Testamentary Promise: High Court Upholds Farm Inheritance Claim
In the case of Kramer v Stone [2024] HCA 48, the High Court of Australia reaffirmed the enforceability of testamentary/inheritance promises under the doctrine of proprietary estoppel by encouragement. This decision underscores the importance of aligning verbal promises with formal testamentary documents.
Case Overview
Background: David Stone managed a farm in Upper Colo, NSW, since 1975 under an oral share farming agreement with the late Dr. Harry Kramer. After Dr. Kramer's death, his wife, Dame Leonie, assured Mr. Stone that he would inherit the farm upon her passing. Relying on this promise, Mr. Stone continued managing the farm under challenging conditions for 23 years.
Will Provisions: Contrary to her earlier promise, Dame Leonie's Will bequeathed the farm to her daughter, Hilary Kramer, leaving Mr. Stone a sum of $200,000.
Legal Proceedings: Mr. Stone claimed proprietary estoppel, asserting that his reliance on Dame Leonie's promise to his detriment entitled him to the farm. Both the Supreme Court of NSW and the Court of Appeal ruled in his favour, leading to an appeal to the High Court.
Decision
The High Court dismissed the appeal, affirming that:
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Clear Inheritance Promise: Dame Leonie's assurance constituted a clear and unequivocal promise.
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Reasonable Reliance: It was reasonable for Mr. Stone to rely on this promise, and such reliance was foreseeable by Dame Leonie.
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Detrimental Action: Mr. Stone's continued management of the farm under substandard conditions and for minimal income demonstrated reliance to his detriment.
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Unconscionability: It would be unconscionable to allow Dame Leonie's estate to renege on the promise, given Mr. Stone's significant detrimental reliance.
Implications
Estate Planning: Discrepancies between verbal promises and formal testamentary documents can lead to legal disputes and unintended estate distributions.
Proprietary Estoppel: The decision highlights that courts may enforce verbal promises regarding property inheritance if the person to whom the promise was made has reasonably relied on the promise to their detriment.
Legal Consistency: To prevent potential claims, ensure that any assurances or promises about property succession are recorded and reflected accurately in legal documents.
Estate Legal Proceedings: Disappointed beneficiaries should be questioned about any promises made to them by the deceased and the circumstances in which any such promise was made.
People are advised to review their estate plans to ensure consistency between their intentions and legal documents, and so mitigating the risk of disputes grounded in proprietary estoppel. Conversely, disappointed beneficiaries should be questioned about any testamentary promises made to them.
For more information or assistance with testamentary/inheritance promises, please contact our Private Clients team.
Author: Gerard Basha