The Court recently found that a promise made in 1965 created a binding agreement between family members, that gave rise to a constructive trust and an estoppel.
Family agreements are hard to uphold, largely because they are generally informal. In this particular case the person acquiring the promise took steps to make sure that the promise was well known amongst the broader family.
Background
Husband and wife had each been married previously. They each had a child from an earlier relationship. Some years later, they had a child together. The mother died when the child was only 8 years of age.
In 1965, the family household consisted of the father, and both of the adult children, together with the younger child. The son had married, and his wife resided in the property as well. The daughter was in a relationship, and they lived in the property as well.
The property was rented but had been the family home since sometime in the 1940s.
In 1965, the landlord made an offer to the father to sell the house to him for £2,200. The father was not sure for how much longer he wanted to reside in Sydney, so discussed the opportunity with his adult children.
The son, Raymond, declined the offer on the basis that his income was uncertain and he did not know how to make the repayments.
The Promise
The daughter, Gloria, instead, asked for a loan of £1,100 so she could purchase the property.
The father agreed to give the loan to her, provided that the family members could each remain living in the property for how long they wished without being charged rent, and on the condition that the property be left to Raymond and Trevor (the minor child) on Gloria’s death.
Gloria agreed. A family conference was held in which the father invited his siblings and their children. One of these family members was still alive and gave evidence at the hearing. The evidence confirmed that such a promise had been made.
The Court was persuaded that the promise had been made. His Honour found that the terms of the promise were broadcast to a wider audience than those interested in it, and thus the promise was intended to create a legally binding relationship between them. It was not merely an informal family agreement.
Order of Deaths
However, Trevor, the minor child died first. Raymond survived Gloria, and was a plaintiff in the proceedings, however died before the decision was handed down.
Gloria’s partner became a joint owner of the property and held it as tenants in common with Gloria. He died in the 1970s. Gloria inherited the whole of his estate, so that she became the sole owner of the property.
She continued to reside in the property for the rest of her life. However, family relationship deteriorated and Raymond and his family were forced to vacate in the 1960s. The father also left for Queensland, however would stay at the property whenever he was in Sydney. Gloria had remarried by the time of her death. She had left a will prepared in 2017. She survived her husband. She inherited a property he owned in Woy Woy. In her will she bequeathed the Woy Woy property to some family members. She then distributed the rest of her estate between a godson and two charities. The property was not specifically bequeathed in the will (despite the terms of the promise), and fell into residue.
The executor of the estate was a neighbour of the deceased. She deferred all correspondence to the solicitor acting for the estate (who had also prepared the will).
The Woollhara property had been sold and the proceeds of sale distributed to the residuary beneficiaries before the commencement of proceedings.
The executor claimed she was protected from liability and the claim should fail as she had published a notice of intention to distribute the Estate. This defence failed.
Publication of Notice Wrong
Firstly, publication of the notice was only published in the Sydney Morning Herald, which was not the proper place to publish the notice. It was not in accordance with the Supreme Court Rules, which required publication on the online registry website.
Secondly, the executor, was on notice of a claim well before publication was attended to.
Raymond did not have much funds. He initially was attempting to liaise with the estate solicitor directly. However, he was informed he must engage a lawyer to raise the issue with them. Raymond engaged the services of a law clerk who was working on a pro bono basis through a community legal centre.
The law clerk was clearly out of his depth, not yet being an admitted solicitor, and wrote to the solicitor on Raymond’s behalf. He outlined a claim, which was not the claim pursued in the Court. Slattery J was satisfied that there was sufficient evidence of a likely claim from Raymond, to constitute the executor being on notice of a potential claim prior to the time of distribution.
Decision
Slattery J found that the basis of the plaintiff’s claim in estoppel was made out, namely that:
- On the encouragement of Gloria, her father adopted a particular assumption or expectation that a legal relationship existed. This was the promise to transfer the property to Raymond and Trevor in her will.
- The father relied upon that assumption or expectation by loaning her the money;
- The father’s reliance was known or reasonably expected by Gloria; and
- The father, his estate and those who benefit from Gloria’s promise would suffer detriment if the assumption or expectation was not fulfilled by the first party.
No formal orders were made in respect of the executor as further submissions were required. This was due to Trevor dying before Gloria. The Court wanted to hear submissions on whether Raymond simply inherits half the proceeds, or did he inherit it all?
The alternative family provision claims failed.