Can a claim for property still be made when promises are broken?

Proprietary estoppel claims, especially in respect of farming properties, are on the rise.  Estoppel by encouragement “is founded in an assumption as to the future acquisition of ownership of property which has been induced by a representation or promise upon which there has been detrimental reliance by the plaintiff” (Q (a pseudonym) v E Co (a pseudonym) [2020] NSWCA 220).

The recent case of Reeves v Reeves [2024] NSWSC 134 involved a dispute between two siblings regarding their entitlement to valuable farming property following their mother’s death.  Their father had died before their mother, and the Plaintiff and the Defendant were the only two children. 

The Plaintiff claimed that in his teenage years his parents had promised that he would inherit “half of the farm” (Initial Promises) and he had relied on those promises and chose to remain on the farm instead of pursuing other opportunities. 

After the death of the Plaintiff’s father, his mother decided to close the dairy, which operated on the farm.  She instead set up a beef cattle operation and leased some of the lots that formed part of the property.  The Plaintiff claimed that his mother encouraged him to continue to work on the farm on the understanding that he would receive the portion of the farm that had been leased (Subsequent Promises).  The farm comprised 21 lots and the Plaintiff claimed he was promised 13 of the lots as well as part of another lot (the Leased Lots) which were predominantly located north of a road that divided the property.  His mother subsequently made a Will which only gifted 2 of the Leased Lots to the Plaintiff and the rest of the property to the Plaintiff’s brother (the Defendant) who had also lived and worked on the farm.

The Plaintiff made both a construction claim, and a rectification claim in relation to his mother’s Will.  He asked the Court to properly construe the reference to the gifted lots in the Will to mean most of the lots north of the dividing road. Those claims were unsuccessful and were dismissed by the Court.

The Plaintiff also claimed that he was entitled to 14 of the farm’s 21 lots based on the principles of proprietary estoppel, specifically estoppel by encouragement.  In making its decision, the Court considered whether the deceased made the promises or representations to the Plaintiff, whether the promises were merely statements of revocable intention or were of a binding nature, whether the Plaintiff relied on the promises, whether the Plaintiff’s parents knew (actually or otherwise) that the Plaintiff was relying on the promises and whether the Plaintiff relied on the promises to his detriment.

The Plaintiff claimed his parents had encouraged him to stay and work on the farm and had repeatedly made representations or promises to him that he would inherit part of the farm (the Initial Promises and the Subsequent Promises), and he had relied on those representations to his detriment.  The Plaintiff is a research scientist and claimed he gave up the opportunity to study medicine and for postdoctoral studies overseas (this was not disputed) so he could remain on the farm and assist with farming operations in reliance on the promises that had been made to him. 

In making its decision, the Court considered several factors including the evidence of witnesses to conversations as well as the evidence of the solicitors who prepared the mother’s last Will and her prior Will.  The Court found that the Subsequent Promises were not mere statements of present intention but were an assurance of provision and were intended to have a binding effect [at 603].  The Court also found that the Plaintiff relied on the promises by forgoing educational opportunities, his entitlement to profits from the dairy operation, and opportunities to purchase and set up a family home elsewhere.  He instead remained on the farm and undertook farming tasks, maintenance and improvement works, often without remuneration. The Court was also satisfied that it was clear to the parents that the Plaintiff was acting in reliance on the promises.  The Court held that the decisions made by the Plaintiff were life changing with “irreversible consequences of a profoundly personal nature, beyond the measure of money” [at 813].

The Court held that the Plaintiff was successful in his estoppel claim in relation to the 14 lots.

If a promise has been made to someone in relation to inheritance of a property and circumstances later change, it is important for families to openly communicate their intentions in relation to their succession plans to help alleviate the potential for disputes between family members.