But she promised I could have the farm when she died! – Problems with Promising Property

Have you been promised a property or other gift when someone dies? Or are you the one making those promises?

The High Court recently considered what happens when a person promises to leave a farm to someone in their Will but doesn’t follow through.

Spoiler alert: verbal promises can carry real legal weight, even if they aren’t written into a Will!

The Promise

Mr Stone began share farming on land owned by Dr Harry and Dame Leonie Kramer in 1975. In the 1980s, Dr Harry made two promises to Stone:

1. that Stone would inherit the farm; and
2. that the farm would be left to Dame Leonie, who would then pass it to Stone.

After Dr Harry’s death in 1988, Dame Leonie became sole owner. She later repeated the promise to Stone “out of the blue,” even adding that Stone would receive a sum of money.

Stone relied on these promises for the next 23 years, working for minimal pay and living in poor conditions. But when Dame Leonie died in 2016 her last Will left the farm to her daughter, Hilary, and gave Stone only $200,000.

The first court decision: Stone wins

When the case first went before the Supreme Court of NSW, the judge ruled in favour of Mr Stone.  The court found that:

• there was a clear promise that Stone would inherit the farm;
• Stone reasonably relied on the promise to his detriment by staying on the farm, working for low wages and missing better opportunities; and
• Dame Leonie should have been aware of his reliance.

The legal concept at the heart of this decision is called estoppel.  Simply put, it prevents someone from going back on a promise if it would be unfair to do so, especially when a person has relied on the promise to their detriment.  In this case, the court decided it would be unjust to allow the promise to be ignored.

The fight over the farm continues

Dame Leonie’s daughter appealed the decision, first to the Court of Appeal and then to the High Court of Australia.  She argued that the promise should not be enforced unless:

1. Dame Leonie gave further encouragement to Stone after the original promise; or
2. Dame Leonie had actual knowledge that Stone was still relying on the promise.

The Final Decision:

The High Court disagreed with Dame Leonie’s daughter and upheld the earlier decision.  The farm was ordered to be held on trust for Mr Stone by Dame Leonie’s estate.

The majority of the High Court clarified that a clear promise, coupled with a person’s reasonable reliance on it to their detriment, can be sufficient to establish an equitable remedy.

Importantly, they said that actual knowledge of reliance or further encouragement is not essential, as long as the original promise implied that reliance was likely.

Takeaways: When promises become enforceable

• Verbal promises can have legal consequences, especially when someone relies on them and suffers a loss.
• A Will can be challenged if there is strong evidence of a prior verbal promise that was relied on.
• Promises made today can turn into court cases tomorrow: talk to a lawyer before you rely on one.

Have you been promised an inheritance, or thinking of making one?

We support our clients as they navigate the legal risks of promises, or Will and estate planning.  Whether you are worried about a future dispute or dealing with one now, we are here to help.

Call us on 4951 8199 or email for more information on how we can support you.

 

The material included in this website is produced by O’Hearn Lawyers Pty Limited.  It is designed and intended for general information purposes only.  The contents do not constitute legal advice, are not intended to be a substitute for legal advice and should not be relied upon as such.  You should seek legal advice or other professional advice in relation to any particular matters you or your organisation may have.