Pavlis v Pavlis

Summary

1. Francis Michael (Frank) Forde served as Prime Minister for the shortest term in Australia's history. He held that office from the death of John Curtin on 6 July 1945 until 13 July 1945 when Forde lost the Australian Labor Party leadership to Ben Chifley. His brief occupation of Australia's highest political office may be contrasted with a more enduring architectural legacy. Although he was a Queenslander, for many years the Forde family lived in Sydney in a grand 1906 Federation home called "Virginia" in Strathfield (the Property). This case concerns a dispute about alleged beneficial interests in the Property among the family of its current owners.
2. By 1986, the Property was in a very dilapidated state. In that year, it was bought for $300,000.00 by the first defendant, Emanuel Pavlis, and his wife, the second defendant, Koula Pavlis. Without disrespect, I shall refer to the members of the Pavlis family by their Christian names. Emanuel and Koula have three sons: the first plaintiff, George (born 1962); the second plaintiff, Chris (born 1963); and Garry (born 1969).
3. Regrettably, this is a type of dispute with which the Court is all too familiar. It appears that, for many years, the Pavlis family got along well. However, by 2017, disagreements had split the family in two. On one side are George and Chris. On the other side are Emanuel (now 89) and Koula (now 88), supported by Garry. Although Garry is not a party to the proceedings and claims no present interest in the Property, he has given evidence in his parents' case and is funding their legal costs. The rancour between the two sides is so great that they disagree completely on almost all of the essential facts.
4. Over what fell into two broad phases of work (1988 to 1990 and 2001 to 2008), the Property was restored to its former Federation style glory with great attention to matters of period detail. "Restoration" may be a more apt description than "renovation" for what was done. There was uncontradicted evidence that the Property now has a market value of $5.5 million.
5. George and Chris' case is that George, assisted by Chris, supervised, physically assisted with, and funded a very large part of the renovations in the expectation, encouraged by Emanuel and Koula, that he and his brother would receive a majority interest in the Property when their parents died. It was not in dispute that under Emanuel and Koula's current wills, they will receive nothing, although there is some benefit to their children. Their brother Garry is the principal beneficiary.
6. George and Chris allege, among other iterations, an express representation by Emanuel and Koula that they (George and Chris) would each have a 40% interest in the Property in return for their direct and indirect contributions to the renovations. Alternatively, they submit that their interest in the Property arises by reason of a joint undertaking that has failed without attributable blame. Their case is one of proprietary or promissory estoppel, a constructive trust, or at the very least an equitable lien. They accept that Emanuel and Koula are entitled to reside in the Property for their lifetimes and that Emanuel and Koula should have access, if necessary, to the Property as an asset for the purposes of their maintenance in life, including matters such as medical and nursing home expenses should they arise.
7. Emanuel and Koula deny any express representations were ever made. Their case is that everyone in the family helped as they were able with the renovations (supporting the various tradespeople involved) as family members, for the benefit of the family as a whole, so that they would have a beautiful home in which to live. That object has been achieved. Their case is that George and Chris have exaggerated their contributions to the renovations.
8. The Court has concluded that, with the exception of Garry, none of the parties' evidence on critical matters can be relied on unless it is inherently likely, against interest, or supported by contemporaneous records or other independent evidence. Previous litigation in which the family was involved has informed the Court's conclusion that George, Chris and Emanuel will give whatever evidence suits the case they wish to make. Therefore, the Court does not accept George and Chris' evidence that Emanuel and Koula expressly represented that George and Chris would receive a precisely identified interest (40%) or any other interest in the Property.
9. However, the Court does accept that George and Chris contributed substantially in time, effort and funds (much of which appears to have been reimbursed to them) to the renovation. They did so not on the faith of a promise of a share of the Property or any other encouragement from their parents, but for two reasons. First, they were receiving a significant commercial benefit (with no corresponding benefit to their parents) of using the Property as security for their business ventures. Second, they had their own expectation that after their parents had enjoyed the benefit of the Property, George and Chris, as sons, would receive a "fair" share of their parents' estate.
10. George and Chris' claim fails because that expectation does not give rise to an interest in the Property or an entitlement to any other form of equitable relief. Nor have they persuaded the Court to the level of actual satisfaction that there was any "joint enterprise" in relation to the Property between George and Chris and their parents. Instigated entirely by George, what was done to the Property was done for the reasons identified in the preceding paragraph and incidentally to the benefit of Emanuel and Koula, but not as part of an enterprise which the evidence permits to be characterised as "joint". The Court accepts the submission made for the defendants that these proceedings are in truth about George and his activities (undertaken with Chris) and are an attempt to achieve something akin to a property settlement from their parents while they are still alive.
11. Mr H Insall of Senior Counsel appeared with Mr P Horobin of Counsel for George and Chris. Mr G Waugh of Senior Counsel appeared with Ms K Hopper of Counsel for Emanuel and Koula.

Structure of these reasons

1. What follows is divided into these sections: 1. Dramatis personae 2. The plaintiffs' pleaded case 3. The defendants' response 4. Facts not in dispute or independently established 5. The legal principles in relation to credit and fact finding 6. Credit findings 7. Findings as to disputed facts 8. Whether the pleaded representations were made 9. Whether the case based on contributions is made out 10. Miscellaneous matters

Dramatis Personae

1. It is convenient to begin with an uncontroversial description of each of the members of the Pavlis family and other witnesses.

Emanuel Pavlis

1. Emanuel was born in Leros, Greece in 1931. He is the husband of Koula and the father of George, Chris and Garry. Emanuel moved to Australia in 1955. He speaks sufficient English for basic conversational purposes but does not read it. He communicates with his children in Greek. After running a delicatessen and working in the family hardware business, Emanuel retired in 1991. Since 1996 his only income has been the aged pension. His cross-examination was conducted with the assistance of an interpreter, but at various times Emanuel answered in both English and Greek.

Koula Pavlis

1. Koula was born in Sparta, Greece in about 1932. Koula is the wife of Emanuel and the mother of George, Chris and Garry. Koula moved to Australia in 1956. Koula and Emanuel were married in 1958. Koula has been a homemaker. She speaks very little English and does not read English. She communicates with her children in Greek. Her very brief cross-examination was conducted through an interpreter.

George Pavlis

1. George was born in Australia in 1962 and is the eldest son of Emanuel and Koula. George is a builder and company director. He lived in the various Pavlis family homes, including the Property, until he married.

Chris Pavlis

1. Chris was born in Australia in 1963 and is a company director. He lived in the various Pavlis family homes, including the Property, and moved in and out of the family home until he married.

Garry Pavlis

1. Garry was born in Australia in 1969 and is the youngest son of Emanuel and Koula. Garry is not a party to the proceedings but has been paying for Emanuel and Koula's legal representation. Garry attended university and obtained a Bachelor of Business (Land Economy). He is a licensed real estate agent and valuer and owns a real estate business. Until he married in 2014, he had always lived in the various Pavlis family homes, including the Property.

Nick Pavlis

1. Nicholas (Nick) Pavlis is a younger brother of Emanuel. Nick was born in 1946 in Greece. Nick gave evidence on behalf of George and Chris, by audio visual link from Queensland. Nick deposed that he had not had any meaningful contact with Emanuel for over 20 years, save for seeing Emanuel at their brother Tony's funeral four years ago. His cross-examination revealed that he was not close to Emanuel as they grew up. He made no secret of his animosity towards Emanuel, which dates back to the time they were both children. Nick was close to both George and Chris from the time they were children and gave evidence intended to corroborate that Emanuel had been a domineering father.

Jason Field

1. Jason Field is a valuer and the Managing Director of National Property Valuers NSW Pty Ltd. Mr Field prepared two reports for George and Chris. For the first report, dated 16 December 2019, annexed to his affidavit of 10 February 2020, Mr Field was asked to assess the Property's current and retrospective market value. In his second report, issued on 23 July 2020, Mr Field was asked to assess the retrospective market rental value of the Property between 1 January 2010 and 5 July 2014.

The plaintiffs' pleaded case

1. The case falls into two parts: a case brought on express representations said to have been made, and one which depends on the contributions to the restoration of the Property said to have been made by George and Chris.
2. The proceedings were commenced by statement of claim filed on 21 September 2018. Relief was purportedly sought in relation to George, Chris and Garry. However, the plaintiffs' claim was amended during the course of the hearing on 9 November 2020 to take account of the fact that Garry was not a party. The amended relief (including the deletions) includes: "1. A declaration that the Defendants hold [the Property] on constructive trust: a. for each of the Plaintiffs as to a 40% share alternatively as to such proportion as would prevent the unconscionable retention of property by the Defendants; alternatively b. for each of the Plaintiffs as to a 40% share alternatively as to such proportion as would prevent the unconscionable retention of property by the Defendants, subject to the Defendants' right to reside at the property for life. 2. Alternatively, a declaration that the Defendants are estopped from denying a. that [the Property] is held for the benefit of the Plaintiffs and Garry Pavlis with each of the Plaintiffs' share in the property being 40%, alternatively for the benefit of the Plaintiffs as to a one third share each and Garry Pavlis; alternatively b. that [the Property] is held for the benefit of the Plaintiffs and Garry Pavlis with each of the Plaintiffs' share in the property to be 40%, alternatively for the benefit of the Plaintiffs as to a one third each and Garry Pavlis, subject to the Defendants' right to reside at the property for life. 3. A declaration that the Defendants hold [the Property] on constructive trust for the Plaintiffs in accordance with the terms referred to in paragraph 2. 4. Alternatively, a declaration that the Defendants hold [the Property] subject to an equitable charge or lien in favour of the Plaintiffs to the extent to which their contributions as pleaded in the Statement of Claim have contributed to or increased the value of [the Property]. 5. An order that the Defendants be restrained from dealing with or encumbering [the Property] in any manner inconsistent with the interests of the Plaintiffs as set out in the above paragraphs. 6. Equitable compensation. …"
3. What follows is a summary of the facts alleged by the plaintiffs drawn from their amended statement of claim.

The defendants' response

1. With limited exceptions, the defendants put the plaintiffs' version of events entirely in issue. In particular, the four conversations critical to the plaintiffs' case were denied.
2. I should record that in practical terms it was Emanuel's evidence that was deployed to meet the plaintiffs' allegations. Koula swore a very short affidavit in which she denied the critical conversations particularised in the statement of claim and denied she had ever agreed, or been present when it had been agreed, that the Property was to go to her sons in accordance with the 40:40:20 division alleged by the plaintiffs. It was clear from Koula's brief cross-examination that she now remembers very little and that she left discussions about business to her husband and sons. In final submissions, no one suggested that Koula's evidence was of assistance to the Court.
3. Emanuel said he had been running businesses in Australia since 1955. Each of George and Chris had left, respectively, his accounting work and dental technician role of his own volition to work in the South Granville Hardware Business, and George and Chris had set up P & S Aust of their own volition to run the Blacktown Hardware Business.
4. Emanuel denied that George and Chris in any way contributed to or worked on the Albyn Road Property. He denied the 1985 Conversation. Similarly, he contended that the Property had been purchased at the price offered without any suggestion it was at an undervalue. While the plaintiffs were not guarantors in relation to the Property, Emanuel accepted that George had assisted with Stage One of the renovations, but said that all the family had done so. However, all of the costs were paid by him and Koula. He denied the 1986 Conversation and the 1988 Guarantee Conversations had ever occurred and that he and Koula had ever agreed to hold the Property for their children.
5. In relation to the litigation with the CBA, Emanuel denied that the plaintiffs funded his and Koula's litigation expenses. He also denied the 1999 Conversation. However, he accepted that he could not pay what was owing under the settlement of that litigation and contended that Garry had paid $453,000.00 of that amount and that the plaintiffs had paid $22,000.00.
6. Emanuel also denied that the plaintiffs had contributed to Stage Two as they said they had done.

Facts not in dispute or independently established

1. It will be apparent from the foregoing that all of the critical factual matters are in dispute between the parties. As a first step in resolving those disputes, I will next set out the Court's findings of fact about matters which were admitted in the pleadings, were supported by independent, contemporaneous documents or were not otherwise seriously in dispute. These facts provide essential points of reference for the Court in making findings about the matters in dispute. As is often the case in matters such as this, I also record at this point that it is neither possible nor legally necessary for the Court to attempt to resolve specific disputed matters of family history going back to the childhood of the plaintiffs.
2. Emanuel and Koula were married in 1958.
3. George was born in 1962.
4. Chris was born in 1963.
5. In 1967, Emanuel and Koula bought a house in Queen Street, Ashfield for $13,600.00 which was rented out until the family moved into the house in 1974.
6. Garry was born in 1969.
7. In 1975, Emanuel and Koula bought a supermarket in Enfield called the Scoop Supermarket Food Store which was open six days a week.
8. In or about February 1981, at the age of 19, George commenced a course at Sydney TAFE and, thereafter, obtained an Accounting Certificate and a Real Estate Certificate.
9. While he was studying, George had a job in 1981 for about five months as a bookkeeper in an accounting firm. At the same, he undertook his first property development transaction, participating in a syndicate of five people from the accounting firm to purchase a property.
10. At some point in 1981 or 1982, Emanuel and Koula leased premises in Guildford Road, South Granville and established the South Granville Hardware Business with Emanuel as the manager.
11. In or about February 1982, at the age of 19, Chris commenced a Dental Technician course at Randwick TAFE and, thereafter, obtained a Dental Technician qualification.
12. On 21 June 1982, Pednap Pty Ltd was registered with Emanuel and Koula as the sole directors and shareholders.
13. By a deed made on 25 July 1982, Pednap Pty Ltd became the trustee of the Pavlis Family (No 2) Trust and, at some point around this time, became the operator of the South Granville Hardware Business.

Fact finding and credit - Legal principles

1. In approaching the task of fact finding, particularly where credit is a significant issue, the Court has applied nine principles.
2. First, at the forefront of the Court's approach has been the oft cited statement of McClelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 318-9: "Where, in civil proceedings, a party alleges that the conduct of another was misleading or deceptive, or likely to mislead or deceive (which I will compendiously describe as "misleading") within the meaning of s 52 of the Trade Practices Act 1974 (Cth) (or s 42 of the Fair Trading Act), it is ordinarily necessary for that party to prove to the reasonable satisfaction of the court: (1) what the alleged conduct was; and (2) circumstances which rendered the conduct misleading. Where the conduct is the speaking of words in the course of a conversation, it is necessary that the words spoken be proved with a degree of precision sufficient to enable the court to be reasonably satisfied that they were in fact misleading in the proved circumstances. In many cases (but not all) the question whether spoken words were misleading may depend upon what, if examined at the time, may have been seen to be relatively subtle nuances flowing from the use of one word, phrase or grammatical construction rather than another, or the presence or absence of some qualifying word or phrase, or condition. 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. Each element of the cause of action must be proved to the reasonable satisfaction of the court, which means that the court "must feel an actual persuasion of its occurrence or existence". Such satisfaction is "not … attained or established independently of the nature and consequence of the fact or facts to be proved" including the "seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, or the gravity of the consequences flowing from a particular finding": Helton v Allen (1940) 63 CLR 691 at 712."

Fact finding and credit - Submissions and conclusions

1. For the reasons that follow, the Court has concluded that Koula's evidence can carry no weight, and that in relation to George, Chris and Emanuel, each of them is a witness whose evidence cannot be considered reliable on any contested matter unless it is inherently probable, against interest or corroborated by independent witnesses or contemporaneous documents.

George's credit - Defendants' submissions

1. The defendants' submissions concerning George's credit were based on two fundamental criticisms. The first was to highlight the difference between George's evidence in the CBA Proceedings and Emanuel and Koula's Proceedings, and how he sought to present his relationship with his parents, especially Emanuel, in these proceedings.
2. The second criticism focussed on the alleged 40:40:20 Conversation, but on the basis that the same considerations reflected adversely on George's credit generally. This criticism relied on three elements: the absence of any reference to a 40% interest in the Caveats; the absence of any particularisation of the 40:40:20 Conversation in the statement of claim filed only a few weeks after the Caveats; and the almost identical versions of that conversation in the affidavits filed by George and Chris. It was submitted that this last matter was sufficient in itself for the Court to find that George and Chris had colluded to make up that evidence.

George's credit - Plaintiffs' submissions

1. In answer to the criticism of the differences between George's past and present evidence, Mr Insall SC submitted that the "different impression" given in George's earlier evidence was explicable, in words which I had used, as evidence of a family "circling the wagons" to fend off the banks.
2. As to the differences between the Caveats and George and Chris' subsequent evidence, the defendants sought to minimise these issues by referring to objective circumstances (primarily the substantial work and expenditure undertaken by the plaintiffs) as supporting their case. The defendants' approach was criticised for not engaging with "George and Chris's broader evidence as to the representations or the objective circumstances supporting their case" (Plaintiffs' Closing Submissions in Reply, at [2]). The essence of the plaintiffs' answer was set out in [5] of their submissions in reply: "Against these objective circumstances, the differences between expressions in the caveats and the Plaintiffs' evidence are of little import. They are, in any event, explicable by reason that they appeared in documents obviously settled by lawyers and that "understandably deferential" lay clients and witnesses were unlikely to avert to the precise differences in language between such documents (cf. Masson at [112]). Caveats are documents typically prepared by lawyers as a holding exercise, describing a claim in a summary form and prior to the solicitors taking full instructions from clients."
3. The reference to Masson is to this observation of Nettle and Gordon JJ in Queensland v Masson (2020) 94 ALJR 785; [2020] HCA 28 (Masson) at [112], which, for important context, I set out with its preceding paragraph (citations omitted): "[111] Possibly, if Mr Peters had been a judge or a lawyer or someone else whose education and experience has more to do with semasiology than the applied science of critical emergency care, he might have chosen an expression such as "not recommended" or "not appropriate". But it is neither surprising nor at all unlikely that a paramedic whose day‑to-day business is one of making life and death decisions should conceive and speak of a "not recommended" or "not appropriate" course of initial treatment as one that is "not permitted". Common sense and ordinary experience dictate that, just as a paramedic's initial treatment must be immediate and unhesitating, a paramedic is likely to be inclined to conceive and speak of actions in perfunctory and unqualified terms. Of course, exceptionally, such a person might be so particular in his or her choice of language as to convey that, by stating that something is "not permitted", he or she means that all choice is excluded. But whether that was the case here could only be decided by seeing and hearing the witness give his oral evidence. [112] The oft unspoken reality that lay witness statements are liable to be workshopped, amended and settled by lawyers, the risk that lay and, therefore, understandably deferential witnesses do not quibble with many of the changes made by lawyers in the process - because the changes do not appear to many lay witnesses necessarily to alter the meaning of what they intended to convey - and the danger that, when such changes are later subjected to a curial analysis of the kind undertaken in this matter, they are found to be productive of a different meaning from that which the witness intended, means that the approach of basing decisions on the ipsissima verba of civil litigation lay witness statements is highly problematic. It is the oral evidence of the witness, and usually, therefore, the trial judge's assessment of it, that is of paramount importance."

George's credit - Conclusion

1. For the following reasons the Court does not accept George as a witness whose evidence can be relied upon in relation to controversial matters. His evidence will only be given weight if it is inherently probable, against interest or corroborated by independent witnesses or contemporaneous documents.
2. First, and foremost, is the complete contrast between George's evidence in the Bank Litigation (see [134] and [139]) and the picture he has sought to paint in these proceedings. This contrast is far more than a matter of a "different impression" (see [171]). In the former proceedings, George presented himself as the driving force, assisted by Chris, in all of the commercial undertakings affecting the Pavlis Family and the Property, with Emanuel and Koula as passive and innocent dupes. In these proceedings, George has sought to present himself and Chris as pawns in the hands of a domineering father, forced into helping their father for no reward and having to rely on representations of future entitlement to the Property.
3. George's evidence in the earlier proceedings is even more damaging to his credit than because of mere inconsistency. If it is true, it is an admission of disreputable and dishonest conduct by George towards his vulnerable parents. If it is false by reason of its inconsistency with the evidence George now advances, then the Court does not know which evidence is true. On either view the Court is left in the position that it must conclude that George's uncorroborated evidence cannot be relied upon. The Court concludes that George is a witness who will give whatever evidence suits his cause.
4. The Court also accepts the defendants' second criticism (see [170] above). I deal with this in [206] to [214] but it is convenient at this point to set out why I do not accept Mr Insall SC's submissions on this point: 1. As to the Caveats not mentioning the alleged 40% interests: there is no evidence of urgency or incomplete instructions to lawyers. George and Chris both accepted in cross-examination that they knew the Caveats were important, that there was no rush, that they had been careful to tell their solicitor the full story and that they had the benefit of legal advice. The Caveats were prepared by the same solicitor who two months after the Caveats were lodged filed the plaintiffs' statement of claim as solicitor on the record. If a conversation referring to 40% interests had occurred and been relied upon by the plaintiffs, it is inconceivable that it would not have been referred to in the Caveats. 2. Masson does not assist the plaintiffs. It is clear from [111] (set out at [173] above) that the High Court was referring to a description of one or two words. As I set out in [206] and [207], George's and Chris' affidavit accounts of the 1988 Guarantee Conversations are virtually identical. I accept the defendants' submission that it is inconceivable that some thirty years later George and Chris would recall a conversation in Greek and produce an English version in almost identical terms. As I discuss in [214] below, this bespeaks collusion which renders the evidence of both George (and Chris) unreliable. At the very least it demonstrates that there has been no genuine, independent attempt to recollect critical evidence so as to give the Court a truthful rather than reconstructed account. As it goes to such a fundamental matter in their case, it is a proper foundation for the Court to conclude (as it does) that their uncorroborated or otherwise not independently verifiable evidence on any controversial matter of importance should not be accepted.

Chris' credit - Defendants' submissions

1. The defendants' primary attack on Chris' credit was to the same effect as the attack on George by reason of their substantially identical affidavit evidence as to the 40:40:20 Conversation. They also submitted that Chris was not being careful to tell the truth (citing his confident, but plainly wrong, answer as to in what country he had verified the statement of claim); that he was evasive about critical conversations being in the statement of claim; and that when asked to identify the most important conversation, he did not refer to the 40:40:20 Conversation (see [238] for this evidence).

Chris' credit - Plaintiffs' submissions

1. The plaintiffs' response to these criticisms was identical to their response in relation to George set out in [172] to [175]. It was submitted that the other miscellaneous criticisms of Chris were commonplace issues for lay witnesses unfamiliar with cross-examination and did not warrant a finding of lack of credibility.

Chris' credit - Conclusion

1. There are two reasons why the Court does not accept Chris as a witness whose evidence can be relied upon in relation to controversial matters. His evidence on such matters will only be given weight if it is inherently probable, against interest or corroborated by independent witnesses or contemporaneous documents.
2. First, throughout the relevant history of the Pavlis Family, Chris appears to have played a supporting role to George. As such, the Court's doubts about George's veracity necessarily inform the Court's approach to Chris' evidence insofar as it corroborates George's evidence. While it is not Chris' evidence, George's evidence in the Bank Litigation about Chris as George's willing assistant in the family businesses is at odds with Chris' evidence in these proceedings, which seeks to corroborate George's evidence in these proceedings that they were both victims of their domineering father.
3. The second reason is that referred to in [170] and [179] above in relation to George.

Nick's credit

1. Only brief submissions were ultimately made by any party about Nick's credit and his evidence, to which I have referred in [19]. That evidence was intended to be corroborative of George and Chris' evidence about, among other things, their early work for, and relationship with, their father and did not go to any of the central factual disputes in the case. Nick's evidence was too peripheral, and his animosity towards Emanuel too obvious, for the Court to place any reliance on Nick's evidence.

Emanuel's credit - Plaintiffs' submissions

1. Mr Insall SC submitted that the beginning and end of the question of Emanuel's credit was to be found in this evidence, being his own admission that he tells the story that suits him (Tcpt, 6 November 2021, p 421(41)-423(36)): "INSALL: Are you saying you swore an affidavit in the Commonwealth Bank proceedings and are you saying this is a mistake? Is that what you would like his Honour to believe? WITNESS: Yeah, yes, because this actually got nothing to do with this case here, to me. Well, I..(not transcribable)..because this is truth in here, and not in there, I mean to say-- HIS HONOUR: The "in here" - WITNESS: Because too many things - HIS HONOUR: Just pause there. The "in here" refers to the affidavit of, the current affidavit of the current proceedings, the "there" is a reference to the affidavit of the Commonwealth Bank proceedings. WITNESS: Yes. INSALL: So, what I suggest to you is, you make up evidence to suit whichever case you're running at the time, is that correct? WITNESS: At this time yes, that's right. INSALL: Now, just if you go up to paragraph 14 on the same page, you say "during the past ten years or so, George Pavlis has conducted a number of business. I have not been involved to any significant degree and have not been involved in any of the management decisions." Do you see that? WITNESS: Yes. INSALL: Was that correct? WITNESS: This is correct. I didn't get involved in any sort of a business with George, or in companies with George, or in companies with Chris. I never get involved in not one of them. … HIS HONOUR: I propose to go back a step, because I'm concerned about whether Mr Pavlis understood something you put to him Mr Insall. INSALL: May it please the Court. HIS HONOUR: Madam Interpreter, would you please interpret the question that I'm about to ask to Mr Pavlis. INTERPRETER: Yes, your Honour. HIS HONOUR: I'm just going to repeat a question that Mr Insall asked you a moment ago. The question was to this effect, that you made up the evidence in - you make up the evidence in your affidavits to suit whatever case you want to make at the time. … INTERPRETER: Okay. I just told him that what you said to me. HIS HONOUR: Yes. INTERPRETER: That he actually makes up the evidence for each case that he is actually - HIS HONOUR: Yes. That's right, and I understood that you drew attention to each of the two affidavits? INTERPRETER: Yes. Okay. HIS HONOUR: What is your answer to that question? Do you agree or disagree that that is what you have done? WAUGH: Your Honour, he's being distracted by looking at the affidavits. He's not answering your Honour's questions. HIS HONOUR: I think he understands my question. Do you agree or disagree that that is what you have done?" WITNESS: Well, your Honour, I'm agree. HIS HONOUR: You agree? WITNESS: I agree."

Emanuel's credit - Defendants' submissions

1. Mr Waugh SC submitted that Emanuel was a credible witness whose evidence had the "ring of truth", not least his denials of ever making any promises to George and Chris about the Property. It was submitted that the Court should be cautious about making adverse findings based on demeanour where a witness gives evidence, as occurred here, with the assistance of an interpreter. Insofar as there were matters adverse to Emanuel in his evidence, and even accepting that it was inescapable to conclude that Emanuel understood what he was saying in his evidence set out in [186], the Court should understand that Emanuel was a suggestible witness. Insofar as he may have accepted that evidence he had sworn in the Bank Litigation was false, it went to peripheral matters and was not to be compared to central issues about which the plaintiffs were said to have lied. Furthermore, at least one of the affidavits in those proceedings that was now in question had been prepared by George's solicitor at the time.

Emanuel's credit - Conclusion

1. The Court accepts Mr Insall SC's submission that by Emanuel's own admission his evidence on critical matters cannot be relied upon. As the transcript set out in [186] demonstrates, I was concerned that something may have gotten lost in translation when it came to Emanuel's understanding of what was being put to him. However, he adhered to his admission after he had had the benefit of clarification through the interpreter. Despite his best efforts to minimise the effect of Emanuel's answers, Mr Waugh SC properly accepted in oral argument that it was "inescapable" that Emanuel understood what was being put to him.
2. Emanuel presented in the witness box as a proud and stubborn man who wished to resist at every turn the case brought by the plaintiffs rather than attempt to address the evidence in a truthful way to the best of his ability. I accept Mr Insall SC's submission that many of Emanuel's strenuous denials were simply unrealistic in the light of common sense and the practical likelihood of what had occurred.
3. I am also fortified in the conclusion I have reached by the contrast in the pictures which Emanuel sought to paint of himself in these proceedings (independent, patriarchal, "in charge") with his affidavits in the Bank Litigation. In the face of the contrast, the Court has no basis on which to determine which is closer to the truth.
4. The Court therefore concludes that Emanuel is a witness whose evidence cannot be considered reliable on any contested matter unless it is inherently probable, against interest or corroborated by independent witnesses or contemporaneous documents

Koula's credit - Plaintiffs' submissions

1. The plaintiffs submitted that Koula had no real recollection of events and that the Court should accept her evidence that "she left it to the men" and her evidence that she had just signed whatever had been put in front of her for the purposes of these proceedings. In short, her evidence was of no assistance to the Court at all.

Koula's credit - Defendants' submissions

1. The defendants submitted that Koula had given her evidence truthfully and to the best of her recollection. She understood that the work was being done to the Property so the family could live in it.

Koula's credit - Conclusion

1. Koula presented, both in the witness box and in her affidavits, as having no real recollection of events. Koula identified herself as a traditional Greek wife and mother who looked after the household, and the Court accepts her evidence that she had no input into monetary or business affairs. Her lack of English also meant she could not read contracts or assist with any accounting or invoicing matters in the various businesses of her husband and sons. Given her lack of recollection and very limited role outside domestic matters, with no disrespect intended, the Court accepts that her evidence is of no assistance on any of the questions central to the resolution of these proceedings.

Garry's credit - Plaintiffs' submissions

1. Mr Insall SC submitted that Garry's role in the proceedings was somewhat peripheral. As Garry had not been challenged in cross-examination on this point, Mr Insall SC did not submit that Garry's evidence should not be accepted to the effect that he had made cash contributions to the renovations of the Property of approximately $150,000.
2. However, he submitted that Garry's evidence should be approached with caution and a recognition of at least the likelihood of exaggeration for three reasons: 1. Garry was now the principal beneficiary under Emanuel and Koula's wills to the exclusion of the plaintiffs so that, while not a party to the proceedings, he had a real interest in ensuring the plaintiffs failed. His partisan interest was further demonstrated by the fact that he was paying the defendants' costs of these proceedings. 2. Garry had given evidence in his parents' interest of events which was implausible because he would have been very young when they happened. 3. Garry's evidence about the Maroubra Unit was not credible.

Garry's credit - Defendants' submissions

1. The defendants submitted that Garry's evidence had not been seriously challenged in cross-examination, with the exception of the issue of the Maroubra Unit. Garry frankly accepted that he has a financial interest in the outcome of the proceedings. He continues to contribute to his parents' finances and is paying their legal expenses. However, none of this is a reason to find that he was not a credible witness.

Garry's credit - Conclusion

1. The attack on Garry's credit, such as it was, was essentially based on Garry having a financial interest in the outcome, but the same could be said of the plaintiffs. Garry presented in the witness box as a frank witness who was endeavouring to tell the truth. The Court accepts him as a witness of truth. However, with the exception of the 1999 Conversation, much of his evidence was peripheral to the essential factual matters genuinely in dispute.
2. In reaching this conclusion, it is necessary to say something briefly about the dispute between the parties concerning the Maroubra Unit. Garry's evidence was that he had bought the Maroubra Unit in March 1999 and had sold it "to free up funds" to assist in paying the settlement with CBA and CBFC. Chris' affidavit evidence was that he (Chris) "in May 1999, …sold the unit which I owned" (being the Maroubra Unit) and applied the proceeds to the settlement. Chris said he was the building manager of the relevant unit block, became aware of the Maroubra Unit and brought it to Garry's attention so he could "flip" it for a quick profit to apply to the settlement. Garry accepted that Chris had drawn the Maroubra Unit to his attention but otherwise denied Chris' version of events.
3. The Court accepts Garry's version of events and rejects Mr Insall SC's criticism of Garry on this point for two reasons: first, that the only contemporaneous records available (the transfers of the Maroubra Unit) on their face contradict Chris' assertion that the Maroubra Unit was his; and, second, because of the general view I have taken about Chris' credibility in the absence of independent evidence (see [182]).

Were the various alleged representations made?

1. Having set out the Court's findings as to credit, it is convenient to turn next to the question of whether the Court accepts the plaintiffs' case in relation to the various representations pleaded. In doing so, I pass over the 1985 Conversation because Mr Insall SC made clear that his clients did not contend that any rights which they now asserted arose from the alleged conversation. However, I note for completeness that applying the Court's findings as to credit has the result that were a finding necessary, the Court would not accept that the 1985 Conversation occurred as alleged.

Did the 1986 Conversation happen?

1. George's affidavit evidence of the 1986 Conversation was: "63. In about early July, 1986 I had a conversation with both Defendants. I said to both of the Defendants: "We are getting the property at half price. You have only got the property through my connections. You have got to agree that this is a nest egg for me and my brothers for the future. Also what a great image to own a home that was built by a former Prime Minister of Australia, Mr Frank Forde." The Defendants each said words to the effect: "Everything is all okay. Everything is good. Yes of course it is." In late 1986, I said to the Defendants: "It is going to take a lot of work to renovate the Redmyre Road Property. Everything will need to be replaced and there needs to be extensive landscaping in due course. I will have to sell a property to help fund the renovations." The First Defendant said words to the effect: "Yes of course you will but you are doing it for all of us and you have an interest in the property." 64. As a result of the conversation in the last paragraph, I assumed that the Redmyre Road Property was to be acquired and held by the Defendants as a nest egg for me and my brothers and that we had an interest in the Redmyre Road Property."
2. Emanuel's affidavit response to this evidence was: "77. I deny the conversations in paragraph 61 to 63 of George's Affidavit. George never negotiated the purchase of Redmyre Road. The discussions were always between Mr Zion and me."
3. It is not necessary for the Court to resolve the dispute in the evidence about how the Property was brought to the attention of Emanuel and Koula or whether the purchase price represented the market price. The 1986 Conversation is completely uncorroborated. As such, given the Court's findings as to George's credit, the Court is not satisfied on the balance of probabilities that the 1986 Conversation actually occurred. Because of the Court's findings about Emanuel's credit, the Court's conclusion about the 1986 Conversation does not depend on giving any weight to Emanuel's denial.

Did the 1988 Guarantee Conversations happen?

1. George's affidavit evidence of the 1988 Guarantee Conversations was: "70. At the time of executing the Guarantee dated 21 March, 1988 at Tab 18 of Exhibit "GP1" and just before the settlement referred to at Tab 19 of "GP1", I had a conversation with the Defendants and said words to the effect: "We are signing this because of our interest in the property. We are protecting our interest in the property which you said we could have." The Defendants said words to the effect: "Yes, it is all okay, that is what you are doing." I said words to the effect: "Because Chris and I are working hard for the property all of the time, we should have a major interest in the property as opposed to Garry's interest." The Defendants said words to the effect: "Yes of course. Garry is seven years younger. He cannot contribute to the property the way you are." I said to the Defendants: "Chris and I should get 40% and Garry 20%." The First Defendant said: "Yes, everything is OK. I know what I am doing." I repeated to the Defendants: "40:40:20 to Chris, me and Garry, right?" The Second Defendant then said: "Yes, all is good. I trust you because you have a lot of talent in building and you did a good job at Albyn Road, Strathfield." On a separate occasion at about this time in my presence, the Defendants said to the Second Plaintiff: "Without signing the guarantees, we can't get any loans and we won't be able to run the business and extend the house because we do not have enough income or security to do it by ourselves." Shortly after this, the Second Plaintiff in my presence had a conversation with the Defendants in which he said to the Defendants: "We are signing the guarantees because the house will one day be ours." The Defendants said to the Second Plaintiff: "Yes that's right." 71. As a result of the conversation in the last paragraph, I assumed that the Redmyre Road Property was to be held thereafter by the Defendants for me and my brothers and that the Second Plaintiff and I would thereafter have a 40% interest each in the property, with our younger brother Garry having a 20% interest in the property."
2. Chris' affidavit evidence of the 1988 Guarantee Conversations was: "34. At the time of executing the Guarantee, the First Plaintiff had a conversation with the Defendants at a time shortly and in my presence before signing the guarantee in which he said words to the effect: "We are signing this because of our interest in the property. We are protecting our interest in the property which you said we could have." The Defendants said words to the effect: "Yes, it is all okay, that is what you are doing." The First Plaintiff said words to the effect: "Because Chris and I are working hard for the property all of the time, we should have a major interest in the property as opposed to Garry's interest." The Defendants said words to the effect: "Yes of course. Garry is seven years younger. He cannot contribute to the property the way you are." I recall the First Plaintiff speaking to the Defendants in my presence in the kitchen around this time. The First Plaintiff said to the Defendants: "40 for me, 40 for Chris and 20 for Garry. That is how it should be." Both Defendants then said separately: "Yes of course. That is how it should be." On a separate occasion at about this time, the First Plaintiff said to me: "Without signing the guarantees, we can't get any loans and we won't be able to run the business and extend the house because our parents do not have enough income or security to do it by themselves." Shortly after this I had a conversation with the Defendants in which I said to the Defendants: "We are signing the guarantees because the house will one day be ours." The Defendants said to me: "Yes that's right." On the basis of this conversation, I assumed that the Defendants would hold Redmyre Road Property for me and my brothers and that the First Plaintiff and I would have the major interest in the property as opposed to Garry's share. On the basis of this conversation I entered into the Guarantee."

Did the 1999 Conversation happen?

1. George's affidavit evidence of the 1999 Conversation was: "89. The Defendants had no cash to pay the judgment referred to in paragraph 86 above and no ability to borrow money to pay the judgment. As of 1999, the Defendants owed, in addition to monies for the judgment, the sum of $155,000.00 to Citibank. I along with the Second Plaintiff organised a payment of the First Defendant's judgment debt and refinanced the Citibank loan through St George Bank with the Second Plaintiff and Garry Pavlis becoming guarantors. I did not become guarantor because I had by this time married Iris and I did not want her to know that I was going to guarantee the Redmyre Road Property. I did not want to create tension in my marriage. I continued to work on the Redmyre Road Property despite this also causing tension in the marriage. 90. At the time of paying the First Defendant's debt in early 1999, I had a further conversation with the First Defendant in the presence of the Second Plaintiff and Garry Pavlis. I said to the First Defendant words to the effect: "Without Chris, Garry or I being guarantors, we would have to sell the house because you are not earning any income and you are both on pensions. Because the house isn't finished, we would not get good money for it either. You now need to honour the agreement that Chris and I get most of the property because there is still a lot more work to be done." The Defendants said words to the effect: "Yes of course. We will sort this out later. Who else will get it? Of course it will go to you boys." 91. As a result of the conversation in the last paragraph, I assumed that the Defendants would honour the agreement made in 1988 under which the Redmyre Road Property was to be held by the Defendants for me and my brothers and that the Second Plaintiff and I would thereafter have 40% interest each in the property, with our younger brother Garry having a 20% interest in the property."
2. Although George says the 1999 Conversation was in the presence of Chris, Chris' affidavits made no mention of it.
3. In his affidavit evidence, Emanuel does not deny George's account of the 1999 Conversation although nothing turns on this. He does say: "These proceedings are the first time I have heard that George and Chris are claiming an interest in" the Property. The 1999 Conversation is denied in the amended defence and Emanuel denied it in cross-examination (Tcpt, 9 November 2020, p 468(8-20)).

The plaintiffs' case based on their contributions

1. The same outcome applies to the plaintiffs' case based upon the contributions which they made to the improvement of the Property by reason of the further factual and legal conclusions which follow.
2. Viewed in its totality, the evidence makes clear that George was the driving force behind everything that has led to this litigation, including on his version (although the Court does not find it necessary to resolve) being the person who introduced the Property to his parents. His dominant role was neatly expressed in his self-description of "manager" in the document set out in [124] of what he represented to banks to be the "Pavlis Family Business" which was centred around property development but included the importing business of Ideal. He was assisted in this by Chris. That dominant role also appears in what evidence there is about the conduct of the Bank Litigation (see [129], [130] and [142]).
3. This conclusion of George's dominance is consistent with, but for obvious reasons does not depend upon, George's version of each of the representations asserted by him on behalf of the plaintiffs. They have not been accepted as fact by the Court. Nevertheless, it is revealing that George, on his own version of those alleged conversations, portrays himself as their unequivocal instigator, with Emanuel and Koula's alleged responses barely amounting to more than acquiescence or passive agreement. George's versions of these alleged representations are at least insistent and could reasonably be viewed as aggressive or bullying.
4. Not least because of their limited formal education and English language ability (with no disrespect intended), Emanuel and Koula were, at best, passive participants in and indirect beneficiaries of George and Chris' activities. At worst, if George's evidence in the Bank Litigation is to be believed, they were the victims of being used and disgracefully deceived by George - but it is not necessary for the Court to make any finding about this and no such finding is made.
5. While George and Chris may have represented, and even persuaded themselves, that they were engaged in the "Pavlis Family Business", they were the immediate beneficiaries of that business through the activities of P & S Aust and, to a lesser extent, P & S. Emanuel and Koula had no legal entitlement to any benefit from George and Chris' development activities and, as George admitted in cross-examination, none of the financial transactions which actually precipitated the Bank Litigation were for the benefit of Emanuel and Koula. Whatever Emanuel and Koula may have received was literally in the gift of George and Chris.

Five miscellaneous matters

1. In reaching these conclusions, and for completeness, I record five other matters.
2. First, I am fortified in these conclusions by what I consider to be very telling - and the Court accepts as truthful - evidence given by George at the conclusion of his cross-examination (Tcpt, 4 November 2020, p 252(47)-254(6)): "WAUGH: I'll try and break it down, sorry, thank you. I want to ask you about when you were doing the stage 1 renovation works at Redmyre Road, when you were involved in doing work there, all right? WITNESS: Yeah. WAUGH: What I want to suggest to you is, had you stopped to think about then why you were doing that work and what you expected to get out of it, it would have been this - do you follow me so far? WITNESS: Little bit. WAUGH: What don't you follow? WITNESS: Keep going. WAUGH: It would have been this, that you thought, and it would have been in your own private thinking, all right, something like this: you might have expected it was that one day you would inherit a share of your parents' estate; do you agree with that? WITNESS: That's why we're doing it. WAUGH: And that's all you expected when you were doing that work at that time, wasn't it? WITNESS: Inheritance, like, not the two and a half per cent. WAUGH: Inherit a share of your parents' estate, that's what you were expecting? WITNESS: That's correct, yeah, expect to share, that's right. WAUGH: The same applies for the work you did on stage 2 of the renovations; is that right? WITNESS: Correct. The scenario's very easy. After death it was always promised. Three brother, being the elder brothers, that extra percentage extra and that's it. It's very simple mathematics and that's what everyone else done in, with his brothers and sisters. HIS HONOUR: Would you be fighting if the will simply divided the estate one third, one third, one third? WITNESS: With respect, your Honour, if Garry was a similar age I'd say, look, we were in the brunt of things. We all copped it one way or another our grievances and costs whatever. Being the eldest brother I feel that we've, we've got to get that extra bit, not out of greed but out of principle, out of the hierarchy system, and that's why, which I believe that's where the equity is in our culture, first son in particular, but because Chris and I were one year apart we've really copped a lot of the brunt and, as I said, I don't see anything - because we've paid for it. If we never did anything and never worked - HIS HONOUR: I understand. WITNESS: Yeah. HIS HONOUR: I'll stop you there, because I think you're going to tell me things you've already told me. WITNESS: Yeah, I'm sorry about that but - yeah. HIS HONOUR: Is it then not so much expecting a share of the estate but expecting what you consider to be a fair share of the estate? WITNESS: A fair share, because any, part of an estate could be 2%. Yeah, you're given a state (as said) but that's - I didn't do this for two and a half per cent. Well, actually I never got even anything in that will. It's passed to my son at 25, like three years - HIS HONOUR: Yes, thank you."

Conclusion

1. The proceedings will be dismissed. Subject to any application any party may wish to make, the plaintiffs will be ordered to pay the defendants' costs.

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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. Decision last updated: 02 September 2021