minor works, this is not a case where the party raising the estoppel has undertaken significant expenditure in improving the property in the expectation that it would one day be theirs. Under the family arrangement, the plaintiffs have been remunerated by Rade for their caretaking duties, and have received significant proprietary interests in the Burringbar Street Property and the MPC, the latter of which they continue to derive rental income from. The plaintiffs’ case for detriment is not made out.

Unconscionability issue

514. Were it more appropriate to consider countervailing benefits in terms of the unconscionability of departure from the promise or expectation, I find that the countervailing benefits that have accrued to the plaintiffs in effect subsumed or sufficiently made good the representations of Rade and Danica (specifically, the fourth to sixth representations) so as to make it not unconscionable for Rade to depart from the expectation that the plaintiffs could occupy, and Dimce would inherit, the Illawong Property.

Relief issue

515. Given my findings in respect of detriment, countervailing benefits and unconscionability, the plaintiffs’ proprietary estoppel claim must fail. In those circumstances, I propose to dismiss the plaintiffs’ claim.

516. Prima facie, costs should follow the event.

Cross-claim

517. My findings against the plaintiffs on the estoppel case are sufficient to determine the outcome of the cross-claim. Rade’s cross-claim ought to succeed.

518. The plaintiffs’ defence to the cross-claim recognised that, if their statement of claim were dismissed, they do not technically have any defence. Nonetheless, the plaintiffs contended that the four week period allowed for in the cross-claim for the plaintiffs and their family to vacate the Illawong Property was harsh and unreasonable. Instead, they sought a period of six months or more to vacate the property.

517. As matters currently stand, I do not see any basis for permitting such an extended period of time for the plaintiffs to vacate the Illawong Property, particularly in circumstances where they have been on notice since November 2021 that Rade was seeking to have them vacate the property.

518. However, in light of Rade’s death and cognisant of potential exigencies of the administration of his estate unrelated to these proceedings, I consider that the most appropriate course is for the parties to bring in short minutes of order to give effect to these reasons for judgment in respect of what, if any, relief is sought on the cross-claim.

Orders

521. The orders of the Court are as follows:

1. Order that the plaintiffs’ statement of claim be dismissed.

2. In light of the defendant’s death and any potential exigencies of the administration of his estate unrelated to these proceedings, direct the parties to confer and bring in short minutes of order giving effect to the reasons for judgment in respect of what, if any, relief is sought on the defendant’s cross-claim by 4pm on 3 February 2025.

3. In the event that the parties are unable to agree on a set of orders on the defendant’s cross-claim as per order 2, direct the parties to provide their own short minutes of order by 4pm on 3 February 2025.

4. Order that the plaintiffs pay the defendant’s costs of the proceedings (including those of the defendant’s estate) on the ordinary basis.

5. Grant liberty to any party to apply to Meek J within 7 days by email correspondence to the Associate to Meek J to vary order 4, failing which the costs order will become a final order.

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Endnotes