Bahnik v Budimir (No 2)

1. [1]

   These reasons deal with the outstanding issues following my judgment in Bahnik v Budimir [2025] NSWSC 1595 (J). Abbreviations in the J will be adopted in these reasons.

2. [2]

   In the J I found that the plaintiff had made out his claim in proprietary estoppel by encouragement in relation to a promise made by Peter to the plaintiff in July 2010 that if the plaintiff continued to support and care for both Peter and Lily until Peter’s death, Peter would leave him ‘all my possessions’: J[64], [168]-[170]. This is the First Promise referred to at J[3(1)]. The promise was confirmed by the subsequent statements by Peter referred to at J[66]-[67].

3. [3]

   As a result of the way the matter was argued at the hearing, I directed the parties to make further submissions regarding the question whether the relief sought by the plaintiff, being a declaration of a trust in his favour over the entire estate, would be disproportionate and the appropriate orders as to costs.

Competing orders sought by the parties

1. [4]

   The orders sought by the plaintiff are:

   1. (1)

      A declaration that the defendant is estopped by the conduct of the late Peter Kastropil from denying that the plaintiff is the legal and beneficial owner of the whole of the estate of the late Peter Kastropil.

   2. (2)

      An order that within 28 days the defendant pay to the plaintiff, or as he may direct, the distributable estate of the late Peter Kastropil.

   3. (3)

      An order that the defendant account to the plaintiff for monies received and distributed in respect of the estate of the late Peter Kastropil.

2. [5]

   The orders sought by the defendant are:

   1. (1)

      A declaration that the Defendant as administrator of the estate of the late Peter Kastropil (the deceased) holds the lesser of:

   2. (2)

      An order that the Lump Sum be payable within 28 days of the date of completion of administration of the estate.

   3. (3)

      An order that the Plaintiff’s costs be paid out of the deceased’s estate on the ordinary basis as agreed or assessed.

   4. (4)

      An order that the Defendant’s costs be paid out of the deceased’s estate on the indemnity basis.

3. [6]

   In the alternative, the defendant says that the Lump Sum could be quantified as a percentage of the net estate after payment of all estate expenses and liabilities. The appropriate percentage might be in the order of 50 per cent, which is roughly equivalent to the calculation in proposed order (1) in [5] above.

4. [7]

   By an affidavit sworn on 21 April 2026, Mr Alexander Munro, solicitor for the defendant, provided an update to the Court regarding the status of the funds held in trust for the estate. He deposed that:

   1. (1)

      The gross distributable estate at the date of Peter’s death as recorded in the inventory of property annexed to the Grant of Letters of Administration (Inventory) was $7,842,879.65.

   2. (2)

      The estate has a current tax liability of $46,294.83 which includes an amount for general interest charges for which an application for remission is to be made. No further tax liabilities are anticipated except for tax on interest derived on the estate’s funds which are largely invested in controlled monies accounts.

   3. (3)

      The other anticipated liabilities of the estate are: (a) further accountant’s costs estimated to be approximately $2,000, (b) the defendant’s legal costs in obtaining the grant of letters of administration and administering the estate, including accounting fees and other disbursements paid by the estate from 15 May 2018 to 4 February 2026, which total $121,955.23 (inc GST); (c) the defendant’s legal costs of these proceedings, from 15 September 2023 to 4 February 2026, including counsel’s fees and other disbursements, which total $215,286.26 (inc GST) and (d) the estimated future legal costs to finalise the administration of the estate and to finalise these proceedings, estimated to be approximately $20,000 (inc GST).

   4. (4)

      In light of the above, the net distributable estate is approximately $8,718,392.37 (being the amount currently held in Turner Freeman’s trust account and controlled monies accounts) less the estimated liabilities referred to in (2) and (3) above.

Proportionality of the relief sought

1. [8]

   At J[48] I referred to the principle that where the four requirements for estoppel by encouragement from a promise set out Kramer v Stone (2024) 281 CLR 484; [2024] HCA 48 at [36]-[41] have been established, the prima facie outcome is that the party estopped will be required to make good the expectation unless ‘the disproportion between detriment and expectation is so great that conscience does not require that the party estopped should make good the expectation’, referring to Q (a pseudonym) v E Co (a pseudonym) (2020) 383 ALR 469; [2020] NSWCA 220 at [127]. This concept of ‘proportionality’ has been discussed in a number of cases but it is sufficient to refer to the following.

2. [9]

   In The Commonwealth v Verwayen (1990) 170 CLR 394; [1990] HCA 39, Deane J said at 443 and 445:

3. [10]

   These observations were referred to with approval in Giumelli v Giumelli (1999) 196 CLR 101 at 123; [1999] HCA 10 at [42] per Gleeson CJ, McHugh, Gummow and Callinan JJ.

4. [11]

   In Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 at [84]-[85], French CJ, Kiefel, Bell and Keane JJ said (footnotes omitted):

5. [12]

   In Kramer at [40], Gageler CJ, Gordon, Edelman and Beech-Jones JJ said (footnotes omitted):

6. [13]

   As noted in this passage, it is because the relief is moulded to prevent the detriment arising from the plaintiff acting upon the expectation to which the promise gave rise that the relief will usually require the fulfilment of the promise. This reflects the purpose of the remedy in proprietary estoppel cases, which is to deal with the unconscionability constituted by the promisor resiling from the promise which induced the detrimental reliance by the promisee: Sidhu at [85]; Guest v Guest [2024] AC 833 at [13] and [94] per Lord Briggs JSC (Lady Arden and Lady Rose agreeing).

7. [14]

   It follows that there is no positive requirement for a plaintiff to prove that the relief sought is proportionate; rather the principle of proportionality operates as a negative restraint such that the plaintiff is entitled to relief which makes good the expectation unless that would be out of all proportion to the detriment: see eg Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84 at [4] per Allsop P and [62] and [77] per Handley AJA; Ashton v Pratt (2015) 88 NSWLR 281; [2015] NSWCA 12 at [142] per Bathurst CJ (McColl and Meagher JJA agreeing); Priestley v Priestley [2017] NSWCA 155 at [160] and [164], per Emmett AJA (McColl and Macfarlan JJA agreeing); Moore v Aubusson [2020] NSWSC 1466 at [418]; Soulos v Pagones [2023] NSWCA 243; (2023) 416 ALR 181 at [402]-[407] per Ward P (Meagher and Mitchelmore JJA agreeing at [693]); and see also Guest at [76] per Lord Briggs JSC; S Rares and Q Rares, The Law of Estoppel in Australia (LawBook Co, 2026) at [9.900].

8. [15]

   It also follows that the court does not seek to frame the relief to do the minimum equity to do justice between the parties: Delaforce at [3], [59]; Sidhu at [85].

9. [16]

   The court must take into account the impact of its orders on third parties and any injustice they would suffer: Delaforce at [60], citing Giumelli at 113-4, 125. In Donis v Donis (2007) 19 VR 577; [2007] VSCA 89 Nettle JA (Maxwell ACJ and Ashley JA agreeing) summarised the approach to be taken to the relief for proprietary estoppel by encouragement at [20] (footnotes omitted):

10. [17]

    The plaintiff submitted that proportionality is not in issue. The Court has found that the deceased clearly and unequivocally intended that he would leave the plaintiff ‘all his possessions’ (J[169]-[170]). The plaintiff is entitled to have his expectation made good unless the relief sought is out of all proportion to the detriment suffered: Priestley at [164]. The findings in the J with respect to detriment make clear that the detriment was very significant and of a life-changing nature, and accordingly the relief sought is not out of all proportion to the detriment suffered.

11. [18]

    The plaintiff submitted that where, as here, the expectation was defined with certainty by the party estopped, that is where the court must start reflecting the importance of making good the expectation which has been encouraged by the party estopped: Delaforce at [4] and [92]. There is nothing in the present case that calls for anything less than the fulfilment of the promise made by the deceased, in particular no third-party will suffer from the court giving relief which fulfils the promise. As confirmed by the Court’s findings, the defendant had practically no contact with the deceased and it is clear that her approach throughout the litigation was entirely self-serving.

12. [19]

    The reliance placed by the defendant on Moore v Aubusson at [424]-[425] is misplaced because in that case the expectation relief was granted in respect of the two parcels of land which were the property to which the relevant promise related.

13. [20]

    The defendant’s alternative form of relief which would limit it to the amount of $2,900,000 (indexed for inflation) conflates expectation and value, and should not be accepted because there is no reason why the plaintiff’s estimate of the actual size of the estate in August 2013 (at the time of the Guardianship Tribunal application) is relevant to the question of relief.

14. [21]

    The defendant submitted that the appropriate relief in the present case was that stated in proposed order (1) set out at [5] above. This was on the basis that ‘the conscionability of giving effect to the plaintiff’s expectation can be assessed in two ways’:

15. [22]

    These two alternatives are the same as those referred to in J[191], but it appears from the defendant’s proposed order (1) set out at [5] above that the defendant now only advances the second alternative. This would limit the relief to an amount equal to what the plaintiff understood to be Peter’s assets in August 2013, when the plaintiff made an application to the Guardianship Tribunal, said to be $2,900,000 adjusted by CPI to give a present value.

16. [23]

    While accepting that Court has made findings as to the care and support that the plaintiff provided to the deceased (J[22] – [23]), and also the lifestyle decisions that he made on the basis of the representation in July 2010 (J[86]- [87]), and that this detriment cannot be quantified precisely in dollar terms, even on the most favourable analysis, the defendant submitted that it must fall well short of the value of the whole of the estate (approximately $8.7 million).

17. [24]

    The defendant relied on the following observations of Ward CJ in Eq (as her Honour then was) in Moore v Aubusson at [424]–[425], as to the approach to relief which would have been appropriate had she been persuaded that the testamentary promises extended to the whole of the deceased’s estate (as opposed to her finding that the testamentary promises related only to the two properties of the deceased):

18. [25]

    Similarly, the defendant submitted that in the present case, the services provided by the plaintiff fall well short of the value of the estate and hence the detriment suffered is out of all proportion to the value of the promise that is sought to be enforced. In addition, this is not a case where the plaintiff’s expectation was quantified with precision other than by reference to all of the deceased’s ‘possessions’. Where the expectation is not defined precisely, the Court has a greater discretion in moulding the relief: Delaforce at [62].

19. [26]

    The principled method of determining the appropriate relief, and having regard to the reasoning in Moore v Aubusson, is to moderate the relief by reference to what the plaintiff actually thought he was receiving: Giumelli at 121 per Gleeson CJ, Gummow, McHugh and Callinan JJ, quoting with approval the statement of McPherson J in Riches v Hogben [1985] 2 Qd R 292 at 301 that ‘what attracts the principle is not the promise itself, but the expectation which it creates’); see also Roch LJ’s statement in Sledmore v Dalby (1996) 72 P & CR 196; [1996] EWCA Civ 1305 that ‘[t]he extent of the equity is to have made good, so far as may fairly be done between the parties, the expectation of A which O has encouraged’.

20. [27]

    Either approach outlined at [21] above would, it was submitted, provide ‘a more proportionate remedy’ (albeit far exceeding the detriment suffered by the plaintiff), but does so on a principled basis by reference to the actual financial expectations of the plaintiff. In that respect, the second alternative more accurately reflects the plaintiff’s actual expectation.

21. [28]

    The defendant also submitted that in the event that the Court finds that the plaintiff is entitled to the entire estate, the plaintiff’s entitlement is only ascertained after all debts and liabilities of the estate have been paid (including defendant’s costs which are considered to be a first charge over the whole of the trust estate). By way of analogy, it has been held that where a promisor enters into a contract to leave the residue of his or her estate to a promisee, the promisee is only entitled to so much of the estate as remains after all the creditor’s claims have been satisfied: Jervis v Wolferstan (1874) LR 18 Eq 18; Bigg v Queensland Trustees Limited [1990] 2 Qd R 11 at 17; Barns v Barns (2003) 214 CLR 169; [2003] HCA 9 at [65].

22. [29]

    In my view, the relief granted to the plaintiff in the present case should make good the expectation to which the promise made by Peter in 2010 gave rise. That expectation was that Peter would leave him ‘all my possessions’ subject to a condition that Peter survived Lily, which condition was satisfied. Contrary to the defendant’s submission, that expectation was neither undefined nor uncertain (and hence what was said by Handley AJA in Delaforce at [62] and [92] about the position where the expectation is ‘undefined or uncertain’ does not arise). The words ‘all my possessions’ meant that the promise was a gift of Peter’s entire estate, real and personal: Re East Dec’d [1964] QWN 16; Fielder v Burgess [2014] SASC 98 at [43]-[54].

23. [30]

    Re East Dec’d concerned a gift in a will of ‘all my monetary and personal possessions’. Gibbs J held that these words were to be construed as comprising the entire estate, real and personal, of the testator with the words ‘monetary and personal’ adding nothing to the meaning of the phrase ‘all my possessions’. In relation to the words ‘all my possessions’ his Honour said at [4]:

24. [31]

    I accept the plaintiff’s submission that plaintiff’s expectation that he would receive entirety of Peter’s estate if he survived Lily was not extravagant or out of all proportion to the detriment he suffered. This detriment is identified in J[22]-[24], [31]-[32], [86]-[89], [180]-[184] and [187]-[188]. It included caring for an elderly person which went far beyond what would be expected of a friend and is not capable of quantification in monetary terms: cf Jennings v Rice [2002] EWCA Civ 159 at [51]. Further adding to the burden on the plaintiff was that the commitment he made in 2010 to provide that care was for an indeterminate time. He provided that care for a period of eight years until Peter’s death including regular and frequent visits when Peter was in full-time care at the Cardinal Stepinac Nursing Village: J[22]-[24] and [31]-[32]. The provision of care and assistance to elderly persons of this kind is a type of detriment that is ‘life changing’ and ‘substantial’: Zupic v Piano [2018] NSWSC 692 at [85]. It was life changing here also because the plaintiff delayed his decision to move to Queensland to be with his grandchildren (J[182]) and substantial amounts of time were devoted by the plaintiff to the care of Lily and Peter which meant that he neglected his own obligations to his teenage children (J[86]-[89]).

25. [32]

    For these reasons, it would be unconscionable for Peter to have departed from the expectation created by the promise he made, and on which the plaintiff relied to his detriment, and the relief should give effect to that expectation.

26. [33]

    The appropriate relief to fulfil the expectation is to impose a constructive trust over Peter’s estate to give effect to the promise, but on the basis that it confers an entitlement to the net estate after payment of all estate expenses and liabilities (including costs of these proceedings). This appropriately moulds the relief to reflect the true nature of the promise, which must be ‘subject to the same contingencies’ as a testamentary contract of the same kind: Delaforce at [33], [35]. An example of case of the latter kind is Bigg v Queensland Trustees Ltd [1990] 2 Qd R 11 where McPherson J held that the trust to be imposed to give effect to a binding promise to dispose of an estate by will was the net estate after discharging the deceased’s liabilities and funeral expenses and costs, stating (at 17):

27. [34]

    No third party has been identified whose interests would be adversely affected in a relevant way by granting the relief in this form. No injustice to the defendant has been identified.

28. [35]

    The constructive trust arose as from 2 November 2017 (the date of Peter’s death) reflecting the principle that where proprietary estoppel is established and detrimental reliance upon the relevant promise gives rise to a constructive trust, the constructive trust comes into existence at the time of the conduct which gave rise to the trust: McNab v Graham (2017) 53 VR 311; [2017] VSCA 352 at [102], [107]-[109] per Tate JA (Santamaria and Keogh JJA agreeing). In this case, that was the date of Peter’s death. While the defendant was not appointed as administrator until 14 August 2023, this vested in her all Peter’s real property as from death (which included the Tulloch Avenue property): Probate and Administration Act 1898 (NSW), s 45; see generally G E Dal Pont, Law of Succession (3rd ed, 2021, LexisNexis) (Dal Pont on Succession), [11.80].

29. [36]

    I do not think it is appropriate to make the additional orders sought by the plaintiff referred to at [4(2)-4(3)] given that the defendant has to take some additional steps to complete the administration. The parties should be able to work out a practical way to implement the order declaring the constructive trust, but I will grant liberty to apply in the event that some issue does arise.

30. [37]

    I do not accept the defendant’s submissions regarding the alternative relief she contends for:

    1. (1)

       As to the first alternative in [21] above, the mere fact that the promise made by Peter was conditional on Lily dying first does not suggest that giving effect to the plaintiff’s expectation would be out of all proportion to the detriment. I have dealt with why the conditionality of the promise is not a basis to deny relief at J[173]-[177]. I note also that a significant part of the detriment was suffered after Lily’s death.

    2. (2)

       As to the second alternative in [21] above, the evidence relied on relates to the application form to the Guardianship Tribunal completed by the plaintiff in August 2013, which required information about Peter’s ‘financial situation’ including a list of his ‘major assets’ and their value. The plaintiff wrote on the form that Peter’s major assets were ‘house’ with a value of $900,000, ‘shares’ with a value of $1,000,000 and ‘savings deposits’ with a value of $1,000,000. It is apparent from the Inventory that the identification of Peter’s three major assets was correct but the plaintiff may well have underestimated their value. However, that is not a proper basis for concluding that the prima facie relief is out of all proportion to the detriment suffered. The plaintiff’s expectation was that he would receive a gift of all Peter’s possessions, whatever their value may be (T21.25-34). For this reason, the relief sought by the plaintiff is not inconsistent with the observation of McPherson J in Riches v Hogben at 301 that what attracts the principle is the expectation created by the promise.

    3. (3)

       The observations made by her Honour in Moore v Aubusson at [424]-[425] set out above were directed to the facts of that case and cannot be transposed to the present case. In particular, given the nature of the detriment in the present case, it cannot be quantified or relevantly compared to the value of the promise. Further, the comparison between the services provided by the plaintiff and the value of the estate is a false one, as it fails to take account of all the relevant detriment in this case. This is not a case of the kind referred to in Kramer at [40] where the detriment is relatively small or a readily quantifiable monetary outlay.

    4. (4)

       The observation of Roch LJ in Sledmore v Dalby relied on by the defendant needs to be read in light of the fact that it was a case applying the principle that the relief must search for the minimum equity to do justice (as is clear from his Lordship’s conclusion that ‘I would allow this appeal and make an order for possession in the appellant's favour on the basis that the minimum equity to do justice to the respondent on the facts of this case was an equity which has now expired’). As noted earlier, that ‘minimum equity’ principle does not apply in Australia. For this reason also, the defendant’s submission that the second alternative of limiting the relief to a lump sum of $2,900,000 should be adopted because it ‘provides a more proportionate remedy’ is wrong as it involves the application of the wrong test.

Costs

1. [38]

   The issue in relation to costs is whether the defendant’s costs of these proceedings calculated on the indemnity basis should be paid out of the estate.

2. [39]

   It is common ground that an executor and trustee (including an administrator) is entitled to an indemnity (or, where costs have been paid, reimbursement) from the estate for expenses incurred in the execution of the will and in the administration of any trusts: ss 59(4) and 93 of the Trustee Act 1925 (NSW).

3. [40]

   Rule 42.25 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) provides:

4. [41]

   Rule 42.25 operates by way of an exception to r 42.1, pursuant to which costs follow the event subject to other provisions in Pt 42.

5. [42]

   The defendant submitted that that she is entitled to an order for her costs being paid on the indemnity basis out of the whole of the trust estate as a first charge and in priority to any distribution to the plaintiff. It was submitted that it cannot be said that she conducted or maintained these proceedings unreasonably or improperly. She did so in her capacity as administrator, representing the interests of all of those parties entitled on intestacy having obtained on 16 October 2024 judicial advice pursuant to s 63 of the Trustee Act that she would be justified in defending these proceedings.

6. [43]

   The plaintiff submitted that the defendant should not be entitled to indemnity for her costs out of the estate because she has, in substance, acted for her own benefit in these proceedings: see Nadilo v Souris (No 2) [2019] NSWSC 246 per Leeming JA at [37] – [40] citing Nowell v Palmer (1993) 32 NSWLR 574 at 581-582. It was submitted that she would have been well aware that disproving the plaintiff’s case would have meant that she would take the entire estate pursuant to the rules of intestacy. The manner in which her affidavit evidence was prepared (including the matters pointing to the involvement of others in its preparation) shows that she (and those who assisted her) were in substance acting for her own benefit.

7. [44]

   Section 63 of the Trustee Act provides relevantly:

8. [45]

   In Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42, the plurality (Gummow ACJ, Kirby, Hayne and Heydon JJ) said in relation to judicial advice obtained pursuant to s 63 of the Trustee Act (at [70]-[72]):

9. [46]

   In my view, the defendant acted properly in obtaining judicial advice that she would be justified in defending the proceedings and acted in accordance with the judicial advice she received. By obtaining that advice she resolved doubt about whether it was proper for her to defend the proceedings. While it appears that she was the sole person entitled on an intestacy, when the proceedings were brought she had assumed the office of administrator and was subject to the same duties as an executor including to get in the assets, pay expenses and liabilities of the deceased and then distribute the estate in accordance with the rules of intestacy and produce accounts: Dal Pont on Succession at [12.1]. Those duties included paying the liabilities of the estate to the Australian Taxation Office referred to above which are significant. Her role was not simply to act in her own interest: cf Nadilo at [37]-[40].

10. [47]

    In addition, I consider that she was entitled to put the plaintiff to proof of his case as it concerned dealings between the plaintiff and Peter about which she had no direct knowledge. Hence, while I gave her evidence no weight (J[135]), this had no bearing on the outcome.

11. [48]

    In all the circumstances I consider it is appropriate that the defendant’s costs of defending the proceedings be paid out of the estate on an indemnity basis pursuant to UCPR r 42.25.

Conclusion

1. [49]

   For these reasons the Court will make the following orders:

   1. (1)

      A declaration that the Defendant as administrator of the estate of the late Peter Kastropil (the deceased) holds as from 2 November 2017 the net estate after payment of all estate expenses and liabilities (including costs referred to in orders 2 and 3 below) on constructive trust for the Plaintiff.

   2. (2)

      An order that the Plaintiff’s costs be paid out of the deceased’s estate on the ordinary basis as agreed or assessed.

   3. (3)

      An order that the Defendant’s costs be paid out of the deceased’s estate on the indemnity basis.

   4. (4)

      Liberty to apply on 3 days’ notice setting out the relief sought.