Cautionary Tales of Farm Succession Planning: The Interaction between Your Promises and Your Will
By Winona Page
The recent High Court dismissal of appeal in Kramer & Anor v Stone [2024] HCA 48 is a timely reminder to farm owners to properly document your farm succession plan and consider your estate planning within the context of any historical promises and agreements made.
A major risk for farm owners when updating your estate planning documents is to be considering your Will in isolation. The ability for your executor to uphold your Will and testamentary documents can be impacted by promises and arrangements you may have made during your lifetime, if those promises have induced third parties to rely upon them to their detriment.
Kramer & Stone tells the cautionary tale of Dame Leonie Kramer and Dr Kramer who entered into a share farming arrangement with Mr David Stone in 1969. Mr Stone was promised by Dame Kramer in 1988 that the farm would pass to him upon her death. Mr Stone relied on this promised and lived and worked at the property for less than market wage and unfavourable conditions for 23 years upon reliance of the promise made by Dame Kramer. Upon Dame Kramer’s death in 2016, her Will left the property to her daughter and a pecuniary legacy of $200,000.00 to Mr Stone. Ultimately, Mr Stone brought a promissory estoppel claim against the Estate of the late Dame Kramer (the Estate) and the Supreme Court held in the first instance that Mr Stone was entitled to equitable relief for the farm to be held on trust for Mr Stone. The matter was appealed to the High Court, who held by majority to dismiss the appeal. The majority confirmed that in cases where a clear and unequivocal promise was made which a reasonable person would expect the promisee to rely upon, and the promisee did rely on that promise to their detriment, that promissory estoppel will be made out. If the promise was severe enough in nature, the Supreme Court’s equitable jurisdiction may find the appropriate relief is to require fulfilment of the promise by the Estate.
It is important, in light of Kramer & Stone and recent judgements that farm owners need to properly consider the interaction between business arrangements, promises, and their estate planning documents. A common pitfall for farm owners is to advise your legal team of current matters only; the promise you made to a partner, shareholder, or employee many years prior may still be relevant in the event of a dispute and this must be disclosed to your legal team. If you wish to withdraw from a prior promise made, you should do so formally with the assistance of your legal team.
Reach out to Harris Lieberman Solicitors to discuss your Farm Succession plan tailored to your individual situation.