Galaxidis v Galaxidis

Supreme Court of NSW|2000-10-09|Before: Austin J

CITATION : Galaxidis v Galaxidis [2001] NSWSC 1123 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 3884/98 HEARING DATE(S) : 3, 4, 5, 9 October 2000, 29, 30, 31 January 2001, 1 & 5 February 2001, 1, 2 & 3 May 2001, 3 July 2001 JUDGMENT DATE : 6 December 2001

John Galaxidis (P) Athanasios Galaxidis (D1) PARTIES : Georga Galaxidis (D2) Nikolaos Galaxidis (D3) Antonios Galaxidis (D4) JUDGMENT OF : Austin J

COUNSEL : D A Smallbone (P) M J Watts (D1, D2, D4) SOLICITORS : M J Woods & Co (P) Potts Latimer (D1, D2, D4) CATCHWORDS : EQUITY - proprietary estoppel through 'encouraged assumption' - father makes non-contractual promises upon which sons rely to their detriment - ingredients of equitable doctrine - meaning of 'detriment' - appropriate remedies LEGISLATION CITED : Conveyancing Act 1919 (NSW) ss 23C, 54A Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424 Balfour v Balfour [1919] 2 KB 571 Beaton v McDivitt (1987) 13 NSWLR 162 Dillwyn v Llewelyn (1862) 4 De GF & J 517 [45 ER 1285] CASES CITED : Electroboard Administration Pty Ltd v O'Brien [1999] NSWCA 452 Flinn v Flinn [1999] VSCA 109 (Supreme Court of Victoria, Court of Appeal, 4 August 1999) Giumelli v Giumelli (1989) 73 ALJR 547 Ramsden v Dyson (1866) LR 1 HL 129 Riches v Hogben [1985] 2 QdR 292 Roufus v Brewster (1971) 2 SASR 218 The Commonwealth v Verwayen (1990) 170 CLR 394 DECISION : See under heading 'Conclusions'

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION AUSTIN J THURSDAY 6 DECEMBER 2001 3884/98 JOHN GALAXIDIS & ANOR V ATHANASIOS GALAXIDIS & 3 ORS JUDGMENT

HIS HONOUR: Introduction 1 This is an unfortunate case in which two sons are in a bitter dispute with their father and mother and, perhaps worse still, with their younger brother. It is a case about a father, committed to Greek traditions, seeking to control the social and financial lives of his sons in a way that young people in today's Australia would find repugnant. The two eldest sons rebelled against his domineering attitude, and consequently the family has broken apart. What makes the case distinctive is that the father sought to bolster his control by promising his sons that he would give them property, and now the two eldest sons are calling him to account. 2 The case began by summons filed on 10 September 1998, and was continued by statement of claim filed on 17 November 1998. After many interlocutory contests, the hearing proceeded on the basis of a "third further amended statement of claim" filed on 1 May 2001. There are also cross-claims by the first and second defendants against the plaintiff, dated 22 September 2000 and 16 January 2001. 3 For ease of identification, I shall refer to the three brothers by their first names, John (the plaintiff), Nikolaos (the third defendant) and Antonios (the fourth defendant). I shall refer to their father and mother, the first and second defendants respectively, as Mr Galaxidis and Mrs Galaxidis. Although Nikolaos is a defendant, he supports John against the other defendants. His position was described in my reasons for judgment on the application for joinder, delivered on 22 November 2000. Essentially, he has at all times wished to avoid the risk of liability for costs. On 22 November 2000 I declined to make an order for indemnity for costs in his favour, and I delivered reasons for judgment in which I endeavoured to explain the position concerning costs. 4 By the third further amended statement of claim, John as plaintiff (supported by the third defendant, Nikolaos) claims relief of many kinds. Upon analysis, the claims for relief fall into five categories, related to one another as follows: (a) declaratory and specific relief to establish that they and their brother Antonios have the unencumbered title to the property at 8 Flinders Street North Wollongong ("the Property"); (b) alternatively to (a), (i) declaratory and specific relief to prevent Mr and Mrs Galaxidis from encumbering or disposing of the Property, and to require them to free it from encumbrances; and (ii ) orders to identify the assets acquired, directly or indirectly, by Mr and Mrs Galaxidis using advances made by the Australia and New Zealand Banking Group Ltd against the security of the Property, and to charge those assets with payment of the amount required to exonerate the Property from all encumbrances; (c) either alternatively to (a) or (b), or additionally to either of them, an order for an account of profits in respect of Mr and Mrs Galaxidis' use and enjoyment of the Property since 1996, or alternatively an inquiry as to damages; (d) as a separate claim, a declaration that the Property is charged with payment to the plaintiff and the third defendant of compensation for work done by them in the business formerly known as AG Motors; (e) as an order ancillary to their various claims for proprietary relief against the Property, an order for the extension of the caveat lodged by the plaintiff against the Property. 5 John and Nikolaos claim to be entitled to such relief on four grounds, relating to contract, estoppel, constructive trust and wrongful exclusion from possession of the Property. Each of these claims rests upon their allegations about a series of conversations between them, their brother and their father and mother, during which (they contend) their father repeatedly promised them that he would give the Property ( inter alia ) to them and Antonios, when he retired. Recent amendments to the statement of claim contend, as an alternative, that Mr Galaxidis promised to give them the Property upon the death of the survivor of himself and their mother. They say that they relied upon their father's statements and acted to their detriment accordingly. Subject to a few legal issues, the case turns upon my findings of fact as to these alleged conversations, and the conduct of John and Nikolaos in reliance upon what their father said. 6 By their defence, and their evidence, Mr and Mrs Galaxidis and Antonios deny the version of the conversations given by John and Nikolaos. They also raise defences under ss 54A and 23C of the Conveyancing Act 1919 (NSW) because of the lack of written evidence of an agreement or arrangement said to give rise to an interest in land, and they say that John was not able due to his age to enter into any agreement in respect of land. In their defence they also say that John and Nikolaos did not seek to assert any interest in the Property or to restrain Mr and Mrs Galaxidis from mortgaging it, until John lodged a caveat in 1998. They say it would be unconscionable to permit John and Nikolaos to assert an interest in the Property because of · their delay of over two years in instituting this proceeding, · their acquiescence in standing by and observing the creation of a new business called Compact Car Rentals and the re-letting of part of the Property to Budget Rent-A-Car, and · the change of position by Mr and Mrs Galaxidis with the knowledge and acquiescence of John and Nikolaos. 7 By their cross-claims Mr and Mrs Galaxidis sought an order for recovery from their son John of an alleged debt of $30,800, or damages, and an order for the removal of the caveat; and damages for breach of an implied term for the exercise of due care and skill in an alleged management agreement with respect to their business in 1990. The plaintiffs contended that the claims for recovery are unsupported by the evidence and statute-barred. However, it has become unnecessary for me to resolve these matters because in his submissions, counsel for Mr and Mrs Galaxidis informed me that his clients would not pursue the cross-claims. 8 Two interlocutory matters are worthy of mention. First, when the final hearing commenced on 3 October 2000, the defendants appeared in person. During the course of the morning, arrangements were made for them to secure legal representation, and that afternoon Mr Watts of counsel appeared for the defendants, and has done so, very ably, since that time. On Wednesday 4 October 2000 Mr Watts moved, with leave, for an order disqualifying the solicitor who had been acting for the plaintiff. After argument, I decided to hear that application and when I had done so, I found it to be successful. My reasons for judgment were delivered on Thursday 5 October 2000. In consequence, the time allotted for the final hearing had been substantially used up by the application and in any case, an adjournment had become necessary to enable the plaintiff to obtain another solicitor. The hearing did not resume until 29 January 2001, and thereafter it progressed slowly because of the need for translation. 9 Secondly, in November 2000 the first plaintiff filed a notice of motion to join Nikolaos Galaxidis as a defendant. He had previously been a co-plaintiff but had discontinued with consent. On 22 November 2000 I delivered reasons and made orders having the effect that both Nikolaos and Antonios Galaxidis be joined as parties to the proceedings, as the third and fourth defendants respectively.

The witnesses 10 The only affidavits relied upon in this proceeding (apart from an affidavit about translation) were the affidavits of the family members, Mr and Mrs Galaxidis and their three sons. They were the only witnesses to give oral evidence. The taking of the oral evidence of Mr and Mrs Galaxidis was a slow and difficult process - not simply because they required the assistance of translators, but because they (and in particular Mr Galaxidis) had sufficient understanding of English that occasionally the translator's services were overridden or dispensed with ad hoc , notwithstanding my warnings to the witnesses that to do so could render their evidence incomprehensible. 11 The evidence of Mr and Mrs Galaxidis was unsatisfactory in another respect. I formed the view, after listening to them and Antonios and perusing their affidavits in light of their oral evidence, that the affidavits of Mr and Mrs Galaxidis had been prepared with a great deal of assistance from Antonios. In cross-examination Mr Galaxidis denied many of the statements that he had made in his affidavits, suggesting at the very least that he had not properly understood his affidavit evidence. The affidavit of Antonios made on 31 January 2001 appears to have copied identical passages in the affidavit of Mr Galaxidis made on 14 November 2000; Antonios asserted implausibly, in cross-examination, that he just happened to remember the conversations in exactly the same words. 12 That conclusion was reinforced by the special role occupied by Antonios as intermediary between his parents and the English-speaking world, including the lawyers in this case. The special role of Antonios was well described by his father, who appeared before me on 3 October 2000 as a litigant in person. He said: "… my son [Antonios], he got all the case with solicitors and barristers and he knows all the case. If he can read to me in English and I understand what he say. That is all I wanted him to come in here, not to represent me as party, just to read me all the case and objections, and I can say yes or no if it is law." 13 I also found the oral evidence of Mr and Mrs Galaxidis and Antonios to be unsatisfactory in various ways. As I have mentioned, Mr Galaxidis contradicted his own affidavits in the witness box. Additionally, there were significant instances in which he could not recall in cross-examination subjects on which he had given evidence by affidavits (for example, in paragraph 14 of his affidavit made on 9 August 1999 he gave evidence of an alleged end of financial year conversation but in cross-examination he could recall nothing of any such conversation). 14 I gained the distinct impression from their oral evidence that Mr and Mrs Galaxidis and Antonios were advocates for their cause, unwilling to acknowledge that there may have been deficiencies in their recollection of conversations conducted in the Greek language, and of events, that happened so long ago. They allowed their evidence to be distorted by the influence of passion (in the case of Mr and Mrs Galaxidis) and self-interest in the case of all three of them. 15 Given the unsatisfactory state of the affidavits and oral evidence of Mr and Mrs Galaxidis and Antonios, one would expect the external documentary evidence to have special significance. To the extent, however, that the documentary evidence comprises income tax returns and financial records for AG Motors, my view is that the documentary evidence too should be regarded with scepticism, as regards the matters in issue in the present case. If one examines the income tax returns in order to ascertain how much work John and Nikolaos did in the business in a given year, whether they thereby became entitled to wages, and if so, whether those wages were lent back to the business, one observes some extraordinary fluctuations from year to year and from brother to brother. The tables prepared by counsel for John and Nikolaos, in appendices to his final submissions, have set out comparative figures for the three sons extracted from the tax returns which are in evidence. The tables show, for example, that Nikolaos received remuneration over the period from 1981 to 1988 at rates per hour fluctuating, apparently randomly, from $1.15 to $7.66. There are similar fluctuations for the other two brothers. The tables show that the treatment of interest on the loan accounts was also arbitrary and irrational. There was no consistent interest rate and after 1984, no interest appears to have been credited at all. 16 The most obvious explanation for the haphazard recording of remuneration is the one put forward on behalf of John and Nikolaos. This is that their father and his accountant, Mr Tambakis, worked backwards from the amount of tax that would otherwise be payable, to produce a deduction for wages, proportionate to the size of the profit and the potential tax liability for the year in question, that would give the desired tax outcome. 17 The documentary evidence about the loan accounts held by the three sons with the AG Motors business plays an important part in the defendants' case, since the loan accounts are relied upon to show the work actually carried out by the sons in the family business, and to show that the sons were in fact receiving proper remuneration for their work. The loan accounts are also relied upon as an explanation for the important transaction that occurred in about April 1994, as to which Mr and Mrs Galaxidis and Antonios say that the parties agreed to extinguish the loan accounts and so "wipe the slate clean", while John and Nikolaos deny that this was part of the agreement. My conclusion that the documentary evidence is unreliable is therefore of some importance. 18 Apart from the haphazard character of the amounts and rates of remuneration disclosed in the tax returns, Mr Galaxidis gave unconvincing evidence about them, including implausible evidence in cross-examination that the returns were prepared before the end of the financial year (apparently given for the purpose of deflecting the inevitable suggestion that if the records were prepared after the end of the financial year, they would be based on his defective recollection). Moreover, there were no other records of wages kept, such as a wages book or timesheets. There is nothing to show that any group tax was ever paid, or that any consistent method of calculation of wages was employed. The records show no work by John after 30 June 1985, although the 1985 tax year was a very profitable one for the business, and Mr Galaxidis eventually conceded in cross-examination that John was selling cars in that year. 19 The affidavit evidence of John and Nikolaos, while very similar in some respects, suggests independent attempts by them to recollect conversations and facts. On the whole they support one another's evidence in the affidavits but they do not do so in identical terms. Their evidence was obviously affected by self-interest and passion. They probably exaggerated, to a degree, their working hours and financial deprivation. The depth of feeling between them and their parents and younger brother is obviously intense. But I found their oral evidence to be on the whole satisfactory notwithstanding these influences. They seemed to me to make a genuine attempt, in cross-examination, to recollect events and accept mistakes in recollection where it was reasonable to do so. 20 Counsel attacked John's evidence on the ground that cross-examination showed that he had an unreliable memory. It is true that his memory of certain things, such as whether the conversation which led to the transfer of the Stafford Street property occurred in 1994 or 1995, and as to the Greek word for "retire", was faulty. But it would be wrong, in my view, to conclude from those examples that his evidence of specific conversations of great importance to him was equally unreliable. 21 Counsel also contended that John's evidence was untruthful in certain ways. I have carefully considered the examples put forward by counsel, but I do not agree with him that they are instances of untruthfulness. I shall not work through each example here. One that should be mentioned, however, is John's evidence about the consideration of $170,000 stated on the memorandum of transfer for the Stafford Street property. His evidence was that he obtained a valuation of that figure for the bank, and inserted the figure in the instrument of transfer so that stamp duty could be assessed and paid. However, according to John there was no true valuation, and the amount stated in the instrument of transfer did not reflect any bargain between the parents and their sons. It was not the purchase price because there was no purchase price for the Stafford Street property, but instead the property was transferred to the sons and Maria (the wife of Nikolaos) on the basis that they would take over their parents' mortgage and business debts. This evidence suggests candour rather than untruthfulness, particularly in the admission that the valuation provided to the bank was not a true valuation. 22 Counsel also attacked the reliability and accuracy of the evidence of Nikolaos. Again, however, the examples used demonstrate more in the nature of candour than unreliability. 23 I have therefore decided to prefer the evidence of John and Nikolaos to the evidence of Mr and Mrs Galaxidis and Antonios where there is a conflict between them and no other reliable means of resolving that conflict. My account of the facts, set out below, is based on the evidence of John and Nikolaos where they gave relevant evidence. Where their evidence is inconsistent with the evidence of Mr and Mrs Galaxidis and Antonios on a point of significance, I shall set out the competing versions and make specific findings, giving reasons to support my conclusions, if there are any specific reasons beyond my overall assessment of the witnesses as described above. 24 Counsel for John and Nikolaos attacked the credit of Mr and Mrs Galaxidis on the ground of "breach of honour". He said that the evidence showed the parents to be manifestly willing to go back on their word to their sons on important matters. He laid particular emphasis on their change of intention reflected in their new wills. Although their evidence was that in accordance with the Greek tradition, the three sons were always treated even-handedly and would share their property equally when they died, in fact they had departed from this tradition by making new wills on 1 May 2001 excluding John and Nicolas from their estates. 25 I do not regard this "lack of honour" as a determinative consideration in the assessment of the evidence in this case. It is true that Mr and Mrs Galaxidis have, by making their new wills, acted inconsistently with what they described in their evidence as the Greek tradition of treating children equally. If, however, I had formed the view that their two elder sons were not justified in bringing the present proceeding, and therefore that they had caused unnecessary heartache to their parents, I would not have seen it as a breach of honour for the parents to respond by departing from the Greek tradition and excluding those sons from the benefit of their estates in their wills.

Early history (arrival in Australia, birth of children, property transactions, acquisition of Stafford Street, commencement of AG Motors) 26 Mr Galaxidis (who was born in 1932) and Mrs Galaxidis (who was born in 1944) arrived in Australia as immigrants from Greece in February 1963. Their eldest son, Nikolaos, was born in 1965. John was born in 1967 and Antonios was born in 1972. 27 From soon after their arrival, Mr and Mrs Galaxidis went about making a financial success in their new country, mainly by buying and selling real estate. They bought land at Unanderra in 1965, and also a house in Bexley. They bought another property in Bexley in 1966 and later sold them to buy a house and land in Dulwich Hill in 1970, selling the Dulwich Hill property and buying again in Bexley in 1971. They built on the land at Unanderra, establishing a home there in 1973, and then they sold their Bexley property and bought a development site to build home units at Port Kembla. They sold the Unanderra property in 1977 and bought a property at 7 Stafford Street North Wollongong. 28 Mr and Mrs Galaxidis were the registered proprietors of the Stafford Street property as joint tenants. The property comprised a three-bedroom weatherboard house, a panel beating and mechanical workshop and a licensed car yard. The family resided there from 1977 until 1994, and Mr Galaxidis commenced to conduct a business there. The business traded under the name of A G Motors and provided services in smash repairs, panel beating, spray painting, and motor mechanics. Additionally, Mr Galaxidis sold second-hand motor vehicles from the car yard. Mrs Galaxidis helped from time to time in the business but mainly she performed the role of mother and homemaker. 29 From about 1977 all the tax returns of Mr and Mrs Galaxidis were prepared by an accountant called John Tambakis. In respect of each financial year, Mr Tambakis would prepare and forward to Mr Galaxidis income tax returns and balance sheets.

1977 - 1982 (John and Nikolaos work for their father after school, Mr Galaxidis makes promises about future ownership of property) 30 During this period the three sons of the family were schoolboys. From late 1977 or early 1978 John and Nikolaos began helping their father in his business. They helped him to strip cars and motors, repair motors, prepare cars for spraying and generally run errands for the business. They re-assembled cars that had been painted and cleaned them, and prepared them for sale. They did this work after school and on weekends and holidays. 31 Their work also included paperwork in connection with the business. They would assist their father to make entries in the police record book, and to fill out various forms, receipts and cheques. They would help their father to spell the names of various motor vehicle models and to translate all advertisements. 32 It is not necessary for me to resolve the conflicting evidence on this point. It is clear enough on all accounts that John and Nikolaos did a substantial amount of work for their father's business outside school hours, whether or not they were free to play sport and do homework as well. Neither of them received any wages or other remuneration from their parents, although (as one would expect) their parents provided their food and clothing during their school years, and it seems that their mother gave them small amounts of pocket money on a regular basis and occasionally in response to requests. 33 Clearly enough, the frequent requests by John and Nikolaos for spending money, and their father's refusal to provide it, led to many family discussions and even arguments. There is conflicting evidence as to just what was said by Mr and Mrs Galaxidis. The question is whether they made no more than general statements to the effect that their sons would inherit their property when they died, or made specific promises that their sons would acquire proprietary interests in the business and property at an earlier time. 34 John and Nikolaos gave evidence that, whenever they requested pocket money from their father during this time, or money for sporting equipment or records or the like, their father would say: "No no no. We can't afford it. We don't need that stuff. There's more important stuff at stake." Mr and Mrs Galaxidis do not really contest the evidence that this was said. Mr Galaxidis agreed in evidence that he said "You're young kids. You don't understand. If I give you money, you'll go and spend it." I also find that Mrs Galaxidis said words to a similar effect, on many occasions. 35 John and Nikolaos say that their father told them constantly, from 1978 to 1988 when Nikolaos married: "One of these days, this property and this business will be yours. I'm not going to take it with me to the grave. When I retire, I'll give it to you. The money that I'm not giving you is staying in the business, so that one day you will have something to show for it, so you are not left with nothing when I'm gone." 36 Mr and Mrs Galaxidis deny that this was said. They say, in effect, that their statements were about testamentary disposition rather than any gift inter vivos. Mr Galaxidis claims that he said to each of his three sons, "When I die, whatever is left will be yours". 37 In my opinion it is unlikely, having regard to the oral evidence of the parties and the context in which the statements were made, that Mr Galaxidis made any specific promise that he would put money representing his sons' pocket money into the business, for their later benefit. But I find that he told them that he was putting as much money as he could into the business, so they would benefit from the value of the business at a later stage. Additionally, weighing up all the evidence, I find that Mr Galaxidis represented to his sons that they would benefit by taking over the business when he retired, not when he died, and that in saying so, he implied that they (and their younger brother, Antonios) would become the proprietors of the business to the exclusion of himself and Mrs Galaxidis. 38 I also accept John's evidence that his father's statement extended to "this property" as well as the business. Until 1986 when the Flinders Street property was acquired, the reference to "property" can only have been a reference to the Stafford Street property. I shall consider later whether a similar promise was made in respect of the Flinders Street property after Mr and Mrs Galaxidis acquired it. Although the evidence of John and Nikolaos is that their father's statement, quoted above, was made constantly from 1978 up to 1988, in my view it is unlikely that a statement in those precise terms was made after the acquisition of the Flinders Street property, since by then there were two properties and the reference to "this property" would be problematic; but if such a statement were made, it would probably have been confined to the Stafford Street property since Mr Galaxidis was physically located there during the family discussions in which he made the quoted statement. 39 Mr Galaxidis' promise was to give his sons the property and the business when he retired. In his cross-examination John was unable to say, with any clarity or conviction, what would have happened if his father had died or sold the property before retiring. The literal answer (and probably what was intended by Mr Galaxidis) is that the arrangement would not be triggered by death or sale of the property, although the sons would have expected to benefit under their father's will upon his death. 40 Counsel for Mr and Mrs Galaxidis contended that it would be implausible that Mr Galaxidis would have promised to make over his main income-producing assets to his sons upon his retirement, because that would leave him and his wife with nothing to live on. But in my view there is no such implausibility given the family context. I accept John's evidence that the sons would not have left their parents without support after the parents had performed their promise.

1982-1984 (John and Nikolaos continue to work for their father after leaving school and are not paid; Mr Galaxidis prepares financial statements showing wages and loans by John and Nikolaos) 41 By 1982 when John and Nikolaos left school, there were frequent quarrels between them and their father about financial arrangements and the business. Mr Galaxidis gave evidence that he was often frustrated because they did not concentrate on working hard and building a good and honest reputation. He said he felt at times that they thought they knew more than he did and could not be taught anything. Nikolaos gave evidence that their father taught his sons his way of doing things and would dismiss any suggestions for change that they might make, only to implement them himself a few days later. 42 Mr Galaxidis gave evidence that on about 30 June 1982, he had a financial discussion with John and Nikolaos. He told Nikolaos that he had worked approximately 15 hours per week during the previous year and that he was entitled to be paid a salary of $2060. He told John that he had worked approximately 10 hours per week for the year and was entitled to a salary of $890. He told them that Mr Tambakis would arrange for them to lend this money back to the business and that they would earn interest. He says they agreed. He says that at no time did either of them object to this arrangement. 43 John and Nikolaos deny that this conversation ever took place. They say that at the end of each financial year in the 1980s, their father met with Mr Tambakis in the family lounge room to discuss the preparation of tax returns. They say their father instructed Mr Tambakis to claim a deduction for wages to them, balanced by loans, in order to reduce his tax bill. They say they overheard the conversations between their father and Mr Tambakis but that the arrangement was never discussed directly with them, and never mentioned except at tax time. They say they avoided confrontation with their father, or any discussion with him about financial matters, at the time of these meetings with the accountant because their father always became very angry when he was told he had to pay tax. Nikolaos specifically said that he was afraid of his father. 44 Mr Galaxidis gave evidence of similar conversations, although with respect to different quantities of hours worked and wages recorded, on about 30 June 1983, 30 June 1984 and 30 June 1985. Again, the sons deny that there were any such conversations. 45 In my opinion the evidence of John and Nikolaos is to be preferred on this point. I find their father's evidence, that he brought them into his conversations with Mr Tambakis, to be implausible, and he was unconvincing on the point in the witness box. Moreover, I infer from the defendants' failure to call Mr Tambakis that his evidence would not have assisted them on this point. 46 John and Nikolaos say that they worked for much longer hours for their father after they left school, rather than merely for 10 or 15 hours per week. By the time they commenced attending TAFE in 1982, they each worked seven days per week exclusively in their father's business. It is not necessary for me to make any precise findings as to the amount of time the two sons spent working for their father during this period. It is sufficient to say that John and Nikolaos worked for substantial hours, part-time, for their father at Stafford Street while they attended TAFE. 47 There is some conflicting evidence about the use of motor cars around this time, which in the end does not bear in any significant way upon any of the questions I have to decide. Suffice it to say that according to John and Nikolaos, they would have to ask their father for permission to use any motor vehicle, and he would always allocate them the cheapest ones, whereas according to Mr Galaxidis his sons were always provided with good motor vehicles but John was involved in at least four motor accidents and Nikolaos was involved in one. 48 Mr Galaxidis did not pay them any wages because he was concerned, as he said, that they would spend all their money on "hobby cars and socialising". He recorded wages for them at the end of each financial year, and also recorded that they had lent their money back to him for the business. He calculated interest on each loan. John and Nikolaos say they never agreed to these arrangements and frequently complained about not receiving wages. They received some spending money when they went out, and they did not pay board. But they had to ask for the money they received. 49 In my opinion the provisions made by Mr and Mrs Galaxidis for John and Nikolaos, by way of use of cars, pocket money, food and board, did not amount to payment in lieu of wages. Rather, these allowances were in the nature of supplementary provisions of the kind parents often make for their teenage children. They should not be regarded as payments in kind to be set off against the work done by the two boys. 50 For some of the period from 1983 to 1988 John and Nikolaos received unemployment benefits, although they were working long hours for their father. They gave at least part of the unemployment benefits to their parents. In 1985 Nikolaos received Austudy payments and was directed by his parents to make deductions and give them the net balance of the benefits received, and he did so.

1985-1988 (acquisition of Flinders Street property, Nikolaos goes to Greece) 51 During 1985 John, who had been studying real estate in his TAFE course, was offered a full-time job as property manager with a real estate agency in Kiama, provided he had his own motor vehicle. His father refused, he says, to provide him with a car. According to John, Mr Galaxidis said: "No. You are going there and make peanuts? This is where your work is and this is where the real money is." 52 John tried to get a personal loan to buy a car but could not do so because he had no records to show his income or any employment record, and he says his father refused to provide him with a letter of employment. Mrs Galaxidis says that she and her husband were concerned about John driving on the road to Kiama, which was notoriously dangerous, when he was an inexperienced driver and had already had accidents. She says she advised him to catch the train. I am prepared to accept that she was concerned about safety, but I find that her husband objected to the idea of John working for a real estate agent and wanted to keep in working for the family business. 53 In mid-1985 Mr Galaxidis leased premises at 74 Flinders Street North Wollongong and moved part of the A G Motors business (the sale of motor vehicles) to that address. The panel and workshop remained at 7 Stafford Street. 74 Flinders Street was in an area where there were many motor industry businesses and was a prime site for that industry. John and Nikolaos continued to work in the business at that time. During the 10 months that the business operated at 74 Flinders Street, it made a gross income over $200,000 and Mr Galaxidis paid income tax of about $22,000. Again John and Nikolaos received no wages for their work in the business at that time. 54 During the period from December 1985 to August 1987 John and Nikolaos worked full-time in the business, for (they say) an average of 70 to 80 hours per week. Nikolaos received unemployment benefits which were paid into an account for which his mother held the passbook. He withdrew only small amounts. On one occasion he purchased a set of car-enthusiast springs for the car that his father allowed him to drive, and his father became enraged for about an hour. Incidents of this kind induced fear in Nikolaos, and such occurrences were regular. 55 In March 1986 Mr Galaxidis purchased 8 Flinders Street Wollongong for the business, with a view to selling cars from those premises. He says he funded the purchase by extending his loans, selling some personal cars and other stock, and selling the Port Kembla property. He says he did not need or obtain financial assistance for the purchase from his sons. John's evidence is that his father sold the Port Kembla property well before he bought 8 Flinders Street. John's counsel made some detailed submissions about the sources of the purchase money but those submissions are consistent with the proposition, which I accept, that the Flinders Street property was acquired out of the financial resources of Mr and Mrs Galaxidis. 56 The property at 8 Flinders Street was bought at auction by Mr and Mrs Galaxidis as joint tenants. The purchase price was $175,000. The property comprised a car yard but it was in a poor condition, and unimproved except for a small brick office and a gravel and coal wash surface in the yard, and barbed wire and mesh fences. The property backed onto 7 Stafford Street and could be reached by a plank over a creek between the two properties or by a short walk over the nearby road bridge. 57 By the time of purchase of 8 Flinders Street, John and Nikolaos were still receiving no wages and arguments would constantly break out between them and their parents. Nikolaos was about 21 by that time, and John was about 19. The older they became, the more they wanted income of their own, but their father refused. 58 Nikolaos gives evidence of a conversation, which appears to have occurred more than once, in which his father responded in this way: "No! We can't afford money for senseless things. I have a large debt on my shoulders. Don't worry. Once everything is paid off and we retire it will be yours. Think of me as investing your money wisely so that you will have something to show for it in the future, and not waste it on things that are unimportant." 59 In my view, this is just another version of the conversation deposed to by John, which according to his evidence was repeated frequently from 1978 to 1988. I am not able to conclude, on the evidence, that Mr Galaxidis reiterated this promise after the acquisition of the Flinders Street property in a manner that unambiguously extended the promise to the property. 60 After 8 Flinders Street had been acquired, Mr Galaxidis sealed the yard, and built a new office together with a covered but open workshop. John and Nikolaos worked with Mr Galaxidis for the first year or so after the acquisition of the property. They say they worked for seven days a week. That may be an exaggeration, but it is clear that the work was substantial. Antonios helped after school hours. A great deal of physical work was necessary to improve the site. Most of the work was done by Mr Galaxidis, but John and Nikolaos helped. 61 The family was not a happy one at that time. John and Nikolaos complained that they did not have wages and had to depend on their parents for spending money. Mr and Mrs Galaxidis objected to their two sons spending money on socialising, and particularly objected to John going out with girls and staying out very late at night. There were disagreements between Mr Galaxidis and the two boys about how best to do repair work and other work. 62 In about November 1986 Nikolaos began a relationship with a Greek woman called Maria, while she was on holiday in Australia. His parents initially opposed the relationship but he continued without their knowledge. In August 1987 Nikolaos went to Greece to pursue the relationship with Maria. His father opposed the trip but in the end, drove his son to the airport and gave him $100. Nikolaos managed to save approximately $2500 for the air ticket and some travellers cheques. Nikolaos returned in February 1988. 63 John says that while his brother was away, he had to work even longer hours and perform significantly greater duties. Mr Galaxidis says that John gave him only limited help during this period, telling his father "If Nick's not here, I'm not helping you all the time". About this time, Mr Galaxidis purchased a Toyota Celica for John, and according to Mr Galaxidis, John spent most of his time restoring and repairing the vehicle at the Stafford Street workshop. John admits to repairing the vehicle but denies spending most of his time doing so. It is likely, in my view, that the evidence of Mr Galaxidis is exaggerated. John says that late in 1988 his father demanded and received $2000 in payment for the vehicle.

1988-1989 (Nikolaos starts his own business and marries, further family disputes about money, John works for Strathfield Car Radios) 64 Nikolaos returned to Australia in February 1988, and resumed working for his father in the business until about May 1988. From about March 1988 he began to purchase motor vehicles to repair and sell them through his own proposed business. He married Maria on 21 May 1988 and moved out of home. After living for a while in a rented flat, Nikolaos and his wife purchased a property in Coniston, using $43,000 given to them by Maria's father. 65 After his marriage, Nikolaos conducted his own business called "Nick's Cars". For the purposes of the business he made use of his father's motor dealer's licence and sold the cars from the Flinders Street premises. There is disputed evidence as to how much help Nikolaos received from his father in setting up in conducting the new business, and as to how much help Nikolaos continued to give in his father's business. It is unnecessary to resolve those conflicts of evidence here, since they are not directly referable to the claims in the present proceeding. 66 John remained living at home before and after his brother's wedding. His evidence is that he had a conversation with his father in May 1988 in which he told his father that he needed an income. He says Mr Galaxidis responded: "No way. Not even one cent. I can't afford to pay you and Nick. I still owe money. When the properties are paid off then everything will be passed on to you. Besides, if I paid you your money you would just waste it. This way, I will invest it and you will eventually have something." 67 Mr Galaxidis denies that he said that he would give the business to his sons, but I accept John's evidence, in light of my overall assessment of the credibility of the witnesses. 68 In May 1988 John obtained employment with Strathfield Car Radios. He informed his parents about the job on the day before he started. He claims he continued to help his father in the business after hours, but Mr Galaxidis denies this, and Mrs Galaxidis says it happened only three or four times a month, for 10 or 15 minutes each time. It is probable that John did some work for his father after hours, but that it was not substantial. In response to a demand by his father, John paid Mr Galaxidis $2000 for the Toyota Celica that his father had made available to him. The money came from savings accumulated from his earnings at Strathfield Car Radios. 69 In about May 1988 Mr Galaxidis gave Nikolaos a 1976 Toyota Corolla sedan, which was unregistered and needed rust repairs and repainting. He told Nikolaos that he had received the car as a trade in, and if his son did the repairs he would make a profit of around $2000, which would give him a good start in his business. Nikolaos repaired and registered the car and sold it for $2500, using the profit to buy a colour television and video. When his father saw that Nikolaos had used the profit in this way, he objected and demanded the profit. Nikolaos gave him a cheque for $1950, representing the profit after his costs but with no allowance for labour. Mr Galaxidis accepted the cheque. 70 In June or July 1988 Nikolaos moved his business to a rented workshop at Hurley Avenue, Fairy Meadow. It is probable that he did so because his father required him to leave. There is conflict between the evidence of Nikolaos and the evidence of Mr Galaxidis as to whether, after Nikolaos established separate premises, Mr Galaxidis helped him by selling motor vehicles. It is probable, in my view, that Nikolaos received very little assistance, if any, from his father after he left, although Nikolaos did need to rely on his father's motor dealer's licence.

1989-1994 (Mr and Mrs Galaxidis and Antonios go to Greece, John and Nikolaos run the business, Mr Galaxidis promises to retire but does not, Mr Galaxidis removes the business of John and Nikolaos from Flinders Street, Mr and Mrs Galaxidis acquired the Balgownie land and build there) 71 At some time in the period from November 1989 to June 1990, Mr Galaxidis told Nikolaos that he and Mrs Galaxidis, and Antonios, intended to travel to Greece and Canada and would be gone for 4 to 6 months. Mr Galaxidis said he did not want to shut the car yard and stop trading, and asked Nikolaos to manage the business. He said that Nikolaos could take $150 a week out of the business for living expenses and could pay telephone and electricity bills from the business cheque-book. Nikolaos agreed, but he said it would be very difficult to run the business on his own. 72 Subsequently Mr Galaxidis had a conversation with John. He invited John to come on the overseas trip but John said he could not, because he had a responsible job with Strathfield Car Radios. Mr Galaxidis then asked John to help run the business while he was away. John refused on the same ground. 73 According to John's evidence (substantially corroborated by the evidence of Nikolaos), the following conversation occurred, in the presence of Mr and Mrs Galaxidis, John and Nikolaos (and possibly Antonios), shortly afterwards: Mr Galaxidis: "As you are aware, Nick's going to leave his business to run AG Motors." John: "Well, if Nick's going to leave his business, I gather that I have to as well. I can't leave my job, come and run your business for 3, 4, 5 or 6 months and then expect to go back to my job, because someone else will fill my position. Therefore I want to know what your intentions are as far as the family business is concerned." Mr Galaxidis: "I'll make you and Nick signatories on the cheque-book. I am retiring. I want you and Nick to take over the business, so you'll have no more problems as far as going back and trying to start again from the bottom of the ladder." John: "Well, since it's going to be mine and Nick's business, we're going to run it the way we want. We're going to renovate the yard, paint the fences with a new colour scheme for the yard. We're going to landscape the yard. We'll put in new flood lights, new awning lights and signs, etc." Mr Galaxidis: "It's your business. Do what you like. Don't go overboard and spend money where it is not needed. I'm going to Greece because I'm very tired. I don't want to work anymore. I'm too old." 74 In his account of this conversation, Mr Galaxidis denies that he ever said that he was retiring or intended to retire. The evidence of Antonios is that he did not hear his father say that he would retire at this time, or that the business was his sons' business. I prefer the evidence of John and Nikolaos on this point to the evidence of their father. As I have said, I regard John and Nikolaos as generally reliable witnesses and I regard their father's evidence as generally unsatisfactory. Moreover, it seems to me implausible that, having broken away from the family business by taking a job at Strathfield Car Radios, and then moving up to a managerial position there, John would have returned to the family business in the absence of a specific promise of financial benefit to him. 75 I find that when Mr Galaxidis told his sons he was retiring, he meant that his retirement would take effect when he stopped working in the business prior to his departure for overseas. John was challenged in cross-examination as to whether his father said he was going to retire at some future time, or that he was retiring before departing for overseas. I am satisfied with John's evidence that his father used Greek and possibly also Australian words, conveying the latter meaning. 76 At the latest, this occurred just before 8 June 1990, when he left for overseas. It is true that nothing much was done before his departure to make over the business to his sons. He gave them drawing rights on his business cheque account rather than making over the account to them (as he did when he transferred the business to them in 1994). Taken in isolation, that would suggest that he was giving them temporary management of the business. But there are several possible explanations for not making over the bank account in 1990, such as that he might not have had time before his departure and he might have wanted to retain access to the account for travel expenses. We know from other evidence that Mr Galaxidis was averse to legal formalities. Given that he told his sons he was retiring and thereby encouraged them to leave their other occupations and return to the business, the proper construction is that Mr Galaxidis retired and gave the business to his sons before his departure for overseas. 77 Mr Galaxidis' retirement, prior to his departure for overseas, satisfied the condition he had placed upon his earlier promises about the properties, but nothing was done to transfer them to the sons. However, in my view this lack of implementation does not cast doubt on the binding nature of the earlier promises, for two reasons. First, the evidence shows that Mr Galaxidis was keen to avoid documentation that might lead to a stamp duty obligation. Secondly, the retirement took effect just before the departure of Mr and Mrs Galaxidis overseas, at a time when it may well have been difficult to attend to transfer, and shortly after they returned Mr Galaxidis purported to come out of retirement. 78 After the discussion John and Nikolaos left their jobs and started running the AG Motors business. I accept their evidence that they would not have done so but for the specific inducement given by their father that the business was theirs to run and that he would retire. The business carried a $40,000 overdraft limit and was operating at an overdraft in the vicinity of $32,000 to $36,000. There were outstanding bills in the sum of $10,000, and stock worth about $50,000. 79 On a literal interpretation of their conversation, Mr Galaxidis promised to give the business solely to John and Nikolaos, but in my view Mr Galaxidis' intention was to give the business to his three sons in equal shares. John and Nikolaos expected that all three sons would benefit equally when Antonios was old enough to take part in the business. 80 During the time that their father was overseas, John and Nikolaos (according to their evidence, which I accept on these matters) operated the business profitably. They took out about $100 to $200 per week each for living expenses, approximately in accordance with their father's wishes. They spent the profits made during that time on the property, by renovating the yard and buying equipment. They bought and sold cars on the AG Motors cheque account and they also supported their parents and Antonios financially during their overseas holiday by sending them $10,000 to top up their charge accounts and transferring $18,000 by telegraphic transfer to a Mercedes dealer in Belgium for the purchase of a motor vehicle for their father. They sent other money as well, at their parents' request. The total sent to their parents and Antonios was $32,000. 81 The improvements to the property included installing a drainage system that took three or four days of solid work to install. They put up some signs and made some cards and stationery. They also started a car detailing business, which was their own idea. They spend about $12,000 creating this business including about $7000 for the acquisition of equipment. They installed a drainage system at the Flinders Street property and created a detailing bay behind the office there. 82 When their parents returned to Australia, the overdraft had risen to about $51,000. There is a dispute between the father and his two sons as to the stock level. John and Nikolaos say the stock level had been increased from 7 or 8 cars to 28 cars, although they were cheaper cars. Their father claims that the stock level had been depleted. I prefer their evidence to his. 83 John and Nikolaos say that when their father saw what they had done to the premises, he approved and said that the business could make a lot of money. Mr Galaxidis says that the cost of the changes to the business had been borne by him out of his cheque account, but he had not received any income from the new car detailing business during that period that he was away, and he alleges that the income of the new business was banked into the bank accounts of John or Nikolaos. There is some bank account evidence, somewhat ambiguous, that suggests this may have occurred, but if it did, there was no ground for Mr Galaxidis to object. He had given the business to his sons before he departed for overseas. 84 Mr Galaxidis instructed Mr Tambakis to audit the books and records of the business. Subsequently he told his sons that he was $20,000 short in the business during the period in which they managed it. Either immediately or shortly after returning, he told his sons that he had decided to take over the business again. He told his sons they did not know what they were doing and needed his guidance. He said no money was to be withdrawn from the business without his approval. He said "Nobody's going to pull even one dollar out. If you need money you will have to ask me, and I will decide whether to pay it." He insisted that John was not to go out at night more than twice per week, and that he must be home by a stated time. He said that the domestic bills of Nikolaos and his wife and children would be paid by the business but only with his approval. 85 John and Nikolaos rejected these terms. They did not seek to prevent their father from returning to the business on the ground that he had given it to them, apparently because they believed it would be pointless to do so. Instead, they proposed to open a separate business run by themselves as partners trading as Nick's Cars, while at the same time looking after the car yard and selling cars for their father. They say that their father agreed to these arrangements. Just as significantly, it appears that they agreed, reluctantly, to his return to the business, and by doing so they gave up the rights to the business that he had given to them before his departure for overseas. 86 From about May to November 1990 the new arrangements operated, although Mr Galaxidis frequently complained, especially about John going out at night and having his friends visit him at the premises during business hours. John and Nikolaos took out a $10,000 overdraft and acquired their own stock of cars, and within two months the overdraft had been increased to $25,000. They say they sold their own cars from the yard, as well as helping to sell their father's cars. But clearly enough, the arrangements did not work. Mr Galaxidis constantly complained that John's friends visited him at work, gathering around the workshop, smoking and talking, frequently in a boisterous manner. He complained that they were storing their tools in the spare toilet room, preventing the toilet from being used, and that they disagreed with his methods for selling cars. 87 Eventually Mr Galaxidis refused to permit John and Nikolaos to carry on their business from the Flinders Street yard, although he offered to permit them to use the yard solely for the purpose of selling their cars. They set up a workshop at the home of Nikolaos in Coniston, and for some time they repaired cars and prepared them for sale at Coniston and then took them to Flinders Street to sell them. But according to John and Nikolaos, the arrangement was unsatisfactory because the Flinders Street yard was often left unattended. The income of Nick's Cars dropped dramatically because, they say, neither of them was at the site to promote sales. 88 These arrangements continued from 1991 to 1994. During that time Antonios studied for a university degree in mathematics, and provided some limited help to his father in the business. John continued to live at his parents' home, and neither John nor Antonios paid any board to their parents. 89 In August or September 1991 Mr and Mrs Galaxidis acquired some vacant land at Balgownie. They began building a house there about a year or so later. In their evidence John and Nikolaos referred to the house as "a mansion". Mr Galaxidis performed a great deal of the construction work himself, with the assistance of Antonios and contractors. The house became something of an obsession for Mr Galaxidis, and he needed to find money to make progress with the building. 90 In 1993 or 1994 Mr Galaxidis rented about one-third of the site at Flinders Street to Budget Rent-a-Car for about $50,000 per year.

1994-1996 (the family reaches an agreement as to transfer of the Stafford Street property and Mr Galaxidis' retirement from the business, and that agreement is implemented) 91 At some time prior to 14 April 1994 there was a family conference in which an agreement was reached with respect to the property at 7 Stafford Street and other matters. There is a dispute between the parties as to what was agreed. 92 The version put forward by John and Nikolaos is as follows. They say their father said that he wanted to retire from the business and he proposed to his three sons that they should take over a $150,000 loan secured over 7 Stafford Street, plus a $50,000 overdraft, plus outstanding bills of $10,000, in return for use of one-third of the Flinders Street car yard, the business name AG Motors, the business stock and the property and fully equipped workshop at 7 Stafford Street. The discussion continued: John: "You want us to buy Stafford Street when you promised to give it to us for nothing because of all the work we did. You said that one day it would be ours, and now we have to buy it? You'd be giving us a debt, we're buying it." Mr Galaxidis: "I know I promised you Stafford Street, but I'm going to make up for it with Flinders Street." John: "You told us you are going to give us Flinders Street anyway. Now it's come at a price where I have to hock myself to help you move into your mansion." Mr Galaxidis: "Well, the mansion's going to be yours one day as well. I'm not going to take it six foot under with me." Later John said: "As long as we don't get stuffed up and you guarantee us that we get a third of the 8 Flinders Street yard to retail our motor vehicles to service such a large debt. Put it in writing that you're going to give us third." Mr Galaxidis replied: "Don't you trust me, I'm your father. It's all going to be yours, anyway. Why pay extra money for solicitors and stamp duty?" 93 Mrs Galaxidis was present during the whole of the family conference, while attending from time to time to jobs in the kitchen from which she could hear the conversation. She supported her husband and urged her sons to accept the proposal. In response to John's request for legal documentation to set out the agreement, she urged her sons to trust their parents. All three sons agreed to go ahead with the deal. 94 Mr Galaxidis gave a different version. He claims to have said to his sons: "I am thinking of selling Stafford Street. I don't want to sell it to just anyone. I have made a lot of money from this business and believe it is a goldmine. I would like the business to stay in the family. You can purchase the house and the business. If you agree, I will give you the fully equipped licensed workshop with all parts and materials. You will receive all parts, equipment, hoists and tools. This is an opportunity to clean the slate and repay all the family loans from you to me for the time that you worked for me in the business. To help you on your way, I will set aside a portion of my car yard at Flinders Street for two years rent-free. However you are to open at 8am and close at normal business hours. I don't want boys and girls in the yard socialising. If after two years your business has grown and is good I will help you more. You must prove to me you can run and establish a good business." 95 Mr Galaxidis says that his sons' assumption of liability for the $150,000 loan represented their payment for the Stafford Street property, although he says a balance of $20,000 remained owing because the property was worth $170,000. He says that the assumption of responsibility for the $50,000 business overdraft equalled the value of the stock of sale cars that they acquired with the business. He says all three sons accepted his proposal. 96 John and Nikolaos deny that their father said anything about repayment of family loans or that he referred to a two-year time limit on the use of one-third of the Flinders Street yard. They deny he said that he would help them some more if after two years their business had grown and was good, or that he spoke about paying for the tools. 97 After the family conference the three brothers took over the AG Motors business, the business stock, the panel shop, and one-third of the Flinders Street yard. The Stafford Street house was transferred into the names of the three brothers and Nikolaos' wife. John and Antonios each took a one-third share as tenants in common, and Nikolaos and Maria took the other one-third share, holding it as joint tenants. The transfer acknowledged receipt of consideration of $170,000. This was the valuation placed upon the property by Jack Albert Real Estate at John's request. John's evidence, which I accept, is that he procured a valuation for the bank, which was effectively transferring the loan from his parents to himself and his brothers and Maria, and that the consideration for the transfer was only the assumption of the $150,000 debt and the acquisition of the business. There was no promise by the purchasers to pay $170,000, notwithstanding the terms of the instrument of transfer. 98 John, Antonios, Nikolaos and Maria signed a registered mortgage in favour of the National Australia Bank securing an amount of $200,000, and the loan was guaranteed by Mr and Mrs Galaxidis. The previous mortgage over the Stafford Street property was discharged. The $150,000 loan and the $50,000 overdraft were transferred into the names of the three brothers and they took responsibility for the debts of the business. They continued to operate the business until July 1996. 99 Mr Galaxidis says that under the terms of the transaction, he was entitled to $20,000 representing the amount by which the valuation of the Stafford Street property exceeded the debt of $150,000 secured over it, which his sons had taken over. He says he was also entitled to $20,000 for tools and $60,000 for rental of the space allocated to his sons at the Flinders Street yard. He says this amount was set off against repayments by him of his sons' loans to the business in the sum of $69,000. Consequently, he says, he is entitled to a balance of $31,000. John and Nikolaos deny that their father is entitled to an additional $31,000 calculated in this way. They say that most of the spare parts left at Stafford Street were valueless and they took them to the rubbish dump because they could not use them. 100 In my view, the version of the arrangements given by John and Nikolaos is to be preferred to Mr Galaxidis' evidence of it. Their statement that their father based the discussion on his desire to retire is corroborated by a file note of the National Australia Bank made at the time of the 1994 transaction, and a later note or 20 September 1996. 101 In addition to my unfavourable assessment of Mr Galaxidis as a witness, I take into account the implausibility of John and Nikolaos agreeing to an arrangement structured on such an arm's length basis as the evidence of Mr Galaxidis would imply, when their father had previously promised to give his sons the business when he retired. Additionally, if the arrangements had been negotiated as an arm's length transaction, one would have expected other matters to have been addressed - for example, Mr Galaxidis' calculations do not appear to make any allowance for the debts of the business at the time of transfer. Moreover, the unsatisfactory nature of the loan accounts makes it unlikely that even Mr Galaxidis would have regarded them as real records of the value of his sons' work, to be taken into account in making the arrangements that were under discussion. 102 Further, the working papers of Mr Tambakis suggest a different explanation for the $20,000 difference in the loan accounts. It appears that there were several transactions between Antonios and his parents regarding cars, and these transactions were brought into account through his loan account. Specifically, it appears that the balance of the loan account moved from $89,552 to $69,552 not by virtue of an adjustment referable to the difference of $20,000 between the "purchase price" for the Stafford Street property and the amount of debt taken over by the sons and Maria, but because a Statesman car was withdrawn from Antonios' use and consequently $20,000 was credited to his loan account. Finally, the loan accounts were retained in the balance sheet for 30 June 1994, suggesting there was no contemporaneous intention to "wipe the slate" at the time of the 1994 transaction. 103 In fact the arrangements reached, according to the evidence of John and Nikolaos, were substantially less beneficial to them than what their father had previously promised them. They acquired the Stafford Street property and the business burdened with debt. They did not receive the use of the whole of the Flinders Street property, but only one-third of it. Even if one puts aside the promises that had previously been made, the transaction was not an attractive proposition from the point of view of the brothers. This is shown by a schedule prepared by counsel for the plaintiff, based on the evidence, which conveniently summarises the benefits conferred on the sons and their parents by the 1994 transaction. 104 It might seem odd and implausible, in isolation, that John and Nikolaos would voluntarily enter into a transaction with their parents less beneficial to them than the promises their parents had previously made. In my opinion the explanation for their doing so arises out of the family relationship. Although their father had gone back on his word in 1990 when he resumed control of the business and the properties after his return from overseas, the sons still felt obliged to respect his wishes and support him. When he made a proposal in 1994 that was less advantageous to him, they protested about that very matter, but in the end they felt obliged by family ties to accept what was offered. Importantly for the determination of this case, my findings as to the arrangements made in 1994 imply that those arrangements were in substitution for the previous promises made by Mr Galaxidis. 105 The critical question of fact is how the 1994 arrangement treated the ownership of the Flinders Street property. It was a part of the arrangement that the three sons would have the use of one-third of the Flinders Street property for the purpose of conducting the business of AG Motors there. In my view, on the evidence, this use of the property was to be indefinite and not merely limited to two years, as Mr Galaxidis subsequently claimed. On the other hand, I accept (as John acknowledged in cross-examination) that the parties to the arrangement agreed that Mr and Mrs Galaxidis would be entitled to receive the rent paid by Budget Rent-a-Car for their occupation of one-third of the Flinders Street site, as the rental was to provide them with a retirement income. 106 One way of reconciling these parts of the arrangement is to say that by the arrangement, Mr and Mrs Galaxidis promised or represented that they would give their sons an indefinite right of occupation of one-third of the site - in effect, a licence - but that they did not represent that they would confer any proprietary interest on their sons, because they retained the right to rent the other parts of the property and to enjoy the rental income. An alternative interpretation is to say that the parents promised or represented that they would make their sons the beneficial owners of the Flinders Street property, subject to the sons allowing them to receive the rental from the portion of the property that was externally rented. 107 Weighing up all the evidence, I prefer the latter interpretation to the former. I take into account the fact that before the arrangement was entered into, the sons had the benefit of previous promises that their parents would give them the Stafford Street and Flinders Street properties when their father retired. The previous promises indicate the probability that proprietary ownership of the properties was on the minds of everyone concerned when they came to make the new arrangement in 1994. On the version of the discussion which I accept, Mr Galaxidis said in response to John's complaint that he had promised to give his sons the Stafford Street property, that he was "going to make up for it with Flinders Street". Later John demanded that his father "put in writing" that he was going to give his sons one-third of Flinders Street and that his father should "guarantee" that the sons would get one-third of that property, and Mr Galaxidis replied by asking his sons to trust him and by saying he did not want to pay extra money for solicitors and stamp duty. This part of the conversation strongly suggests that Mr Galaxidis, on behalf of himself and his wife, intended that the arrangement would give his sons a proprietary interest in the Flinders Street property, although in other respects it is very vague. 108 Although part of the conversation refers to giving the sons one-third of the Flinders Street property, in all the circumstances I take that to mean that the sons were to receive the beneficial ownership of the whole property subject to Mr and Mrs Galaxidis retaining their right to receive the rental income from the two-thirds of the property that were not designated for use by AG Motors. 109 Later in this judgment I shall analyse whether the intentions so expressed, followed by the sons' conduct in implementing the arrangement, gave rise to any contractual right or equity in their favour. 110 In June 1994 Mr and Mrs Galaxidis moved from the Stafford Street property to their new home at Elsie Court, Balgownie. John and Antonios went with them. The property was mortgaged to the Australia and New Zealand Banking Group Ltd. In 1995 Mr Galaxidis constructed a third office on the Flinders Street yard. Mr and Mrs Galaxidis also visited Greece for several months in that year. 111 The three brothers operated the AG Motors business, after they acquired it in 1994, until mid-1996. In conjunction with another person, John and Nikolaos opened up a car radio business in a shop near the Flinders Street car yard. When their father found out about this new business he was upset, comparing it with the car detailing business conducted by the brothers during his absence in 1990, which he had regarded unfavourably. Mr Galaxidis gave evidence that he became increasingly worried about the operation of the business and the failure of John and Tony to contribute to the running of the Balgownie house, where they were living with their parents. 112 On 1 March 1996 Mr Galaxidis leased one-third of the Flinders Street yard to Illawarra Auto Rentals Pty Ltd as a car rental site for $1000 per week (plus annual consumer price index increases and a proportion of water rates), for a term of two years with a one-year option. He was able to discharge his mortgage to the National Australia Bank over the Flinders Street property a month later. 113 In about mid-1996 the National Australia Bank discharged the guarantee given by Mr and Mrs Galaxidis for the business debt taken over by their sons, after Nikolaos gave security to the bank over his house. This occurred only after yet another dispute between Mr Galaxidis and his two sons. Nikolaos was reluctant to give a guarantee to support debts of the business but he eventually agreed to do so.

1996-2000 (Mr Galaxidis demands rent for Flinders Street, Antonios leaves the business and Mr Galaxidis closes it down, Mr Galaxidis and Antonios start a new car rental business at Flinders St, the Stafford Street property is sold, John lodges a caveat against the Flinders Street property and commences these proceedings) 114 In about May 1996 Mr Galaxidis had a discussion with his sons about the state of the business. He said he was not happy with the way the business was being conducted. He proposed a new venture, in which a rental car business would be started up, with him in charge and all three sons working for him. He would borrow against the security of the Flinders Street yard to finance the acquisition of a fleet of rental cars. John and Nikolaos say their father sought to impose requirements about the conduct of their personal lives, and offered to pay them only award wages, and then only as long as the business was making money. They responded negatively to the proposal. Antonios supported it. 115 In mid-1996 Mr Galaxidis told John and Nikolaos that he had found someone to take a lease of the one-third of the Flinders Street yard that they were using, for $500 per week. He told them if they did not pay rent of that amount he would be forced to accept the alternative offer. At that time another one-third of the yard was vacant, and John told his father he should rent out the vacant one-third. His father said: "Don't worry about what I do. Give me $500 a week or you're out and I also want $250 a week from you Tony and you John for board. That makes $1000 a week. Give me a cheque right now." 116 They refused to pay. There was a terrible family argument, which ended with Mr Galaxidis chasing Nikolaos around the car yard and threatening to kill him. John and Antonios moved out of the Balgownie house. Subsequently Antonios was reconciled to his parents and moved back into the house, but John did not. 117 At about the same time, there were arguments amongst the brothers about a demand by Antonios to draw money from the business. The evidence of John and Nikolaos is that, at the time when they took over the business in 1994, the brothers reached an agreement that they would not draw wages from the business but they would draw money out of the business cheque account as it was needed. Antonios objected that Nikolaos was withdrawing substantially more than him, but John and Nikolaos said that it was understood from the beginning that Nikolaos would withdraw more because he had a family to support, whereas Antonios was living at home without paying board. Antonios disagreed and demanded $21,000, which he described as his share. John said a payment of that amount would cripple the business and that the money could be withdrawn more gradually, but Antonios demanded full payment. 118 This dispute led to the termination of the partnership of the brothers. In July or August 1996 Antonios froze the overdraft and left the business. Days later the business telephone number was disconnected by Antonios, on the ground that the account was in the name of Mr Galaxidis, even though the sons had paid the telephone bills. Mr Galaxidis locked his sons out of the Flinders Street car yard and ordered them to take their cars and leave. That was effectively the end of the AG Motors business, as John and Nikolaos had no licence to continue it. Mr Galaxidis seized a filing cabinet containing the records of the business. 119 Subsequently there were arguments between Mr Galaxidis and John and Nikolaos about the ownership of tools and cars. John's briefcase including some business records for AG Motors, his private bank records and some personal documents were taken by persons unknown from the premises at Stafford Street. 120 Some months later Mr Galaxidis opened a new business called Compact Car Rentals, and Antonios came to work for him in the new business. He executed a mortgage over the Flinders Street property to obtain finance for the business, without informing Nikolaos or John. At that time, the Flinders Street property was valued at $650,000. The evidence indicates that Compact Car Rentals has been a successful business operating at high profits. Antonios says that he has a very good working relationship with his father, and has always been paid for his work. 121 In April 1998 Antonios and his girlfriend Kylie acquired land that Balgownie, subject to a mortgage. During the period from October 1999 to March 2000 Mr and Mrs Galaxidis and Antonios acquired two properties in Balgownie and one in Edward Street Wollongong. In two of those three cases the title is held by the three of them as joint tenants, while in the third case Mr and Mrs Galaxidis are joint tenants as to a one-half share and Antonios has a one-half share as tenant in common. Two of the three properties are unencumbered. It is a reasonable inference that profits from the Compact Car Rentals business were used towards the purchase money for those acquisitions. 122 The Stafford Street property was sold by the brothers and Maria for $182,000 in September 1997. In March 1998 John lodged a caveat over the Flinders Street property. In August 1998 he received a notice of proposed lapsing of the caveat and in September 1998 he took the present proceeding, initially by summons for extension of the caveat. Eventually in the present proceedings the caveat was extended until further order. 123 The evidence indicates that, by June 2000 one-third of the Flinders Street yard was leased to Budget Car Rentals, another third was used by Compact Car Rentals, and the remaining one-third was leased as a car sales yard to Velj Pty Ltd trading as Tony's Car World. The Flinders Street property was valued at $900,000. 124 On 1 May 2001 Mr and Mrs Galaxidis made new wills. They revoked their previous wills, under which they had made equal one-third provisions for each of their three sons upon the death of the surviving spouse. In the new wills each spouse gives his/ her estate to the surviving spouse for life, and thereafter to Antonios absolutely. Each will contains provisions in the following terms: "5. I DECLARE that I had previously proposed to make an equal one-third provision for my eldest son NIKOLAOS GALAXIDIS together with another equal one-third share to my second son, JOHN GALAXIDIS , with a further equal one-third share to my youngest son, ANTONIOS GALAXIDIS after the life estate to my [husband/wife] ended. However: (a) in 1998 JOHN and NIKOLAOS commenced proceedings in the Supreme Court of New South Wales No 3884 of 1998 against my [husband/wife] and I; (b) in my view the claims made by NIKOLAOS and JOHN , in these proceedings, were a series of lies and the institution and prosecution of these proceedings have destroyed my family; (c) [in the case of the will of Mrs Galaxidis but not in the will of her husband] my husband is extremely upset by the Supreme Court proceedings. I have almost no contact with NIKOLAOS and JOHN and I do not see my only grandchildren, NIKOLAOS'S children. (d) my previous Will was made on 7 June 1990. Despite the Supreme Court proceedings being in existence for approximately 2 1/2 years at the date of this Will, I tolerated these proceedings on the basis that NIKOLAOS and JOHN had made an error of judgment in bringing these proceedings and had received bad legal advice. However, NIKOLAOS and JOHN have changed solicitor in the course of the proceedings and they have relentlessly continued with their proceedings against my [wife/husband] and I. As a result I am deeply hurt and offended and I have no further intention to give these two adult sons, NIKOLAOS and JOHN , anything upon my death. 6. I declare that I have made provision for my son, ANTONIOS GALAXIDIS , because he has provided immense physical and moral support and assistance, especially since 1996 in the commencement and day-to-day operation of my [husband's] business of Compact Car Rentals, my real estate purchases, my other business affairs and my day-to-day life up to the date of my death."

Legal analysis 125 It is necessary to consider, in turn, the plaintiff's claims in contract, proprietary estoppel, constructive trust and wrongful exclusion from use and enjoyment of the land. 126 I should say at the outset that the third further amended statement of claim pleads, in the alternative, promises by Mr and Mrs Galaxidis to give their property to their sons after the death of the surviving spouse. In my opinion the facts do not support this contention. Therefore I shall concentrate on the plaintiff's contention that his parents promised to give their sons (or made representations encouraging their sons to expect the beneficial ownership of) the Flinders Street property when Mr Galaxidis retired. 127 It will be seen that the plaintiff's factual case depends upon three family conversations, and conduct consequent upon those conversations. I shall consider each of the categories of legal claims by reference to my findings concerning the three conversations. I shall refer to the conversations, for convenience, as the first, second and third conversations. A brief summary of each conversation and the subsequent conduct is as follows.

The first conversation 128 In the first conversation, repeated constantly during the period from 1978 to 1988, Mr Galaxidis said in the presence of Mrs Galaxidis, to John and Nikolaos, "one of these days, this property and this business will be yours", and "when I retire, I'll give it to you". These statements were made in response to requests by John and Nikolaos to be paid pocket money, and later wages, for their work in the AG Motors business. After Mr Galaxidis made these statements, on each occasion that he did so, his sons continued to work for him in the business, knowing their father's attitude to the payment of wages, and in fact not receiving wages.

The second conversation 129 Just before John went to work for Strathfield Car Radios and Nikolaos was married, in May 1988, there was a single conversation between John and his father in which Mr Galaxidis said "when the properties are eventually paid off, then everything will be passed on to you". The conversation took place when John told his father that he needed an income. After the conversation, in which his father made it clear that he would not satisfy that need, John left the business and went to work for Strathfield Car Radios.

The third conversation 130 This is the conversation, in or prior to April 1994, in which the three brothers and their parents reached an arrangement for the transfer to the sons and Maria of the Stafford Street property, the transfer of the business to the sons, and the conferral on the sons of an equitable interest in the Flinders Street property. In return, the sons and Maria accepted responsibility for a debt of $150,000 to the bank, and the sons accepted responsibility for the debts of the business. Mr Galaxidis, on behalf of himself and his wife, promised his sons that the Flinders Street property was to be theirs, subject to the parents retaining an entitlement to receive rental income from the property other than the one third where the business was conducted. After the third conversation, the Stafford Street property was transferred to the sons and Maria, and the business was taken over by the sons and was conducted in the Stafford Street and Flinders Street properties.

Contract claim 131 In my opinion the first and second conversations did not give rise to a contract between Mr and Mrs Galaxidis and their sons. 132 I should say, first, that in my view the statements made by Mr Galaxidis in those two conversations were intended to be binding and to be relied upon. Mr Galaxidis made these statements in response to requests for money from his sons. Those requests changed in character over time. In 1978 John was 11 and Nikolaos was 13. In effect, they were asking for pocket money. An isolated statement by their father that he would not give them pocket money but that he would give them his property when he retired, would not be regarded as giving rise to legal rights and obligations. In this case, however, statements to that effect were constantly repeated over a period of 10 years, as an inducement by Mr Galaxidis to persuade his sons to work in his business without wages, and for the purpose of enabling him to maintain his control over their lives. John and Nikolaos were schoolboys when his statements in the first conversation were first made, but Mr Galaxidis continued to make the statements after they had left school (1982) and were working full-time (apart from their technical college courses) and without wages. 133 In a normal case, statements of this kind made by a father to his sons in a family context do not have any legally binding effect. But this is very far from being a normal case, as my detailed account of the facts has shown. In my opinion the combination of the fact that the statements were constantly repeated, and the fact that the statements were made as a justification for not paying wages for full-time service, in the context of the Greek tradition surrounding family affairs and the determination of Mr Galaxidis to keep his sons under his control, transformed its character into a statement intended to have legal effect: see Beaton v McDivitt (1987) 13 NSWLR 162; compare Balfour v Balfour [1919] 2 KB 571 with Roufus v Brewster (1971) 2 SASR 218, 222. That conclusion with respect to the first conversation implies that the second conversation should be interpreted in the same manner, since the subject matter and context were the same. 134 Counsel for the defendants made a submission based on evidence given by John to the effect that his father said to him (believing it to be true) "you don't understand", and on John's concession that in making the promise in the first conversation his father may have simply been trying to keep his sons happy by fobbing them off. Although John conceded that this might possibly have been so, his evidence was that his father made a categorical promise, repeated after he and his brother had commenced to work full-time in the business. In the circumstances, I do not regard John's evidence as in any way inconsistent with my conclusion that the words used by Mr Galaxidis were intended to have a binding effect. 135 Secondly, in my opinion the evidence establishes that in making the promises that he made in the three conversations, Mr Galaxidis had the authority of his wife. She was present from time to time when the first conversation was repeated, and she was present for the third conversation. The second conversation is in similar terms. She allowed her husband to be their spokesman on matters of this sort, and she supported him. 136 The difficulty with regarding the first and second conversations as giving rise to contractual promises is not the absence of an intention to create a binding obligation or the absence of authority to bind Mrs Galaxidis; it is that they were both incomplete and uncertain. In neither case was there any specific consideration expressed or implied. As to the first conversation, it is not contended that John and Nikolaos promised, in consideration for their father's promise, that they would remain in the business indefinitely, or for any particular time, or at all. Both of them in fact remained in the business, without receiving wages, until 1988. But on the facts, it cannot be said that their conduct in continuing to do what they were already doing was consideration supporting their father's promises. 137 As to the second conversation, John's response was to leave the business (except for some limited after-hours assistance) and take a position with Strathfield Car Radios. He did not provide any consideration for his father's promise. 138 Counsel for the plaintiff relied on Electroboard Administration Pty Ltd v O'Brien [1999] NSWCA 452 as authority for the proposition that continued performance of work without payment may supply consideration. I accept that this may be true in appropriate circumstances, but in the present case there is no basis for finding or inferring that the continued service that they provided was linked to their father's promise, as the price they paid for obtaining the promise or the "quid pro quo" for it (cf Australian Woollen Mills Pty Ltd v Commonwealth (1954) 92 CLR 424, 461). In the Electroboard case, the consideration which was found to support a restraint of trade covenant entered into by an existing employee arose out of the fact that the employer had threatened to dismiss the employee if she did not sign - the benefit to the employer from the restraint of trade contract was that it obtained her signature to the contract, and the benefit to the employee was that she diverted the prospect of imminent dismissal. The facts of the present case are not analogous. 139 The third conversation gave rise to a contract for the transfer of the business and the Stafford Street property, but in my view the representations and arrangements with respect to the Flinders Street property arising from that conversation cannot be treated as terms of the contract, because they were too vague and uncertain. Mr Galaxidis said that he would "make up for it" with Flinders Street, but he did not say precisely how he would do so. John demanded a guarantee that the sons would get one-third of Flinders Street, but he demanded it "to retail our motor vehicles", while insisting that his father "put in writing" that he would "give" the sons one-third. The demand is ambiguous as to whether it was a demand for a proprietary interest or just for a licence to use the property for business purposes. The response by Mr Galaxidis, who said "it's all going to be yours anyway", is even more ambiguous. The uncertainties surrounding the third conversation are too deep, in my view, to be cured by the implication of terms to give the arrangement business efficacy. 140 My conclusion, therefore, is that the contract claim must fail, because none of the statements by Mr Galaxidis upon which the plaintiff relies amounted to a contractual promise. Given that conclusion, it is unnecessary for me to consider questions relating to the contractual capacity of the sons, as minors, or the effect of ss 23C and 54A of the Conveyancing Act 1919 (NSW) on the validity and enforceability of the plaintiff's claim under this heading, in view of the absence of writing.

Proprietary estoppel 141 The plaintiff says that : · Mr and Mrs Galaxidis created in him and Nikolaos an expectation that he and Nikolaos would have an interest in the Flinders Street land, by virtue of the three conversations; · Mr and Mrs Galaxidis knew or ought to have known of the expectation; · in reliance upon the expectation, he and Nikolaos acted to their detriment; · Mr and Mrs Galaxidis encouraged the plaintiff and Nikolaos to act in reliance on the expectation; · it is therefore unconscionable for Mr Mrs Galaxidis to deny the plaintiff's and Nikolaos' interest in the Flinders Street property. 142 The species of estoppel that the plaintiff invokes is sometimes referred to as "proprietary estoppel". The equitable doctrine is well established. It arises out of such cases as Dillwyn v Llewelyn (1862) 4 De GF & J 517 [45 ER 1285], and has been explored in such recent cases as Riches v Hogben [1985] 2 QdR 292, Austotel Pty Ltd v Franklins Selfserve Pty Ltd (1989) 16 NSWLR 582 and Giumelli v Giumelli (1989) 73 ALJR 547. However, even now there is no entirely satisfactory label for the doctrine. The word "estoppel" is not entirely apt because, if the equity is established, the plaintiff may become entitled to positive equitable relief, rather than relief which merely prevents the defendants from insisting upon their strict legal rights as landowners. The word "proprietary" might also be misleading, because the relief obtained by a successful plaintiff will not necessarily give rise to a property interest. For example, in Giumelli the order was for a sum of money to be paid representing the value of the plaintiff's equitable claim. And as the High Court warned in Giumelli (at 548) care must be taken in using a label such as "constructive trust", even though the remedy may (depending on the facts) be an order for the conveyance of property. 143 Indeed, one may respectfully query whether the terminology of constructive trusts should be employed at all, for to do so is to add a layer to the analysis. The Court must in any case consider whether there is an equity, and then consider what is the most appropriate proprietary or monetary or other relief to satisfy the equity. It is not easy to see what is added by interposing between those two steps an inquiry as to whether there is a constructive trust in the circumstances. 144 In the Austotel case Priestley JA reviewed the case law extensively and said (at 610) that the following proposition applies to the equitable doctrine: "For equitable estoppel to operate there must be the creation or encouragement by the defendant in the plaintiff of an assumption that a contract will come into existence or a promise be performed or an interest granted to the plaintiff by the defendant, and reliance on that by the plaintiff, in circumstances where departure from the assumption by the defendant would be unconscionable." 145 On that analysis, the equitable doctrine identifies three ingredients, namely encouraged assumption, reliance and unconscionability.

Encouraged assumption 146 The question is whether the three conversations, in their context and in light of the conduct of the sons subsequently, amounted to the creation or encouragement by Mr and Mrs Galaxidis of an assumption on the part of their sons that a promise would be performed or an interest granted to the sons by their parents. My finding that none of the conversations gave rise to contractual promises poses an immediate issue: does that finding prevent the plaintiff from making good a claim to relief under the equitable principle? 147 It is clear from the cases, including the Austotel case itself, that the doctrine is available to assist a plaintiff where a promise or representation has been made that falls short of a contractual promise. Indeed, that is where the doctrine is invoked. In Riches v Hogben , in a passage approved by the High Court in Giumelli (at 554), McPherson J said (at 300-301): "A consequence of applying the principle may be to complete an otherwise imperfect gift, as in Dillwyn v Llewelyn , or to give effect to an agreement that, for want of certainty or consideration or some other essential element, falls short of constituting an enforceable contract. Many of the reported cases are concerned with imperfect gifts; but there is of course a sense in which all agreements made or promises given without consideration are imperfect gifts of the benefits they purport to confer. What distinguishes the equitable principle from the enforcement of contractual obligations is, in the first place, that there is no legally binding promise. If there is such a promise, then the plaintiff must resort to the law of contract in order to enforce it, it being the function of equity to supplement the law not to replace it. The second distinguishing feature is that what attracts the principle is not the promise itself but the expectation which it creates. … Finally, the equitable principle has no application where the transaction remains wholly executory on the plaintiff's part. It is not the existence of an unperformed promise that invites the intervention of equity but the conduct of the plaintiff in acting upon the expectation to which it gives rise. That is why in Dillwyn v Llewelyn , where the son built on land promised but not effectively conveyed to him by a memorandum signed by his father, Lord Westbury LC said that the only inquiry was 'whether the son's expenditure, on the face of the memorandum, supplied a valuable consideration, and created a binding obligation'." 148 Counsel for the defendants submitted that a representation or promise will not found an estoppel unless it has been made in clear and unambiguous terms. But as Brooking JA observed in Flinn v Flinn [1999] VSCA 109 (Supreme Court of Victoria, Court of Appeal, 4 August 1999), paragraph [80], "a promise may be definite in the sense that there is a clear promise to do something even though the something promised is not precisely defined". He cited the well-known passage, frequently approved in later cases, from the dissenting speech of Lord Kingsdown in Ramsden v Dyson (1866) LR 1 HL 129, 170-171: "The rule of law applicable to the case appears to me to be this: If a man, under a verbal agreement with a landlord for a certain interest in land, or, what amounts to the same thing, under an expectation, created or encouraged by the landlord, that he shall have a certain interest, takes possession of such land, with the consent of the landlord, and upon the face of such promise or expectation, with the knowledge of the landlord, and without objection by him, lays out money upon the land, a court of equity will compel the landlord to give effect to such promise or expectation. This was the principle of the decision in Gregory v Mighell (1811) 18 Ves 328, [(1811) 34 ER 341], and, as I conceive, is open to no doubt. If, at the hearing of the cause, there appears to be such uncertainty as to the particular terms of the contract as might prevent a court of equity from giving relief if the contract had been in writing, but there has been no expenditure, a court of equity will nevertheless, in the case which is above stated, interfere in order to prevent fraud, though there has been a difference of opinion amongst great judges as the nature of the relief to be granted. Lord Thurlow seems to have thought that the court would ascertain the terms by reference to the Master, and if they could not be ascertained, would itself fix reasonable terms. Lord Alvanley and Lord Redesdale, and perhaps Lord Eldon, thought this was going too far; but I do not understand any doubt to have been entertained by any of them that, either in the form of a specific interest in the land, or in the shape of compensation for the expenditure, a court of equity would give relief, and protect in the meantime the possession of the tenant." 149 According to Brooking JA (at paragraph [81]), Lord Kingsdown's speech has been relied on in support of the proposition that a proprietary estoppel may give rise to an equity even though the interest to be taken is unclear, or the promised or expected interest is uncertain. It was decided in Austotel that an equitable estoppel could arise out of a letter of intent for the making of a new lease for enlarged premises, even though the rental had not been agreed. 150 Applying the principles of these and other cases, Brooking JA found that a promise to confer an unspecified interest in a farm was not too uncertain to be the basis for a proprietary estoppel, especially when considered together with promises made on other occasions and the surrounding circumstances (at paragraph [94]). 151 It seems to me that in the present case the three conversations should be considered as a series, to be evaluated together in order to ascertain the intention of Mr and Mrs Galaxidis and the meaning of the words that Mr Galaxidis used. In the first conversation he established an intention to give his property and business to his sons when he retired, the property at that stage being only the Stafford Street property. When Mr and Mrs Galaxidis acquired the Flinders Street property, Mr Galaxidis conveyed to John, in the second conversation, their intention that their gift would be extended to the Flinders Street property as well as the Stafford Street property and the business. In the second conversation the intended gift was not tied to the retirement of Mr Galaxidis, but rather to when the properties were paid off. But if there are grounds of equitable fraud for the court to intervene, that uncertainty would not prevent a remedy from being fashioned to address the circumstances. For example, I see no reason why, if the other ingredients for the application of the equitable principle were satisfied, the court could not make orders enforcing the parents' promise if at the time of the hearing, it were true that Mr Galaxidis had retired and also that the properties had been "paid off". 152 The circumstances were changed by the third conversation. It seems to me fairly plain that all parties intended that the new arrangements would replace the promises made in the first and second conversations. It was no longer a case of Mr and Mrs Galaxidis promising to do something in the distant future, when Mr Galaxidis retired. He was retiring from the business in the immediate future, and they were immediately transferring the Stafford Street property and the business. In that context, the statement by Mr Galaxidis that he was "going to make up for it" with Flinders Street, and John's demand that his father "put in writing that you're going to give us this third", were not references to the conferral of a beneficial interest at some future time conditional upon the happening of some further events. The language that they used meant that upon the implementation of the arrangement reached in the third conversation, Mr and Mrs Galaxidis would thereupon hold an interest in the Flinders Street property for their sons, who would be permitted forthwith to take over the business and continue it in operation there. 153 My finding of fact at paragraph 107 above is that the promise or representation by the parents was that they would make their sons the beneficial owners of the Flinders Street property, subject to the sons allowing them to receive the rental from the portion of the property that was externally rented. By participating as they did in the third conversation, Mr and Mrs Galaxidis encouraged in their sons the assumption that they would become the beneficial owners of the Flinders Street property, subject to that qualification with respect to rental income.

Reliance 154 In my view there is the plainest evidence of reliance by the sons on this assumption. Mr Galaxidis responded to John's complaint that his father had previously promised to give the sons the Stafford Street property and was now offering it to them subject to a large debt, by saying that he would "make up for it with Flinders Street". This, in its context, was a representation that he would make over beneficial ownership of Flinders Street to his sons, as I have held. In the presence of his brothers, John specifically asked his father to put the promise about Flinders Street in writing, and his father specifically invited the sons to trust him - that is, to alter their positions by implementing the transaction, in reliance upon his representation in the third conversation. 155 The sons and Maria implemented the arrangements for Stafford Street, and the sons implemented them for the business, in reliance on what had been said. The transaction was not beneficial to them in the absence of the acquisition of an interest in the Flinders Street property, as I have explained. 156 Counsel for the defendants contended that there was evidence in the plaintiff's case inconsistent with the proposition that the plaintiff had relied upon his father's representations. In paragraphs 27 and 28 of the plaintiff's affidavit of 17 December 1999 he refers to complaints made by him to his mother, apparently shortly after he left school, that he was not receiving wages. Counsel for the defendants says that if the plaintiff really relied on his father's promises, he would not have raised the question with his mother. I disagree with this. The plaintiff was not demanding full wages but only some wages, a natural demand for a young man even where he expects to benefit substantially, in the distant future, by working for less than full wages. In any event, this question is superseded by the third conversation and the action of the plaintiff in reliance upon his parents' promises at that time. 157 In their submissions, counsel for both parties addressed the question whether the sons had acted to their detriment in reliance on their parents' representation. Until the High Court gives further clarification in this area (for example, by resolving the issue whether the various doctrines and remedies in the field of the estoppel are to be brought under a single overarching doctrine (see Giumelli at 549, citing The Commonwealth v Verwayen (1990) 170 CLR 394 at 411), there is likely to be uncertainty as to whether a plaintiff who invokes the equitable doctrine currently under consideration must prove not only reliance on an encouraged assumption, but also that the reliance was detrimental, in order to be entitled to relief of some kind. As I read the judgment of Priestley JA in the Austotel case, reliance must be proved but it is unnecessary for the plaintiff to prove detriment in order to make out an entitlement to relief of some kind (note also Kirby P at 585, Rogers AJA at 621). As I read the majority judgment in Giumelli (especially at 554-556), the Court assumed rather than decided that detriment is a necessary ingredient for the application of the equitable doctrine, and clearly the Court regarded evidence of detriment as relevant to the kind of relief that would be ordered; and in particular, proof of the plaintiff's detriment would be relevant to the question whether the defendant should be ordered to make good the encouraged assumption or merely to reverse that detriment. Further, in the Court's view 'detriment' is a wide concept encompassing the loss of the property that the plaintiff was encouraged to expect: at 552; see Flinn v Flinn at paragraph [121]. 158 Counsel for the defendants contended that the plaintiff and Nikolaos did not suffer detriment by continuing to work in the business after the first and second conversations. He drew attention to the fact that the plaintiff was learning the motor trade from Mr Galaxidis, as was Nikolaos. He submitted that they were not prejudiced by living and working at home. I disagree with this submission. In my opinion, while the plaintiff and Nikolaos obtained some benefits in the nature of training, free board, spending money and the use of motor vehicles, they were still significantly disadvantaged by not receiving any wages, even if one assumes that the money they would otherwise have received was put back into the business for their ultimate benefit in the event that their parents performed their promises. I do not regard the evidence in the loan account and tax return documentation as reliable evidence, for reasons that I have given, and therefore I do not accept that John and Nikolaos received and willingly lent back to the business the wages there documented.

Unconscionable departure from assumption 159 In this case Mr and Mrs Galaxidis encouraged their sons to assume that they were to receive the beneficial ownership of the Flinders Street property once the transfer of Stafford Street and the business had taken place, subject to the qualification that the parents would be able to receive the income of the part of the property that was externally rented. They and Antonios subsequently departed from that assumption by bringing the AG Motors business to an end and excluding John and Nikolaos from the Flinders Street property.

160 Mr and Mrs Galaxidis departed from the assumption after they had freed themselves of the debt attaching to the Stafford Street property and the business debt, and the guarantee that they had temporary given after implementation of the 1994 transaction. Upon their exclusion of John and Nikolaos from the Flinders Street property, they were able to develop with Antonios the new Compact Car Rentals business, which operated profitably. They were able to use the Flinders Street property as security for borrowing to establish the new business. They were able to acquire new properties, some of which are encumbered. All of these things became possible only when they had departed from the assumption that they had encouraged their sons to make and rely on. It is plain, in those circumstances, that Mr and Mrs Galaxidis acted unconscionably in doing so.

161 It follows, in my view, that the elements of the equitable doctrine have been made out here. The remaining task is to fashion remedies and orders appropriate to satisfy the plaintiff's equity. Remedies and orders 162 In Giumelli the majority judges indicated (at 549) that where the ingredients of the equitable doctrine are satisfied, the plaintiff's equity is more than a "defensive equity", and while the plaintiff does not have an immediate right to positive equitable relief, it is open to the Court to satisfy the equity by going beyond the minimum relief necessary to reverse the plaintiff's detriment. In some cases the only way to prevent the plaintiff from suffering detriment (as their Honours understood that term) may be to enforce the defendants' promise. According to their Honours, in each case the Court must look to the circumstances to decide what way the equity can be satisfied. Before a constructive trust is imposed, the Court should first decide whether there is an appropriate equitable remedy which falls short of the imposition of a trust. In making this decision, the Court should take into account various factors including the impact of the orders upon relevant third parties (at 549-550).

163 In that case the order made by the Full Court was designed to bring about a conveyance to the respondent of the promised lot after a subdivision of the farming property, thus imposing on the appellants the obligation to pursue a subdivision for that purpose. The High Court decided that this remedy was not appropriate, given that there was a partnership action pending between the parties, and improvements had been made to the promised lot by family members other than the respondent. It was also relevant that there had been a breakdown in family relationships and another family member was in occupation of the promised lot. The High Court accepted that the respondent's prima facie entitlement was to the promised lot, but to avoid injustice to a third party (the family member in occupation) it would be better to express the relief as a money order rather than an order for the acquisition of title. However, the money order that the Court favoured was not intended merely to meet and address the respondent's past detriment, but to reflect the value of the encouraged assumption.

164 In the present case, the encouraged assumption related to the beneficial ownership of the Flinders Street property, which is held subject to leases of two-thirds of it. An order for the acquisition of title to the Flinders Street property would not interfere with the rights of the third party lessees of part of the property. Subject to one matter relating to the mortgage over the property, I can see no other considerations militating against an order that Mr and Mrs Galaxidis transfer the Flinders Street property to their three sons. In my opinion considerations of justice strongly favour the making of such an order, in the circumstances of unconscionability to which I have referred. Nor, in my view, is it adequate or even appropriate in the present case to make a money order by way of compensation for the work performed by the plaintiff and Nikolaos. The evidence does not permit me to quantify the appropriate compensation for the work that has been done, and in any event compensation for work would only address part of their detriment.

165 In the circumstances of the present case, it seems to me that the transfer of the Flinders Street property should be in favour of the three sons as tenants in common in equal shares. It should be subject to the existing leases.

166 Orders will need to be made to reflect the qualification or condition upon the encouraged assumption, with respect to the retention by Mr and Mrs Galaxidis of their income stream from the rental of part of the property. It seems to me that in principle, the amount of rental to which Mr and Mrs Galaxidis should be entitled under the orders should be the amount of rent currently being received by them, as at the date of this judgment. This is because the primary purpose of equity's intervention is to satisfy the plaintiff's equity as established at the date of judgment.

167 It seems to me that the income stream for Mr and Mrs Galaxidis could be preserved in the orders in a number of ways, as to which I am prepared to hear the submissions of the parties. Subject to any such submissions, I would be inclined to make orders charging the Flinders Street property in the hands of the sons with the obligation to pay Mr and Mrs Galaxidis an amount (payable monthly if the rent is currently paid monthly) equivalent to the present amount of rent received from external tenants, for the remainder of their joint lives and the life of the survivor of them. The order should provide a facility for an independent valuer to place a capital value on the entitlement of Mr and Mrs Galaxidis so that their interest can be paid out in the event of sale of the property.

168 The plaintiff contends that I should make orders exonerating the Flinders Street property from the liabilities of Mr and Mrs Galaxidis and Antonios. It seems to me that this is an appropriate course to take. Mr and Mrs Galaxidis were able to use the Flinders Street property as security to raise funds for the commencement of the Compact Car Rentals business by unconscionably departing from the assumption they encouraged their sons to make about the beneficial ownership of the property. The benefit of the mortgage has not been shared equally amongst the sons. Satisfying their equity by acquisition of the property entails, in the circumstances, that the property should come to them free of the mortgage.

169 The easiest way to achieve this would be to give Mr and Mrs Galaxidis and Antonios time, after delivery of these reasons for judgment, to negotiate a refinancing of the current borrowing so as to procure a discharge of mortgage. If that cannot be achieved, a more complicated solution may be necessary. That would be to secure the obligation of Mr and Mrs Galaxidis to exonerate the Flinders Street property from the mortgage encumbrance, upon the three properties acquired by them and Antonios in 1999 and 2000. I would prefer not to do so, however, until Mr Mrs Galaxidis and Antonios have had the opportunity, after considering these reasons for judgment, to see whether a refinancing can be negotiated that would discharge the mortgage.

170 As a supplementary remedy, the plaintiff and his brother Nikolaos should have the benefit of an order requiring Mr and Mrs Galaxidis and Antonios to pay them two-thirds of an appropriate occupation fee for use of the one-third of the Flinders Street property that AG Motors was to occupy, in respect of the period from exclusion of AG Motors from the site until the date of my orders. If necessary, I shall make a direction for an inquiry to determine the appropriate occupation fee. I would hope, however, that a figure can be agreed through the negotiating skills of the legal representatives.

171 It will be noted that the orders I have in mind will, except where specifically mentioned, benefit Antonios as well as his brothers. I have considered whether Antonios has been guilty of disentitling conduct of a kind that should lead me to exclude him from the benefit of the orders that I shall make. I have decided, on balance, that he should not be excluded from the benefit of the orders except to the extent specifically stated.

172 On one view of the events, Antonios can be regarded as having cynically taken advantage of the family dispute for his personal benefit. Another view, which I am inclined to favour, is that although his conduct has not been beyond reproach by any means, his position in the family and his relationship with his parents was to a substantial degree determined by the fact that he is rather younger than his brothers, and the advantages that have flowed to him are principally a consequence of that fact. Constructive trust 173 As an alternative basis for relief, the plaintiff alleges a constructive trust based on the idea that he was a joint venturer with his parents and brothers in a venture which has failed, and that he did not intend his co-venturers to take the benefit of his contributions to it: Muschinski v Dodds (1985) 160 CLR 583.

174 In my opinion the facts simply do not fit this category of claim. In no sense was the plaintiff a joint venturer with his parents. He worked for them as an employee until 1988, and in 1990 he and his brothers acquired the AG Motors business from them, and they acquired the business and the Stafford Street property from their parents again in 1994. Their father attempted to interfere in the conduct of the business after they had acquired it but they generally resisted his interference until he was provoked to purport to exclude them. The relationship is characterised as an employer/employee relationship initially (admittedly in a family context) and then as a venture between the brothers excluding the father at a later stage. Wrongful exclusion from use of land 175 The third further amended statement of claim asserts that Mr and Mrs Galaxidis have excluded John and Nikolaos from the possession, use and enjoyment of the land since 1996. It asserts that the exclusion was in breach of contract and in disregard of their entitlement to a beneficial interest in the land. I do not accept the breach of contract claim for the reasons I have given. I do accept the claim to a beneficial interest in the Flinders Street property, but it seems to me that the appropriate relief is not merely to restore John and Nikolaos to possession, but to make orders for the transfer of the property to the three brothers on the terms that I have indicated.

176 In light of the orders I propose to make, my view is that an order for an account of profits or equitable compensation is not appropriate. It is, however, appropriate to make an order for the extension of the plaintiff's caveat, at least until formal orders are made of the kinds that these reasons for judgment envisage. Delay, acquiescence and change of position 177 Counsel for the defendant submits that the plaintiff had delayed in asserting his interest in Stafford Street and then Flinders Street, and by the time he acted Mr Galaxidis had materially changed his financial and business interests. He points to the plaintiff's evidence that he knew he could act by lodging a caveat, and says that if the plaintiff had an interest in Flinders Street in 1994, then lodging a caveat was made available to him at that time. And yet no caveat was lodged until March 1998. That was the case even though the plaintiff was aware in 1996 that his father was about to embark on a new car rental business that would require capital. Therefore the plaintiff knew in 1996, or ought to have known, that his father would need to borrow on the security of the Flinders Street property to obtain capital to start the new business.

178 In my opinion these defences are not made out, on the facts. Although the plaintiff was guilty of some delay in lodging a caveat and then commencing the proceedings, his delay did not cause prejudice of a kind that should prevent him from obtaining relief. The unconscionable conduct of Mr and Mrs Galaxidis occurred in and from 1996, commencing when they departed from the encouraged assumption by purporting to terminate the business and exclude their sons from the Flinders Street property. The commencement of the Compact Car Rental business and the raising of funds for that purpose occurred not much later. The plaintiff did not depart from the property without an argument, and indeed arguments on various fronts continued for some time.

179 Moreover, the "prejudice" upon which the defendants rely appears to be largely or entirely the prejudice of having organised a borrowing secured over the Flinders Street property. There is no evidence suggesting that the borrowing cannot be repaid. The fact that the business has served as a springboard for the acquisition of other assets cannot generate prejudice of the kind necessary to constitute a defence, for that would imply that a program of profiting from one's own misdeeds could provide protection from enforcement proceedings. Conclusions 180 The orders that I propose to make to give effect to the plaintiff's equity, for the benefit of the three brothers, are summarised under the subheading "Remedies and Orders" in my discussion of the claim based on proprietary estoppel. I shall direct the plaintiff to bring in draft minutes of orders to reflect what I have said.

181 The submissions of the parties extended to the question of costs. In my opinion the appropriate order is that the first, second and fourth defendants pay the costs of the plaintiff and the third defendant.

182 I shall stand the matter over for the purpose of making orders.

Last Modified: 12/12/2001 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

Conveyancing Act 1919(NSW)ss 23C, 54A

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Judgment (42 paragraphs)

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Cases Cited (9)