Enforcing a promise of an inheritance - Proprietary estoppel in a Will dispute

Wills and Estates: 23 March 2019

Re Mahoney [2015] VSC 600

Since the recent amendments to Part IV of the Administration and Probate Act 1958, which restricted the categories of people eligible to make family provision claims, a growing area in estate litigation is in the area of "equitable proprietary estoppel. In plain English, this is an action which may be taken to enforce a promise or promises made to the plaintiff, where the plaintiff has acted in reliance on that promise and suffered detriment as a result.

This can often be a way for a disinherited party to claim a share in a deceased estate where they are unable to make a family provision claim, usually because they are ineligible to make a claim, where the estate has been distributed, or where the relevant property does not form part of the estate.

Many estate disputes involve claims that the deceased made certain promises in relation to inheritance of their assets. Often the scenario may arise in the case of a family farm, where a child works on their parents' farm for years for little or no remuneration, in reliance upon promises made by the parents that that child would eventually inherit the farm.

A recent Victorian case in this area is the decision of McMillan J in Re Mahoney [2015] VSC 600.

In that case the deceased died leaving two sons and four daughters. In her Will, she left her farm property to one son (the Defendant) and left the rest of her estate equally between her other five children (her four daughters and her other son, the Plaintiff). On the same day she executed her Will, the deceased transferred the farm property to the Defendant for no consideration, and also transferred the livestock and chattels to the Defendant.

The Plaintiff claimed there was a common understanding within the family that, on the death of the deceased, the plaintiff and the defendant would receive the farm, livestock and chattels with the residue of the estate, comprising money, being given to the four girls ('the common understanding').

On the basis of the common understanding, the Plaintiff claimed that the Defendant held the farm, the livestock and chattels on trust for the Plaintiff as to one half or share thereof ('the common intention trust') and was estopped from denying the Plaintiff's entitlement.

Following the requirements for proprietary estoppel as set out in the case of Harrison v Harrison [2011] VSC 459, the Court found as follows:

1. the deceased made a promise to the Plaintiff that when she died she would confer an interest in the farm, the livestock and chattels to him;
2. the Plaintiff acted in reliance on that promise in working without wages on the farm for at least 20 years, in entering into the business partnership with the Defendant to ensure a continued stream of income for his parents and, when that partnership ceased and he could no longer work on the farm with the Defendant, in doing contract shearing work to support his family with the blessing of the deceased;
3. the Plaintiff acted reasonably in so relying on the promise made to him by the deceased;
4. the deceased knew or intended that the Plaintiff would rely on her promise and would thereby act in the manner referred to above;
5. the Plaintiff suffered detriment as a consequence of the deceased's failure to adhere to her promise.

Alternatively, the Court also found that the transfer was unconscionable and procured by undue influence.

The Plaintiff was therefore successful in his claim, and the Court ordered specific performance of the deceased's promise, that is, a transfer of half of the farm property, the chattels and the livestock to the Plaintiff.

It is important in estate litigation to think outside the "Part IV/family provision box. This case is an example of how a claimant may be successful in obtaining a share of a deceased's asset based upon promises, despite the asset not forming part of the estate at the date of death. Aitken Partners are able to advise anyone in a similar situation about possible, less common, causes of action to obtain the desired outcome.