Weeks v Hrubala

DECISION : Proceedings dismissed with costs.

CATCHWORDS : ESTOPPEL [32]- Proprietary estoppel by encouragement- Plaintiffs allege a series of promises was made to them by the deceased that "they could live on the deceased's property for the rest of their lives" in consideration of them maintaining the property and performing personal services for the deceased while the deceased was alive- Corroboration desirable to make out a claim against a deceased estate virtually absent in this case- Necessity of sufficient link between the promises made and the work performed- Case fails on the facts.

LEGISLATION CITED : Family Provision Act 1982, s 6

Barnes v Alderton [2008] NSWSC 107 Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1 Gillett v Holt [2001] Ch 210 CASES CITED : Giumelli v Giumelli (1999) 196 CLR 101 Jennings v Rice [2003] 1 P & CR 100 Re Hodgson (1886) 31 Ch D 177 Sullivan v Sullivan [2006] NSWCA 312

Jean Weeks as Administratrix of the Estate of the late Mabel McDonald (P1) PARTIES : Theo Jobse (P2) Joseph Hrubala as Executor of the Estate of the late Karol Pilarcik (D)

COUNSEL : M Tibbey (P) M Southwick (D)

SOLICITORS : Legal Aid Commission of NSW (P) Mavrakis & Associates (D)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

6631/04 - WEEKS v HRUBALA JUDGMENT 1 HIS HONOUR: These proceedings concern the estate of the late Karol Pilarcik, who is commonly known as "Charlie" and I will, without meaning any disrespect, so refer to him in these proceedings. 2 Charlie died on 15 August 2004. He lived at a property in Leppington which was his farm. Probate of Charlie's will, a will made on 7 December 1998, was granted to the defendant on 26 July 2005. The defendant describes himself as Charlie's nephew and adopted son. 3 The will provided that the defendant and Mabel McDonald were appointed executors (Mrs McDonald, it would appear, renounced probate). He gave his property to relatives. 4 The farm, according to the inventory for probate purposes at that date had a value of $480,000. The net distributable estate is said by the defendant to be $570,000, though the plaintiffs say that it is worth considerably more, over a million dollars because of the increase in value that should be attributable to the farm. 5 The original plaintiffs were Mrs Mabel McDonald (the first plaintiff) on her own behalf and on behalf of her son Douglas. The second plaintiff is Mr Theo Jobse. 6 Mrs McDonald died in 2006. Administration of her estate was granted to the person who currently appears as the first plaintiff, Ms Jean Weeks. However, for simplicity, I will in these reasons employ the term "the first plaintiff" or "the plaintiffs" as referring to the original plaintiffs. 7 The plaintiffs' statement of claim can be split into two parts: (A) the claim made by the first plaintiff; and (B) the claim made by the second plaintiff. 8 As to (A), the statement of claim asserts that Mabel McDonald moved to the property in 1993 with her adult son, Douglas, whom she says suffers from a disability. The farm at that stage occupied 20 acres. It has now been split into two 10 acre blocks which are referred to as Lot A and Lot B. Lot A still belongs to the estate. Lot B was given to the defendant during Charlie's lifetime. Lot A has erected on it a two-storey house which appears to have been used as two flats, one upstairs and one downstairs. At all material times the defendant has lived on Lot B. 9 Mrs McDonald says that when she first came to the property she was to pay $80 a week in rent which Charlie reduced to $60 a week as there was no electricity for the building she was occupying. However, after a few weeks Charlie told Mrs McDonald that if she was prepared to do his shopping, read his mail and cook for him she need not pay rent. She did so and thereafter never paid rent. Later Charlie purchased a caravan for Mrs McDonald and her son to occupy. 10 Paragraph 25 of the amended statement of claim pleads that:

"On many occasions since they commenced living there, (Charlie) told both the first and second plaintiffs that they could live on the property for the rest of their lives and that after he died the first plaintiff could live on the top floor of his dwelling and live there for the rest of her life and the second plaintiff could move into the bottom floor of the same dwelling and live there for the rest of his life. Particulars The promises to the first and second plaintiffs were made on a number of occasions including the following:

(a) whilst (Charlie) was waiting to be taken to hospital on or around 1998; (b) at around Christmas of 2000, shortly before he was taken to hospital; (c) shortly before (Charlie) was hospitalised at Camden; (d) in or around early June 2001; (e) whilst (Charlie) was in hospital between October and November 2003; (f) on or around 13 August 2004." 11 The statement of claim then went on to allege that these promises were made in consideration of the extensive care, support and services of the plaintiffs for Charlie personally and for the services of each of the plaintiffs towards the maintenance and improvement of Charlie's 20 acre property. The care and support etc, were undertaken at the request of Charlie and were accepted by him and that each of the plaintiffs relied on those promises and stayed on the property to assist Charlie instead of pursuing other opportunities which may have been more remunerative. Each of them thus altered their positions by remaining on the property and undertaking services to Charlie in reliance of the promises made to each of them. 12 I will come to the evidence said to support that paragraph shortly. But first I will deal with case (B). 13 As to (B), the second plaintiff is a carpenter by occupation who appears often to have been unemployed. He is currently living in Alice Springs but what he is doing and how much he is earning I am just not told. The second plaintiff says that he carried out works on the property and moved to the property in December 1997. He says he is now pursuing work opportunities away from the property. The second plaintiff says he was first asked to pay $60 a week in rent but "soon reaching a standing arrangement with Charlie that he would mow the lawns on the property in lieu of rent". The property, as I have said, was extensive. 14 The second plaintiff says that he did a lot of work for Charlie over the years both with respect to the property and on personal services. 15 Both case (A) and case (B) are based on a restitutionary claim for quantum meruit for work done and services provided though the principal claim in each case is for equitable compensation in respect of what was done by the plaintiffs, the allegation being that there was a breach of the arrangement under which they worked for Charlie, they having the understanding that they would live on the property for life. 16 Claim (B) is also for relief under the Family Provision Act 1982. The second plaintiff said that he had a close personal relationship with Charlie and was a member of Charlie's household and a person for whom Charlie should have made provision. 17 The plaintiffs say that when Charlie died they were living on the property and the defendant cut off the electricity from the part of the premises in which they were living and sought the plaintiffs' eviction. It would seem that Mrs McDonald remained on the property through to 28 October 2004 when she and her son, Douglas, moved to stay with her daughter, Christine. Mrs McDonald died in 2006 but I am not told when in 2006. She said that she moved out because she was scared of the defendant. She said he was making threats and added, "also the stress of the situation was getting to me and I didn't feel well and it was very hard to live there without electricity". 18 The defendant does not deny that he cut off the electricity but says that he did so because he asked Mrs McDonald to pay for the electricity. She declined and he could see no reason why he should have to pay for her electricity and he was not prepared to do so. 19 The evidence in this case is at a very odd state. As I said, Mrs McDonald died in 2006 and, accordingly, she was not available to be cross-examined. She swore affidavits between December 2004 and May 2005 and two of those affidavits were read without objection to them being read, though there were some objections to some parts. 20 In a case of a person suing a deceased estate the court normally looks for some sort of corroboration: see Re Hodgson (1886) 31 Ch D 177 even though, as a matter of law, corroboration is not absolutely necessary. Experience, however, shows that when plaintiffs are making a claim against a deceased estate the court is wise to look for corroboration. Unfortunately, there is very little corroboration in this case and added to that is the difficulty that Mrs McDonald is not available for cross-examination and so one has to discount the weight that one would give to her evidence accordingly. 21 Unfortunately, it gets worse than that because Mrs McDonald's affidavits are phrased in very summary form. When one is looking to see the evidence of the actual promise one has great difficulty. Paragraph 11 of Mrs McDonald's affidavit of 7 December 2004 says: "I met Charlie and moved into the property on Lot B, Building No 1 sometime between March and July 1993. I agreed to pay Charlie $80.00 rent per week for the two bedroom house. When he had difficulty connecting the power he reduced the figure to $60.00 ...". 22 She then says that Charlie asked her to do the shopping etc, and continued in para 14: "I agreed to this arrangement. I also did many other things beyond this agreement."

She then details some of the work she did. In fact, she is fairly detailed about the work she did. That throws up the lack of detail with respect to the promises. She then says in para 33 that there was a conversation on some day when Charlie was in hospital in October and November 2003, during which Charlie said to the second plaintiff and herself: "if anything happens to me you can stay on in the house. You can live upstairs and Theo downstairs for as long as you live."

She then noted: "This was not the first time Charlie had said this to me. He had told me this a number of times over the years I lived on the property." 23 It is extremely unfortunate that she did not give any details of these other events or tie them in with the work that she said she did. She then says in para 37: "Two days before Charlie died he again said to me words to the following effect: 'If anything happens to me you can stay on in the house. You can live upstairs and Theo downstairs for the rest of your lives'." 24 That is as far as Mrs McDonald's evidence went. It will be observed that there is very little linkage with the alleged promise and the work she did and that she never actually says that she did work only because of the promise. This is significant because there are three inferences that might be drawn: (a) that she did the work because of the promise; (b) that she did the work in lieu of rent; and (c) that she did the work out a friendship. 25 The second plaintiff, who is still alive, gave evidence that in 1998 (para 22 of his affidavit of 7 December 2004): "When Charlie was admitted to hospital … Charlie first told Mabel and I that we could live in the house if he died. Whilst we were waiting for the ambulance Charlie said words to the following effect to Mabel and me: 'You don't have to worry about the future at all. If something happens to me you and Mabel can live in the house. You can live downstairs and Mabel can live upstairs.'" 26 Evidence was given in para 26 that around Christmas 2000 and before Charlie went to hospital Mrs McDonald, Douglas McDonald and the second plaintiff were with him and Charlie said: "I think I am going to die. If something happens to me don't be worried Mabel, you can live upstairs with Doug and Theo you can live downstairs." 27 In para 38, which refers to the time when Charlie went to hospital at Camden, the second plaintiff says, "He again made promises to Mabel and I to the same effect: 'Mabel, don't be worried. You and Doug can live upstairs when I die and Theo can live downstairs.' " 28 The second plaintiff does say in para 27 of his affidavit of 7 April 2005 that because of the promises he believed that he would have a secure place to live and on that basis he felt able to refuse the work and to continue to look after Charlie in the property: "I certainly relied on the promises made by Charlie in this regard." 29 The defendant is a close relative of Charlie and is the executor of Charlie's estate. The defendant is very adamant that the plaintiffs have completely overstated the case. He says Mrs McDonald and her son and the second plaintiff virtually did nothing and that he hardly ever saw any of them do any work on behalf of Charlie. He called as witnesses some other acquaintances of Charlie. 30 Ms Tibbey for the plaintiffs cross-examined them without, I think, much effect except that when one of the witnesses was leaving the witness box he made it quite clear that he considered that the plaintiffs' claims were completely fraudulent and he would like to punch one of them to show his displeasure. This, I think, even more than the cross-examination, showed that that witness was not a witness for whom one would give very much credit because he was so emotionally involved with the righteousness of the defendant's case. 31 In any event, it is very difficult to accept the defendant's evidence on this matter. Not only was he away from Australia for large periods of time, as Ms Tibbey points out, there are quite a number of references in the medical records which were composed by persons with no axe to grind which do show that Mrs McDonald and the second plaintiff were involved in the care of Charlie over a long period of time and they were even thought by the medical professionals to be people who must be next of kin. 32 Accordingly, it seems to me on the facts that I should accept, on the balance of probabilities, that both Mrs McDonald and the second plaintiff, Mr Jobse, did considerable work for Charlie personally and in and about Charlie's property. 33 The main difficulties that the plaintiffs have are that there is little evidence tying up the promises with the work that was done; that the claim is a claim against a deceased estate with very little corroboration of the promises that were made other than the plaintiffs themselves; that the work that was done could be in consideration of the promises or it could be in consideration that no rent was paid for them being on the premises or it could be out of friendship. There is the further difficulty that the promises were very vague. 34 As I said, with reference to authority in Barnes v Alderton [2008] NSWSC 107, there are a number of cases where a person makes a promise to leave someone property if they die and that sort of promise is usually completely unenforceable for a number of reasons, the main reason being that there is no equity to perfect an imperfect gift. Further, prima facie everyone in the community knows that there is freedom of attestation and that promises to leave people property after they die is always subject to someone changing their will. However, as Robert Walker LJ said in Gillett v Holt [2001] Ch 210, it is possible that a promise to leave property after death can be enforced under the doctrine of proprietary estoppel by encouragement if the facts and circumstances show that despite the general rule that wills are irrevocable, this promise was made on the basis that it was to be implied that the promise was irrevocable. There is some flavour in the evidence that this was so, but it seems to me that without the detailed evidence that one would expect given by both Mrs McDonald and the second plaintiff of the actual terms of the promises and of them saying that had they not believed the promises, they would not have continued to work and that they considered the promises to be irrevocable, the case is very flimsy. 35 I note the second plaintiff makes a statement about that but it does not seem to me to be particularly strong for me to be able to make a finding in his favour, on the balance of probabilities. 36 Mr Southwick, who appears for the defendant, also says that where one has a promise which, if one was making it as a matter of common law, would be void for uncertainty, then equity normally does not enforce it under any guise: see Co-operative Insurance Society Ltd v Argyll Stores (Holdings) Ltd [1998] AC 1 at 14, a case involving the specific performance of a shopping centre, but the principle is applicable in the instant case. 37 To my mind, even though the plaintiffs did do work for the estate, I do not consider that the evidence is strong enough in this claim against a deceased estate for me to reach the conclusion that the work was done on the basis of the promise. Even if I had come to the view that there was sufficient material, I would have had great difficulty in working out what the promise was. Was it to confer an equitable life estate? Did it involve subdivision? Probably the answer to both questions is "No", and if it was otherwise, s 23C of the Conveyancing Act 1919 as pleaded by the defendant would bar the claim. 38 Accordingly, it would seem that there was some promise to grant a personal life interest, but what were the terms of the personal life interest? Was it for the electricity, rates, maintenance (fair wear and tear excepted) to be paid by the occupiers or what? 39 But even assuming that there was such a promise, so far as Mrs McDonald is concerned, if she had an entitlement in equity on the basis of proprietary estoppel, the most that she could expect would be to continue to live in the subject property, or, if that became untenable, to be provided the cost of alternative equivalent accommodation between 28 October 2004 and her death in 2006. If this is the basis of equitable compensation, then Mrs McDonald was living with her daughter at no cost. So this would be minimal. In fact, even though the evidence is that that was very cramped living, she did not have to pay any rates or maintenance etc, on the Leppington property. 40 Ms Tibbey says that this is the wrong way of looking at it, that when one looks at what Handley JA said in Sullivan v Sullivan [2006] NSWCA 312 (which, although a dissenting judgment, is acknowledged to state the principles), the way in which one deals with this situation normally is to fulfil the expectation: see also Giumelli v Giumelli (1999) 196 CLR 101. There is, of course, a great deal of truth in that but it is not the whole story as cases like Jennings v Rice [2003] 1 P & CR 100 show, that even if one does opt for fulfilment of the expectation rather than compensation for it, one has to apply proportionality and the claim made by Mrs McDonald appears to be, on one basis, $350,000; on another basis, $15,000. The first would be far out of proportion to anything that the court would award. 41 It seems to me, that the way in which one addresses what is called the minimum equity would be the cost of alternative accommodation. That is virtually nil. 42 So far as Douglas McDonald is concerned, there is just no evidence that would allow me to work out any loss that he may have suffered. The promise, of course, was never made to him at all, so it would be part of the damages or equitable compensation which would be part of Mrs McDonald's claim. 43 The alternative case in restitution based on a quantum meruit fails for similar reasons. There is just insufficient material to show what was the arrangement under which the work was done. Thus, it would seem to me that the first plaintiff's claims fail. 44 Mr Jobse's claim is a little stronger on the evidence but, again, it suffers from most of the defects that were endemic in Mrs McDonald's claim. I accept that he did work, although I do have doubts in view of the other jobs he had in, and his living in, the Crookwell area whether he actually did such work as he claimed, but I find that he did more than Mr Hrubala would give him credit for. The promises that he relies upon go back to 1998 and although he says, in paragraph 27 of his affidavit of 7 April 2005, with respect to one of the promises, that he gave up looking for other things, there is really very slender material as to any detriment he suffered, and he was living rent free on the premises and for a considerable part of this time he was unemployed. Again, I do not think there is sufficient material in a claim against a deceased estate to uphold his claim. 45 As to the secondary claim under the Family Provision Act 1982, Ms Tibbey says that Mr Jobse was part of the household of the deceased. Being part of the household usually involves some sort of family connection. Perhaps it doesn't always, but it usually does. Here, the people were not living in the same building, though they were living in close proximity. There does not appear to be that degree of family connection. Again, even if there were a household connection so as to make Mr Jobse a person under clause (d) of the section 6 definition of "eligible person", I cannot see factors warranting the making of an order. He really was a person who just did a whole lot of odd jobs and performed personal services for the deceased, whilst he lived on the property for some considerable time free of charge. There is no indication at the moment that he has any needs. He is living somewhere in Alice Springs. I do not know where or under what circumstances. His assets as at 2005 are only very modest, but we do not know what they are today or what his income is and, accordingly, that claim fails also. 46 Accordingly, in my view, the plaintiffs' claims should be dismissed with costs. I so order. The exhibits may be retained, though Exhibit PX06 may be returned.

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