Plaintiffs Claim Interests from Another's Property

Pavlis v Pavlis [2021] NSWSC 1117 (2 September 2021)

The parties are in dispute over the benefits to be derived from a property which now has a market value of $5.5 million.  The plaintiffs assert that they are entitled to 40% interest in the Property due to their contributions to the property's renovation work.  On the other hand, the defendants allege that the plaintiffs' exaggerated their contributions.  The Court, in adjudicating whether or not the plaintiffs have proven any matter that would make it unconscientious for parents to retain benefit of contributions absolutely, assessed the plaintiffs' motivations in their contributions. 

Facts:

Francis Michael (Frank) Forde served as Prime Minister from the death of John Curtin on 6 July 1945 until 13 July 1945 when Forde lost the Australian Labor Party leadership to Ben Chifley.  Although he was a Queenslander, for many years the Forde family lived in Sydney in a grand 1906 Federation home called “Virginia” in Strathfield (the Property).  By 1986, the Property was bought for $300,000.00 by the first defendant, Emanuel Pavlis, and his wife, the second defendant, Koula Pavlis.  Emanuel and Koula have three sons: the first plaintiff, George and the second plaintiff, Chris and Garry. 

By 2017, disagreements had split the family in two.  On one side are George and Chris.  On the other side are Emanuel and Koula supported by Garry.  Although Garry is not a party to the proceedings and claims no present interest in the Property, he has given evidence in his parents’ case and is funding their legal costs.

The Property now has a market value of $5.5 million due to two broad phases of restoration work.  George and Chris asserts that they supervised, physically assisted with, and funded a very large part of the renovations in the expectation, encouraged by Emanuel and Koula, that he and his brother would receive a majority interest in the Property when their parents died.  Under Emanuel and Koula’s current wills, they will receive nothing, although there is some benefit to their children.  Their brother Garry is the principal beneficiary. 

George and Chris allege that they would each have a 40% interest in the Property in return for their direct and indirect contributions to the renovations.  Alternatively, they submit that their interest in the Property arises by reason of a joint undertaking that has failed without attributable blame.  Their case is one of proprietary or promissory estoppel, a constructive trust, or at the very least an equitable lien. 

Emanuel and Koula submitted that everyone in the family helped as they were able with the renovations (supporting the various tradespeople involved) as family members, for the benefit of the family as a whole, so that they would have a beautiful home in which to live. They allege that George and Chris have exaggerated their contributions to the renovations.

Issue:

Whether or not it is unconscientious for the parents to retain the benefit of contributions absolutely. 

Applicable law:

Evidence Act 1995 (NSW) s 140(2) - provides that the Court must, in deciding whether it is satisfied that a case has been proved to the requisite standard, take into account the nature of the cause of action or defence; the nature of the subject matter of the proceeding; and the gravity of the matters alleged.
Real Property Act 1900 (NSW) s 57(2)(b) - where the means to issue notices in relation to the Property pursuant to the CBA Mortgage are provided.
Succession Act 2006 (NSW) - provides for subsequent claims for a family provision order.

Ak-Tankiz v Ak [2014] NSWSC 1044 - where his Honour said that the principal evidence relating to these issues consisted of the uncorroborated evidence of the witnesses, or alternatively the only corroboration available was the testimony of other witnesses. 
Baumgartner v Baumgartner (1987) 164 CLR 137; [1987] HCA 59 - provides that the essence of equity is the making of contributions for the purposes of a joint endeavour or relationship, and the retention by one party of those contributions when the relationship fails without blame where that retention is unconscientious because it was not intended that the other party alone should enjoy them. 
Briginshaw v Briginshaw (1938) 60 CLR 336 - provides that reasonable satisfaction should not be produced by inexact proofs, indefinite testimony or indirect inferences.
Browne v Dunn (1893) 6 R 67 - where it was held that it is an obligation “to put to an opponent’s witness in cross-examination the nature of the case upon which it is proposed to rely in contradiction of [the witness’s] evidence”.
Cubillo v Commonwealth of Australia (No 2) (2000) 103 FCR 1; [2000] FCA 1084 - provides that the Court is not bound to accept or reject a witness' evidence in its entirety.
Queensland v Masson (2020) 94 ALJR 785; [2020] HCA 28 - where the Court held that common sense and ordinary experience dictate that, just as a paramedic's initial treatment must be immediate and unhesitating, a paramedic is likely to be inclined to conceive and speak of actions in perfunctory and unqualified terms.
SAMM Property Holdings Pty Ltd v Shaye Properties Pty Ltd (2017) 345 ALR 633; [2017] NSWCA 132 - where it was provided that the rule in Browne v Dunn is an obligation of procedural fairness which counsel has when cross-examining a witness who counsel intends to submit should not be accepted.
Sangha v Baxter [2009] NSWCA 78 - where it was held that there are risks in making global findings about credibility of any particular witness. 
Steinberg v Commissioner of Taxation (Cth) (1975) 134 CLR 640; [1975] HCA 63 - Gibbs J held that the fact that a witness is disbelieved does not prove the opposite of what he asserted.
Warner v Hung, in the matter of Bellpac Pty Ltd (In liq) (No 2) (2011) 297 ALR 56; [2011] FCA 1123 - where the concept of actual persuasion was elucidated by Emmett J.
Watson v Foxman (1995) 49 NSWLR 315 - where it was held that where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. 

Analysis:

George and Chris contributed substantially in time, effort and funds (much of which appears to have been reimbursed to them) to the renovation.  Their contribution was for the significant commercial benefit (with no corresponding benefit to their parents) of using the Property as security for their business ventures and their own expectation that after their parents had enjoyed the benefit of the Property, George and Chris, as sons, would receive a “fair” share of their parents’ estate.  Such expectation does not give rise to an interest in the Property or an entitlement to any other form of equitable relief.

Conclusion: 

The plaintiffs have failed to make out that whatever was done was a “joint” endeavour so as to render Emanuel and Koula’s retention of the benefit unconscientious, as opposed to what was unilateral and, to a large degree, self-interested conduct by the plaintiffs.  The Court has concluded that, with the exception of Garry, none of the parties’ evidence on critical matters can be relied on unless it is inherently likely, against interest, or supported by contemporaneous records or other independent evidence.  The Court does not accept George and Chris’ evidence that Emanuel and Koula expressly represented that George and Chris would receive a precisely identified interest (40%) or any other interest in the Property.