The Facts
Rural property purchased by couple and managed on share farming basis
A married couple bought a rural property on the northwest peri-urban fringe of Sydney in 1969. Both held high-profile jobs in fields unrelated to agriculture, so for the whole of the time between the purchase and the death in 2016 of the wife, who outlived her husband, the property had to be run by a manager on a share farming basis.
The claimant was the son of the man who had managed the property until 1974, after which the claimant, then 22, took over, and remained as the manager until the death of the wife.
Under the will of the wife β the sole owner of the property after her husbandβs death β the property was left to one of her two daughters; and there was a gift of a little over $200,000 to the claimant.
Claimant starts legal action alleging broken promise to leave him the farm
The claimant started legal action, saying that on various occasions the wife had assured him that the property would be his when she died.
He said that in sticking with the task of managing the property for such a long time, he had relied on that assurance; that the wife should have known that; and that he, and not the daughter, should become the property owner.
Claimant lives rent-free on property and receives retainer
The arrangements under which the claimant share farmed the property were mainly organised by the husband. The 25-hectare property was variously used as a citrus orchard, for grazing cattle, and for growing vegetables for sale; although it was not really a fully commercial enterprise, and would have been more accurately described as a hobby farm.
The claimant lived in a rent-free house, received a regular retainer (which in the absence of other benefits would not have been a living wage), and had all operating costs met except fuel, which was shared.
Absence of documentation to confirm arrangements
These arrangements were purely word-of-mouth; there was nothing written down. The claimant asserted that during the 1980s, three oral promises were made to him; two by the husband, and one by the wife, after the husbandβs death.
The court referred to these as βthe representationsβ, although the claimant characterised them as βsuccession plansβ.
Claimantβs account of representations made to him
According to the claimant, the first of the representations was that in his will, the husband would give the claimant a βlife interestβ in the property, under which it would be left to the two daughters, but on the condition that the claimant could live there until he died, or decided to leave.
The second representation, the claimant said, was that the husband, expecting that he would shortly die, told him that he would leave the property to his wife in his will; but she and he had agreed that when she died, she would leave the property to the claimant.
The third representation (strongly disputed in evidence) was that, after the death of the husband, the wife had said to the claimant that in her will she would leave the property βand a sum of moneyβ to him.
Details of wifeβs will become known after her death
When the wife died, it was discovered that she had left the property not to the claimant, but to one of the coupleβs two daughters instead.
There was, however, a bequest to the claimant of $200,000, subject to adjustment by any change in the CPI between the date of the will and the date of distribution of the assets.
When the wife died, the claimant commenced proceedings in the Supreme Court of NSW, claiming the property was held on trust for him.
Supreme Court finds in favour of claimant
Those proceedings were determined in favour of the claimant. The reasons given were complex, but the central theme was that the claimant would not have remained in such uncertain and poorly remunerated work had he not done so in reliance on the representations, and that this reliance was reasonable.
The beneficiary daughter appealed to the NSW Court of Appeal, which unanimously dismissed her appeal, taking, in broad terms, the same view as the Supreme Court. The daughter then appealed to the High Court.
Expert commentary on the court's decision
High Court rules in favour of claimant
In Kramer v Stone [2024] HCA 48, the High Court found, by majority, in favour of the claimant, Mr David Stone. In doing so, it rejected the arguments of the daughter, Ms Hilary Kramer.
Understanding of the intricacies of the concept of estoppel, and the circumstances which will give rise to an estoppel can only be fully appreciated by reading the judgment in full. Even then, quite a bit of background is required for a complete picture.
Daughter argues that court should give effect to her motherβs will
The daughterβs primary argument when the claimant first took legal action in the NSW Supreme Court was, obviously, that the court should give effect to the terms of her motherβs will, and order that the property be transferred to her.
However the judge (usually referred to as the judge βat first instanceβ in the report of an appeal) sided with the claimant, by largely accepting the claimantβs evidence about the representations.
The daughter appealed to the NSW Court of Appeal, where the disputes about the underlying facts were largely decided in the claimantβs favour, so when the case reached the High Court of Australia, only one real dispute about the facts remained.
This was whether the wife had an expectation that the claimant would rely on her assurance that she would leave the farm to him in her will, demonstrated by his continuing to manage the farm, despite the material detriments to him.
Arguments in High Court centred on concept of estoppel
In the High Court, the daughter did not challenge most of the findings on disputes of fact which had gone against her in both the Supreme Court and the Court of Appeal. This left the bulk of the arguments in the High Court to be around the concept of estoppel.
It is correctly said that a promise made to someone, in the absence of some additional factor such as a contract, a deed, or a bequest in a will, does not give rise to a legal right which might be enforced by a court if the promise is broken.
The daughter argued that nothing in her motherβs conduct β even largely accepting the claimantβs account of what the wife had said and done β justified setting aside the gift of the farm to her in her motherβs will.
What is estoppel?
Derived from an Old French word (meaning, unsurprisingly, to stop), estoppel is actually a rule of evidence. In court proceedings, estoppel has the effect of preventing a litigant from asserting (or denying, as the case may require) the existence of some fact, irrespective of whether it actually exists.
The claimantβs central argument was that the daughter was βestoppedβ from relying on the provision of the will leaving the farm to her. As βestoppedβ and βestoppelβ are not words in very common usage, despite having been around for centuries, itβs only fair to provide a bit of explanation.
Estoppel rests heavily on notions of good conscience
Many kinds of estoppel are described as βequitable estoppelβ; βequitableβ being a term deriving from a centuries-old distinction between βlawβ and βequityβ.
These are terms which have meanings quite different in the legal context than in ordinary everyday English. In England many centuries ago, courts of equity were established as a result of pressure from the church.
These were βcourts of conscienceβ, designed to be complementary to the common law courts, where the rules were inflexible; and technicalities could defeat a litigant with the moral high ground. The term βunconscionableβ is found in this judgment, and in many others, where equitable considerations are being discussed.
Equitable concepts and principles were developed in large measure to moderate the cut-and-dried, black-and-white nature of the common law. The application of common law principles not infrequently produced results which were legally correct, but nonetheless obviously unfair.
The concept of estoppel is not confined to equity, but equitable estoppel rests heavily on notions of good conscience. And there are even subspecies: a reader of the judgment will come across terms such as estoppel βby acquiescenceβ; estoppel βby encouragementβ; and so on.
High Court not unanimous in judgment
In some ways itβs easier to start with the view of the single dissenting judge in the High Court. Very much boiled down, the dissenter thought that what the wife had said and done amounted to nothing more than a promise and that, as has been said, a broken promise does not, in and of itself, give rise to a legal right.
This judge went further, to speculate that the wife might even have forgotten about the promise to leave the farm to the claimant in her will.
Claimant acted to his own detriment by remaining in poorly paid job
The other four judges agreed with the outcomes of both courts below, although not necessarily for exactly the same reasons.
However, a key plank of the majorityβs reasoning was accepting that, on all the evidence, the claimant had acted to his detriment in remaining in the poorly remunerated farm manager role in reliance on a clear and unequivocal promise made to him, when he could have accepted much better paying jobs elsewhere.
The underlying equitable principles meant that it would be unconscionable for the court not to act so as to remedy that detriment.
Wife did not have to know that claimant was relying on her promise
The majority rejected two specific arguments presented by the appellant daughter.
One was that the court, in order to find that an estoppel had arisen, should be satisfied that the wife actually knew that in remaining in the farm manager role, the claimant was relying on her promise.
No further evidence required as confirmation of promise and reliance upon it
The other was that the court could not find that an estoppel had arisen in the absence of evidence that, subsequent to the making of the promise, the wife had done or said something by way of confirmation of the promise, or encouragement to the claimant to stay as farm manager in reliance on the promise.
The majority said that neither of these elements was required, if the court had found as fact that the promise had been made; that the claimant had relied on it; and that reliance would have been to the claimantβs detriment if the court did not remedy this by accepting the claim.
Familyβs social standing may explain daughterβs persistence
While itβs difficult to be precise about costs, itβs pretty certain that the daughter, in chancing her arm at three levels of the judicial system and having failed on each occasion, paid a high price for that determination in costs awarded to the claimant.
Finally, a bit of human interest: both the husband and wife had distinguished careers unrelated to the farm or its operation. The husband was Dr Harry Kramer, who served for a long period as Director of the NSW Institute of Clinical Pathology and Medical Research.
The wife was Dame Leonie Kramer AC DBE who was, among other things, for a time Chair of the Board of the Australian Broadcasting Commission, and later Chancellor of the University of Sydney.
Read the judgments
For the first judgment in the Supreme Court of NSW, please see Stone v Kramer [2021] NSWSC 1456.
For the appeal in the Supreme Court of NSW – Court of Appeal please see Kramer v Stone [2023] NSWCA 270.
For the final judgment in the High Court of Australia please see Kramer v Stone [2024] HCA 48.