This update was co-authored by Jonathan O’Connor, Law Graduate
A recent case in the Supreme Court of WA, Currie v Currie [No 2]) [2017] WASC 312, shows once again that a person may be prevented from breaking a promise to give property. Currie concerns 17,608 acres, 13 years of hard work and a disgruntled son pulling a gun on his father.
This case is a timely reminder that if you are promised property, be it a farm or otherwise, and that promise has been broken, you may be able to hold the person/s to their promise through a proprietary estoppel claim.
However, proceedings to enforce a broken promise to give property are expensive, time-consuming and can fracture family relationships. They can be avoided by obtaining legal advice on proper estate and succession planning at an early stage.
The Facts
Background
Graeme Currie and his wife, Erica, farmed on property in Bruce Rock (Currie farm). The Currie farm was comprised of a number of small adjoining properties, with separate certificates of titles. Graeme was effectively the registered proprietor of all the properties.
Graeme and Erica had four children. Two of the children, Bruce and Andrew, began working full-time of the Currie farm after they finished school. However, after a few years they decided that they wanted to split from Graeme and farm on their own. They discussed the split with Graeme on several occasions and it was ultimately agreed that the Currie farm and its machinery would be split between the three in exchange for Bruce and Andrew paying Graeme an annual fee and assuming responsibility of debt and lease obligations.
The agreement/promise
After some years of farming separately, the family met again to discuss how the Currie farm would be formally divided, as it was all still registered in Graeme’s name. It was formally agreed that, in order to avoid paying stamp duty and transfer costs, the sons’ portion of the Currie farm would be transferred to them in Graeme’s will, or at an earlier time if they wish to pay the stamp duty and transfer costs. For all effects and purposes, Graeme had assured the sons that the land they were farming on was theirs.
Breaking the promise
As the years went by, Bruce’s financial situation worsened and he eventually decided to sell his portion of the Currie farm. After a few arguments, one involving Bruce pulling a gun on Graeme, they both signed a contract to sell some of the land. Still farming on the remaining portion, Bruce later asked Graeme if he could sell the land or whether it would be transferred to him. Another argument ensued and roughly a month later, Graeme delivered to Bruce a lease over the land, saying that he wanted it in place for tax purposes. Bruce did not sign the lease at first.
Graeme later informed Bruce that the land was still his and Bruce was required to vacate. Reluctantly, Bruce eventually signed the lease. When the lease was due to expire, Graeme met Bruce and gave him a lease for the following year. Bruce said the lease was unworkable and left.
Subsequently, Bruce lodged a caveat over the land. By a letter to Bruce from his solicitors, Graeme said that at no time was there any agreement that the land was to be transferred to Bruce on Graeme’s death or at any time prior to his death and denied that Bruce had any beneficial ownership of the land or is entitled to be transferred the legal title.
Bruce initiated proceedings, claiming that Graeme was obliged to assign or transfer ownership of his portion of the Currie farm to Bruce on the principles of proprietary estoppel – where a person has relied upon a promise to their detriment and effectively seeking orders from the Court preventing Graeme from denying the promise.
Decision
Justice Le Miere found that Graeme had induced or encouraged Bruce to assume that Graeme would transfer his portion of the Currie farm to him by will or at some earlier time, and that Bruce had relied upon the promise to his detriment, such as by repaying Graeme’s debts and incurring operational expenditures.
In the circumstances, His Honour found that it was unconscionable for Graeme to be permitted to depart from the assumption and declared that Graeme held Bruce’s remaining portion of the Currie farm on trust for Bruce. He ordered that Graeme transfer to Bruce the legal title to those properties on condition that Bruce pay $100,000 to Graeme and caused any guarantee by Graeme over the properties to be discharged.
Conclusion
Farm and business succession planning through proper advice and discussion between family members over time may have avoided such issues arising and resulting in damage to family relations as well as significant uncertainty and legal cost.
It should be noted that this decision is currently pending appeal.
If you require advice about transitioning ownership and control of property and business, and need advice on proper estate and succession planning, including duty implications, please contact our office on (08) 9321 3755.
The information published in this paper is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.