Share farming & Proprietary estoppel

The fundamental purpose of equitable estoppel is to protect a person from acting to their detriment by preventing the promisor from resiling from their promise or representation; proprietary estoppel applies where a person induces another to adopt an assumption or expectation that the other has or will obtain an interest in the first person’s property, and on the basis of this assumption the other person alters their position or acts to their detriment.

Proprietary estoppel

The two types of proprietary estoppel are:

estoppel by encouragement -where a person relies upon express promises or representations that they will obtain an interest in land, and

estoppel by acquiescence – where a person improves land in the mistaken assumption that they have an interest in the land, and the owner of the land who is aware of the mistake does nothing to dispel this assumption.

Background

David Stone and Harry Kramer entered into an oral share farming agreement in 1975 that David would grow crops and maintain a farming property in Colo; Harry would pay all operating costs except the costs of fuel which would be shared. David would live rent free in one of the houses on the Colo Property, be paid a retainer of $600 per quarter and receive half the gross proceeds from the sale of produce and cattle.

In the early 1980s Harry told David that if he continued with the Share Farming Agreement and with management of the farm he would be left a life interest in the Colo Property in Harry’s will (the First Succession Plan).

In 1987 or 1988 Harry told David that he and Leonie had agreed that He would leave the Colo Property to her in his will, but that she would then leave the Colo Property to David (the Second Succession Plan) if he continued with the Share Farming Agreement and with management of the farm.

Harry died in 1988 Leonie as executor and beneficiary of his estate was obliged to adhere to the Share Farming Agreement, and the First and Second Succession Plans.

Following Harry’s death, Leonie told David that if he continued with the Share Farming Agreement and with management of the farm he would inherit the Colo Property together with $200000.00 (the Third Succession Plan). Leonie died in April 2016.However in her will, made on 11 November 2011 Leonie left the farm to her daughter Hilary and $200,000 to David.

The proceedings


David commenced proceedings against the executors of Leonie’s estate submitting that he had continued with the share farming agreement, and undertook additional tasks on the Colo Property, in the expectation that Leonie would bequeath the Colo property to him, instead of following a different occupation that would have provided a higher income and greater provision for his old age.

The decision

The Court was satisfied that David acted on the faith of that assurance to his detriment by continuing the farming operation on the Colo Property for about 23 years thereafter in the belief that he would inherit that property under Leonie’s will.

The court inferred from an analysis of David’s income that in the period of 1976 to 2003 he had earned roughly one third of the average annual male income.

Consequently, David was entitled to appropriate equitable relief to relieve him of the effect of Leonie’s unconscionable conduct not to have left the Farm to David in her will.

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