ESTOPPEL AND TESTAMENTARY SUCCESSION – RECENT DEVELOPMENTS Dr Stephen Janes B a rri ster Deputy Dean School of Law Un i ve r sit y o f We st e r n Sydney INTRODUCTION A person may make many types of representations about what will happen to their property upon death. In what circumstances will these representations be binding upon the estate? The representation may constitute: A testamentary contract (including a mutual will) Estoppel TESTAMENTARY CONTRACTS Testamentary Contracts are in all respects contracts but are constituted by promises as to one’s testamentary dispositions supportable by consideration. Testamentary Contracts comprise: Contracts to leave specific property by will to another Contracts to leave the entire estate to another Contracts not to revoke a will Mutual wills CONTRACTS TO LEAVE PROPERT Y Example: A promise to leave specific reality by will in return for a promise to marry; Synge v Synge  1 QB 466. Specifically enforceable in equity. If property left otherwise than to the promisee then a beneficiary who takes under a will contrary to the promise holds the gift on a constructive trust for the promisee. Enforceable at common law by way of damages for breach of contract being the value of the property at death. The promisee may elect as to whether to proceed in equity or at common law. The promisee may proceed during the lifetime of the promisor if aware of the breach of the promisee but if seeking damages these will adjusted for contingencies. CONTRACTS TO LEAVE THE ENTIRE ESTATE Is a promise only to leave what is left at death and not to preserve property until death; Palmer v Bank of New South Wales (1975) 133 CLR 150. The contract will be breached only if the promisor makes in their lifetime what is in substance a testamentary disposition contrary to the promise; Palmer v Bank of New South Wales (1975) 133 CLR 150 at 159 per Barwick CJ but c.f. Birmingham v Renfrew (1937) 57 CLR 666 at 689 per Dixon J. MUTUAL WILLS The parties intend to enter a legally binding agreement as to the disposition of their respective estates; Birmingham v Renfrew (1937) 57 CLR 666. However there must be clear and satisfactory evidence of the agreement; Walters v Olins  Ch 212 at . Example: A husband promises that if he survives his wife then he will leave his estate to a designated third party. The wife in response to this promise then promises to make a will leaving her estate to her husband and vice versa. If the husband survives the wife and takes her estate but the changes in his will in favour of other beneficiaries then equity will compel these beneficiaries to hold their gift on a constructive trust for those designated to benefit under the mutual will agreement. The equity arises as a result of the husband allowing his wife to die believing the agreement will be fulfilled. MUTUAL WILLS - PROOF T h e m u t ua l w i l l a g r e e m e n t n e e d n o t b e c o n s t i t ute d i n a f o r m a l w r i t te n d o c ume n t . I t m ay a r i s e f r o m d i s c us s i o n s b et w e e n f a m i l y m e m b e r s ; A l b r ow v C u n n i n g h a m [ 2 0 0 0 ] N SWS C 1 0 3 . S o m e f a c to r s to c o n s i d e r : To h o w m a ny p e o p l e t h e s t a te m e n t w a s m a d e W h et h e r t h e r e i s a s t a te m e n t i n w r i t i ng T h e c o n s i d e r a t i o n o f fe r e d f o r t h e p r o m is e T h e n u m b e r o f t i m e s t h e s t a te m e n t w a s m a d e The language used by the parties T h e c o n tex t i n w h i c h t h e p r o m i s e w a s m a d e T h e n a t u r e o f t h e r e l a t i o n s h i p b et w e e n t h e p a r t i e s T h e c e r t a i n t y o f t h e te r m s MUTUAL WILLS - BREACH It has been held that to transfer a property inter vivos, but continue to live in it and pay the rates and charges, if done with intent to defeat the agreement is sufficient to constitute a breach of a mutual will agreement; Bauer v Hussey  QSC 269 at  but this is inconsistent with Palmer but in line with Dixon J in Birmingham. Disposal of property by the survivor of a mutual will agreement that is the subject of the agreement may constitute a breach of that agreement that could be restrained by injunction in the lifetime of the survivor; Walters v Olins  Ch 212 at . ESTOPPEL - GENERAL Certain representations as to a persons testamentary wishes not amounting to a contractual promise may give rise to a proprietary estoppel. By contrast to promissory estoppel which arises from an existing legal relationship usually a contract but need not relate to any proprietary interest. The distinction between the two has been removed in favour of equitable estoppel; Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387. As Hoffmann LJ said in Walton v Walton (unreported) 14 April 1994;  CATranscript No 479, para 21 , equitable estoppel [by contrast with contract] . . . does not look forward into the future [; it] looks backwards from the moment when the promise falls due to be performed and asks whether, in the circumstances which have actually happened, it would be unconscionable for the promise not to be kept. There must be assurance, reliance and detriment to establish proprietary estoppel; Thorner v Major  1 WLR 776 at . EQUITABLE ESTOPPEL In Waltons Stores (Interstate) Limited v Maher (1988) 164 CLR 387 at 428-29, Brennan J stated that to establish equitable estoppel: the plaintiff assumed or expected that a particular legal relationship would exist with the defendant and the defendant would not be free to withdraw from that relationship; the defendant induced the plaintiff to adopt the assumption or expectation; the plaintiff acts or abstains from acting in reliance on the assumption or expectation; the defendant knew or intended him to do so; the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; the defendant has failed to act to avoid that detriment. ESTOPPEL – TESTAMENTARY SUCCESSION The difficulty with testamentary representations amounting to an estoppel was the notion that a will is always understood to be revocable. Early cases focused upon the need for an irrevocable promise. This approach was rejected in Gillet v Holt  Ch 210 in favour considering whether allowing the testator to go back on the representation would in all the circumstances be unconscionable. THE REPRESENTATION Must be in respect of identifiable property to be sufficiently certain; Thorner v Major  1 WLR 776. The property may change over time but it still must be identifiable. Must be as to future intention not present intention; May arise by way inference from statements and conduct; However there must be evidence of representations by the testator and not by a third party such as a deceased parent who was a prior owner of the property; Hampson v Hampson  NSWCA 359. What matters is whether the representation could in all the circumstances be reasonably understood as intended to be relied upon by the representee. The actual act of reliance need not be foreseen; Thorner v Major  1 WLR 776 at . RELIANCE AND DETRIMENT There must be detrimental reliance. This need not be expending money or financial detriment but it must be something substantial; Gillet v Holt at 232. It is the substantial detrimental reliance that gives rise to the issue of whether it would be unconscionable to allow the representor to go back on the representation. Mere disadvantage is not enough; Duic v Duic  NSWCA 42 at . A person does not need to show there was some alternate course of action that would have been open to them; Wardell v Wardell  NSWCA 214 at . The estoppel can arise in the lifetime of the representor such as where property is disposed of or there is a change in testamentary intention; e.g. Gillet v Holt REMEDIES In the determination of the relief to be granted in equitable or proprietary estoppel cases, the notion of enforcement or vindication only of the “minimum equity” is not a governing principle, rather relief should be based upon what is necessary to remedy the unconscionable conduct; Giumelli v Giumelli (1999) 196 CLR 101 at 123–125. Matters that can assuage the detriment brought about by the resiling from the representation or encouragement by the party concerned are relevant to such determination; Delaforce v Simpson-Cook (2010) 78 NSWLR 483 at [3 ]; ; . Proportionality may be relevant but normally the court will give effect to the expectation in land that has been created by the defendant’s conduct; Ramsden v Dyson (1866) LR 1 HL 129 at 170 per Lord Kingsdown. Equitable compensation may be awarded in some cases as the most appropriate remedy even in the lifetime of the representor but subject to a discount; Quinn v Br yant  NSWCA 377. CONTINGENCIES The principal contingency that ef fects both a promissee under a contract and the representee under an estoppel is a claim for a Family Provision Order. Distinction drawn in Barns v Barns (2003) 214 CLR 169 between inter vivos promises and testamentary promises. A testamentary contract is subject to a FPO as Chapter 3, Succession Act 2006 operates upon then net estate of the deceased being the property available for distribution under a will or on intestacy. By analogy estoppel based upon testamentary representations is so subject to an FPO as the representation relates to the distributable estate. THANK YOU QUESTIONS?