+61 2 9560 3388
Succession law News, September/October 2010
How much can you rely on a promise by someone in respect of property? The NSW Court of Appeal has affirmed the effect of proprietary estoppel by encouragement in NSW.
The 2010 case of Delaforce v Simpson-Cook [2010] NSWCA 84 saw the authorities of proprietary estoppel by encouragement reviewed. Estoppel by encouragement refers to the situation when the owner of property encourages another to alter their position in expectation of receiving an interest in real property. If the second party has changed his or her position to his or her detriment, then the law of equity may compel all or some of the expectation or promise.
This case involved promises made by the husband and relied upon by the wife in the “notations” contained in consent orders for a Family Law property settlement between the Plaintiff [the wife] and the Deceased [the husband]. Part of the settlement was to be a payment of $50,000.00 from the husband to the wife and that the wife would allow the husband to live in the property until his death upon which he would leave the property to her in his will. The wife then agreed to forgo the $50,000.00 if the husband spent that money on a granny flat. This was “noted “ in the consent orders on 13 June 2002. The will in question was executed in 1998 and appointed the wife as executrix and left the residuary of the estate to her. However, the husband executed a new will in 2007, revoking all prior wills and leaving the residual of his estate to a cousin. The wife was not mentioned in this will and upon the death of her former husband the wife commenced proceedings in the New South Wales Supreme Court The plaintiff wife obtained an order for transfer of the property based on proprietary estoppel by encouragement and an order for transfer of the estate based on the Family Provision Act (FPA). The New South Wales Court of Appeal dismissed the appeal based on proprietary estoppel by encouragement and overturned the decision based upon the FPA. The court noted that plaintiff’s reliance was clear in her early reluctance to make an agreement with the deceased, as noted in a letter to her lawyer, and the inclusion of the promise in the consent orders. The plaintiff had relied upon the consent orders drawn up in 2002 and as such she had refrained from seeking orders from the Family Court despite her awareness that the 1997 Will could be revoked. It is well established that a promise in a will may not be revoked if this promise is more than a simple statement of gift as in this case. This is because the law of equity will enforce a contract not to revoke a will or leave property out of a will by imposing a trust over the estate. In this situation, the consent orders from the property settlement amounted to such a contract and the detriment was not simply the payment of $50,000.00 but also the abandoning of the wife’s opportunity to seek an order in the Family Court in relation to the property settlement. As such it would not be appropriate for the court to simply award damages of $50,000.00 to the plaintiff. This case emphasises the importance of taking care in estate planning and making verbal promises as to what will be given in a will.