But you promised me the farm?!? Promissory estoppel and the alternate family provision claim

Hildebrandt v Papakonstantinou [2024] NSWSC 1181 (19 September 2024)

 In a recent case decided by the New South Wales Supreme Court, the plaintiffs sought relief based on the doctrine of proprietary estoppel and, alternatively, a family provision order in relation to a rural property owned by their parents. This case involves complex familial relationships and promises made regarding the ownership of a family farm in Mangrove Mountain, NSW, highlighting issues of reliance, expectation, and inheritance.

Background of the Case

The plaintiffs, Mrs. Georgina Hildebrandt (Gina) and her husband Mr. Kit Hildebrandt, invoked proprietary estoppel, claiming that Gina was promised half of the family farm owned by her parents, Markela and the late Hrisoulis Papakonstantinou. The farm had been jointly owned by her parents, and upon her father’s death in 2023, his interest in the property passed to her mother as the surviving joint tenant.

The property, located at Niclins Road, Mangrove Mountain, had been the subject of various family discussions and plans over the years. Gina had lived on the farm during her youth, and after a period of living abroad in Canada, she and her family returned to Australia in 1991. Gina and Kit moved into a portion of the property and made significant improvements, including building a house in 2001. Throughout their time on the farm, Gina and Kit relied on verbal assurances from her parents that they would inherit the southern half of the farm, commonly referred to as "Gina's Lot," with her brother, Arthur Papakonstantinou, inheriting the northern half, or "Arthur’s Lot."

Proprietary Estoppel Claim

The central issue in this case was whether the assurances made by Gina’s parents gave rise to an equitable interest in the property for Gina and Kit, enforceable through proprietary estoppel. Proprietary estoppel arises when one party (the promisee) relies on the assurances or representations of another party (the promisor) to their detriment, believing that they will acquire rights in the property. In this case, Gina argued that her parents repeatedly told her that she would inherit half of the farm, and based on this belief, she and her husband gave up their life in Canada and invested significant time and money in improving the southern portion of the property.

Gina’s evidence included multiple instances where her parents told her that half of the farm was hers. From as early as the 1970s, Gina’s parents had made comments such as, “1/2 of the Farm is yours and 1/2 of the Farm is Arthur’s,” which continued through the years, even as she moved back to the property after her time abroad.

Despite these assurances, Gina acknowledged during cross-examination that she always understood the inheritance would only come into effect upon the death of both her parents. This admission weakened her proprietary estoppel claim, as it suggested that she did not expect to receive a legal interest in the property during her parents’ lifetime.

Family Provision Claim

In the alternative, Gina sought a family provision order from the estate of her late father, Hrisoulis Papakonstantinou. Family provision claims in New South Wales are governed by the Succession Act 2006 and allow eligible family members to apply for adequate provision from a deceased person’s estate if they believe they have not been adequately provided for in the will.

Gina’s family provision claim was based on her argument that, as the daughter of the deceased, she had not been adequately provided for in the will. Her father’s estate was relatively simple, as his main asset was the jointly owned farm, which had passed to Gina’s mother, Markela, upon his death.

The Court’s Decision

Ultimately, the court dismissed both the proprietary estoppel and family provision claims. In rejecting the proprietary estoppel claim, the court found that while Gina and Kit had relied on the assurances made by her parents, the critical element of detrimental reliance was undermined by Gina’s own evidence. Gina consistently stated that she understood she would only inherit the property after her parents’ deaths, which indicated that she did not expect to acquire any legal interest in the property during her parents’ lifetimes. This understanding was fatal to the claim, as proprietary estoppel typically requires the promisee to believe they have or will soon acquire a legal interest in the property.

The family provision claim was also dismissed on the basis that Gina had not demonstrated that she was inadequately provided for by her father’s estate. As the farm had passed to her mother by survivorship, the court found no basis for granting a family provision order.

Key Legal Principles

This case serves as a reminder of the complexities involved in family disputes over property and inheritance. It highlights several important legal principles:

1. Proprietary Estoppel: To succeed in a claim of proprietary estoppel, the claimant must show that they relied on the representations of the property owner to their detriment, believing that they would acquire an interest in the property. Crucially, this belief must be reasonable, and the claimant must expect to receive the interest during the owner’s lifetime or under circumstances that give rise to an immediate entitlement.

2. Family Provision Orders: Family members seeking a family provision order must demonstrate that they have been inadequately provided for under the will or the intestate estate of the deceased. The court will consider the financial and personal circumstances of the claimant, as well as their relationship with the deceased.

3. Equitable Relief in Family Disputes: Equitable doctrines such as proprietary estoppel often come into play in family disputes where there are informal promises or understandings about property. However, the courts require clear evidence of detrimental reliance and a belief in an immediate or soon-to-be-acquired interest.

Implications for Future Cases

This case underscores the importance of formalising agreements or understandings regarding property within families. Informal promises, even when repeated over many years, may not be enforceable in court if the claimant cannot demonstrate the necessary elements of reliance and detriment.

For individuals considering making promises about property inheritance, it is advisable to document these agreements in writing, such as through wills or deeds of family arrangement, to avoid disputes and potential litigation in the future. Conversely, individuals who believe they have been promised an interest in property should seek legal advice to ensure that their rights are protected, particularly if they are making significant financial or personal sacrifices in reliance on those promises.

In conclusion, the case illustrates the challenges of proving proprietary estoppel and the limitations of family provision claims, particularly in complex family dynamics involving informal promises and expectations regarding inheritance.

Conclusion

This decision highlights the importance of clear legal documentation and formal agreements in matters of property and inheritance. While family relationships may often involve promises made with the best of intentions, the lack of formalisation can lead to significant legal disputes, as seen in this case. Parties involved in similar situations should consider seeking legal advice to avoid potential misunderstandings and costly litigation down the line.