Don't Make False Promises - They May Come Back to Bite You

Lorraine Madden - Lavan

In the 2017 Western Australian Court of Appeal case of Currie v Currie, the Court found that a son was entitled to a share in farming property owned by his father based on the fact that the son had relied on representations by his father that he and his brother would be left equal shares of the family farm.

Facts
Husband and wife, Graeme and Erica Currie farmed in partnership at Bruce Rock.

Their two sons Bruce Currie and Andrew Currie worked the farm, along with Graeme.

Graeme discussed his succession plans with Bruce and Andrew on multiple occasions, and promised (by way of oral assurances and proposed succession plan documents) to split the farm between them equally.

In reliance on Graeme’s promise, Bruce:

  • Registered the business name “Glenayr Farms”, through which he operated his farming business, on his prospective share of the farm;
  • Established a loan facility and repaid a portion of Graeme’s debt; and
  • Purchased land adjoining the “Glenayr Farms” land.

Bruce informed Graeme that he was concerned, having taken on these commitments, that he did not have title over the land he farmed.

Bruce and Graeme reached an ‘in principle’ agreement over the land.

Graeme did not transfer the land to Bruce as they had agreed as he wanted to try and avoid paying duty on the transfer by leaving the land to Bruce in his will.

As Graeme was in his seventies, Bruce was wary that he may not receive title for another twenty years.

Subsequently, Graeme provided Bruce with a lease document to permit Bruce to continue farming on Graeme’s property (at a price).

Although Bruce did sign (in protest), his relationship with Graeme deteriorated, due to the financial pressure he was under, and the uncertainty of receiving the property promised to him.

Tensions reached boiling point when, during a heated argument, Bruce threatened Graeme with an unloaded gun.

Graeme then instructed his solicitors to write to Bruce, asserting that Bruce had no entitlement to any of the land, including upon Graeme’s death.

As a result, Bruce commenced proceedings against Graeme (and Andrew). Bruce’s claim was grounded on proprietary estoppel, in that he claimed he was induced by Graeme’s representations and conduct to “expect or assume that [Graeme] would…pass ownership of the…properties to him.”1

Trial

Bruce alleged that he had been induced by Graeme’s representations and conduct over the period from early 2003 until a meeting in March 2011 to expect that Graeme would assign or pass ownership of certain properties to him.

At trial, the Court found that Graeme held a share in his properties, which formed part of Glenayr Farms, on constructive trust for Bruce.

Le Miere J found that Graeme had informed Bruce in early 2003 that he would divide the farming property between Bruce and his brother and assign Bruce a portion of the farming property.

Graeme further advised Bruce in 2006 that he could treat the land as his own and that he would transfer it to him in his will; but if Bruce wanted the land transferred prior to Graeme’s death, Bruce would have to pay the duty.

Graeme’s conduct after 2006 was consistent with those representations. Bruce relied on Graeme’s promise to his detriment.

Graeme was ordered to transfer the title to certain properties to Bruce on the condition that Bruce paid $100,000 to Graeme and caused any guarantees by Graeme over the properties to be discharged.

Appeal

Graeme appealed against the decision, however the Court of Appeal dismissed Graeme’s appeal and affirmed the first instance decision.

Lavan Comment

This Court of Appeal decision highlights the importance of the consequences of making representations on which others may rely to their detriment.

If you have any questions in relation to this article, or require assistance in relation to your own testamentary arrangements, please do not hesitate to contact Lorraine Madden.

Lorraine Madden
Special Counsel
Lavan
Level 20, 1 William Street
Perth WA 6000
08 9288 6894
lorraine.madden@lavan.com.au

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