Stone v Kramer [2021] NSWSC 1456 concerned the ownership of a rural Colo Property. David Lindsay Stone (the Plaintiff) filed a statement of claim against the defendants, Hilary Lorraine Kramer and Jamie Ferrer, who are the executors of the estate of the late Dame Leonie Judith Kramer(the deceased).
The background
The Plaintiff had farmed the Property under an oral share farming agreement since 1975, claiming an entitlement to the Property based on a representation allegedly made to him by the deceased (the representation) that he would receive the Property on her death, following earlier indications reportedly made to him by Dr Kramer to a similar effect (although the first of those representations referred only to a life interest).
The Court held that the evidence suggested that the relationship between the plaintiff on the one hand and the deceased and her husband on the other was an informal halfway house between a commercial and a domestic one, and that even though there was an underlying commercial relationship in the form of the share farming agreement, the parties to that agreement substantially acted upon the basis of trust and the give and take that would commonly characterise a domestic relationship.
In 1988, after the death of her husband, the deceased promised the Plaintiff that she would leave him her 100-acre rural Property along with some money when she passed away. The plaintiff worked on the property for 23 years, believing he would inherit it, but the deceased left it to the appellant in her will, leaving only $200,000 to the Plaintiff. In so doing, the plaintiff had relied on the representation to his detriment0 and that the deceased “ought reasonably to have assumed” and “ought to have known” that the respondent had continued with the share farming agreement on the expectation that he would inherit the Property, and that it was otherwise unconscionable for the deceased to have resiled from the representation.
At first instance, the Court found that the deceased had made the promise and that the Plaintiff had relied on it. The Plaintiff continued to work on the farm, earning only one-third of the average male income, because he believed he would inherit the Property. The Court also found that the Plaintiff likely would have given up farming and pursued a more lucrative job if he knew he would not inherit the Property. The Court concluded that it was unfair for the deceased not to honour her promise to the Plaintiff, and he was entitled to equitable relief.
The Court recognised that the Property was held on constructive trust for the respondent based on equitable estoppel arising out of the representation made to the respondent by the deceased.
The appeal
In Kramer v Stone [2023] NSWCA 270, the Court of Appeal dismissed an appeal from Hilary Lorraine Kramer. (the appellant).
The principal issues before the Court of Appeal were whether the primary judge erred in:
- Finding that the deceased made the representation.
- Finding the representation was an assurance as opposed to a revocable testamentary promise.
- Failing to find that the deceased did not encourage the respondent to act to his detriment.
- Finding that actual knowledge by the deceased that the respondent acted to his detriment is not required where the respondent establishes constructive knowledge.
- Finding that the deceased had constructive knowledge of the respondent’s reliance on the representation.
- Finding that the deceased acted unconscionably in not leaving the respondent the Property despite leaving a legacy of $200,000.
- Finding that the respondent’s reliance on the representation was reasonable.
A further issue arose on the appellants’ application to rely on, for their challenges on appeal to findings made in the principal reasons for judgment, on the evidence admitted for a subsequent hearing in which the respondent applied to reopen his case.
The decision
The Court unanimously dismissed the appeal.
On the first issue, the Court held that it was open for the primary judge to have found that the representation was made by the deceased to the respondent. Notwithstanding the delay, there was nothing to indicate that the primary judge did not carefully review the evidence when he came to prepare his reasons.
On the second issue, the Court further found no error in the primary judge’s conclusion that the representation made to the respondent would have been understood by a reasonable person in his position as an assurance rather than a statement of revocable intention.
On the third issue, the Court found the representation amounted to the requisite encouragement, especially given that the primary judge had rejected the proposition that the deceased would have made the representation to convey a mere possibility of inheritance rather than an assurance, as that would have been cruel and out of character for her.
On the fourth issue, the Court found that in an estoppel by encouragement case, the deceased didn’t need to know of the respondent’s reliance on the representation after making the representation.
On the fifth issue, the Court held that the relief granted by the primary judge was not out of proportion (or wholly disproportionate) to the respondent’s detriment.
On the sixth issue, the Court held that the primary judge did not err in finding that the respondent’s reliance on the representation was not unreasonable.
On the last issue, the Court held that the co-executors should not be permitted to rely on the evidence adduced at the first instance after the principal hearing for the respondent’s application to reopen, even though the Court adduced the evidence before making the orders.
The Court found that the deceased promised to leave Property to the respondent and that the respondent had relied on this promise to their detriment. The Court also found that it was reasonable for the respondent to expect the deceased to keep her promise, awarding the respondent the Property as relief, as it was not disproportionate to the detriment they had suffered. Overall, the Court found that the respondent was entitled to the Property based on the principle of proprietary estoppel.
Costs
The appellants sought the costs of both the appeal and the first instance proceedings if the appeal were successful. Had that issue arisen, there may have been some difficulty in that part of the issues raised at the hearing. Nevertheless, in light of the Court of Appeal’s conclusion, it is unnecessary to consider this. Costs should follow the event.
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