Equity answers broken promise: proprietary estoppel in Currie v Currie

Last year, the Supreme Court of Western Australia published its decision in the case Currie v Currie.¹

The case involved a bitter family dispute over valuable farming property in the Wheatbelt region of Western Australia.

In his decision, the Honourable Justice Le Miere outlines when equity will intervene, to prevent unconscionable outcomes, where a party acts in reliance on a promise.

Facts 

Husband and wife, Graeme and Erica Currie farmed in partnership at Bruce Rock. 

They had four children, including sons Bruce Currie and Andrew Currie.  Bruce and Andrew worked the farm, along with Graeme.

Graeme discussed his succession plans with Bruce and Andrew on multiple occasions, and promised (by way of oral assurances and proposed succession plan documents) to split the farm between the two sons.

Acting in reliance on Graeme’s promise, Bruce registered the business name “Glenayr Farms”, through which he operated his farming business, on his prospective share of the farm. 

Bruce established a loan facility with Rabobank, and repaid a portion of Graeme’s own Rabobank debt. Bruce also purchased land adjoining the “Glenayr Farms” land.

Despite taking on a large financial burden, and committing himself to a career in farming, Bruce still did not have title over the land on which he farmed. Bruce organised a meeting with Graeme to mediate and discuss succession, and although an in-principle agreement was formed, the transfers were never completed.

Graeme did not want to transfer the properties until his death (by the terms of his Last Will and Testament) in order to avoid stamp duty becoming payable. As Graeme was in his seventies, Bruce was wary that he may not receive title for another twenty years. During an argument with Bruce, Graeme proclaimed “who gets their inheritance from a person before that person dies?”²

Previously, Graeme’s promise to transfer the properties to Bruce had not been subject to a gift by Last Will and Testament.

Subsequently, Graeme provided Bruce with a lease document to permit Bruce to continue farming on Graeme’s property (at a price).

Although Bruce did sign (in protest), his relationship with Graeme deteriorated, due to the financial pressure he was under, and the uncertainty of receiving the property promised to him.

Tensions reached boiling point when, during a heated argument, Bruce threatened Graeme with an unloaded gun.

Graeme then instructed his solicitors to write to Bruce, asserting that Bruce had no entitlement to any of the land, including upon Graeme’s death.³

As a result, Bruce commenced proceedings against Graeme (and Andrew). Bruce’s claim was grounded on proprietary estoppel, in that he claimed he was induced by Graeme’s representations and conduct to “expect or assume that [Graeme] would…pass ownership of the…properties to him."⁴

Proprietary estoppel

In his decision, Justice Le Miere outlined⁵  that in order for proprietary estoppel to be established, the following had to be proved:

• Bruce had assumed he would acquire or take ownership of the property;
• Bruce’s assumption was induced, encouraged or acquiesced in by Graeme; 
• Bruce had detrimentally relied upon his assumption; and
• It would now be against the conscience for Graeme to be permitted to depart from the assumed state of affairs.

Graeme argued that “an assumption that land would be received by will, rather than during [his] lifetime is incapable of giving rise to a proprietary estoppel because a person’s will is inherently revokable”. ⁶ Justice Le Miere did not agree; a promise to make a gift by will is not necessarily a promise to make a “revokable testamentary instrument".

“…the inherent revocability of [Wills] (even if well understood by the parties …) is irrelevant to a promise or assurance that ‘all this will be yours’”.

“Where assurances given were intended to be relied on, and were in fact relied on, it was not necessary to look for an irrevocable promise since it was the other party’s detrimental reliance on the promise which made it irrevocable”.⁹

Justice Le Miere found that Bruce assumed that Graeme would pass ownership of the properties to him.¹⁰  Bruce worked full time on the properties, and pursued a career in farming (to the exclusion of other career paths). By Graeme’s conduct and promises, Bruce acted under the assumption that Graeme would assign ownership, and did so to his detriment.

Justice Le Miere held that it would be unconscionable for Graeme not to fulfil the assumption which he encouraged, and on which Bruce relied. The fundamental purpose of proprietary estoppel “is to protect the plaintiff from the detriment that would flow from the defendant’s change of position if the defendant were to be permitted to resile from his or her promise”.¹¹  Therefore, “the relief granted may require the taking of active steps…including the performance of the promise."¹²

Accordingly, Justice Le Miere ordered that Graeme hold those properties that had been promised to Bruce (at a later date or by will), on constructive trust, to be subsequently transferred to Bruce.

Lavan comment

The decision provides useful insight into how the court may view a promise to gift specific property by Will. Despite a Will maker having full discretion to revoke or change their will, if a promise has been made as to the form of the Will, and the person to whom the promise has been made acts in reliance on that promise (to their detriment), the property which has been promised may ultimately be deemed to be held on constructive trust.

If planning for future succession, or intending to make a Will to give effect to promises made, we recommend contacting Lavan to discuss your options.