On 6 September 2016, in Damevski v Hope [2016] NSWSC 1231,  Pembroke J dismissed a claim by one of two children of a deceased (Nick), together with his wife (Rada) and their son (Darko), in which they sought an order that title to certain property at Rockdale that they had continuously resided in since 1994 (which was owned by the deceased) be conveyed to them.

The plaintiffs claimed:

“that promises were made and expectations raised that led Nick and Rada to believe that the Rockdale property would remain their home after the deaths of Tome [the father, who died in 2002] and Gurga [the mother, who died in 2006]; that they relied on those promises and changed their position to their detriment; and that the appropriate equitable relief is that their assumption should be made good.” [3].

They relied on the doctrine of equitable estoppel by encouragement, as most recently considered by the High Court in Sidhu v Van Dyke [2014] HCA 19.

As an alternative, they sought leave to bring a claim (more than 7 years out of time) under the Family Provision Act 1982.

This was notwithstanding that:

• the deceased had died in 2006 without a will, and the rules of intestacy provided relevantly that her estate would be shared equally by her two surviving children (Nick and his sister, Nada, the defendant);
• the plaintiffs had lived rent-free in the Rockdale property since 2006 while Nada had “worked long hours doing menial work in order to afford her own flat” [22];
• the plaintiffs had “done their best to deprive Nada of her entitlement [on an intestacy] and to conceal the true position from her.” [26]

The doctrine of equitable estoppel by encouragement is said to come into existence:

“… when an owner of property has encouraged another to alter his or her position in the expectation of obtaining a proprietary interest and that other, in reliance on the expectation created or encouraged by the property owner, has changed his or her position to the detriment.”: Delaforce v Simpson-Cook [2010] 78 NSWLR 483; Milling v Hardie [2014] NSWCA 163 at [36].

His Honour found at [10] that:

“It seems probable that Nick and Rada spent at least $35,000 and possibly as much as $50,000 on improvements to the Rockdale property. They were prepared to do so because of an assumption on their part that they would have an indefinite right of residence in the property and that they might possibly inherit it. There was little more to their assumption than hope and aspiration, mingled with optimism. They took a risk. Both knew that they had no guaranteed entitlement. And both were acutely aware that Nick’s sister, Nada, might also have a claim on the property. Although from their perspective at the time, Nada was then currently better off than they were and there was reason to think that the Rockdale property would eventually come to them entirely, without the need to share its proceeds with Nada. The risk of expenditure was therefore worth taking. But as will become clear, circumstances changed.”

In ultimately deciding to dismiss the proprietary estoppel claim, his Honour found that:

“Neither Nick nor Rada were plausible on the central questions of representation, encouragement, reliance, detriment and reasonableness: … I formed the impression that Rada, in particular, was astute to the issues in the case and that, whether consciously or subconsciously, her evidence reflected her perceived self- interest and could not be relied on safely. As I said at the outset, the plaintiffs’ desperation to retain the home where they have lived for a long time is understandable but legally insufficient. There was no tangible corroboration of the plaintiffs’ case and every reason to be sceptical.” [15]

and:

“I am not satisfied at the factual level that the requisite ingredients of a claim based on estoppel or constructive trust – namely representation, encouragement, reliance, detriment and reasonableness – have been established. The more probable explanation, as often happens in a family context, is that the monies were expended in hope and expectation, with an eye to the future, knowing of the risks involved, but taking a gamble as to the legal outcome. This is one of those cases. The situation is compounded in this case by the absence of credible foundational evidence of any clear representation or encouragement by Tome. The uncorroborated assertions of Nick and Rada do not provide me with the requisite level of reasonable satisfaction.” [17]

In refusing to grant leave to bring the claim under the Family Provision Act out of time, his Honour was critical of how plaintiffs had “done their best to deprive Nada of her entitlement [on an intestacy] and to conceal the true position from her”  and that their “mendacious and self-interested behavior deserves censure rather than the exercise of the court’s discretion in their favour.” [26].

This case highlights a number of important issues for cases of this type. It is helpful:

• if the representation is clear and unambiguous.
• that there is corroboration of the relevant representation by the deceased –  preferably in writing.
• if there is no such corroboration,  it is essential that at least the plaintiffs will not be susceptible to disbelief on their oaths, as the court scrutinises self-interested evidence by plaintiffs, particularly where the maker of the alleged representations is deceased.
• that the case aligns with subjective concepts of fairness. The maxim “those who seek equity should do equity” applies.