Background
5The family emigrated to Australia from Italy in about November 1969. At that time Mr and Mrs Palagiano were aged 37 and 32 respectively. Tony was aged 12, Joseph nine and Chiara seven. After a few months they moved to Malabar. The family had few, if any, savings. Mr Palagiano worked with General Motors Holden in Pagewood. He had little English. Mrs Palagiano worked in a factory at Botany. Within seven years the family had saved enough to purchase the Hillsdale property. Hillsdale is a suburb just north of Matraville. The property was bought for $49,000 and the transfer to Mr and Mrs Palagiano was dated 8 October 1976. Mr and Mrs Palagiano borrowed money from the Bank of New South Wales Savings Bank to assist with the purchase. It is not known how much of the purchase price was borrowed. However on 15 September 1978, less than two years after the property was purchased the mortgage was paid off.
6None of the children completed high school. Tony deposed that he left school and started work when he was only 12, approaching 13. Joseph corroborated that evidence. Tony said that he started work in 1970, the year after the family arrived in Australia.
7Chiara is four years younger than Tony. She agreed that Tony left school early, but said that he did not start working until he was about 17 or 18 after he got his driving licence. When Tony was 12 she was eight. I do not accept that she can accurately recall such details. Nonetheless, I find it difficult to accept that Tony would have started regular paid employment as young as 12 or 13. But given that both Chiara and Joseph left school and started work when they were 15 or 16 and that Tony admittedly had trouble fitting in to school, I think it likely that he would have started work when he was about 15 or perhaps a little earlier. The precise year in which he started work is not important.
8Tony said that his first job was at the factory at which his mother worked. He was paid $16-20 a week. He did not last long at that place. According to his affidavit he then went to work at a fruit shop in Hillsdale for a friend of his father's at which he earned about $20 or $25 a week. According to his affidavit his next job was at a factory in Botany called Dyes and Bleaches (although in his oral evidence he said that Dyes and Bleaches was his second job). It was a textile factory. Tony deposed that he worked 12-hour days and 12-hour night shifts, working altogether about 60 hours a week. He said that he worked at that factory for two and a half years and gave all his money to his father who paid him back some pocket money. I accept that evidence. He said he received about $200 per week. His next job was at a Masterfoods factory at which he was working when the family moved into the Hillsdale property. In his affidavit Tony placed the time of the move to the Hillsdale property as being at the end of 1974, about two years before the property was purchased. That confirms my view that his memory as to when he started his employment is faulty. It is more likely that he started his employment about two years after he said he did, when he was 14 approaching 15. He said that he earned about the same level of wages, that is, around $200 to $230 per week at Masterfoods.
9Tony deposed that when he was 12 and shortly before his first job at the factory at Botany, his mother and father sat down with the three children and his father said:
" Tonino will be going to work from now on because we want to save money to buy a house. We don't want to pay rent anymore. We want to save a deposit as fast as we can so we can buy our own home. Sacrifices will have to be made. Tonino will have to miss school and get a job but it will be good for all of us in the end. One day the house will be yours. Everyone in this family is equal. "
10Tony says that shortly before the family moved to the Hillsdale property, his father said to him:
" Tonino, we have at last saved enough money for the new home. You have been a good boy. It's all been worth it. You will own this home one day with Giuseppe and Chiara. Everyone is equal in this family. "
11These conversations are the foundation of Tony's claim to a one-third interest in the Hillsdale property. He pleads that in 1970 when he was 12 his father directed him to leave school, to get a job and to pay his wages to his father in order to enable his father to purchase a home. The statement of claim alleges that when giving this direction, Mr Palagiano orally represented to Tony that he would eventually receive a one-third interest in the home to be purchased, as would Joseph and Chiara. He pleads that in accordance with his father's direction, he left school, obtained employment, and thereafter paid his wages to his father. He pleads that he continued to pay his wages to his father from the time he started employment (alleged to be 1970) to 1987. When he was unemployed he says he paid his unemployment benefits to his father. He pleads that " in complying with the deceased's directions and demands as regards payment of the money [being wages and unemployment benefits] [he] relied upon the frequent verbal representations made by the deceased that [he] would eventually receive a one-third interest in the [Hillsdale] property ." He pleads that it would be unconscionable for the deceased not to honour the representations made to him that he would eventually receive a one-third interest in the Hillsdale property and that the defendant as executor ought to be held to the representations made to him by his father.
12In cross-examination Tony was asked why he left school and said that he was forced to do so by his father so that he would bring a wage home. I accept that evidence.
13I also accept that from time to time the deceased told his children, including Tony, that they would all inherit the family home and that it was to the advantage of them all that the children's wages be used to help purchase the home. I think it very likely that Tony's wages were added to those of his father and mother to meet the family's living expenses, and either directly or indirectly to assist his parents in saving enough money to be able to afford to buy the house. Similarly, I think it likely that his wages, along with the wages of his father, mother and Joseph (after Joseph started working), were pooled to meet the family's expenses and to pay off the mortgage over the Hillsdale property. It is not possible to be more definite. There is no corroboration of the wages earned by Tony or Joseph at the time. There is no evidence as to what were the wages of Mr and Mrs Palagiano. Nonetheless, the fact that the family was able to purchase the house in Hillsdale seven years after they arrived in Australia and pay off the mortgage on the house after a further two years suggests frugal living and a strong ethic of saving all available money.
14However, I do not accept that any of the witnesses have any recollection of any particular conversation in which their father spoke of all of the children one day benefiting by sharing the house equally. I accept the evidence of Joseph and Tony that something along those lines was said more than once. But the context in which statements to that effect were made, and any qualifications are unknown and unknowable. The representations alleged by Tony and Joseph are said to have been made up to 40 years ago. As McLelland CJ in Eq said in Watson v Foxman (1995) 49 NSWLR 315 (at 319):
" Furthermore, human memory of what was said in a conversation is fallible for a variety of reasons, and ordinarily the degree of fallibility increases with the passage of time, particularly where disputes or litigation intervene, and the processes of memory are overlaid, often subconsciously, by perceptions or self-interest as well as conscious consideration of what should have been said or could have been said. All too often what is actually remembered is little more than an impression from which plausible details are then, again often subconsciously, constructed. All this is a matter of ordinary human experience. "
15I am not satisfied that there was anything promissory in the statements made, as distinct from their being statements of Mr Palagiano's then intentions and expectation. Circumstances can change. Mr and Mrs Palagiano's financial circumstances could change. For example they might choose to sell the house for any reason. Family dynamics might also change, as they did. In the family setting there was no intention or expectation that Mr Palagiano's representations as to the inheritance of the family house, or the steps alleged to have been taken in reliance on the representations, would create legal relations.
16I do not accept that Tony's actions in leaving school and starting work, or his handing over his wages to his father, were steps taken by him in reliance upon any representation made by his father that the house would one day belong to him, his brother and sister. On his evidence he was 12 when he left school and took up work. I think it more likely that he was 14 or 15 when he did so, but whatever his age, he had no real choice in the matter. As he said in cross-examination, his father forced him to leave school in order to go to work and bring home a wage. By the same token he continued to live at home and was provided with board until he married in 1988.
17The same is true of Joseph. He deposed that he left school at age 15 in 1975. However, he also had a strong recollection that when he left school the family was then living in the Hillsdale property. As the property was not purchased until October 1976 it is more probable that he left school at the end of 1976 aged 16 years. He deposed that before he started work his father said to him " When you are paid you give me your money like Tonino so we can repay the bank quicker and one day the house will be yours to share with Tonino and Chiara ". I do not think that Joseph recalls any particular conversation. Like Tony, he has reconstructed the conversation to which he deposes from his general impression of having been told that in due course all three children would inherit the house.
18Joseph's decision to leave school was not induced by any such representation. In cross-examination he gave the following evidence:
" Q. ... why did you leave school?
A: I was not very academic at school.
Q. So it was time to leave school and get a job?
A: Exactly. "
19I accept Joseph's evidence that from the time he started work until he was aged 22, that is in 1982, he handed over his wages to his father and got some money back as pocket money.
20Given that he left school at the end of 1976, the period for which he handed over his wages to his father was no more than six years.
21Joseph gave evidence that he trusted his father to keep what he called his father's promise that he would receive a one-third share of the family home. He said he relied on that promise in handing over his pay packet up to 1982. I do not accept that Joseph's conduct in handing over the pay packet was done by him in reliance upon what he said was a promise by his father that he would receive a one-third share of the family home. Until he was 22 he simply complied with his father's wishes in that respect.
22There was dispute between Chiara and Tony as to whether Tony handed over his wages to his father and, if so, for how long. Tony was in a position to know. There were frequent arguments between him and his father on the subject of money. I think it likely that Tony from time to time resisted handing over his entire wage to his father in return for pocket money. It is Tony's evidence that he continued to hand over his wage to his father until 1987 (shortly before he married), that is, when he was about 30. I think it probable that Mr Palagiano expected Tony to hand over his wage, that Tony usually did so, whilst retaining some part for himself, and that this was a point of friction between him and his father. Just how much money Tony handed over to his father over the years is impossible to say with any certainty.
23Nonetheless, the family, through Mr Palagiano, was able to save enough for a further property purchase. Joseph started working at the end of 1976. Chiara left school in 1978 when she was 15 years old. From that time all three children contributed their wages, or some of their wages, to their parents.
24In 1980, Mr Palagiano was made redundant when the General Motors Holden plant was closed. He received a redundancy package, but it is not known how much money he received. He retired on a disability pension due to high blood pressure although he was only 48. Mrs Palagiano continued to work for a couple of years.
25On 10 February 1982 an investment property in Smith Street, Hillsdale (the "Smith Street property") was purchased in the names of Tony, Joseph and Chiara. Whilst the property was purchased in their names, Mr Palagiano was instrumental in the purchase. The purchase price was $85,000. According to Joseph, Mr Palagiano provided about $40,000 to $50,000 of the purchase price. It is not clear how Joseph would have known this, but there was no contrary evidence. According to Chiara, Mrs Palagiano's brother and his family contributed to the purchase price. Likewise, it is not clear how Chiara would have known this, but there was no contrary evidence. A mortgage was taken out, but none of Tony, Joseph or Chiara said how much they borrowed. Whilst the mortgage must have been in their names, it is clear that their father managed the purchase and the borrowing. The mortgage was discharged on 25 August 1986. According to Joseph, he had stopped handing over his wage to his father in 1982. According to Chiara, she gave about $40 to $50 per week towards the mortgage on the Smith Street property. Mr Palagiano was on a disability pension from 1980 and Mrs Palagiano had retired by at least 1982. Given these matters, it is reasonable to presume that a substantial proportion of Tony's wages must have been used to make up the moneys used to purchase the Smith Street property and to pay off the mortgage. It is possible that Mr Palagiano had other sources of funds, but there is no evidence that he did, except for an unknown amount that Chiara asserts was provided by her mother's brother and his family.
26Tony also gave evidence that in 1982 he borrowed $6,000 from the State Transit Credit Union to lend to a friend called Tony Wong. He was obliged to repay the loan to the Credit Union over five years with the loan instalments to be deducted from his pay each fortnight. Tony gave evidence that when his father learned of this arrangement he was angry and required that Tony Wong repay the money which he did. Tony said that his father took the money and said that he would put it in the bank. The loan was repaid by the regular deductions from Tony's pay. Tony was not cross-examined on this evidence and I accept it. However, I do not accept that in allowing his father to take the $6,000 repaid by Mr Wong, Tony was acting in reliance on a promise or expectation that he would receive a one-third share of the family home.
27Before the Smith Street property was purchased, Mr Palagiano told Joseph that the house would be sold and the money divided for the three children to help them buy their first homes when they got married. That is what happened. Chiara married Anthony Mankarios in 1987, Joseph married five months later, and Tony married in February 1988. The Smith Street property was sold in April 1988. There was no evidence of the sale price, except that Joseph thought it was $150,000. Following the sale of the property each child received $50,000.
28Tony stopped handing over his wages to his father in October 1987 after he and his future wife, Gabrielle, decided to marry. In 1988, Tony and his wife bought a house in St Clair using his share of the proceeds of sale of the Smith Street property. At about the same time Joseph and his wife, Vesna, bought a house in St Mary's, again, using Joseph's share of the proceeds of sale of the Smith Street property. Both are suburbs a long way from Hillsdale. Chiara and her husband purchased a unit close to the Hillsdale property. From the time Tony and Joseph moved to the other end of Sydney, they had much less contact with their parents, whereas Chiara maintained regular contact.
29Joseph deposed that soon after the birth of their third child in December 1994 his mother told him that she had $30,000 to share between him, his brother and sister. He deposed that his mother " gave us $10,000 at that time ". Neither Tony nor Chiara gave evidence of receiving $10,000 at that time. (Mrs Palagiano gave $30,000 to Chiara in 2007 which she divided three ways.) It seems that the 1994 payment was a particular benefit given to Joseph and his family, notwithstanding, (or perhaps because), prior to the birth of his third child, Joseph and his parents had had a falling out. This led to his not seeing his parents for about a year, but there was a reconciliation.
30In about the mid 1990s Joseph and his family sold their house at St Mary's and purchased a property at Tempe. (Chiara places this event as taking place in about 1999 or 2000, but Joseph said that he only lived at St Mary's for about five years which would place the move much earlier). From the time of the move, Joseph had more frequent contact with his parents, but his main contact was with his mother. He tended to avoid speaking to his father.
31In 1998 Tony and his family sold their St Clair house. They purchased land in Colo Vale in the Southern Highlands and built a house. This was about 100 kilometres from the Hillsdale property. According to Tony, he and his family drove to Hillsdale for Sunday lunches and he made regular phone calls to his parents. I do not accept that evidence. It is not corroborated. Chiara had no knowledge of any such contact.
32Chiara and her husband are comfortably off. In 1997 they bought tickets for Mr and Mrs Palagiano and them to travel together to Italy. Whilst in Italy Mr Palagiano had a minor heart attack and the doctor in Italy advised Chiara that he needed to see an eye specialist. On his return to Australia he attended an eye specialist in Chatswood on a weekly basis. He was diagnosed as having a retinal melanoma. Chiara drove him to his appointments. In the second year of Mr Palagiano's treatment he also had to attend a doctor in Bondi every week. Chiara drove him to his weekly appointments at both places and cut down her hours of working to three days a week in order to drive her father to his appointments. (She was employed in the business of which her husband was a part-owner.)
33For many years Mr and Mrs Palagiano expressed their disappointment with Joseph and Tony for not maintaining regular contact. Chiara deposed that in 1997 or 1998 Mr Palagiano told her that his sons " never come for me or your mother, they just come for money ".
34In 1999 Mr Palagiano had to have radiotherapy for his cancer. The treatment caused him to lose his sight. His health deteriorated further. At about the same time Mrs Palagiano began to suffer serious health problems. Chiara, but neither of the sons, helped care for them both.
35Mr and Mrs Palagiano had seven grandchildren. Tony and his wife Gabrielle have two children, Tiarne, now aged 19 and Dikea now aged 16. Joseph and his wife have three children, Melissa, Peter and Nicholas (aged about 23, 20 and 15). Chiara and her husband have two children, Jessica and Julia (aged about 23 and 17). In or about 2005 Mrs Palagiano told Chiara that she had money of hers in a term deposit with the bank which she had decided to give to the grandchildren. According to Chiara, her father resisted the idea and said " The parents will take the money, not the kids. As for Tony, he will just gamble it. They will just lose all that money and the kids will get nothing. " I accept that a conversation to that effect took place. Nonetheless, according to Chiara, her mother was determined to give money to her grandchildren. $17,000 or $17,500 was transferred to bank accounts for each of the children. Contrary to the views expressed by Mr Palagiano to his daughter about Tony, the money set aside for Tony's children has not been touched. According to Joseph, the gifts were made in 2003 at the Prince Henry Hospital when both Mr and Mrs Palagiano were in hospital and the gift was made by both parents. He deposed that while the amount of the gift was quantified as $17,000 for each grandchild, it was given to him to deal with as he saw fit. The moneys paid to Joseph were used to reduce the mortgage on the Tempe Street property.
36Accordingly, by 2003 or 2005 Joseph had received $50,000 from the sale of the Smith Street property which was applied to purchase the St Mary's house, $10,000 from his mother in 1994, and about $51,000 from his parents in 2003 or 2005. He had paid his wages and unemployment benefits to his father for about six years.
37Tony paid his wages and unemployment benefits to his father for about 15 years. He also received $50,000 from the sale of the Smith Street property, and two sums of $17,000 or $17,500. He has honoured what he understands to be the wishes of his parents that those two payments of $17,000 be held for the benefit of his children.
38Mrs Palagiano became seriously ill in 2005. Chiara was caring for both her parents. In 2006 Mrs Palagiano spent three months in hospital. Chiara and one of her daughters looked after Mr Palagiano in his house. Tony did not visit during this period. Joseph and his family visited from time to time.
39Mr Palagiano was also admitted to hospital in about August or September 2006. After Mrs Palagiano was discharged, it was Chiara who looked after both her parents and took her mother to regular chemotherapy treatment. Her parents became wholly reliant upon her.
40Neither Tony nor Joseph visited their mother on her 70 th birthday. This was upsetting to Mr Palagiano. Less than two months after her 70 th birthday Mrs Palagiano died. Shortly before she died, she told Chiara that she had a box of money hidden in the cupboard which was for Chiara. After her mother's death Chiara found there was $30,000 in the box. Chiara gave $10,000 to Tony and $10,000 to Joseph.
41After their mother's funeral in June 2007 Chiara told Tony that she would need help looking after their father. Tony said words to the effect " Put him in a nursing home. I can't be expected to come here every week. " Mr Palagiano overheard this. This led to another argument between Mr Palagiano and Tony. Mr Palagiano ordered him out of the house. This was the last time Tony saw his father until shortly before his death when his father was not conscious. There were some telephone conversations in the following two months until about August 2007 when Tony stopped telephoning his father because, according to him, his father was angry and abused him.
42Joseph was also estranged from his father. About five weeks after his mother's death he had a violent argument with his father who became very angry and threatened him with a walking stick. At a passing ceremony for Mrs Palagiano a week later they did not speak. He stopped visiting his father. He did not see his father again until he received an SMS from Chiara, which eventually prompted him to visit his father in hospital the day before his father died.