Smilevska v Smilevska

Credibility of Witnesses

1. Neither Gorica nor Mitre gave oral evidence at the main hearing. Their affidavits were read but their credibility was not challenged by cross-examination. But they both gave evidence in this hearing concerning issues of final relief and costs.
2. Gorica was a reasonably reliable witness. She was firm in the views she expressed. She is generally to be believed. She said strongly that she did not want to sell the Port Kembla property to defeat Temjana's claim. The Court accepts that evidence.
3. Mitre Sarafoska was also a reasonably reliable witness. He had a fair command of English. I accept he did not need the money from the sale of the Port Kembla property for himself. He seemed genuinely to be of the view that (i) a deposit of $200,000 was always needed for the nursing home and (ii) that no one within the family was prepared to fund the difference between Blaguna's pension and her nursing home fees.
4. The Court found Temjana much as it did before: a generally reliable witness. But not all of what she said was accepted. Temjana's statement that she "had many little savings" is not to her discredit and is perhaps consistent with the fact of her having saved $20,000 that was pre-committed to paying her legal costs.

The Final Relief Issues

1. The Court's second judgment reserved for further consideration some questions relevant to the form of final relief to be granted. The Court indicated that after the plaintiff's success on her proprietary estoppel claim that the declaratory relief Temjana sought "is appropriately moulded to give effect to the expectation created in Temjana" and is "not out of proportion to the detriment suffered and "should be granted": second judgment at [140]. But the Court identified that "there may be issues as to whether any part of the value of the Port Kembla property can be used for Blaguna's benefit during her lifetime": second judgment at [141]. And the Court's preparedness to make a declaration in the terms Temjana sought was left "subject to any further submissions about the exact form of relief necessary to reserve some financial benefit for Blaguna from the Port Kembla property whilst she was in the nursing home": second judgment at [168]. At the hearing in November 2016 the parties took advantage of the Court's reservation of further consideration of this issue and put their submissions as to the form of final relief, which are considered here.

Additional Findings in relation to Final Relief

1. The final relief considered in these reasons raised new contests and required findings that were not already included in the Court's first and second judgments. Those additional findings are set out in this section.
2. Decisions made in 2014 and 2015. It is common ground that the solicitors acting on behalf of Gorica and Mitre sent a letter of demand to Temjana on 4 August 2014. That letter pointed out that as Blaguna's health had deteriorated she could no longer care for herself, and neither could Gorica. The letter concluded that "as a result Mrs Smilevska must be placed in a nursing home". The letter then reasoned that "this means that…[the Port Kembla property] must be sold in order to pay the accommodation costs of the nursing home for Mrs Smilevksa. We can indicate that these costs are very high". The letter concluded with a demand that Temjana vacate the Port Kembla property within 28 days.
3. The thrust of Gorica's evidence, which the Court accepts, is that she had been told that the costs of accommodation for the nursing home for Blaguna were "very high". Gorica said in evidence, "they were asking for $200,000 to be submitted to the nursing home and to confirm that she owns the house also". The figure of $200,000 that Gorica remembers is close to the refundable bond amount that Mr Johnson ascertained was the bond that would have to be lodged with the Wollongong Nursing Home (of $190,000) to avoid the payment of an ongoing daily accommodation fee.
4. Gorica and Mitre were heavily cross-examined to suggest that the $200,000 bond would not have to be paid if Blaguna was entitled to a concession under legislation covering admission to nursing homes. But Gorica continued to deny that she was aware that the $200,000 would not have to be paid. Indeed, the plaintiff's solicitors wrote to Gorica's attorneys on 11 August 2014 saying "we maintain Mrs Smilevska can enter a nursing home as stated in our letter of 11 August 2014 without the need to sell her home". But so far as Gorica was concerned, what Temjana's lawyers were telling her did not have the same effect as what the nursing home was telling her and Blagoja: that unless the $200,000 was submitted "we have to pay something extra" by way of a daily accommodation fee. In my view, a proper interpretation of Gorica's and Mitre's evidence on this subject is that they believed what the nursing home was telling them: that the accommodation fee was required. Moreover, the Court does not accept that Gorica or Mitre filled out forms applying for Blaguna's admission so as to deliberately incur the accommodation bond, or RAD, as it is known. Nor in my view was this some elaborate artifice on Gorica and Mitre's part to incur the fee so that they would have to sell the property to defeat Temjana's caveatable interest.
5. In order to ascertain whether Blaguna was required to pay any accommodation fees at the Wollongong Nursing Home, it was necessary for Mitre and Gorica to complete a DHR form for a "Permanent residential aged care combined assets and income assessment" in respect of Blaguna. They did so on 3 June 2015 and their application resulted in a determination that an accommodation bond was payable such that the Wollongong Nursing Home's demand for what Gorica recalls was about $200,000 was in accordance with the resulting determination, according to the DHR form that had been filled out.
6. But Temjana's case was that Mitre and Gorica had not taken advantage of an exemption to the requirement for the accommodation bond that may be available to Blaguna.
7. Mitre and Gorica left blank questions 66 and 67 of the DHR assessment form. Question 66 asked whether at the relevant date of going into the nursing home, Blaguna had "a carer who was eligible to receive an income support payment from Centrelink or the Department of Veterans Affairs" and who had been living in the home with the aged person for two years. The form points out that a carer's allowance is not an income support payment. Question 67 also asks whether the applicant had a close relation "who was eligible to receive an income support payment from Centrelink or the Department of Veterans Affairs" and had been living in the home for up to five years.
8. The DHR records in evidence include a log of communications between DHR personnel and applicants for these assessments. I infer from this log that Mitre was contacted by a DHR officer and advised that officer that "all of questions 65 to 68 are no", and he also confirmed that Blaguna's assets were only her home and savings account, and she had no other assets or income. I accept this is what Mitre said. But I also accept that both Gorica and Mitre believe that to be true.
9. Mr Thomson of counsel helpfully took the Court through the calculation of residential care subsidies under the Aged Care Act 1997 (Aged Care Act), Part 3.1. The whole scheme of the legislation need not be set out in these reasons. But the Aged Care Act provides in Subdivision 44 - D the method for calculation of residential aged care subsidy, at least. It certainly seems quite arguable on Mr Thomson's analysis that it was open for an applicant in Blaguna's position to argue under Aged Care Act, section 44.26A(6) that the value of her home should be disregarded for the purposes of calculating the residential aged care subsidy because a close relation of Blaguna, namely Blagoja, had occupied the home for the last five years and was a person eligible to receive an income support payment throughout that period: Aged Care Act, s 44.26A(6)(c).
10. But if Mitre and Gorica failed to take advantage of this arguable exemption, in my view it was not deliberate. Having assessed them as witnesses, I reject any argument that they were engaged in some exercise of knowingly or recklessly failing to claim an exemption available to them. Yes, Temjana was arguing that an exemption was available, but they were receiving contradictory information from the nursing home itself. There is no clear evidence that they were deliberately ignoring their own legal advice on this subject. The legislation is complex. They were managing Blaguna in the nursing home; they were doing so at a distance. In the circumstances, it is not possible in my view even to infer that their decision to deal with DHR in the way that they did was unreasonable or lacking in good faith.
11. It was also put to Gorica that she wanted to have the house sold so that she could defeat Temjana's claim. But she firmly rejected this and said, the reason the house had to be sold was "so that my mother can be admitted to the nursing home". In my view that genuinely expresses her reasons for wishing to sell the home. In any event, the contention that the house was being sold to defeat Temjana's claim fails to deal with the obvious answer that it would not actually defeat Temjana's claim, because the claim could still lie in equity over the proceeds of sale of the house.
12. Application for Review to the Department of Human Resources. Mitre and Gorica have been attempting in recent times to reduce the accommodation fees payable by Blaguna. On 26 September 2016, SGB applied on Blaguna's behalf to the Department of Human Resources (DHR) for review of the existing determination that permitted Blaguna to be asked to pay the Wollongong Nursing Home's accommodation fees. As at the time of the hearing, DHR had received the application but had not yet completed the review. Under Aged Care Act 1997 (Cth), s 85-5 an application for review of a determination is deemed to be denied 90 days after receipt by DHR of the application if no determination has been made by them. At the time of the hearing, no determination had been made.
13. Calculation of Blaguna's fees for the Wollongong Nursing Home. The Kennedy Healthcare Group manages the Wollongong Nursing Home through a company Wollongong Nursing Home Pty Ltd. Inquiries initiated by Mr Ben Johnson, the solicitor for Blaguna, assist in understanding the break-up of the fees charged by the Wollongong Nursing Home, which is an Australian Government-subsidised aged care home. Blaguna first became a resident at the Wollongong Nursing Home on 4 August 2015, which is notified as her "permanent admission date".
14. Blaguna, like any resident admitted to an Australian Government-subsidised aged care home, must pay a basic daily fee which at the time of the proceedings was $48.25. This maximum basic daily fee payable is calculated to be 85 per cent of the single aged care pension.
15. Blaguna is also liable to pay an additional fee on account of her accommodation. But her accommodation payment fee is means and asset tested. The Department of Health, typically Centrelink, conducts a test for assets and income of a resident and then informs Wollongong Nursing Home whether or not it can charge this accommodation payment fee. Residents who have assets and income below the Department's threshold amounts are not required to pay an accommodation fee at all. But Blaguna is liable to pay the accommodation fee. Blaguna is able to pay her accommodation fee either as a daily fee or by depositing a refundable bond of $190,000. If the refundable bond, known as a refundable accommodation deposit (RAD) is paid, it is not accessed for other recurrent charges, but merely eliminates the requirement for the payment of a daily accommodation fee.
16. Meetings concerning Blaguna's care. Once Blaguna became hospitalised after August 2014, meetings took place at the hospital with the hospital social worker about what might happen with Blaguna when she was discharged. I accept Mitre's evidence about this subject. His account was credible and without serious challenge. He says, and I accept, that the social worker asked each of the family members present whether they were willing to take care of Blaguna, Blagoja, Temjana, Robert Smilevska (Temjana and Blagoja's son), Gorica and Mitre. I accept Mitre's evidence that Temjana and Blajoga both replied that they could not take care of Blaguna.
17. Whilst this may appear to contradict Temjana's previous long-term care for Blaguna, in my view the seriousness of Blaguna's medical condition and need for constant nursing care was such that Temjana accepted by then that she could not continue to care for Blaguna at home, especially with Blagoja. I accept that Mitre and Gorica did offer at that stage to take Blaguna up to Queensland to look after her, but Blaguna herself intervened, saying that "I don't want to move to Queensland, I want to live in my home with my son".
18. This presented something of a stalemate. Nor did any of the family members offer to contribute to the payment of Blaguna's nursing home fees. In reality, as attorneys and guardians this responsibility has now been left to Mitre and Gorica.
19. Blaguna's mental state over time. Temjana propounded a case that Blaguna was constantly confused and suffering memory loss over a long period of time, and that she was always disoriented and unclear where she was in both time and space, and by August 2014 was having hallucinations.
20. The court has already assessed Blaguna's mental state at the time of the trial. The whole of the first judgment is concerned with that subject. Moreover, the Court made further observations about the subject in the second judgment at [21], [54], and [109]. The Court certainly concluded that by December 2015 she needed a tutor.
21. But in my view it is not at all obvious just what her mental state was based, for example, on the medical records, at the time she went into hospital and when instructions were being taken to prepare the proceedings for hearing. I accept Gorica's evidence that although Blaguna has confusion and memory loss, that that was not the case all the time and she did know where she was, sufficiently to communicate her wishes to Gorica and Mitre.
22. The Court does not infer that Mitre and Gorica were aware that Blaguna was incapable of giving them instructions. The medical assessments of her certainly do indicate, that there were periods of time when she was very confused due to developing dementia which appears to have been first diagnosed at some level in 2010. An aged care assessment team (ACAT) report on her in August 2014 did indicate that at the time she was "very confused, disorientated and exhibits some downing behaviours and behaviours associated with worsening dementia", and that her family were unable to care for her. In a Guardianship Division application to the New South Wales Civil and Administrative Tribunal, her dementia was said to be first diagnosed in 2010. In May 2015, the Geriatric Registrar for the Illawarra and Shoalhaven Local Health District assessed Blaguna as "unable to cope at home", and requiring placement in a nursing home. But none of this really indicates that she did not have relatively lucid periods in which she could give some instructions for the preparation of this litigation.
23. Port Kembla Property Appraisals. Mitre and Gorica organised market appraisals of the Port Kembla property from real estate agents. The first, Dimosons appraised the property as having market value as at 1 September 2016 in the range $620,000 - $650,000 and attracting lettings at a market rent of $440 - $460 per week. The second, Wollongong Properties appraised the property as having a market value of between $680,000 - $720,000 and attracting lettings at a market rent of $400 - $450 per week.
24. Rent in the Port Kembla District. The solicitors for Blaguna, SGB, have sought to ascertain a range of weekly rental prices for one bedroom apartments in the Port Kembla area and its surrounding suburbs. They undertook an internet search, on www.realestate.com.au, which is of course only indicative. The search resulted in 16 search results with the highest weekly rental price being $430.00 and lowest being $150.00. The average of the prices from the 16 results was $278.44 per week.
25. This is for a one bedroom unit, not a two bedroom unit. If accommodation with separate bedrooms for Temjana and Zaklina were to be provided, it would be expected that a higher rental figure would be required.

Consideration of Final Relief Issues

1. On the question of appropriate relief, the factual findings below in relation to costs are also relevant and should be taken into account. The Court has clearly left open from the first judgment (paragraph [168]) the question of preserving financial benefits for Blaguna from the Port Kembla property.
2. In my view, consideration of the factual evidence is overwhelming that the combination of Blaguna's legal costs, Mitre and Gorica's legal costs and the possible accommodation bond and other outgoings and expenses for which Blaguna is liable will mean that she must resort to the Port Kembla property to defray her ordinary financial liabilities in the future. The detail of this evidence has only be available on the relief gearing in the full form that has now been presented and causes the Court to reconsider the appropriate form of relief .
3. The idea of the grant of lesser relief than the transfer of the property, with or without hardship is certainly open in these cases: see Giumelli v Giumelli (1999) 196 CLR 101 at 125 [50] and in Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84, Handley JA said at [89]: If and when the enforceability of such a promise does arise in the lifetime of a promisor faced, in compelling circumstances, with the need to resort to the capital value of the property, the doctrine of frustration of contracts may be thought relevant.
4. In my view, to grant declaratory relief in this case of the kind originally contemplated will condemn Blaguna to very grave hardship. This is one of those cases in my view where alternative restitution relief should be examined instead.
5. But the parties did not debate the extent of such restitutionary relief and in my view, due to the various combinations of restitution foreshadowed in submissions, there will need to be a supplementary hearing about how that is to be calculated.

The Costs Issues

1. The costs issues that the Temjana now pursues are raised in her 13 November 2016 motion. Leaving aside the procedural relief sought within her motion, the substantive relief sought in relation to costs is in prayers for relief 3 to 8 of her motion. These are set out below: (3) An order that the plaintiff's costs be paid by Mitre and/or Gorica on the indemnity basis or, alternatively, on the ordinary basis. (4) An order that the costs of both the first defendant ("Blaguna") and the second defendant ("Blagoja") be paid by Mitre and/or Gorica on the indemnity basis or, alternatively, on the ordinary basis. (5) In the alternative to the relief sought in paragraph 4, an order that Blaguna's costs be paid by Mitre and/or Gorica on the indemnity basis (or, alternatively, on the ordinary basis) and that there be no order as to Blagoja's costs. (6) An order that Mitre and Gorica not be entitled to resort to the assets of Blaguna for payment of the costs of the proceedings. (7) In the alternative to the relief sought in the preceding paragraphs: (a) An order that the plaintiff's and/or Blagoja's costs be paid by Blaguna on the indemnity basis or, alternatively, on the ordinary basis; and (b) An order that Blaguna not be entitled to resort to the Port Kembla property for payment of the costs of the proceedings. (8) Insofar as it may be appropriate in light of the Court's other orders, an order that any costs ordered to be paid by Blaguna with recourse to the Port Kembla property be paid or retained out of the Blagoja's interest in the Port Kembla property.
2. The relief sought on Temjana's costs motion is in three parts. First, prayers for relief (3), (4) and (5) seek orders that Mitre and Gorica, third parties to the proceedings, pay the legal costs of various parties to the proceedings, Temjana, Blaguna and Blagoja on either the indemnity or the ordinary basis. These various prayers for relief are referred to in these reasons as "the third party costs orders".
3. Secondly, prayer for relief (6) seek orders that Mitre and Gorica are not entitled to an indemnity out of Blaguna's assets in order to reimburse themselves either to meet their own costs or in connection with satisfying any of the third party costs orders. This prayer for relief is referred to in these reasons as "the Mitre and Gorica non-recourse order".
4. Thirdly, prayers for relief (7) and (8), are pressed in the alternative to the third party costs orders. They claim relief that Blaguna pay Temjana's and Blagoja's costs of the proceedings without Blaguna having recourse to the Port Kembla property to meet that liability for costs. These various prayers for relief are referred to in these reasons as "costs orders against Blaguna".
5. These costs issues raise questions as to Mitre and Gorica's conduct as attorneys, criticisms which arise outside the issues considered in the second judgment: both the third party costs order and the Mitre and Gorica non-recourse order are being sought because of criticisms of their conduct as attorneys. In contrast, the costs orders against Blaguna raise more straightforward issues of how her costs as a defendant should be borne consequent upon the second judgment.

Additional Findings in relation to Costs

1. The costs issues considered in these reasons raised new contests and required findings that were not already included in the Court's first and second judgments. Those additional findings are set out in this section
2. Blaguna's Resources. Mitre and Gorica have drawn from time to time on Blaguna's resources to reimburse themselves for expenses in visiting her from their home in Queensland. They both say, and I accept their account, that shortly after Blaguna appointed them as her attorneys in November 2010 Blaguna said to them both "I don't want you to spend your money when you come to visit me. You can take it out of my pension". Mitre and Gorica were living in Queensland when Blaguna appointed them her attorneys and had been for some time. Acting on this invitation, since then they have reimbursed themselves out of Blaguna's bank account for their travel costs in visiting her and for the cost of meals during those visits. They have also reimbursed themselves in the same way for any additional costs associated with attending to Blaguna's affairs, including attending Court in Sydney for these proceedings.
3. At the time of the November 2016 hearing Blaguna had little liquid funds. As at 3 November 2016 she had only $1,711.62 in her bank account.
4. Blaguna's Defence Costs. Mitre and Gorica have assisted in funding Blaguna's defence costs during the proceedings. But most of her legal fees have been met from her own financial resources. Mitre and Gorica paid her legal fees progressively out of her bank account for Blaguna's defence as they have been incurred. Four groups of legal fees totaling $29,902.49 at the time of the November 2016 hearing have been incurred and paid in this way: Dribbus Kovacevic lawyers, $6,924.04 (being a $1,000 retainer and invoiced professional services of $5,924.04); John Stonham & Co invoiced professional services, $5,314.45; Horowitz and Bilinsky invoiced professional services, $14,000; and Sachs Gerace Broome Lawyers invoices fees for transcript costs and translator fees, $3,664.00.
5. The separate judicial advice proceedings incurred fees in the amount of $5,000 that were paid out of Blaguna's bank account to Horowitz and Bilinsky. The judicial advice proceedings were heard before Bergin CJ in Eq and became necessary in the lead up to the November 2016 hearing.
6. Blaguna has various past outstanding liabilities associated with this litigation. Of the $14,000 paid to Horowitz and Bilinsky, Mitre himself advanced $9,000. That amount is still owing to him. A further invoiced amount of $9,689.66 plus interest is owed to Horowitz and Bilinsky. This means that at least $18,689.66 is still outstanding on account of Blaguna's defence costs up to the end of the main hearing. That figure will be increasing on account of the interest accruing on cost agreements.
7. SGB's costs of the proceedings. The legal costs incurred by Blaguna in defending these proceedings with her current solicitors, SGB are in addition to those past liabilities and are a combination of the counsel's fees and other professional fees and disbursements that Blaguna has incurred to SGB. Mr Parker SC agreed to cap his costs in respect of the proceedings to a maximum of $27,500. Given the number of days the proceedings were heard, the Court readily accepts Mr Johnson's evidence that Mr Parker SC's notional costs of acting in the proceedings has long since exceeded that cap. In addition to counsel's fees, Mr Johnson estimates, and the Court accepts, that the legal costs that Blaguna has incurred in SGB defending these proceedings on her behalf amount to approximately $87,000 plus GST, most of which is comprised of Mr Johnson's own time, together with some time committed by the firm's principal, Mr Sachs, together with disbursements and administrative costs in the order of $4,000. Mr Johnson estimates that Blaguna's legal costs of defending the remainder of the proceedings are approximately $7,000 plus GST. Thus, the total of Blaguna's counsel's and solicitors costs for the main proceedings are $121,500 (being $87,000 plus $27,500 plus $7,000).
8. In order to conserve Blaguna's limited resources, subsequent to the main hearing, counsel and solicitors for Blaguna also capped the legal costs to be charged to her associated with Temjana's costs motion. Mr Parker SC's costs of responding to the notice of motion by mid-November 2016 were $9,000 plus GST. Blaguna's present solicitors, Sachs Gerace Broome's (SGB) costs of responding to the motion were at that time $12,000 plus GST. Mr Ben Johnson the solicitor the carriage of the matter at SGB estimates that Mitre and Gorica will incur legal costs in responding to the motion in the total amount of $21,000 plus GST.
9. The Judicial Advice Proceedings. Shortly before the commencement of the relief on costs hearing, on 24 October 2016, Mr Parker SC applied for judicial advice on behalf of Mitre and Gorica in their capacity as holders of a power of attorney on behalf of Blaguna, and in the case of Mitre also as the tutor for Blaguna. Bergin CJ in Eq advised Mitre in his capacity as tutor he would be justified in pursuing an application to have the court reconsider the relief sought in these proceedings and instead a grant of relief that was less unfavourable to Blaguna in accordance with advice provided to the tutor. The Summons for Judicial Advice has been adjourned. But to date, Mr Johnson's estimate of the legal costs associated with the judicial advice application is $19,000 plus GST, which includes costs of SGB, Mr Parker SC's fees, and disbursements.
10. This means that even with economies in relation to defence costs Blaguna will still have outstanding liabilities in relation to her legal expenses of $182,289.66 (being $18,689.66 plus $21,000 plus GST - namely $23,100, plus $121,500 plus $19,000) plus interest.
11. Non-legal liabilities and Income. Blaguna faces a number of other outstanding liabilities. Principal among these are the liabilities associated with her nursing home accommodation. The amount owing to the Wollongong Nursing Home for Blaguna's accommodation fees as at 15 October 2016 was $35,593.82. Mitre's affidavit on relief at the hearing of 3 November 2016 annexes a copy of the current tax invoice in that amount, constituted by accommodation fees and basic daily care fees. Acting as Blaguna's attorney and also as one of the guardians, Mitre has guaranteed Blaguna's indebtedness to the Wollongong Nursing Home. Ultimately it can be anticipated that if this sum of $35,593.82 (augmented by additional charges to date) goes unpaid by Blaguna, the Wollongong Nursing Home will look to Mitre for payment.
12. Whilst Blaguna is in the nursing home outgoings on the Port Kembla property continue to accrue and still need to be met. For example, a rates notice from Wollongong City Council due on August 2016 levies annual rates on the property in the sum of $1,693.08 and an NRMA Insurance renewal notice invites renewal of the insurance the replacement cost of the buildings of the Port Kembla property for a premium of $1,047.88.
13. Mitre manages Blaguna's finances on her behalf under his November 2010 power of attorney from her, with Gorica's assistance. Blaguna receives a disability support pension of $873.90 per fortnight. She has no other income. Other than the Port Kembla property itself and her bank account and a small number of personal items, Blaguna has no assets. Blaguna is liable to pay her lawyers' fees from the conduct of these proceedings. The current residents of the Port Kembla property, Temjana and Zaklina, do not pay rent for occupation of the port Kembla property. Nor do they contribute to the payment of council rates or insurance on the property.
14. Blaguna's accommodation. Mitre and Gorica are both Blaguna's enduring guardians. By instrument of appointment they were both appointed as joint enduring guardians on 5 November 2010. The instrument of guardianship gave them general power to decide where Blaguna should live, what health care she should receive, what other personal services she should receive and gave them the power to consent to medical dental treatment on her behalf. No other formal specific directions were given with the appointment and Blaguna did not appoint an alternative enduring guardian. Gorica and Mitre accepted their appointments as enduring guardians the same day.
15. In their role as enduring guardians, Mitre and Gorica have become concerned about Blaguna's welfare in the Wollongong Nursing Home, where she is now accommodated and wish to move her closer to their home in Mudgereeba in Queensland. The nursing home in Wollongong is not convenient for them to visit as often as they would like. They are concerned that Blaguna is lonely in the Wollongong Nursing Home and does not have enough regular visitors there. Because Blaguna does not speak English, she is unable to properly communicate with the staff and others at the nursing home. I accept Mitre and Gorica's evidence about Blaguna's current accommodation needs. They are the ones with primary responsibility for her welfare. Moreover given the hostility that exists between Temjana and Blaguna, detailed in the Court's previous judgments, and the contest that has taken place between Temjana and Mitre and Gorica in these proceedings, the court has no confidence that Temjana could readily co-operate with other family members to promote Blaguna's welfare.
16. Mitre and Gorica have thought through their proposal to move Blaguna to a nursing home in Robina, Queensland. I accept that they will be able to visit her there more regularly. They have made enquiries of the Robina nursing home will. It is in a position to accept Blaguna so long as there is space at the time the application is made for her accommodation there.
17. The minimum daily accommodation payments at the nursing home in Robina appear to be higher than those in the Wollongong Nursing Home. Measured as at May 2016 the Wollongong Nursing Home charges are $32.01 per day for accommodation fees and $48.25 per day to care fees. In contrast, the Robina accommodation fees are $76.68 per day. But the care fees at $48.25 per day, are the same as for the Wollongong Nursing Home; these being fixed daily charges under the Aged Care Act .
18. As the Court's second judgment explained, Blaguna's last will of November 2010 gives the whole of her estate to Gorica and Blagoja as tenants-in-common in equal shares. The will appoints Gorica as Blaguna as executrix. This will provides (in clause 3) for the payment of Blaguna's funeral and testamentary expenses and debts before distribution of the net balance to the beneficiaries of Blaguna's estate. After Blaguna's death, even before the meeting of outstanding liabilities to the Wollongong Nursing Home, her executrix will need to meet substantial funeral and testamentary expenses. Mitre estimates, and I accept, that a Macedonian-style funeral and headstone will cost at least $30,000.
19. Thus the liabilities that will be faced upon Blaguna's death that must be met out of her estate, the sole asset of which is the Port Kembla property, will be substantial. Projecting forward it would not be unreasonable to assume that her liabilities to the Wollongong Nursing Home (guaranteed by Mitre) would at that time be of the order of $50,000 - $60,000. Her funeral expenses would be another $30,000. She would have still have unpaid legal fees for her defence costs of these proceedings of the order of $182,289.66 plus interest. This is even before the issue of third party costs orders is considered. If these liabilities, of the total order of $272,289.66 plus interest, are to be met it seems inevitable that the Port Kembla property will have to be sold.
20. Plaintiff's legal fees. This is before one considers the plaintiff's legal costs. Temjana's legal fees are higher than those of Mitre and Gorica. Her solicitor Mr Chris Nikolovski, the solicitor acting at Nikolovski Lawyers with the care and control of the matter, indicates that he has received payment of invoices from the plaintiff on account of costs and disbursements in the sum of $40,864.57 for work done up to 21 July 2015, including some $9,721.25 disbursed as counsel's fees. He deposes that Temjana has not been invoiced for professional fees for any legal work undertaken after 21 July 2015. He estimates that solicitors' professional fees inclusive of GST from 21 July 2015 up until the hearing on 17 November 2016 will be approximately $77,000. There are outstanding disbursements excluding counsel totalling $6,372.96. Anticipated further disbursements of counsel are estimated to be approximately $101,337.50. The plaintiff's total legal costs of the proceedings will therefore be approximately $225,575, comprising $108,143 in solicitors' costs and $117,432 in counsel's fees and other disbursements.
21. Mitre and Gorica's instructions from Blaguna. In response to Temjana's motion, for the first time Gorica and Mitre adduced evidence as to the instructions they had received from Temjana to conduct these proceedings as attorneys on her behalf. Their evidence on this issue is largely consistent with the findings which the Court has already made about Blaguna's views: see the second judgment at [54]. I accept what Gorica and Mitre say about their instructions from Blaguna. They both struck the Court as persons who were doing their best to give effect to Blaguna's wishes.
22. Gorica says, and I accept, that since the commencement of Temjana's case that she has spoken to her mother about the court case several times. Blaguna has said to her "I don't want Temjana to get a share in the house. Temjana needs to leave the house. Bagoja and Temjana are not husband and wife. This is my house. It is not for Temjana". Gorica also says, and I accept, that Blaguna said to her words to the effect of "I never promised that I would give a share in the house to Temjana. Ivan would never have promised a share in the house to Temjana". Importantly, Gorica says, and I accept, "I believe that in defending the case I was doing what my mother wanted".
23. None of this is inconsistent with the Court's finding in the second judgment. It was quite evident to the Court that by the time of the November 2015 hearing, and no doubt generally after the commencement of the proceedings, Blaguna had a well formed antipathy towards Temjana. It is not at all surprising in those circumstances that she would have been giving these instructions to Gorica. I accept Gorica's evidence they were given and she acted upon them.
24. But Gorica's evidence goes a little further. At least indirectly, her evidence appears to contest the Court's findings in the second judgment. Gorica paints a picture of Blaguna caring for Temjana for 40 years and that Zaklina rather than Temjana being the one who looked after Blaguna when she needed it, particularly in her later years and after she came back out of hospital from her hernia operation. But to the extent that this new evidence is inconsistent with the Court's findings in the second judgment, it is not accepted. The Court made clear that its factual findings in the second judgment could not be contested in the relief hearing. All that has happened over time in my view is that despite Temjana's assistance to Blaguna over the years, Blaguna is now unable to recognise that.
25. Mitre's evidence about Blaguna's instructions to him for these proceedings was in substance the same as his wife's. I accept his evidence on this subject. He says, and I accept, that in about August 2014 when Blaguna could not walk and was found to be suffering a hernia, he and Gorica called an ambulance. Blaguna was then admitted to hospital for an operation. In executing their functions as attorneys for Blaguna, he and Gorica went to the Commonwealth Bank at Warrawong and discovered from the bank manager that Temjana had placed a caveat over the Port Kembla property.
26. Mitre says, and I accept, that he spoke to Blaguna about the caveat and she reacted by saying "how can Temjana do this? She has no rights over the property. It's my property".
27. Mitre also says that since these court proceedings began, and I accept, that Blaguna on several occasions has said to him words to the effect: "I don't want Temjana to have a share in my house, she has no right. Temjana doesn't deserve that. She never helped me. She only ever helped herself. Don't let her do this. I want you to stop her from doing this". These statements to Mitre are consistent with those the Court has accepted that Blaguna made to Gorica. I accept Mitre's evidence that he acted, in defending the case Temjana brought, on the faith of these statements Blaguna made to him. He genuinely believed that he was doing what Blaguna wanted in defending the case.
28. Mitre also says that Blaguna said to him during the case "I never promised Temjana any share in my house. Ivan never promised Temjana any share in the house. Over my dead body". Again, Blaguna's expression of these views in my view arises from her present antipathy towards Temjana and do not reflect the reality of what happened in the past. But I nevertheless accept that Mitre has always had faith in his mother-in-law's honesty and has acted to try to give effect to her wishes. In my view, this is not a question of Blaguna's honesty or dishonesty. Her currently feeble state has contributed to her views about Temjana, which views do not reflect a true picture of the past.

Costs - Consideration and the Challenge to the conduct of the Attorneys

1. There are three groups of costs that have been incurred by the attorneys and that are in issue: (1) the costs incurred in defence of the proceedings on behalf of Blaguna ("the defence costs"); (2) the costs of the judicial advice proceedings ("the judicial advice costs"); and (3) the third party costs. The issue is whether there was relevant lack of bona fides or unreasonableness in Mitre and Gorica's conduct as attorneys in all three groups of costs. So their role as attorneys is discussed generally first in incurring each of those groups of costs. These will each then be dealt with below.
2. The Attorneys. The attorneys hold a quasi-trustee position. It is the attorney's duty to make decisions in the best interest of the donor of the power. But the scope for determining the best interests of the donor in that context is wider than would be available to a trustee. The power given to the attorney donee can sometimes for example include the capacity to do anything that the donor could have done, including making gifts to the donee.
3. The attorney's duty is not merely to manage the donor's affairs in the interests of maximising the donor's assets or preserving the donor's assets as a trustee would be required to do. But the duty of a donee of a power of attorney can include the power to act on previously expressed wishes of the donor, even if those wishes are not necessarily financially sensible. Mitre and Gorica have reimbursed themselves from Blaguna's assets for their travel and meal expenses when they visited her from Queensland. But because Blaguna had invited them to do that when she had sufficient capacity to do so, it cannot be said it is inappropriate, given her previous expression of those wishes, for them to do so after she has lost capacity. The attorneys may lose their right of indemnity against the donor of their power if they are not acting bona fide or are acting unreasonably: the test which derives from that applicable to a trustee.
4. For example, Mr Parker SC contended that Blaguna had made it clear that she wanted Gorica to have half her assets. Her unchallenged wills support that conclusion. Mr Parker SC contends and I accept as correct that there is nothing improper in an attorney in that situation seeking to defend litigation on behalf of the donor of the power to achieve a result which the attorney believes is consistent with the donor's wishes, even if those wishes potentially involve benefits to the attorney.
5. (1) Defence Costs. As to defence costs, Gorica and Mitre had to face the question of what they were to do with the suit Temjana had brought against the donor of their power of attorney. That question had really only one of two possible answers: concede or fight. The attorneys apparently took advice. They put their defence of the action against Blaguna in the hands of lawyers, who put on and argued a defence which could not be and was not struck out as embarrassing or without merit. The lack of any contention that the defences the attorneys raised on behalf of Blaguna were unsustainable demonstrates in my view the attorneys' position was not unreasonable. The ultimate failure of these defences does not indicate that pleading these defences was unreasonable.
6. The attorneys answer the issue of their bona fides in a similar way. They contend that once their pleaded defence is assessed as arguable, it is pointless to hunt for some underhanded motivation in commencing the litigation. Whatever their motivation, it resulted in my view in a valid arguable defence being put on. The contention is that an arguable defence is an unlikely vehicle for a party acting without bona fides.
7. But bona fides is the more probable inference from the facts. Mitre and Gorica acted as Blaguna's attorneys right from the beginning of this dispute. Temjana lodged her first caveat in 2013, launching the current contests. But Blaguna's power of attorney dates from November 2010, long before these events. Mitre's appointment as Blaguna's tutor in December 2015 is not the central issue. The challenges here are to the attorneys incurring costs as attorneys. Most of the defence litigation costs were incurred long before the Court appointed Mitre as a tutor.
8. But the question of whether the attorneys behaved reasonably needs also to be assessed by reference to the communications that the donor of the power was having with them. Blaguna was telling the attorneys that Temjana was not caring for her, Blaguna. I accept that this is what she said. The attorneys submit and I accept that if the Court finds that that communication took place, even if it were incorrect, the attorneys cannot be judged to be behaving unreasonably in accepting and acting on what Blaguna says to them.
9. I accept it is possible for Blaguna to have been wrong, and for Temjana in fact to have been caring for Blaguna and the Court has found in the first judgment that this indeed was the case. But Blaguna was giving instructions to the attorneys that Temjana was not doing so. Moreover, the attorneys were living in Queensland and to some extent were reliant upon Blaguna's instructions to them. Their capacity to check the facts for themselves was more limited than it would have been had they lived in New South Wales. There is evidence, which I accept and which is consistent with the principal judgment that Blaguna went to the Department of Social Security ("DSS") accompanied by Mitre and Gorica and told the DSS that Temjana was not caring for her and that that was Blaguna's wish. Blaguna had forgotten the past but she could have said this.
10. The attorneys' conduct also needs to be measured against the size of Temjana's claim and the contrast between that claim and Blaguna's instructions. Temjana was initially claiming that she was entitled to the whole of the Port Kembla property because she was caring for Blaguna. But Blaguna was adamant that she was not caring for her.
11. In my view the attorneys are entitled to an indemnity for their defence costs, out of Blaguna's assets.
12. (2) The Judicial Advice. The judicial advice proceedings were the subject of a separate application and Bergin CJ in Eq (as her Honour then was) made separate costs orders in relation to them. The outcome of the relief hearing has justified the advice sought. The advice was sought on legal advice. The attorneys should have an indemnity from Blaguna's assets for their costs of seeking that advice.
13. (3) Third Party Costs Orders. In my view there is no basis for making a third party costs order against Mitre or Gorica. This is not a case where a third party is putting forward a person of straw to shield the real beneficiary of litigation from adverse costs orders: Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 187 - 190. Blaguna is the substantial defendant in this case, whose property is at stake.
14. Nor is this a case in my view where it could be said that Mitre or Gorica are guilty of an abuse of process. In my view they were carrying out what they thought was their genuine instructions from Blaguna who I accept was able to give them. Nor is Mitre or Gorica's conduct as attorneys open to criticism. In my view it was both bona fide and reasonable. Even if a costs order is made against Blaguna (a matter which has not yet been decided), I see no basis for Mitre or Gorica bearing those costs personally.
15. Mitre's appointment as a tutor makes little difference to this outcome. After the principal hearing was concluded, in order to regularise the conduct of the proceedings, the tutor was appointed. In any event, the usual reason why tutors are appointed, to ensure a successful party has available party against whom to recover costs is not in question here as costs would ultimately be recoverable out of the Port Kembla property.
16. Costs as between the Plaintiff and Defendants. This leaves the final question of what costs order is appropriate between the plaintiff and the defendants. The Court indicated in the course of submissions that it would deal with this question last, because the ultimate question of costs as between the plaintiff and the defendants will be influenced by the outcome, not only of the principal hearing leading to the second judgment, but by the outcome of the relief hearing leading to this judgment. Temjana had substantial success in the principal hearing but Blaguna has substantial success in the relief hearing, as did Mitre and Gorica. The question of overall inter partes costs including Blagoja's costs, will need to be the subject of separate submissions. Were the Court to determine those questions now, one or other party may be denied procedural fairness. Ordinary issues of costs between the parties, including whether or not any costs should be paid on an indemnity basis will be the subject of further submissions as directed by the Court.

Conclusions and Orders

1. For the reasons given the Court determines the contest as to final relief and the costs issues as follows. The Court will hear submissions on a restitutionary remedy to give effect to Temjana's success on the main hearing, and will not make the declaration foreshadowed. The Court declines to make a third party costs order against Mitre and Gorica or to deny them indemnity out of Blaguna's assets for any of their costs.
2. The Court orders the parties to bring in short minutes of order to give effect to these reasons.

Amendments 28 August 2017 - Paragraph 20: insert definition of Aged Care Act and amend subsequent references to italics. Paragraph 23: description of Aged Care Act. Paragraph 63: description of Aged Care Act. 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: 28 August 2017