Kramer v Stone
High Court of Australia · 2024
Kramer v Stone [2024] HCA 48
A share farmer worked a farm for 23 years on the owner's word that he would inherit it. Her will left it to her daughter. Did he need to show she kept encouraging him after that one promise?
In Kronenberg v Macaulay, on ground 2, Leeming JA (Mitchelmore and Free JJA agreeing) said there were 'some difficulties in accepting that if the case be one of proprietary estoppel by encouragement from a promise, the promise must be clear and unequivocal', as the joint reasons in Kramer v Stone said at [37]. His Honour gave reasons, including that the joint reasons did not say they were changing the law and that earlier appellate and High Court statements treated proprietary estoppel as needing a less stringent degree of certainty. The Court did not decide the point, because it had not been fully argued and its orders did not depend on it, and it did not depart from Kramer v Stone. This is an intermediate court's observation, which does not bind the High Court.
In Penya v Penya, Bell CJ (Adamson JA agreeing) said there was much to be said for Leeming JA's observations in Kronenberg, but that it does appear the plurality in Kramer has determined that a clear and unequivocal promise is required to found a proprietary estoppel, or at least one based upon representations, so that Kramer "must be followed in this Court". Mitchelmore JA agreed that the primary judge could not be criticised for using the language endorsed in Kramer at [37], and said the broader issue need not be decided. Bell CJ added that Leeming JA did not ultimately need to pursue the point in Kronenberg and that the same might be said in Penya because the appellant failed on other grounds. The Court held that the primary judge did not err in identifying a clear and unequivocal promise as the first element. Bell CJ also said that a passage in Trentelman v The Owners - Strata Plan No 76700 that referred to "vague assurances" cannot sit with Kramer and should not be followed to that extent. Penya is a decision of an intermediate court, which does not bind the High Court.
What happened?
David Stone was a share farmer on a 100-acre farm at Upper Colo, New South Wales, owned by Dame Leonie Kramer and her husband, Dr Harry Kramer ([3], [5]). His income was irregular and meagre ([1], [13]). Shortly after Dr Harry died in 1988, Dame Leonie told David, "out of the blue", that she and Dr Harry had agreed the farm would pass to him on her death ([11]). The trial judge, Robb J, held that David acted to his detriment in reliance on that promise by continuing to farm for about 23 years, when without it he would have ended the arrangement and taken better-paid work ([12]).
Dame Leonie's last will, made in 2011, left the farm to her daughter Hilary and David a gift of $200,000 ([24]). She died in 2016 ([24]). The trial judge held that an estoppel arose and declared that the farm was held on trust for David by the executors in place of the $200,000 ([26]-[27]). The Court of Appeal (Ward P, Leeming and Kirk JJA) dismissed the executors' appeal ([30]).
What did the Court decide?
The High Court dismissed the executors' appeal with costs. Four Justices (Gageler CJ, Gordon, Edelman and Beech-Jones JJ) gave joint reasons, at [1]-[60]. Gleeson J gave separate reasons at [61]-[103] and would have allowed the appeal ([103]).
The question was whether the estoppel required, after the promise, some further act of encouragement by Dame Leonie, or her actual knowledge that David was relying on the promise to his detriment ([2]).
Proposition
What is the principle?
The joint reasons held that neither requirement was needed. Their Honours said that, where a promise contains encouragement in the sense that a reasonable person in the promisor's position would expect the promisee might rely on it, "there is no requirement for any further subsequent encouragement or actual knowledge of the acts of the promisee taken in reliance on the promise" ([34]). It is sufficient that a reasonable person in the promisor's position would have expected, or the promisor actually expected, that the promise would be relied on in the general manner in which it was relied on: "Either (i) or (ii) is sufficient" ([35]).
For an estoppel arising from encouragement by a promise, the joint reasons refined Brennan J's six requirements in Waltons Stores ([36]) into four. There must be a clear and unequivocal promise ([37]). A reasonable person in the promisor's position must have expected or intended, or the promisor actually did, that the promisee would rely on it by some action, omission or course of conduct ([38]). The promisee must have relied on it in the general manner expected ([39]). And the promisee must suffer detriment, in the sense of being worse off than if the promise had not been made, if the promise is not fulfilled ([40]). The parties had agreed to call the category "proprietary estoppel by encouragement", and the Court said the appeal did not call for consideration of any broader form of "estoppel by encouragement" ([32]).
The joint reasons rejected the first requirement as one that "inappropriately transposes" the principles on perfecting imperfect gifts ([44]). Corin v Patton had held unanimously that the gift there was not "complete in equity", for different reasons ([45]). The joint reasons found it unnecessary to assess those different approaches, because the principle on perfecting imperfect gifts, "to the extent to which it operates in Australian law, is a separate and independent doctrine from equitable estoppel" ([46]). They also said that no submissions had been made on whether or when an imperfect gift can be completed in equity ([47]). They rejected the second requirement as conflating encouragement with estoppel by acquiescence ([44], [56]-[59]).
Gleeson J held that the Court of Appeal "erred in finding an estoppel in the absence of conduct by Dame Leonie, after the promise was made, that encouraged Mr Stone to act in reliance upon her promise" ([68]). Her Honour took the subsequent-encouragement requirement to apply to failed gifts and to promises alike ([73]-[74]) and held that knowledge of a promisee's likely reliance would not suffice ([69], [99]-[100]).
Why does this case matter?
A student who has learned that a gratuitous promise to leave property by will, not made under a binding contract and not carried into a valid will, is not enforceable as such often stops there, or looks for something the promisor did afterwards. This is a recent High Court decision on how informal family promises about land are analysed in equity. A problem question on a disappointed expectation of inheritance invites you to identify the promise, the promisee's conduct and the remedy, and to say which Justices' reasoning you are following. The case is also easy to confuse with the gift-perfection cases, because it discusses them.
Exam and application relevance
Cite the joint reasons for the four elements and for the statement that further encouragement and actual knowledge were not required, and mention Gleeson J's dissent. The first element is a "clear and unequivocal" promise ([37]). Judges of the New South Wales Court of Appeal have since commented on that requirement in Kronenberg v Macaulay and Penya v Penya, so state it as the joint reasons' requirement and attribute any later view to the judge who expressed it. Work through the four elements on the facts: the promise and whether it was clear, what the promisor expected, how the promisee acted, and what detriment follows if it is not fulfilled. Where the facts concern an incomplete transfer or gift, note that the joint reasons treated the perfection of imperfect gifts as a separate doctrine and did not decide whether or when it operates in Australian law. The appeal concerned the two additional requirements; the joint reasons dismissed it against a declaration, made at first instance, that the farm was held on trust for David in place of a $200,000 legacy ([27]), and did not decide any question of relief beyond that appeal, although [40] explains how detriment moulds the relief in such cases.
Check your understanding
1. What two additional requirements did the executors say an estoppel by encouragement needed, and what did the joint reasons say about each ([34]-[35])? 2. State the four elements the joint reasons gave for an estoppel arising from encouragement by a promise, with paragraph numbers ([37]-[40]). 3. What did the joint reasons decide about the relationship between estoppel and the perfection of imperfect gifts, and what did they leave undecided ([46]-[47])? 4. On what point did Gleeson J disagree with the four Justices who gave joint reasons, and what result would her reasons have produced ([68], [103])?