White v Kohacek

[2025] NSWSC 1042

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

White v Kohacek [2025] NSWSC 1042

Hearing dates:

11-15 November 2024

Date of orders:

12 September 2025

Decision date:

12 September 2025

Jurisdiction:

Equity - Real Property List

Before:

Williams J

Decision:

See orders at [316]-[317]

Catchwords:

CONTRACTS – intention to create legal relations – where first plaintiff, defendant and defendant’s now deceased life partner signed a Heads of Agreement for sale of a one-third interest in defendant’s property to be “converted to an agreement for the sale of land” containing numerous “additions”, including the grant of an “irrevocable right of survivorship” to the plaintiffs – where no contract for the sale of land incorporating the “additions” in the Heads of Agreement subsequently executed – whether parties intended to create legal relations by signing Heads of Agreement – Held: the parties did not intend to create legal relations

EQUITY – unconscionability – undue influence – where defendant and life partner suffering special disadvantage at the time of signing Heads of Agreement – where plaintiffs had actual or constructive knowledge of that special disadvantage – where defendant and life partner not deprived of free choice by pressure exerted by plaintiffs at time of signing Heads of Agreement, but their signatures were procured by plaintiffs unconscionably taking advantage of their special disadvantage – where terms of Heads of Agreement highly disadvantageous to defendant and life partner and correspondingly advantageous to plaintiffs – Held: if parties had intended to create legal relations by signing Heads of Agreement, it would have been set aside on grounds of unconscionability, but not on the grounds of undue influence

CONTRACTS – Contracts Review Act 1980 (NSW) – Held: if parties had intended to create legal relations by signing Heads of Agreement, the Court would have declined to enforce it on the grounds that it was unjust in the circumstances relating to it at the time it was made

EQUITY – proprietary estoppel by encouragement – where representations made by defendant and life partner that plaintiffs would receive interests in their property – where those representations were made in, and arose out of, Heads of Agreement – where Heads of Agreement not intended to create legal relations and where plaintiffs procured defendant and life partner to sign Heads of Agreement by unconscionable conduct – Held: Equity will not grant relief to avoid detriment that plaintiffs will otherwise suffer as a result of a relying on representations contained in and arising out of Heads of Agreement which plaintiffs procured defendant and life partner to sign by unconscionable conduct

EQUITY – joint endeavour constructive trust – where plaintiffs rely on joint endeavour founded in Heads of Agreement – Held: Equity will not grant relief to plaintiffs on the basis of a joint endeavour constructive trust where the joint endeavour is the product of plaintiffs’ unconscionable conduct

EQUITY – common intention constructive trust – where plaintiffs rely on common intention founded in Heads of Agreement – Held: Equity will not grant relief to plaintiffs on the basis of a common intention constructive trust where the common intention is the product of plaintiffs’ unconscionable conduct

RESTITUTION – money had and received – no question of principle

Legislation Cited:

Contracts Review Act 1980 (NSW), ss 7(1), 9

Conveyancing Act 1919 (NSW), s 66G

Cases Cited:

Bassett v Cameron [2021] NSWSC 207

Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59

Cirrus Real Time Processing Systems Pty Ltd v Jet Aviation Australia Pty Ltd (formerly Hawker Pacific Pty Ltd) [2025] FCAFC 85

Commercial Bank of Australia Ltd v Amadio (1983) 151 CLR 447; [1983] HCA 14

Electricity Generation Corporation (t/as Verve Energy) v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7

ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24

Ferella v Official Trustee in Bankruptcy [2015] NSWCA 411

Foundas v Arambatzis [2020] NSWCA 47

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

Galati v Deans [2023] NSWCA 13

GLJ v Trustees of Roman Catholic Church for Diocese of Lismore (2023) 414 ALR 635; [2023] HCA 32

Grant v Grant [2020] NSWSC 760

Hellenic Property Holdings Pty Ltd v Makaritis [2025] NSWCA 13

Ho v Powell (2001) 51 NSWLR 572; [2001] NSWCA 168

Hogan v Baseden (1997) 8 BPR 15,723

J & P Marlow (No 2) Pty Ltd v Hayes & McCabe (2023) 112 NSWLR 29; [2023] NSWCA 117

Kramer v Stone [2024] HCA 48; (2024) 421 ALJR 106

McKinlay v Woods [2024] NSWCA 122

Moubarak by his tutor Coorey v Holt (2019) 100 NSWLR 218; [2019] NSWCA 102

Muschinski v Dodds (1985) 160 CLR 583; [1985] HCA 78

Nitopi v Nitopi (2022) 109 NSWLR 390; [2022] NSWCA 162

Pascoe v Dyason [2011] NSWSC 1217

Provident Capital Ltd v Papa (2013) 84 NSWLR 231; [2013] NSWCA 36

Shepherd v Doolan [2005] NSWSC 42

Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47

Stellar Vision Operations Pty Ltd v Hills Health Solutions Pty Ltd [2023] NSWCA 102

Stubbings v Jams 2 Pty Ltd (2022) 276 CLR 1; [2022] HCA 6

Thorne v Kennedy (2017) 263 CLR 85; [2017] HCA 49

Vacation Club Ltd v A GG Properties Pty Ltd [2019] NSWSC 1357; (2019) 19 BPR 39,799

Wakim v Senworth Capital Pty Ltd [2024] NSWCA 102

Watson v Foxman (1995) 49 NSWLR 315

Williams v Legg (1993) 29 NSWLR 687

Woodson (Sales) Pty Ltd v Woodson (Australia)Pty Ltd (1996) 7 BPR 14,685

Zhang v Metcalf [2020] NSWCA 228

Texts Cited:

N/A

Category:

Principal judgment

Parties:

Gary John White (First Plaintiff/Cross-Defendant)
Terryll Sylvia Cassidy (Second Plaintiff/Cross-Defendant)
Arno Mario Carlo Kohacek (Defendant/Cross-Claimant)

Representation:

Counsel:
Mr B Koch (First and Second Plaintiffs/Cross-Defendants)
Mr R Wilson SC (Defendant/Cross-Claimant)

Solicitors:
Bridges Lawyers (First and Second Plaintiffs/Cross-Defendants)
Herbert Weller (Defendant/Cross-Claimant)

File Number(s):

2023/142094

Publication restriction:

Nil

Judgment

Introduction

1. Mr Arno Kohacek is the owner of a 25-acre property at 119 Argents Road, Wilberforce, in the Hawkesbury local government area in New South Wales, being the land in folio identifier XX/XXXX (the Property).

2. Mr Kohacek lived at the Property for many years together with his life partner, Mr Raymond Colley. I use the term “life partners” to describe a relationship in which they owned property together and lived together for substantially the whole of their adult lives and, at the time of the events giving rise to these proceedings, shared a strong attachment to the Property and a desire to continue living there for the rest of their lives. It is neither relevant nor necessary to make any finding about whether Mr Kohacek and Mr Colley were a couple, or whether they were friends who shared their lives together in the manner I have described, as Mr Colley suggested in cross-examination.

3. Mr Kohacek and Mr Colley owned the Property as joint tenants. Mr Colley’s interest in the Property passed to Mr Kohacek by right of survivorship when Mr Colley passed away on 18 March 2022 at the age of 91 years. Mr Kohacek was 81 years of age at the time of Mr Colley’s death.

4. These proceedings arise out of a document prepared by the first plaintiff, Mr Gary White, and signed by him and by Messrs Kohacek and Colley on or about 10 September 2019. The second plaintiff, Ms Terryll Cassidy, is also named as a party to the document, although she did not sign it. Mr White and Ms Cassidy have been in a de facto relationship for many years. They are both former real estate agents.

5. The document, which is entitled “Heads of Agreement”, states that it is an agreement for Mr White and Ms Cassidy to purchase a one-third share in the Property for $500,000, and states that it “is to be converted to an agreement for the sale of land between the parties (the contract) by the vendors [sic] solicitor”. The document sets out various “additions” that will be included in the contract for sale of land, including that the one-third share “is to be purchased as tenants in common between the purchasers and the vendors”, and that Mr Kohacek and Mr Colley grant to Mr White and Ms Cassidy “an irrevocable right of survivorship to the property, effective at the time of exchange of contracts, that has the same effect as if the parties were joint tenants”.

6. The “additions” to be included in the contract for sale of land also included a term providing for the $500,000 purchase price to be paid by Mr White and Ms Cassidy extinguishing certain debts owed by Messrs Kohacek and Colley to various solicitors (through payment or through negotiation), and a term providing that Mr White and Ms Cassidy would be responsible for making the monthly payments for the Commonwealth Bank loan secured by mortgage against the title to the Property, until such time as Mr White and Ms Cassidy were able repay the whole of the amount owing in respect of that loan out of the proceeds of sale of a property owned by Mr White at Condobolin and a property owned by Ms Cassidy at Orange.

7. The “additions” also included a term that Mr White and Ms Cassidy agreed to be “responsible for the general well being” of Mr Kohacek and Mr Colley and to assist with future medical appointments and ongoing health issues “as they would if the vendors were a member of their own family, including the future placement in retirement village accommodation if necessary”.

8. Mr White extinguished the debts owed by Messrs Kohacek and Colley to the solicitors named in the Heads of Agreement. The parties did not enter into any contract for sale of land as envisaged in the Heads of Agreement, and Messrs Kohacek and Colley did not transfer a one-third interest in the Property to Mr White and Ms Cassidy. However, Messrs Kohacek and Colley made new wills under which each of them left the whole of their estate to the other or, if the other did not survive him, to Ms Cassidy. Mr Kohacek appointed Mr White and Ms Cassidy as his attorneys under an enduring power of attorney and as his enduring guardians. Mr White and Ms Cassidy did not repay the loan secured by mortgage against the Property, but did make monthly payments to service that loan.

9. Mr Colley died on 18 March 2022. The relationship between Mr Kohacek on the one hand and Mr White and Ms Cassidy on the other hand broke down dramatically on 20 April 2022, following which Mr Kohacek revoked the enduring power of attorney and enduring guardianship and changed his will to remove Ms Cassidy as a beneficiary.

10. On 28 April 2022, Mr White applied to the New South Wales Civil and Administrative Tribunal for the appointment of a financial manager for Mr Kohacek. On 4 May 2022, Mr White made a further application to the Tribunal to review Mr Kohacek’s revocation of the enduring power of attorney. That application was determined on 30 August 2022 with the Tribunal declining to make any finding about whether the revocation was valid. On 15 February 2023, the Tribunal dismissed the application for a financial management order.

11. Mr White and Ms Cassidy commenced these proceedings on 3 May 2023.

12. Mr White and Ms Cassidy seek:

1. a declaration that the Heads of Agreement is a valid and enforceable agreement between Mr Kohacek, Mr Colley, Mr White and Ms Cassidy, and orders for specific performance of that agreement in terms requiring Mr Kohacek to transfer to them a one-third interest in the Property, and requiring Mr White and Ms Cassidy to pay such amount to the Commonwealth Bank as is required to discharge the mortgage over the Property;

2. a declaration that Mr Kohacek holds a further one-third interest in the Property on trust for Mr White and Ms Cassidy pursuant to a joint endeavour constructive trust or a common intention constructive trust, or by operation of the doctrine of proprietary estoppel;

3. an order that Mr Kohacek, Mr White and Ms Cassidy are restrained from encumbering the Property, or their respective interests in the Property, in any way;

4. an order that Mr Kohacek execute in registrable form a transfer of a two-thirds interest in the Property to Mr White and Ms Kohacek to give effect to the proposed order for specific performance of the Heads of Agreement in respect of a one-third interest and the claimed constructive trust in respect of a further one-third interest; and

5. in the alternative to all of the above, an order that Mr Kohacek pay to Mr White and Ms Cassidy the sum of $554,008.06, either as equitable compensation as a remedy for the claimed proprietary estoppel or as money had and received, and a declaration that Mr White and Ms Cassidy are entitled to an equitable lien over the Property securing the payment of that sum.

13. Mr Kohacek contends that the parties did not intend to create binding legal relations by entering into the Heads of Agreement. Alternatively, in the event that the Court finds that the Heads of Agreement is legally binding, Mr Kohacek’s cross-claim seeks an order setting aside the Heads of Agreement or declaring it void on the grounds of alleged unconscionability or undue influence, or pursuant to the Contracts Review Act 1980 (NSW).

14. Mr Kohacek’s cross-claim also included a claim for damages in the sum of $1,000,000. The multiple rounds of affidavit evidence served by Mr Kohacek prior to the final hearing of these proceedings did not include any evidence capable of supporting that claim, which was abandoned on the first day of the hearing.

15. For the reasons that follow, I have upheld Mr Kohacek’s contention that the Heads of Agreement is not binding and determined that the plaintiffs’ other claims for relief must be dismissed, save for their claim for moneys had and received, which I have upheld in respect of part of the total amount claimed.

Salient facts

Introductory observations in relation to witnesses

16. The plaintiffs’ evidence in chief comprised:

1. an affidavit of Mr White sworn on 3 May 2023 and filed together with the summons by which the proceedings were commenced;

2. a more detailed affidavit of Mr White sworn on 15 December 2023;

3. an affidavit of Ms Cassidy sworn on 22 December 2023; and

4. an affidavit of Mr White sworn on 1 February 2024 correcting and clarifying certain aspects of his affidavit sworn on 15 December 2023.

17. In response to the plaintiffs’ evidence and in support of his cross-claim, Mr Kohacek swore an affidavit on 15 March 2024.

18. Mr White and Ms Cassidy each swore an affidavit on 18 April 2024 responding to Mr Kohacek’s affidavit.

19. Mr Kohacek then swore three further affidavits on 5 August 2024, 28 August 2024 and 12 September 2024. Mr Howard Crawford swore an affidavit on 19 August 2024 on which Mr Kohacek also relied.

20. Mr White swore a further affidavit on 21 October 2024 responding to Mr Kohacek’s further affidavits and to Mr Crawford’s affidavit.

21. Mr Kohacek then swore a further affidavit on 31 October 2024 responding to Mr White’s most recent affidavit.

22. Each of Mr White and Mr Kohacek gave evidence of conversations with one another said to have occurred in 2019 – four years before the commencement of the proceedings and five years before the hearing. Their detailed accounts of such conversations emerged only in the later rounds of their affidavit evidence. For the most part, Ms Cassidy did not participate in or witness those conversations. However, Ms Cassidy gave evidence of conversations that she says she had with Mr White in 2019 about his dealings with Mr Kohacek, and that evidence was broadly consistent with Mr White’s account of conversations that he says he had with Mr Kohacek.

23. It is necessary to be mindful of the following well-known observations of McLelland CJ in Eq in Watson v Foxman: [1]

“… human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience.”

1. (1995) 49 NSWLR 315 at 319.

24. The factors referred to by McLelland CJ in Eq in Watson v Foxman require witness testimony to be assessed having regard to, and placing primary emphasis on, any objective surrounding facts that are either undisputed or established by contemporaneous documents, and the inherent probabilities and improbabilities. [2] However, witness testimony may still be of value and importance, including by providing evidence of the context in which relevant documents and events must be understood. [3]

    2. Fox v Percy (2003) 214 CLR 118; [2003] HCA 22 at [28]-[31] (Gleeson CJ, Gummow and Kirby JJ); Moubarak by his tutor Coorey v Holt (2019) 100 NSWLR 218; [2019] NSWCA 102 at [77] (Bell P, Leeming JA and Emmett AJA agreeing); GLJ v Trustees of Roman Catholic Church for Diocese of Lismore (2023) 414 ALR 635; [2023] HCA 32 at [59]-[60] (Kiefel CJ, Gageler and Jagot JJ) (GLJ).

    3. ET-China.com International Holdings Ltd v Cheung (2021) 388 ALR 128; [2021] NSWCA 24 at [25]-[29] (Bell P, as the Chief Justice then was, Bathurst CJ agreeing).

25. A state of actual persuasion is required before finding any fact. As Kiefel CJ, Gageler and Jagot JJ explained in GLJ v Trustees of Roman Catholic Church for Diocese of Lismore (citations omitted): [4]

“‘To satisfy an onus of proof on the balance of probabilities is not simply a matter of asking whether the evidence supporting that conclusion has greater weight than any opposing evidence … It is perfectly possible for there to be a scrap of evidence that favours one contention, and no countervailing evidence, but for the judge to not regard the scrap of evidence as enough to persuade him or her that the contention is correct.’  The evidence must ‘give rise to a reasonable and definite inference’ to enable a factual finding to be made; mere conjecture based on ‘conflicting inferences of equal degrees of probability’ is insufficient. As Dixon CJ said in Jones v Dunkel, the law:

‘does not authorise a court to choose between guesses, where the possibilities are not unlimited, on the ground that one guess seems more likely than another or the others. The facts proved must form a reasonable basis for a definite conclusion affirmatively drawn of the truth of which the tribunal of fact may reasonably be satisfied.’”

4. GLJ at [60].

26. Quite apart from the inherent fallibility of their evidence of disputed conversations many years ago, each of Mr White, Ms Cassidy and Mr Kohacek was a most unsatisfactory witness.

27. Mr White plainly regarded himself as an advocate for the plaintiffs’ cause first, and a witness second. He swore affidavits in which he purported to give accounts of events and transactions in which Mr Kohacek was involved before Mr White even met him, based on Mr White’s review of Mr Kohacek’s documents. Even when addressing matters about which he had direct knowledge, Mr White frequently added his own argumentative commentary about those matters. Contrary to the submissions made by counsel for the plaintiffs, and despite Mr White’s heavy reliance on documents, Mr White’s affidavit evidence was not wholly consistent with the contemporaneous documentary evidence. As referred to later in these reasons, aspects of Mr White’s evidence are contradicted by the contemporaneous documents, including the terms of the Heads of Agreement. [5] Mr White did make some appropriate concessions in cross-examination, as counsel for the plaintiffs submitted, but he did so reluctantly. [6] At other times, Mr White had a tendency to make speeches supportive of the plaintiffs’ cause or to argue with the cross-examiner rather than directing himself to the substance of the question he had been asked.

    5. See [73], [80], [100] and [130]-[133] below.

    6. See, for example, [118] below.

26. Ms Cassidy was most unwell at the time of her cross-examination, which was punctuated with breaks at intervals of her choosing in order to accommodate her ill health. Under cross-examination, Ms Cassidy conducted herself as an advocate for the plaintiffs’ cause. She made assertions that she perceived as helpful to the plaintiffs’ case concerning matters about which she had no knowledge. [7] She frequently gave speeches in support of the plaintiffs’ case, which were not called for by the question she had been asked. When asked about objective matters that do not sit comfortably with the plaintiffs’ case, Ms Cassidy often sought to avoid answering the question. [8]

    7. See [115] below.

    8. See, for example, [118], [132] and [201] below

27. Counsel for the plaintiffs submitted that Mr White and Ms Cassidy “ought to be considered witnesses of truth doing their best (despite obviously being partial in their own case)”. For the reasons explained at [27]-[28] above, I do not accept the general proposition that they were witnesses of truth doing their best, and I do not accept evidence given by either of them unless it is contrary to their own interests, consistent with objective facts, corroborated by contemporaneous documents or some other reliable source, or consistent with the inherent probabilities. I do not regard either Mr White or Ms Cassidy as a reliable source for the purpose of corroborating the evidence of the other.

28. Mr Kohacek’s evidence suffered from many internal inconsistencies. [9] It became apparent during cross-examination that Mr Kohacek had difficulty recalling the timing of the events giving rise to these proceedings and the order in which some of those events occurred. [10] In addition, as his counsel candidly accepted in closing submissions, Mr Kohacek was often argumentative with the cross-examiner and, on occasion, made speeches rather than answering the question he had been asked. As counsel for the plaintiffs submitted, Mr Kohacek described himself as a strong-willed man. He was emotionally volatile at times during his cross-examination. Many of Mr Kohacek’s text messages to Mr White and Ms Cassidy that were tendered in these proceedings provide contemporaneous evidence of his strong feelings and emotional volatility at the time of the events giving rise to these proceedings. [11] Mr Kohacek damaged his credibility by alleging that some text messages sent from his mobile phone had been written and sent by Ms Cassidy without his knowledge or consent. That serious allegation was revealed in cross-examination to be nothing more than baseless speculation, when Mr Kohacek said that he was not making any accusation that this had occurred and it was merely something that he thought “could have happened” because he could not remember sending the particular messages and Ms Cassidy had access to his phone.

    9. See, for example, [103], [156] and [191]-[194] below.

    10. For example, T214-218.

    11. See, for example, [228]-[230] below.

29. For those reasons, I do not accept Mr Kohacek’s evidence unless it is contrary to his own interests, consistent with objective facts, corroborated by contemporaneous documents or some other reliable source, or consistent with the inherent probabilities. I do not regard Mr Kohacek’s own text messages as a reliable source for the purpose of corroborating his testimony in these proceedings.

Relevant events prior to the first contact between Mr Kohacek and Mr White in April 2019

32. Mr Kohacek and Mr Colley were life partners who lived together for over 60 years. They acquired the 25 acre Property as joint tenants in 1979. Mr Kohacek gave evidence that they enjoyed the rural setting which enveloped and surrounded the Property. At the time of the principal events giving rise to these proceedings in 2019, Mr Kohacek was aged 78 years and Mr Colley was aged 88 years. They lived there together until Mr Colley passed away on 18 March 2022, aged 91 years. Mr Kohacek continues to live at the Property.

33. In about March 2011, the Commonwealth Bank registered a mortgage against the title to the Property securing a loan made to Messrs Kohacek and Colley. By this time, both gentlemen had been retired for many years and had no source of income other than their pensions. The mortgage has been described by Mr Kohacek as a reverse mortgage. It appears that he and Mr Colley drew on the loan over the years to fund various expenses, including costs incurred in connection with several legal proceedings.

34. Between about December 2013 and July 2016, Mr Kohacek and Mr Colley retained and instructed Mr Herbert Weller, solicitor, to commence proceedings in the District Court of New South Wales against various defendants including Tuscany Foods, and to act for them in those proceedings (the Tuscany Foods proceedings). Mr Weller retained Mr Trevor Boyd, as counsel. The Tuscany Foods proceedings were dismissed on 24 June 2016, and Mr Kohacek and Mr Colley were ordered to pay the defendants’ costs.

35. In July 2016, Mr Weller issued an invoice to Mr Kohacek and Mr Colley for legal fees in relation to the Tuscany Foods proceedings in the sum of $451,390.75 (including GST). A dispute developed in relation to those legal fees between Mr Kohacek and Mr Colley on the one hand and Mr Weller on the other hand.

36. During the period between about August 2016 and November 2017, Mr Kohacek and Mr Colley retained Mr Michael Corbett, solicitor, to file a motion in the Tuscany Foods proceedings seeking an order that Mr Weller and Mr Boyd indemnify them in respect of their costs liability to the defendants in those proceedings, and to make a complaint against Mr Weller to the Office of the NSW Legal Services Commissioner (the OLSC).

37. In November 2017, Mr Kohacek’s and Mr Colley’s motion in the Tuscany Foods proceedings was resolved on terms that included Mr Weller and Mr Boyd paying $240,000 to Mr Kohacek and Mr Colley.

38. A further dispute developed between Mr Corbett and Messrs Kohacek and Colley about the fees charged by Mr Corbett in relation to the motion in the Tuscany Foods proceedings and the complaint against Mr Weller.

39. Messrs Kohacek and Colley subsequently retained Mr Peter Jackson, solicitor, of Jackson & Associates, to act for them in proceedings commenced by Mr Weller to recover his outstanding legal fees. By about March 2018, Mr Jackson had ceased acting for them and rendered an invoice for fees in the amount of $47,000. A dispute then developed between Messrs Kohacek and Colley and Mr Jackson in relation to those legal fees.

40. It appears that Mr Corbett and Mr Jackson were also retained to pursue a claim on behalf of Mr Colley for compensation for his injuries suffered in a motor vehicle accident in 2016, and that Messrs Kohacek and Colley were dissatisfied with what they considered to be a failure by those solicitors to pursue or progress that claim.

41. In his affidavits sworn on 5 August 2024 and 12 September 2024, Mr Kohacek deposed that Mr Colley’s health deteriorated dramatically and that he was “very incapacitated” from shortly after the motor vehicle accident in 2016. The weight of the contemporaneous documentary evidence suggests that Mr Colley’s health declined somewhat more gradually in the years after the accident. An aged care assessment dated 30 June 2017 records that Mr Colley was attending to his own personal care needs. Mr Colley reported mild pain in his legs and arteries. He was walking with the aid of a walking stick. He had ceased driving after the accident, and needed someone to accompany him on any trips outside his home. Mr Colley did not report any change in his memory or cognition to his doctors in 2017, but Mr Kohacek maintained under cross-examination that Mr Colley was experiencing memory problems and becoming confused by this time, and that there were changes in his personality and behaviour, particularly at night. Medical records note a history of stroke in 2015, before the motor vehicle accident. Mr Kohacek ultimately accepted in cross-examination that Mr Colley’s health was bad after the car accident in June 2016, but that he became worse as time progressed. I find that Mr Colley’s health declined with his increasing age over a period of time from at least 2015 when he suffered a stroke, and that his car accident in June 2016 contributed to his health problems. Contrary to the plaintiffs’ submission, the precise state of Mr Colley’s health immediately after the accident in June 2016 is not relevant to the resolution of the issues in dispute in these proceedings, and it is not necessary to make detailed findings charting the pace of the decline in his health in the period leading up to September 2019.

42. Messrs Kohacek and Colley listed the Property for sale in about late 2017 or early 2018 through licensed real estate agent Mr David Lee. The asking price was $4,000,000. As referred to later in these reasons, Mr Kohacek told Mr Hahn, a solicitor with whom he conferred in April 2018, that he and Mr Colley had borrowed $350,000 to pay for their court cases and legal fees, and that they had decided to sell the Property “to fight case”.

43. Mr Kohacek gave evidence that Mr Lee introduced them to a prospective purchaser, Ms Xiaolin Qiu, who was also known as Kathy Qiu.

44. Ms Qiu was a practising solicitor and the principal of McQiu Lawyers. According to Mr Hahn’s file note of his conference with Mr Kohacek on 24 April 2018, Mr Kohacek told him at that time that he had told Ms Qiu that they were selling the Property due to the court cases.

45. Ms Qiu decided that she could not afford to purchase the Property.

46. According to Mr Kohacek’s affidavit sworn on 15 March 2024, Ms Qiu came to the Property and told him:

“I can’t afford $3,500,000 but I would like to pay $500,000 for a third. I will pay off your bank which is $380,000, give you another $120,000, and pay off your legal debts. I will pay the bank $500 per week. I will buy a third and you can live here until you die. When that happens the property will pass to me.”

47. Mr Kohacek deposed that he and Mr Colley agreed to those terms proposed by Ms Qiu. However, Mr Kohacek also deposed that their agreement to leave the Property to Ms Qiu in their wills was in consideration for Ms Qiu performing legal work for them without charge.

48. Under cross-examination, Mr Kohacek initially adhered to his version of events in which Ms Qiu asked to be made a beneficiary under Mr Colley and Mr Kohacek’s wills. However, Mr Kohacek ultimately accepted that it was he who had proposed that he and Mr Colley should provide for Ms Qiu in their wills.

49. On 16 April 2018, Mr Kohacek held the first of several consultations with Mr Hahn, a solicitor at Shaddicks Lawyers, with a view to making a new will under which the principal beneficiary would be Mr Colley, or Ms Qiu in the event that Mr Colley predeceased Mr Kohacek. According to Mr Hahn’s file note of Mr Kohacek’s instructions given at that first conference, the Property was the only significant asset that he and Mr Colley owned and the Commonwealth Bank mortgage was their only liability. They had no superannuation. The aged pension was their only source of income. They had no contact with any living member of their families.

50. Mr Kohacek instructed Mr Hahn that the mortgage had been taken out in order to fund the cost of litigation arising out of a dispute with the Hawkesbury City Council concerning the smoke and smell emanating from the Tuscany Foods factory near the Property. Mr Weller had been acting for Mr Kohacek and Mr Colley in those proceedings, but they had become unhappy with him and terminated his services some years ago. They had then engaged Mr Jackson, but they had also become unhappy with his services. Mr Kohacek instructed Mr Hahn that he and Mr Colley had become friendly with a solicitor Ms Xiaolin Qiu who would continue the case for them at no charge. They had first met Ms Qiu as a potential purchaser of the Property when it was listed for sale, but they had subsequently taken the Property off the market.

51. Mr Hahn’s file note records Mr Kohacek’s instructions about the terms of his current will and his wish to prepare a new will. The file note states:

“He has spoken to XQ about doing a new will and including her as a beneficiary – she said she wants to help AK + Ray for no charge

Didn’t want money

It is completely AK + Ray’s idea to make XQ a beneficiary – she has not asked them to – trusts her

Discussion on if she is taking advantage of them – why not beneficiaries – charities.

New will instructions

Executor – Xiaolin (Kathy) Qiu

Sub her adult daughters

1   Raena Luxan Clifford aged 24

2   Samantha Luyou Clifford aged 20

All to Ray

Sub Xiaolin (Kathy) Qiu sub

1   Raena

2   Samantha

Exclude – Nerea

Formed view AK had testamentary capacity – clear instructions.”

52. Mr Hahn’s file note then records Mr Kohacek’s instructions that Mr Colley also wanted to do a new will on mirror terms – that is, leaving everything to Mr Kohacek, or to Ms Qiu (or her daughters) in the event that Mr Kohacek predeceased Mr Colley.

53. Mr Hahn noted that Mr Colley’s instructions were to be confirmed. The file note records that he advised Mr Kohacek to be “very mindful of who they want as the substitute beneficiaries” and “reaffirmed my scepticism of XQ’s motives”.

54. On 17 April 2018, Mr Hahn had a further conference with Mr Kohacek by telephone. Mr Hahn’s file note of that conference records that Mr Kohacek confirmed that he and Mr Colley wanted to proceed with new wills, and that Mr Colley was to speak with Mr Hahn first. The file also records that Mr Kohacek and Mr Colley had agreed between themselves that they should not sell an interest in the Property to Ms Qiu as it will affect their pension, and that they had spoken with Ms Qiu about this and “she agrees with my advice”. Ms Qiu had proposed that she make a loan to Mr Kohacek and Mr Colley to pay out the Commonwealth Bank mortgage, and that Ms Qiu’s loan would be secured by a charge against the Property which would be the subject of a caveat. Mr Kohacek wanted to meet with Mr Hahn to discuss this, together with Mr Colley and Ms Qiu.

55. Mr Hahn had a further conference with Mr Kohacek on 24 April 2018. According to Mr Hahn’s file note of that conference, Mr Kohacek provided a detailed history of the proceedings to which I have referred at [34]-[40] above, the various solicitors that Mr Kohacek and Mr Colley had engaged to represent them in connection with those proceedings, their dissatisfaction with those solicitors, and the disputes concerning their fees. Mr Hahn’s file note then reads:

“House on market for sale October 2017

Agent 6 month exclusive agreement

Agent brought Kathy out 5 weeks ago

…

Selling it to fight case

Borrowed $350,000 because of the court cases/legal fees

Talking to Kathy about reason selling – court cases

She decided not to buy property

She said why you selling beautiful property

Arno – ‘We are bachelors, no children, no relatives. Property can be subdivided’

K ‘This is too much $ for me but I’m a solicitor and if can help you with your legal problems happy to do so pro bono’

Arno spoke to Ray

Ray ‘We are nearly broke. A god bless she can help us’

Arno – if she is going to help us I want to do the right thing by her. She shouldn’t do work for nothing.

When we sell property – pay her the money due to her

…

Offered to help with LS complaint

Came over – showed her documents

…

Has brought over meals.

Seen them 8 times

Said here’s my number – give you advice if you need it.

Jackson sent $34,000 invoices in 2 months.

Said only $40K left in bank.

Kathy and Jackson taking you for a ride.

When selling plan to buy to buy a Kurrajong Heights property which had 2 residences on it …

Arno asked her

Said don’t have $ to pay for another solicitor

She said she’ll buy ½ property + pay you.

Arno didn’t want that as they would lose the pension

Then said I’ll do work for nothing.

Arno – I’ll sell place then pay you

She said not worried about the money

Arno thought the only way to pay her is to make beneficiary of will. Ray agreed

Told Kathy intended to make her beneficiary

She said – that’s not what I want, I do not want people claiming you out of the property.

…

She said I have a reputation to keep. I don’t want people to think I am swindling you.”

56. Mr Hahn’s file note of the conference concludes:

“I will not prepare a will with Kathy as beneficiary. I’ll prepare letter of advice.”

57. In cross-examination, Mr Kohacek disputed the accuracy of certain aspects of Mr Hahn’s file notes. I reject that evidence. It is inherently probable that Mr Hahn took care to take a detailed note of Mr Kohacek’s instructions at the time of the conferences, particularly in circumstances where he was so troubled by those instructions that he refused to follow them at the conclusion of the third conference. I therefore regard those file notes as reliable evidence of Mr Kohacek’s instructions to Mr Hahn. It is inherently probable that those instructions reflected Mr Kohacek’s recollection and understanding of his conversations with Ms Qiu which took place a short time before his conferences with Mr Hahn. Mr Kohacek’s evidence in cross-examination is inherently unreliable due to the passage of six years since the relevant conversations with Ms Qiu, and the likelihood that his memory of those conversations has been consciously or subconsciously overlaid by his adverse perception of Ms Qiu resulting from the dispute that developed in September 2019 concerning McQiu Lawyers’ legal fees, as referred to later in these reasons.

58. Mr Kohacek disregarded Mr Hahn’s concerns and engaged Mr John Mann, solicitor, of Turner Freeman, to prepare wills for himself and Mr Colley in substantially the same terms that Mr Hahn had declined to prepare. Those new wills were executed on 8 May 2018 and witnessed by Mr Mann. Each of Messrs Kohacek and Colley gave the whole of his estate to the other or, in the event that the other did not survive him, to Ms Qiu.

59. On 18 May 2018, Messrs Kohacek and Colley entered into two costs agreements with McQiu Lawyers in relation to their retainer of that firm to act for them: (1) in proceedings that Mr Weller had filed against them in the District Court suing for his fees; and (2) in relation to professional fees charged by Mr Corbett. Mr Corbett had served a bill of costs on Mr Kohacek and Mr Colley on 11 May 2018 in the amount of approximately $56,500. Each of the costs agreements that Messrs Kohacek and Colley signed with McQiu Lawyers on 18 May 2018 provided that the firm would charge for its services at the hourly rates before GST of $395 for Ms Qiu as the principal solicitor, and $350 per hour for the solicitor Ms Gayle Li. Each costs agreement required payment of funds into trust prior to the commencement of work. There is no suggestion in the terms of the costs agreements that the work was to be carried out free of charge.

60. On or about 25 June 2018, North Shore Chambers Pty Ltd trading as McQiu Lawyers lodged a caveat against the title to the Property, claiming an equitable interest in the Property “being equal to the amount of legal fees accrued and owing” by virtue of the costs agreements dated 18 May 2018. Those agreements contain no provision conferring a charge or any other interest in the Property on McQiu Lawyers.

61. On 22 July 2018, Messrs Kohacek and Colley entered into a further costs agreement in relation to the retainer of McQiu Lawyers to act for them in Supreme Court proceeding 2018/201065, which was an application by Mr Corbett for assessment of his solicitor/client costs in acting for Messrs Kohacek and Colley in the proceedings brought against them by Mr Weller. [12] That costs agreement contained the following clause:

“CAVEAT

It is acknowledged and agreed by the client that if our costs and disbursements, including counsel’s fees, are not paid, the firm hereby charges all his/her Right. Title and interest (if any) in the land in Certificate(s) of Title reference XX/XXXXX X and also any property or properties that the client owns concurrently or may acquire in the future, solely or jointly, or have or become to have a beneficial interest in, in favour of ‘McQiu Lawyers’, with the due and punctual observance and performance of the obligations of the client.

The client acknowledges that ‘McQiu Lawyers’ has a registered Caveat on such property or properties in respect of the interests conferred on it in the mater [sic] of Weller v Kohacek & Ors (Proceeding 2017/00383572) and that this Caveat extends to the recovery of costs, including the event of non payment of our, or counsel’s, fees and disbursements for this matter. Such registration of this Caveat by McQiu Lawyers over the client’s property(ies) shall not be challenged by the client in any way whatsoever, and the client agrees not to take any steps in filing a ‘Lapsing Notice’ through the Land Titles Office to have the Caveat(s) removed, until such time of the client has paid all of the firms [sic] fees and disbursements owing by him/her to McQiu Lawyers.”

12. See [36]-[38] above.

62. In October 2018, Messrs Kohacek and Colley each amended their wills to specifically exclude certain relatives from receiving any benefit, notwithstanding Mr Mann’s advice that it was not necessary to do so. Those amended wills were also prepared by Mr Mann’s firm, Turner Freeman.

63. The proposal for Ms Qiu to purchase an interest in the Property appears to have been revived at some time after April 2018. [13] Mr Kohacek gave evidence that, after offering to purchase a one-third share of the Property for one third of the market price, Ms Qiu asked him to obtain a valuation which she told him she needed to be “as low as possible for stamp duty purposes”.

    13. See [54] above.

64. On 8 January 2019, Ms Lynette Savage, a certified practising valuer, issued a document entitled “Valuation Certificate – Stamp Duty Purposes”. The document stated:

“VALUATION

In Accordance with the Stamp Duties Act 1997. (NSW).

This is to certify the Market Value of the fee simple interest and property described as,

119 Argents Road

Wilberforce, NSW, 2756

Lot XX DPXXXXX X

Valuation Date: 8^th January 2018

Valuation:   One Million Five Hundred Thousand Dollars ($1,500,000)”

65. The “Limiting Conditions and Liabilities” set out in the valuation certificate included the following:

“This report and recommendation has been prepared under instructions from my client for stamp duty purposes.”

66. It is common ground that the date “8^th January 2018” is an error, and that the certificate was in fact issued on 8 January 2019.

67. The valuation certificate records a brief description of the Property, its zoning, its bushfire and flood affectation, and the impact of noise from the factory on the land adjoining the rear boundary of the Property.

68. Under the heading “Sales Evidence”, the valuation certificate contains a list of three property sales in January, February and August 2018. None of those three properties is located in Wilberforce. The certificate contains no statement about whether, or to what extent, Ms Savage considered those three properties to be comparable to the Property, and, if so, why. Nor does the certificate explain whether any such comparisons informed Ms Savage’s valuation of the Property and, if so, how and why. The certificate contains no indication that Ms Savage inspected the Property for the purpose of the valuation. For those reasons, I do not accept the valuation certificate as evidence of the actual market value of the Property as at January 2019, or at any other time relevant to these proceedings.

69. In his affidavit sworn on 5 August 2024, Mr Kohacek deposed that Ms Qiu told him when the valuation certificate was received that, for a one-third interest in the Property, she would pay $500,000 and a further sum of $666,000 in cash. Under cross-examination, Mr Kohacek gave evidence that it had been agreed that, in addition to paying a sum of $500,000 to be stipulated as the purchase price in a contract for the sale of the one-third interest, Ms Qiu would discharge the mortgage in favour of the Commonwealth Bank, discharge the debts owed by Messrs Kohacek and Coley to the various solicitors who had been acting for them, and pay something else which Mr Kohacek could not recall, in addition to acting for Mr Kohacek and Mr Colley for free. Mr Kohacek said that “it came to 1 million and something”.

70. Mr Kohacek’s evidence is inconsistent with a handwritten note that he sent to Mr Mann on 17 January 2019, together with a copy of the valuation certificate. The note stated (errors in original):

“FROM    ARNO KOHACEK/RAY COLLEY AND

KATHY QIU

CONTACT:    ARNO AND RAY ON 02 XXXXX X

KATHY QIU ON XXXX XXX XXX

FOR SAMPLE OF CONTRACT

JOHN PLEASE NOTE

RECEIVED VALUATION FROM LYNETTE SAVAGE

ON 16/1/19 COPIES ATTACHED

WILL BRING ORIGINALS ON OUR NEXT

MEETING.

PROPERTY VALUED AT $1,500.000) FOR

STAMP DUTY.

THE PROPERTY WILL BE DIVIDED BY

THREE OF US: RAY / ARNO / KATHY.

KATHY WILL PAY OUR BANK THE

AMOUNT OF $350,000.00 OWING.

TO START KATHY WILL DEPOSIT $2,000.00

PER MONTH WHICH WILL COVER INTEREST

ONLY AND WILL PAY BALANCE AT HER

OWN DISCRETION UNTIL BALANCE IS

CLEARED.

KATHY WILL PAY OUR SOLICITORS FEE

FOR $150,000.00 IN DUE COURSE

THE CONTRACT MUST STIPULATE THAT

BOTH RAY AND ARNO HAVE PERMANENT

RESIDENCY UNTIL BOTH OF WE BOTH

PASS-AWAY, AFTER THAT KATHY WILL

INHERIT OUR 2 SHARES AS PER

OUR WILLS.

ANY ADDITIONAL INFORMATION

TO BE ADDED JOHN MANN TO

KINDLY CONTACT KATHY ON

XXXX XXX XXX OR

VICE VERSA.

JOHN MANN CAN CONTACT ARNO

AND RAY ON 02 XXXXX XXX

OR XXXX XXX XXX

WHEN CONTRACT READY WOULD

JOHN MANN KINDLY LIASE WITH

KATHY TO PERUSE CONTRACT AND

SAME FOR ARNO AND RAY

WHEN EVERYBODY SATISFIED THE

THREE OF US

(KATHY RAY ARNO) WILL

MAKE APPOINTMENT WITH JOHN

MANN FOR SIGNATURES”

71. It appears that Turner Freeman understood the $350,000 to be paid to the Commonwealth Bank and the $150,000 to be paid to the former solicitors for Messrs Kohacek and Colley referred to in the note as comprising the whole of the consideration payable by Ms Qiu for a one third interest in the Property. Turner Freeman prepared a draft contract for the sale of that interest to Ms Qiu providing for a purchase price of $500,000 to be paid by equal monthly instalments of $2,000.

72. Ms Julie Gosden, a paralegal assisting Mr Mann at Turner Freeman, emailed the draft contract to Ms Qiu on 20 March 2019. Ms Qiu replied by email on 25 March 2019, declining to sign the contract “as i strongly believe it is SUCH a unfair contract and will be placed me into a high risk”. As best I can understand Ms Qiu’s email, which is written in poor English, she considered the contract to be unfair because she had understood that the $500,000 purchase price was to be paid by Ms Qiu discharging the debts that Messrs Kohacek and Colley then owed to various solicitors, and paying $2,000 monthly to the Commonwealth Bank to be credited against the amount owing under the mortgage secured against the Property. Ms Qiu objected to the contract providing for the payment of a $500,000 purchase price directly to the vendors in the amount of $2,000 per month.

73. It is not necessary for the determination of the issues in dispute in these proceedings to make findings about the purchase price and payment mechanisms that Mr Kohacek and Ms Qiu had discussed before Turner Freeman prepared the draft contract. According to Mr Kohacek’s evidence, the proposal for Ms Qiu to purchase an interest in the Property was abandoned in March 2019 when Ms Qiu objected to the terms of that draft contract. I accept that evidence, which is consistent with the absence of any contemporaneous documentary evidence suggesting that negotiations continued after Ms Qiu objected to the terms of the draft contract, and which is also consistent with correspondence between Mr White and each of Mr Mann and McQiu Lawyers. Mr White initiated that correspondence in the course of gathering information for the purpose of the complaint that he later lodged against McQiu Lawyers with the OLSC on behalf of Messrs Kohacek and Colley. Mr White relied on that correspondence in his various affidavits sworn in these proceedings.

74. After March 2019, McQiu Lawyers continued to provide legal services to Messrs Kohacek and Colley in relation to the matters described in their costs agreements until Mr Kohacek fell into dispute with them in early September 2019, as referred to later in these reasons.

Dealings between Messrs Kohacek and Colley and Mr White: April – September 2019

75. Mr Kohacek and Mr White have given very different accounts of their first contact with one another in April 2019, and of their discussions in the period leading up to the execution of the Heads of Agreement on 10 September 2019.

76. In his first affidavit sworn on 3 May 2023, Mr White gave evidence that Mr Kohacek had contacted him in April 2019 after hearing that Mr White had made a complaint about Mr Weller, with whom Messrs Kohacek and Colley (represented by McQiu Lawyers) were then engaged in an ongoing legal costs dispute. Mr White deposed that he offered to help Messrs Kohacek and Colley, as he lived very close to them, and a friendship was formed.

77. In his 3 May 2023 affidavit, Mr White did not give any account of his interactions with Messrs Kohacek and Colley in the period after April 2019 through which he formed what he described as a friendship with them. That account emerged for the first time in Mr White’s second affidavit sworn on 15 December 2023, together with a slightly different account of his initial conversation with Mr Kohacek in April 2019. In his second affidavit, Mr White deposed that he declined to provide any details of his dispute with Mr Weller to Mr Kohacek during their initial conversation in April 2019, but agreed to speak to Mr Kohacek’s solicitor. Mr White then received a telephone call from Ms Li of McQiu Lawyers and answered her questions about his dealings with Mr Weller.

78. Mr White deposed that, after his first telephone call with Mr Kohacek in April 2019, Mr Kohacek called him once or twice a week to discuss his dispute with Mr Weller and update Mr White about the progress of that dispute. Mr White deposed that they developed a friendship through these telephone conversations, especially once they realised that they lived quite close to one another. As that relationship developed, they began to speak with one another almost every day, and their conversations shifted from Mr Kohacek’s dispute with Mr Weller to his other disputes, including his dispute with the Hawkesbury City Council and Tuscany Foods, and his dispute with Mr Corbett concerning his fees.

79. According to Mr White’s 15 December 2023 affidavit, he visited the Property in about late June or early July 2019, at Mr Kohacek’s invitation, to inspect water pollution that Mr Kohacek considered to be emanating from Tuscany Foods’ factory and to hear the noise emanating from the factory. This was Mr White’s first contact with Mr Colley. They discussed the disputes with the Council and with Mr Corbett.

80. Mr White deposed in his 15 December 2023 affidavit that, as his relationship with Mr Kohacek and Mr Colley developed, they began to talk to Mr White about their arrangements with McQiu Lawyers. According to Mr White, Mr Kohacek told him in about August 2019 that he and Mr Colley had entered into an agreement with Ms Qiu for her to purchase the Property on terms that she would pay their legal debts in return for the immediate transfer of a one-third interest in the Property, and that the whole of the Property would pass to her under their wills. Mr White deposed that Mr Kohacek told him that he and Mr Colley just wanted to live at the Property for the remainder of their lives without having to worry about their outstanding legal debts. In subsequent conversations, Mr Kohacek told him that McQiu Lawyers were suing Mr Weller, Mr Corbett and Mr Jackson on behalf of himself and Mr Colley. In another conversation in about early August 2019, Mr Kohacek described Ms Qiu as a “saviour” because she had agreed to pay their legal debts and the Commonwealth Bank mortgage in return for a one-third interest in the Property now and the remainder after their death, which meant that they could live “care-free” in the Property for the rest of their lives.

81. Mr White then deposed that he had a conversation with Mr Kohacek in about August or early September 2019 in which Mr Kohacek told him that Ms Qiu had been unable to obtain finance to pay his and Mr Colley’s legal debts in order to purchase an interest in the Property, and that she had told Mr Kohacek that she could not therefore proceed to purchase that interest. Mr White deposed that he observed that the relationship between Messrs Kohacek and Colley and Ms Qiu deteriorated “almost overnight”.

82. According to Mr White, Mr Kohacek telephoned him on about 3 September 2019 and said that he and Mr Colley wanted Mr White to come and meet them at the Property because they had an exciting business opportunity for him. Mr White asked Mr Kohacek what the opportunity was about. Mr Kohacek then asked him if he would be interested in buying the Property on similar terms that he and Mr Colley had offered to Ms Qiu so they could remain living in their home for the rest of their lives. Mr White answered: “potentially”. Mr Kohacek then said they should meet to discuss this further.

83. Mr White gave evidence that he met with Messrs Kohacek and Colley at the Property on the following day, being 4 September 2019. In his affidavit sworn on 15 December 2023, Mr White gave the following account of the gist of the conversation that he says he recalls having with Messrs Kohacek and Colley on that occasion:

“(a)   Mr Kohacek reminded me that Xiaolin Qiu was not able to get finance to buy the Wilberforce Property without CBA’s assistance (which CBA wouldn’t give);

(b)   Mr Colley said that he had even offered Xiaolin Qiu 45% of the Wilberforce Property, and that Xiaolin Qiu still would not accept the deal;

(c)   Mr Kohacek said, irrespective of those matters, they didn’t want to proceed with Xiaolin Qiu; Mr Colley nodded his head in agreement;

(d)   Mr Kohacek said that he thought I would have enough capital to pay out their legal debts and attend to the CBA Mortgage payments without needing to get finance or further encumber the Wilberforce Property;

(e)   Mr Kohacek then asked me to buy the Wilberforce Property (instead of Xiaolin Qiu) and gave me detailed summary of their proposed terms, namely:

(i)   I was to pay Mr Kohacek and Mr Colley’s legal debts at that time, being:

1.   a debt owed to Mr Weller of approximately $14,500;

2.   a debt owed to Mr Corbett of approximately $50,000; and

3.    a debt owed to McQiu Lawyers of approximately $120,000;

(ii)   I was responsible for paying the CBA mortgage on the Wilberforce Property which was approximately $381,000, and the monthly CBA interest payments of $2,000;

(iii)   I would need to remove the McQiu Lawyers’ caveat from the Wilberforce Property title;

(iv)   we would each pay half of the Wilberforce Property’s rates and insurances;

(v)   Mr Kohacek and Mr Colley would be allowed to live in the Wilberforce Property until they pass away;

(vi)   I would assist with the upkeep of the Wilberforce Property and Mr Kohcaek [sic] and Mr Colley’s general-well being [sic] from time to time; and

(vii)   in return, I would receive a one-third interest in the Wilberforce Property now, and later, when Mr Kohacek and Mr Colley passed away, I was to receive the whole of the Wilberforce Property.

(f)   Mr Kohacek then requested that I prepare the written version of the agreement. Mr Kohacek gave me a copy of:

(ii)   the Mr Mann Contract for Sale that Mr Kohacek said had been sent to Xiaolin Qiu in March 2019; and

(iii)   a copy of the Valuation.

(g)   Mr Kohacek then said that:

(i)   he and Mr Colley had previously consulted his lawyer, Mr Mann, on the proposed terms (when they had contemplated entering into the agreement with Xiaolin Qiu and considered that it was a great deal for all parties concerned;

(ii)   I could use the Mr Mann Contract for Sale as a ‘rough guide’; and

(iii)   Mr Kohacek had already obtained the Valuation of the Wilberforce Property on 16 January 2019 recording the value as $1,500,000; I should use the Valuation as the basis of the Wilberforce Property value under our agreement.

(h)   I expressed my concerns about not being able to generate income from the potential investment in the short term, and that I would need to sell property in order to attend to the above. Mr Kohacek and Mr Colley said I could use as much of the land as needed, just not the house. I said OK, and that I would pay additional rates if I could generate income;

(i)   Mr Kohacek and impassioned and charismatic, and he spoke to me like were family. Mr Kohacek and Mr Colley told me that the Wilberforce Property would be a great legacy to pass onto my family. Further, Mr Kohacek and Mr Colley told me they didn’t have any family, and so, for them, it didn’t matter so long as they could stay in the house for the remainder of their lives; and

(j)   I said to Mr Kohacek and Mr Colley that I would buy the Wilberforce Property as offered; but there would need to be a cooling off period so that:

(i)   I could discuss the offer with Ms Cassidy;

(ii)   Mr Kohacek and Mr Colley could get advice on their offer; and

(iii)   my family could come and meet Mr Kohacek and Mr Colley, just in case we all didn’t get along.

(k)   Mr Kohacek and Mr Colley agreed.”

84. This account is far more detailed than Mr White’s evidence in his first affidavit sworn on 8 May 2023, in which Mr White deposed only that Mr Kohacek and Mr Colley had “offered me a similar agreement as had been offered to Ms Qiu” in or about early September 2019. In his first affidavit, Mr White described the agreement as being that he would purchase a one-third interest in the Property “with a right to survivorship” for approximately $500,000, in exchange for which he was to pay out Mr Colley and Mr Kohacek’s legal debts and the Commonwealth Bank mortgage.

85. In his 15 December 2023 affidavit, Mr White deposed that it was clear to him from his conversations with Messrs Kohacek and Colley, and from the documents that they had provided to him, that they wanted a life estate in the Property with the security of having Mr White attend to their outstanding legal debts and the Commonwealth Bank mortgage, pay part of the rates and insurances, and assist with the upkeep of the Property, and, in return, they wanted Mr White to receive a third of the Property immediately and the whole of the Property when they passed away. Mr White referred to this in his 15 December 2023 affidavit as “the Common Intention”.

86. Mr White deposed that he prepared the Heads of Agreement in the days following his meeting with Messrs Kohacek and Colley on 4 September 2019, and that he had daily telephone conversations with them about the terms of the agreement. Mr White deposed that, during those conversations, Mr Kohacek requested a further term for a cash payment of $5,000 as a non-refundable deposit.

87. In her affidavit sworn on 22 December 2023, Ms Cassidy gave evidence of conversations that she had with Mr White during the period between April and September 2019 in which Mr White relayed to her an account of his conversations with Mr Kohacek in terms broadly consistent with Mr White’s affidavit evidence referred to at [76]-[87] above.

88. In particular, Ms Cassidy deposed that she had a conversation with Mr White in about August 2019 in which he informed her that Mr Kohacek had told him that he and Mr Colley had entered into an agreement with Ms Qiu under which she was to take care of their debts in return for a one-third share of the Property now, with the whole of the Property passing to Ms Qiu after Messrs Kohacek and Colley died. According to Ms Cassidy, Mr White told her that Mr Kohacek was angry because Ms Qiu could not get finance to proceed with that agreement.

89. Ms Cassidy also deposed that she had a conversation with Mr White in early September 2019 in which he informed her that Messrs Kohacek and Colley had asked him to buy the Property instead of Ms Qiu because their relationship with her had “gone sour” and they did not want to proceed with Ms Qiu anymore. According to Ms Cassidy’s evidence, Mr White told her that Messrs Kohacek and Colley wanted a life estate in the Property without having to worry about their outstanding debts, and it was proposed that he and Ms Cassidy would pay those debts, help with the upkeep of the Property, and look after Messrs Kohacek and Colley. In return, they would receive one third of the Property now and the remainder after Messrs Kohacek and Colley passed away. Mr White said that they had told him that they just wanted to be able to live at the Property until they pass away. Ms Cassidy asked Mr White how much the Property was worth, and he told her that Mr Kohacek had given him a recent valuation of $1.5 million. Ms Cassidy told Mr White that she thought “the offer was OK but we should get something in writing”. Mr White told her that Mr Kohacek had asked him to put something in writing, and that he had agreed to do so.

92. (2013) 84 NSWLR 231; [2013] NSWCA 36 at [7] (Allsop P, Sackville AJA agreeing).

298. It is not necessary to determine Mr Kohacek’s cross-claim relying on the Contracts Review Act in my view of my conclusions above. If I had determined that the Heads of Agreement was legally binding, then I would have held that, in addition to being liable to be set aside on the grounds of unconscionability, the Heads of Agreement was unjust in the circumstances relating to it at the time it was made for all of the reasons explained at [286]-[291] above. In particular, I would have held that: the circumstances constituting the special disadvantage of Messrs Kohacek and Colley gave rise to a material inequality of bargaining power between them and Mr White (s 9(2)(a)); that although Mr White read through the provisions of the Heads of Agreement with Messrs Kohacek and Colley before they signed it, those provisions were not the subject of negotiation (s 9(2)(b)); that those provisions were not properly explained to Messrs Kohacek and Colley by Mr White who discouraged them from seeking legal advice (s 9(2)(h) and (i)); that it was an unfair tactic of Mr White to present to them the Heads of Agreement which he had drafted and encourage them to sign it without explaining it to them, without the benefit of legal advice, and without even an opportunity to discuss it between themselves in Mr White’s absence (s 9(2)(j)); and that at least clause 6(k) of the Heads of Agreement was not reasonably necessary for the protection of the legitimate interests of Mr White and Ms Cassidy (s 9(2)(d)). I would have refused to enforce the provisions of the Heads of Agreement, conditional upon Mr Kohacek paying to Mr White and Ms Cassidy a sum equivalent to the total of the amounts referred to at [310].

Proprietary estoppel

299. Mr White and Ms Cassidy rely on the doctrine of proprietary estoppel by encouragement.

300. In order to succeed in that claim, Mr White and Ms Cassidy must establish: [93]

     93. Kramer v Stone [2024] HCA 48; (2024) 421 ALJR 106 at [36]-[41] (Gageler CJ, Gordon, Edelman and Beech-Jones JJ).

1. a clear and unequivocal representation or promise made to them by Messrs Kohacek and Colley that they would transfer a one-third interest in the Property to Mr White and Ms Cassidy, and that the remaining two-thirds interest would pass to them following the death of both Mr Kohacek and Mr Colley, on the terms of the Heads of Agreement;

2. that Messrs Kohacek and Colley intended, or that a reasonable person in their position would have intended, that they would rely upon that promise or representation by some action, omission or course of conduct;

3. that they did rely on that promise by acting, or omitting to act, in the general manner that would have been expected by Messrs Kohacek and Colley; and

4. that they will suffer detriment if the promise is not fulfilled, in the sense that they will be left in a worse position as a consequence of their reliance on the promise than if the promise had not been made.

301. The representations on which Mr White and Ms Cassidy claim to have relied are contained in the Heads of Agreement, or were made in the context of and clearly with reference to the Heads of Agreement. [94]

     94. See, for example, [203] and [228]-[229] above.

302. Mr White and Ms Cassidy did pay the debts that Messrs Kohacek and Colley owed to solicitors, made monthly payments to the Commonwealth Bank, paid some of the costs associated with maintaining and insuring the Property, and undertook certain work on the Property. Mr White and Ms Cassidy also provided company for Messrs Kohacek and Colley. Ms Cassidy provided food for them from time to time. Mr White was a listening ear for Mr Kohacek’s complaints against the local council and others who he considered had done wrong by him. [95] Those actions of Mr White and Ms Cassidy were referable to the Heads of Agreement.

     95. See [170]-[181] and [217]-[233] above.

303. As counsel for Mr Kohacek submitted, equity will not grant relief to avoid detriment that Mr White and Ms Cassidy will otherwise suffer as a result of relying on the Heads of Agreement, and statements by Messrs Kohacek and Colley referable to the Heads of Agreement, in circumstances where Mr White and Ms Cassidy unconscionably procured their signature to that document for the reasons I have explained above. The plaintiffs’ proprietary estoppel claim must therefore be dismissed. To the extent that Mr White and Ms Cassidy conferred benefits on Messrs Kohacek and Colley that are quantifiable in monetary terms, they are entitled to restitution, as counsel for Mr Kohacek accepted.

Joint endeavour constructive trust

304. Mr White and Ms Cassidy’s alternative claim for relief based on a “joint endeavour constructive trust” required them to demonstrate: [96]

1. the formation of a joint endeavour;

2. the acquisition of property pursuant to that joint endeavour; and

3. premature termination of the joint endeavour, without fault of any party, leaving one party with a legal interest which that party was not intended to enjoy beneficially in the circumstances. Equity will not permit that party to assert or retain the benefit of the relevant property to the extent that it would be unconscionable for them to do so.

   96. Muschinski v Dodds (1985) 160 CLR 583 at 620 (Deane J); [1985] HCA 78; Baumgartner v Baumgartner (1987) 164 CLR 137 at 148 (Mason CJ, Wilson and Deane JJ); [1987] HCA 59; McKinlay v Woods [2024] NSWCA 122 at [80]-[85] (Leeming JA, White JA and Griffiths AJA agreeing) (McKinlay v Woods).

305. It is necessary to identify the nature, scope and purpose of the alleged understanding between the parties that is said to constitute the joint endeavour, although the scope of that understanding may change from time to time. [97]

     97. Zhang v Metcalf [2020] NSWCA 228 at [57] (Gleeson JA, Payne and White JJA agreeing); McKinlay v Woods at [89] (Leeming JA, White JA and Griffiths AJA agreeing); Hellenic Property Holdings Pty Ltd v Makaritis [2025] NSWCA 13 at [81] (Mitchelmore JA, Basten and Griffiths AJJA agreeing).

306. The Heads of Agreement sets out the foundation and scope of the joint endeavour on which Mr White and Ms Cassidy rely. Unconscionability being the ultimate basis for the imposition of a joint endeavour constructive trust, equity will not grant the relief sought by Mr White and Ms Cassidy on the basis of a joint endeavour constructive trust in circumstances where the joint endeavour is the product of their unconscionable conduct for the reasons I have explained above.

307. I do not find it necessary to address the further difficulty that the relief sought by Mr White and Ms Cassidy on the basis of a joint endeavour constructive trust would have delivered to them a greater interest in the Property during Mr Kohacek’s lifetime than had been contemplated by the Heads of Agreement.

Common intention constructive trust

308. The plaintiffs’ common intention constructive trust claim must fail for the same reason – the intention that Mr White and Ms Cassidy would have some proprietary interest in the Property is founded in the Heads of Agreement, which is tainted by the unconscionable conduct of Mr White and Ms Cassidy and which would have been set aside on that basis if it had been legally binding. [98]

     98. Shepherd v Doolan [2005] NSWSC 42 at [30]-[47] (White J, as his Honour then was); Bassett v Cameron [2021] NSWSC 207 at [564]-[565] (Ward CJ in Eq, as her Honour then was), referred to with approval in Galati v Deans [2023] NSWCA 13 at [148]-[149] (Basten AJA, Macfarlan JA agreeing) (Galati v Deans).

309. In light of that conclusion, it is not necessary for me to address the further difficulty that the relief sought by Mr White and Ms Cassidy on the basis of a common intention constructive trust would have delivered to them a greater interest in the Property during Mr Kohacek’s lifetime than had been contemplated by the Heads of Agreement. Nor is it necessary for me to express any view about whether a common intention constructive trust is even available under Australian law in circumstances where proprietary estoppel has been rejected. [99]

     99. Galati v Deans at [57]-[61] (White JA) and [148]-[149] (Basten AJA, Macfarlan JA agreeing), and the authorities there referred to.

Money had and received

310. Mr Kohacek accepts that Mr White and Ms Cassidy are entitled to be reimbursed for the following payments made in connection with the Property and the Heads of Agreement:

1. the sum of $5,000 paid to Messrs Kohacek and Colley on or about the date of signing the Heads of Agreement; [100]

   100. As referred to at [154]-[157] above.

2. the total sum of $51,946.40 paid to Mr Corbett during the period from 20 September 2019 to 30 October 2020 to discharge debts owing to him by Messrs Kohacek and Colley; [101]

   101. As referred to at [172] and [176] above and itemised in Part B3 of Schedule B to the plaintiffs’ written closing submissions.

3. the total sum of $1,504.13 paid to Mr Weller during the period from 9 October 2019 to 8 January 2020 to discharge debts owing to him by Messrs Kohacek and Colley; [102]

   102. As referred to at [173] and itemised in Part B4 of Schedule B to the plaintiffs’ written closing submissions.

4. the total sum of $92,643.94 paid to McQiu Lawyers during the period from 11 November 2020 to 12 July 2021 to discharge debts owing to that firm by Messrs Kohacek and Colley; [103]

5. the total sum of $106,600 paid to the Commonwealth Bank of Australia during the period from 1 November 2019 to 21 October 2024, and any further payments made by the plaintiffs to the Commonwealth Bank of Australia in the period from 21 October 2024 to the date of these reasons for judgment, to reduce the liability of Messrs Kohacek and Colley (and, after the death of Mr Colley, the liability of Mr Kohacek) under the loan secured by mortgage registered against the title to the Property; [104]

6. the total sum of $12,353.43 paid for rates and insurance in respect of the Property in the period from 9 December 2019 to 2 September 2024, and any such payments made in the period from 2 September 2024 to the date of these reasons for judgment; [105]

7. the sum of $777.20 paid on 15 March 2021 to repair leaks to the dam on the Property; [106] and

8. the sum of $6,597.60 paid during the period from 26 April 2022 to 3 October 2022 in respect of Mr Colley’s funeral costs. [107]

   103. As referred to at [181] above and itemised in Part B2 of Schedule B to the plaintiffs’ written closing submissions.

   104. As referred to at [174] above and itemised in Part B7 of Schedule B to the plaintiffs’ written closing submissions.

   105. As referred to at [175] above and itemised in Part B8 of Schedule B to the plaintiffs’ written closing submissions

   106. As referred to at [220] above and itemised in Part B5 of Schedule B to the plaintiffs’ written closing submissions.

   107. As referred to at [233] above and itemised in Part B6 of Schedule B to the plaintiffs’ written closing submissions.

311. The evidence does not provide a sufficient basis for me to find that Mr White and Ms Cassidy are entitled to be reimbursed for any part of the cost of the new ride-on mower purchased in April 2021. [108]

     108. See [220] above.

312. For the reasons I have already explained, Mr White and Ms Cassidy are not entitled to be reimbursed or compensated for their costs incurred in selling the Orange property, or the loss of profit that they claim to have suffered as a result of selling that property in December 2020 rather than continuing to hold it to the present day. [109]

     109. See [199]-[202] above.

313. The appropriate basis of those amounts for reimbursement is restitution as money had and received, as counsel for Mr Kohacek acknowledged. Counsel correctly accepted that there is no reason to deny the plaintiffs’ claim for pre-judgment interest pursuant to s 100 of the Civil Procedure Act 2005 (NSW) on judgment in their favour for moneys had and received.

314. The submissions made on behalf of the plaintiffs did not address the basis on which they claim to be entitled to an equitable lien over the Property securing payment of the amounts referred to at [310] above. I do not consider that the relevant equitable principles support the recognition of a lien in this case to protect the plaintiffs against loss arising from any difficulty they may otherwise encounter in enforcing judgment against Mr Kohacek to recover those amounts, which the plaintiffs paid in pursuit of a scheme that I have held was founded on their own unconscionable conduct. [110]

     110. See Grant v Grant [2020] NSWSC 760 at [42]-[44] (Rein J) and the authorities there referred to.

Cross-claim for damages

315. As I have mentioned earlier in these reasons, Mr Kohacek’s cross-claim for damages in the amount of $1,000,000 was abandoned on the first day of the hearing.

Conclusion and orders

316. For all of the foregoing reasons, the Court will make orders to the following effect:

1. Judgment for the plaintiffs against the defendant in a sum to be calculated as:

1. $277,422.70, being the total of the known amounts referred to in paragraph [310] of the reasons for judgment published on 12 September 2025; plus

2. the total amount of any payments made by the plaintiffs to the Commonwealth Bank of Australia in the period from 21 October 2024 to 12 September 2025 which have been applied to reduce the liability of the defendant under the loan secured by mortgage registered against the Property; plus

3. the total amount of any payments made by the plaintiffs during the period from 2 September 2024 to 12 September 2025 in for council rates and insurance in respect of the Property.

2. Order the defendant to pay interest to the plaintiffs on that judgment sum pursuant to s 100 of the Civil Procedure Act 2005 (NSW) in an amount to be quantified, calculated separately in respect of each amount comprising part of that judgment sum, from the date on which the plaintiffs paid that amount.

3. Order that the plaintiffs’ claims for relief are otherwise dismissed.

4. Order that the cross-claim is dismissed.

317. The parties will need to bring in short minutes of order to that effect after agreeing the calculation of the judgment sum in accordance with (1) above and the calculation of the amount of interest in accordance with (2) above. Those short minutes of order should also set out any order that is agreed between the parties as to the costs of the proceedings or, failing agreement, the competing orders sought by the parties as to costs. If the parties propose competing orders in relation to costs, the short minutes of order should be accompanied by each party’s written submissions of no more than three pages in length in support of the costs order for which they contend.

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Endnotes

Amendments

12 September 2025 - 12 September 2025 - Paragraph numbering error

26 September 2025 - Amendment to coversheet details - representation

Decision last updated: 26 September 2025