By Darryl Browne -
Snapshot
- The High Court of Australia has explained the essential elements for proprietary estoppel by encouragement.
- They are clear and unequivocal promise, encouragement, reliance and detriment.
- There is no requirement that the promisor engage in conduct after the promise which further encourages the promisee in the course of conduct adopted in reliance on the promise.
- There is no requirement for proprietary estoppel by encouragement that the promisor have actual knowledge that the promisee, in adopting the course of conduct, is relying upon the promise.
The recent case of Kramer v Stone [2024] HCA 48 is the first occasion the High Court of Australia has considered the principles of proprietary estoppel in the context of a testamentary gift. In its decision, it discussed the elements required for a proprietary estoppel by encouragement, and distinguished this from proprietary estoppel by acquiescence and the doctrine of perfecting imperfect gifts.
The facts
The background was neatly summarized by the plurality (Gageler CJ, Gordon, Edelman and Beech-Jones JJ) as:
‘a farm worker who earned an irregular and meagre income working on a farm as a “share farmer” … [being] made a promise by the owner of the farm that he would inherit the farm on the owner’s death. Without that promise, the farm worker would have terminated the share farming agreement, obtained employment that returned a much higher level of income, and enjoyed a new lifestyle free from some of the hardships endured on the farm. Instead, as the owner reasonably expected would occur, the farm worker relied upon the promise by continuing to live and work on the farm for another 23 years. But the owner did not leave the farm to the farm worker in her will’ (at [1]).
At the farm owner’s death, the farm was valued at $1.5 million. The farm worker sued the executor of the farm owner’s estate (‘the executor’) to enforce the promise. He succeeded at first instance (Stone v Kramer [2021] NSWSC 1456) and in the Court of Appeal (Kramer v Stone [2023] NSWCA 270). The executor obtained special leave to appeal to the ultimate Court but failed in the appeal.
