The legal principle of “estoppel” can be called upon to prevent someone from going back on a promise when another person has relied on that promise to his or her disadvantage.
The High Court’s decision in Kramer v Stone demonstrates how casual promises about a rural property can carry legal weight.
A landowner, Dame Leonie, had assured her farmhand of 23 years that the farm would be his upon her passing. Even though the topic was never discussed again between them, the farmhand, encouraged by the promise, continued working on the property for only a modest wage.
On Dame Leone’s death, her Will left the farm to her daughter, prompting the farmhand to take legal action.
The Court found that Dame Leonie should have expected the farmhand to act in reliance on the belief he would one day inherit the farm and awarded the farmhand title to the property.
The case sends a clear warning to landowners that informal promises can be enforceable. Verbal assurances can create legal obligations. For rural families, it highlights the need to ensure succession plans are properly documented and reviewed as circumstances change.
To minimise the risk of disputes that can take an emotional and financial toll, rural families should:
- ensure any agreements concerning valuable assets are in writing, not left to memory or exposed to contrary perceptions; and
- keep records of important conversations, especially those relating to ownership or inheritance.
We would like to acknowledge the contribution of Laura Storck in the development of this article.
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