Radonich v Radonich & Anor [1999] WASC 165

Radonich v Radonich & Anor [1999] WASC 165 | Case summary | Zoe

[61]

20 I am not persuaded, however, that the expenditure was met by George personally. There is no independent evidence. George's account seems quite inconsistent with the general effect of his and other evidence as to the financial stringency experienced by George during this period and the poor financial provision made available to him (and others) by the father even after George married in 1964. It is also the general effect of the evidence that the father's role as head of the family led to him having effective control of the family business, especially the finances, while he was alive and also a substantial influence over the respective affairs of the members of the family. It appears from George's own evidence that he received only small amounts of what may be best described as pocket money for his work, both before and after his marriage in 1964, although the family market gardening business met all the ordinary expenses of his living and personal costs. This is borne out by the evidence of Boris which indicates that he was similarly treated until after the father's death when Boris was put on a regular wage for the first time. It is also the effect of Gloria's evidence that, from the time she had contact with the books of the family market gardening business when she married George in 1964, expenses in respect of Rowley were met by the business. It is also consistent with the father's observations to Gloria in 1964 to the effect that "we also have a block at Jandakot" (Rowley) and "George and I have some turnips growing there". Having regard to all of this, it appears to me to be more probable than not that after John left in 1957 and during his father's lifetime George found it convenient, if indeed he thought about the matter at all, to deal with Rowley on the basis that the development and cropping undertaken on Rowley was undertaken as an aspect of the family market gardening business and that the costs in respect of Rowley were met by the father from the resources of the family business. So, too, it is more likely than not that any returns from Rowley were received by the family business.

[82]

41 There was evidence from both John and George that following their father's death there was a discussion between the brothers about the future. On John's evidence, but contrary to George's evidence, their mother participated. Boris did not. It was the effect of John's evidence that he knew it was his role as the eldest son to take on the responsibilities previously carried by his father, especially of managing the family business and looking after his mother. While he knew that to be his responsibility he was not eager to accept it, especially as he considered he had not yet proved himself. His trucking venture had been a failure and he was just starting to get established in construction. Hence, he was greatly relieved when George made it clear that George was willing to take on that role. He readily accepted George's offer to take on the responsibilities, in effect, of head of the family. As a consequence John felt free to return to the East and he did so to continue in the construction industry. At the time it was expected that the three sons would share in their father's estate by each taking one of the three Rockingham Road properties, and John's evidence was that he told George and his mother that George could continue to have the use of his anticipated inheritance of one of the Rockingham Road properties to continue to conduct the family business as it had been previously conducted by their father. Although not expressly mentioned it was implicit in this that he might also continue to have the use of Rowley for the same purpose. Although not expressly spelt out it was his understanding of the previous use of the Rockingham properties and of Rowley that the family business should have the profits, but meet the expenses, of doing so. Nevertheless, John's evidence was clearly to the effect, once again, that he did not turn his back on the family business or suggest to George that he had no interest in it, or in any of the properties, and he did not say or imply that he renounced any interest he had or might be entitled to in any of the properties in favour of George.

[92]

50 It is convenient to mention at this point the matter of the probate and estate duties payable in respect of the death of the father. George and Gloria gave evidence that they had met these duties personally. George put the duties about $16,000 and he stressed that it took four years of hard work and financial stringency for them to meet this expense. Significance was attached to it as these duties were an expense in respect of the whole of the estate, including Lot 17 Rockingham, and that John made no financial contribution. Thus it was contended for George that the payment of the duties could be seen as some confirmation that it was George's and John's expectation that George was in truth to have the benefit of Lot 17 Rockingham. George said he paid the duty because he thought the properties would be his. Further, it was another factor which might weigh in favour of the fairness and equity of George now enjoying the full proprietary interest in Lot 17 Rockingham. It is accepted that John made no contribution to the payment of the duties or to any of the expenses of the administration of the estate. I accept from the evidence that the duties totalled in the order of $10,000, not $16,000. There were undoubtedly legal fees as well, but the evidence does not establish their amount. I note, however, that there was over $8,000 in cash in one of the bank accounts of the father at the time of his death and it is clear that during the period of the administration of the estate income was being earned by the estate. While these issues were not fully explored during the trial I am not able to find that it was necessary for the whole of the amount of the duties payable to be found from outside the estate. In substantial part they could have been met by the estate itself. Indeed it is the effect of one of the terms of the deed of family arrangement that the funds in the estate were expended on duties and the expenses of administration. Further, the duties were in respect not only of Lot 17 Rockingham, but of all of the Rockingham properties including Boris' lot, and all of the Churchill properties which passed to their mother, as well as the other assets of the estate. These matters detract significantly from the force of the arguments that were sought to be advanced in support of George's case from the payment of the duties.

[98]

56 In 1978 George built a new home for himself and his family. He built this on Lot 16 Rockingham which is the Lot which became his under the terms of 1974 deed of family arrangement. The original family home built by the parents is also on Lot 16, but toward the boundary with Lot 15 (Boris' land). There was difficulty accommodating the house design, which George and his wife Gloria desired, on the Rockingham Road frontage of Lot 16, in the space left between the original family home and the boundary with Lot 17. The plans presented to the local authority for approval for the new home showed the minimum required setback of the north side of the house from the boundary with Lot 17. In fact, however, as constructed, the home is nearer the boundary than the plans indicated. It is, however, constructed entirely on Lot 16 even though to achieve this the house has had to be cramped close to the old family home and built closer to the boundary than the plans indicated and the by-laws would permit. At some time or other George then built a fence on the northern side of his house, there not having been such a fence before then. A survey reveals that this fence was erected in fact on Lot 17. The position of this fence creates the impression that the house is setback from the northern boundary of Lot 16 by the required amount, ie in accordance with the approved plans whereas, in truth, the fence but not the house has encroached on to Lot 17. Even so, the new house is built so that it is as close to the old home as the building by-laws allowed and the new home may be seen to have been squeezed into the available frontage space on Lot 16. While George sought to assert that his encroachment with the fence demonstrated his then belief that Lot 17 was his and not John's, George was not able to offer any satisfactory explanation for the lengths gone to accommodate the new home within Lot 16 by the means I've described if, as was his firm belief on his evidence, he had available to him the whole of the immediately adjoining and equally desirable Lot 17 by virtue of John's abandonment of his interest in Lot 17 in favour of George. In my view of the evidence, had that been his honest belief at the time, at the least George would have raised the matter with John to explore the possibility of securing the transfer to him of Lot 17, or he would simply have built the house on Lot 17 rather than cramp the house and mislead the local authority. It is to be noted that this was the same year that George built the shed on Lot 17 Rockingham. On his evidence he built the shed in the belief and on the basis that Lot 17 was his. Yet his approach in the matter of the house was quite the opposite. The misleading plans persuade met that George did not honestly encroach with the fence onto Lot 17 as he asserts. I would record that George's apparent discomfiture as he was tested about this matter in cross-examination, which was in contrast to John's demeanour as he dealt with this matter, has played a significant part in my assessment of the truth about this matter, as is also the case with the several other matters in respect of which I mention in these reasons that I have come to prefer one version of the evidence over another as a matter of personal credibility.

[115]

73 John came to Perth in 1989 or 1990 for the wedding of George's daughter and in each of the years 1990-1992 there were visits to Melbourne by George and various members of his family. They visited John and Yvonne on each occasion, some of George's family staying with John and Yvonne. George places significance on a conversation with John during one of these visits. He described a social discussion, which included friends, in which John described in very favourable terms how well he'd become established in his affairs and in which George described the financial difficulties he was experiencing with the family market garden business and set out his plans for the future development of the business including its use of the three properties. On George's account John made no comment, showed no interest and raised no objection to any of George's views about the use of the properties. This helped to reinforce in George's mind, on his account of what occurred, that John continued in his position that he had no interest in any of the properties and that George could do with them as he wished. John recalled that occasion but on his evidence had understood the import of what was being said by George quite differently from George's evidence and did not see in what was said by George any occasion or reason to understand that George was regarding any of the properties as his own or to raise any such issue. Milenko Mihaljevich was among those present. He recalled some discussion of John's affair and George briefly putting a more gloomy picture of the position of the business in Perth. He did recall that at one stage John had said to the effect that he wouldn't be coming back to WA but otherwise his evidence on this matter did not assist to resolve the differences between the evidence of John and George about this meeting. At this time John was in good work in the construction industry, which may provide some explanation for some comment concerning his intention, at that time at least, to say in Victoria. I am not able to accept from the evidence concerning this incident that it presented an occasion on which it was reasonable to expect that if John maintained a claim to any interest in any of the three properties it was to be expected that he would publicly assert it, nor that there was in effect a clear assertion of or claim by George to the effective ownership of the three properties (sole ownership in the case of Rowley), such that by his silence it might be thought by George that John was acquiescing in such an assertion or claim. The evidence does not demonstrate that this was an occasion which could reasonably have been understood by George as giving rise to any such inference.

[128]

85 With regard to the rezoning and subdivision issues, however, the position cannot be explained away. It is clear from the evidence that these activities had not been disclosed by the defendants to their solicitor until the preparation for this trial was well underway. Even then their solicitor came upon an aspect of what was occurring in relation to Rowley almost by chance. There followed a confrontation between George and the solicitor, as the solicitor well appreciated that this conduct appeared to materially contradict his instructions. The solicitor was, in the end, called to give evidence at the trial. I am satisfied that George then persuaded the solicitor that these matters had long ceased and had only been undertaken as strategies to dissuade the planning and zoning authorities from rezoning the Rockingham Road properties as part of a proposed school site, and from rezoning Rowley for a water or marine park and/or a regional highway. I am persuaded that each of these possibilities had been real and that in respect of each of the pieces of land there had been developed by George, along with his planning advisers and in the case of Rockingham with his neighbours similarly threatened, a strategy of trying to improve the zonings of the two holdings so that the public authorities would be persuaded to turn their attention to less valuable land for these public purposes. But I am also satisfied on the evidence that this was only part of the story. The rezoning and subdivisional proposal for the Rockingham properties was actively pursued, and significantly further developed at considerable expense to George, well after the threat of a school rezoning had been removed. Indeed, I am satisfied George was still pursuing this when the defendants' solicitor confronted him over this very issue and that he deceived the solicitor and persuaded him it had been a mere strategy and was a thing of the past. The evidence persuades me that, despite George's denial, he was active in developing the subdivisional proposal until September 1998, and that he only stopped the planning advisers then because he was concerned that if that activity became known it would harm his prospects in this action. With respect to Rowley the evidence reveals the position to be much the same, although less dramatic, and that George deceived the solicitor into the belief that this too was a thing of the past and had been merely a strategy. As will appear I am persuaded that George was activated by personal interest in these matters.

[140]

97 In the course of these reasons I have recorded some findings about particular factual issues which findings have been made on the basis of the particular evidence and the credibility of John and George as it impressed me in respect of those issues. It remains essential, however, to deal with the fundamental difference between John and George which is at the heart of this case. Some circumstances stand out, in my appreciation of the facts, as particularly material and informative on the issue of their credibility on the fundamental difference between them. Most significantly, there are the two deeds of family arrangement, one in 1974 and the other in 1984. Their terms are quite inconsistent with the general effect of the position for which George contends that, at all times since 1957 and in particular following the death of their father in 1970 and their mother in 1982 and at the time of the deeds in 1974 and 1984, John remained entirely disinterested in the family business and the family properties and wanted nothing to do with them and consistently held to the position that all his property interests and entitlements were George's for George to do with them as he wished. The attempts by George to explain the two deeds of family arrangement as merely something that he understood from the two different solicitors to be a necessary legal formality to wind up the estates, as each of the sons had to share in the disposition of the parental estate, is not supportable as a legal proposition. It is not credible that two different legal practitioners, one for the 1974 deed and one for the 1984 deed, should have given such advice had John's position been put to them by George, who instructed both solicitors. The only explanation is that George did not instruct either solicitor about what he insists was John's clearly expressed attitude. The most probable explanation for this, in my finding, is that George did not then understand that to be John's attitude. Further as a matter of personal credibility, George left me entirely unconvinced that in 1974, or 1984, he genuinely held that view, or that he now does so. I found his evidence in these respects unsatisfactory, both as to its content and the manner in which he gave it.

[143]

100 The evidence concerning George's efforts, particularly between 1995 and the time of trial, with respect to the zoning and subdivision of the Rockingham Road properties, the zoning of Rowley, and the dealings with his bankers, also tell against the credibility of George in significant respects. In my view George was evasive and at times deceptive, both pre-trial and in his evidence, about the zoning and subdivision affecting the Rockingham Road properties and about the zoning of Rowley. Despite his evidence, which was adamantly to the contrary, I am persuaded that he was pursuing each of these, at least in part, against the possibility that he would either come to some satisfactory arrangement with John by which he would secure title to these properties, or that he would succeed in this action. I am further persuaded that, contrary to his evidence, George does not regard Rowley and to a lesser extent the Rockingham properties, as still necessary to retain in the long term interests of the family business and that he would be prepared to sell these, if they were his, when an appropriate opportunity presented itself. I am further persuaded that he deliberately mislead his solicitor about the zoning and subdivisional plans for Rockingham and the zoning of Rowley when the solicitor first learnt of these and confronted George about them. Not only do these matters effect adversely the credibility of George, it should be noted that those issues of credibility are in respect of matters that provide an insight into George's motivation in respect of this action. He strenuously insisted in the course of his evidence that he would never dispose of any of these properties, were they his, and that his fundamental objective is to maintain the properties (or at least Rowley and Lot 17 Rockingham) so that the family market gardening business can succeed and also so that all three properties can be retained for the benefit of the family in the future. The view I take of the truth of George's activities in these matters is that his motivation is, more probably than not, to seek to secure these properties so that he personally can secure the very substantial financial gain which would be his on the sale of each of them, especially if rezoning and subdivisional prospects are realised.

[241]

152 Given what transpired in that conversation, which I have considered in greater detail elsewhere, the following matters stand out. John and George were not strangers and were not dealing at arms lengths. The central issues discussed were the distribution of the father's estate and the future conduct of the family marketing business and John's role in that, but with an underlying concern to ensure the future maintenance and wellbeing of their mother. John felt a clear obligation to abandon his career in the East and return to accept the responsibility expected of him as eldest son, particularly to ensure his mother's wellbeing and the future management of the family market gardening business. I accept he was reluctant to do this but, nevertheless, I am persuaded on balance he would have done so had this been necessary. George, on the other hand, was keen to assume control of the family market gardening business in place of the father. He had been engaged in this business all his life and was prepared to accept the responsibilities which went with that, including the maintenance and wellbeing of their mother. While the additional labour of John in the family market gardening business would have made life easier, it would have resulted in a significant diminishment of financial return to George. Hence it suited George to offer to step into his father's shoes and to assume the primary management of the family market gardening business and the care of their mother. John was relieved to accept George's offer as it left him free to continue his preferred career. John offered George the use of John's prospective share of the Rockingham properties to facilitate the continuance of the family market business for the time being, which George in turn readily accepted. I am satisfied that no term for the use of John's prospective inheritance was considered or agreed, neither was the payment of any rental considered or agreed and of course none has ever been paid. There was never any written agreement nor was one ever contemplated. As the mother was the administrator of the estate her concurrence in this arrangement during her administration was implicit in what occurred. For relevant purposes the conversation did not go beyond these matters. In particular there was no specific discussion of Rowley, it being apparently assumed, in my finding, that it would continue to be used and managed as it had been since 1957, except that now George would be in sole day to day control free of the influence of their father.

[246]

157 Having regard in particular to these circumstances I am unable to accept that John and George in their dealings re Lot 17 ever contemplated the establishment of any formal legally binding relationship. They dealt as brothers with a strong sense of family responsibility and with a concern for the wellbeing of the whole family, especially their mother. John felt a great sense of responsibility and of guilt that he did not step into his father's shoes as was expected of the eldest son. He was relieved that George was in effect willing to assume that responsibility and was therefore willing to facilitate George in doing so by enabling the family market gardening business to continue for the time being as it had under their father's leadership. To this end he was prepared to have the family market gardening business have the use of his expected inheritance, which became Lot 17 Rockingham, as well as Rowley, and the family market gardening business thereafter under George's leadership continued to use it as the business had until the father's death. These circumstances are quite compelling in my view as revealing that John and George found a convenient family arrangement which suited their separate concerns at the time and in the interests of the family were content to conduct their affairs with regard to Lot 17 Rockingham and Rowley accordingly. The whole point was to enable the family market gardening business to have the returns from Lot 17 for the benefit of the family in Perth, including their mother, and to keep intact the family market gardening business as it had been. At that time John was prepared to forego any personal return from his properties for the time being to facilitate these family purposes. The motivations and actions of John and George, in these circumstances, are not to be measured and judged reliably merely according to the conduct of strangers or of persons engaged in commercial dealings with respect to land. A number of decided cases, including Hill v O'Brien (supra), Errington v Errington & Woods (supra), Hardwick v Johnson [1978] 1 WLR 683 at 688; Wood v Brown [1984] 1Qd R 593 cf 607 - 609 provide an illustration of the relevance of the circumstance that parties were dealing with each other by way of family arrangement or even merely as personal friends. Decisions such as these illustrate how family arrangements may well need to be judged in a different light and how the nature and purpose of the family arrangement may well be persuasive against a conclusion that legally binding obligations were contemplated or created. This is not a case where there is any direct parallel in any of the decided cases to which I have been referred, nevertheless, the facts of this case are in my view quite compelling as to the fundamental significance of the desire of both John and George to further family interests by their arrangements with regard to the use of Lot 17 Rockingham and Rowley.

[295]

196 While the defendants have unquestionably expended in total quite an amount of money and a considerable amount of effort in respect of the properties over the years, including much of the sums identified in the evidence of George and Gloria although in my finding not all of them, it is apparent that much of that expenditure was necessarily incurred in respect of achieving the production which the family market gardening business has had from the use of Rowley and Lot 17 Rockingham over the years, the profits from which have been retained in their entirety by the family market gardening business and so have benefited directly the second defendant and indirectly the first defendant. While the evidence does not permit any precise quantification it is my finding from the evidence that the defendants have benefited substantially from the use they have had of Lot 17 Rockingham and have, at least overall, benefited from the use they have had of Rowley. The evidence certainly does not establish the contrary. While Lot 126 Churchill had provided a useful regular financial return to the family business while it was let out and used for the quarrying of limestone that use had ceased before the 1984 deed of arrangement pursuant to which John became the registered proprietor. Since then Lot 126 Churchill has not been generating income and in fact some expense has been incurred in respect of it by the family business, and hence indirectly by the first defendant, before the formation of the second defendant, and by the second defendant since then. This involved the completion of the filling-in of the quarry which had spread over all the Churchill properties. That work had been at least substantially complete before the 1984 deed, while the land was still owned by the mother. Even then the work appears to have been undertaken under the auspices of George and at the expense of the family market gardening business. While Churchill has not in fact returned any income for the defendants since the 1984 deed, and there has been some expenditure in respect of it, it has nevertheless suited George to retain the four lots. In my view this found expression in George's comment to John in 1993 to the effect that there was the prospect of a better return on realisation if all the lots were retained than if individual lots were sold. I am satisfied, however, that if one considers overall the three lots in question in these proceedings, both the second defendant and indirectly the first defendant have benefited significantly financially from John's preparedness to allow them to be available to be used by George for the purposes of the family market gardening business as George considered appropriate.

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Judgment (297 paragraphs)

Radonich v Radonich & Anor [1999] WASC 165 (13 September 1999)

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