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There have been an increasing number of cases involving alleged promises in farming families to pass down land, known as proprietary estoppel cases. Macpherson Kelley have acted in many such cases (and on either side of the dispute), successfully obtaining judgment in one such proceeding at both Supreme Court of Victoria and then at the Court of Appeal, and resolving other proceedings out of Court. Given that they often traverse succession, share farming, property, trust, estates and mixed family and business interests, these matters require careful handling.

In Harris v Harris, Macpherson Kelley client Gary Harris was successful in his proprietary estoppel case because he demonstrated that:

• his father had made a representation or promise that he had an interest in the land;
• he reasonably believed he had an interest in the land;
• his father knew he would act in reliance on that belief;
• he reasonably acted to his detriment and changed his position in reliance on that belief; and
• it was unconscionable for his father not to fulfil the promise.

These types of cases are complex and often emotionally charged for those involved. Importantly, any such case can only succeed if:

• a promise can be proven; and
• there is clear and significant detriment suffered because of that promise that would never have been suffered if the promise had not been made.

Some clear patterns and lessons have emerged from these proceedings that will be useful for those in similar circumstances. Below are some top tips to avoid getting caught up in a proprietary estoppel case.

Document the agreement

Notably, it is extremely common for families to not document existing agreements. Documenting agreements is beneficial for parties on all sides to provide certainty, not just of the land to be transferred but also of what is expected in return. Circumstances of family members may change – whether it be deaths, remarriages, memory or health issues – altering the priorities of family members.

Structure your arrangements carefully and obtain legal advice to ensure it provides the best outcomes for all involved. Yes, it will mean some legal cost at the time, but can save significant costs in later disputes and may avoid uncomfortable family upsets altogether.

See a lawyer about placing a caveat on title

In specific circumstances, caveats can protect your interests in a specific piece of land and can stop the land being dealt with in a fashion that is inconsistent with your interest in the land.

Document land use

In each circumstance we have seen, the party allegedly promised the farm operated a farming entity on the land prior to the time the transfer was to occur. A right to ownership of the land in the future is not the same thing as having a right to remain on the land until that occurs. Make sure leases or licences are in writing to protect all parties. It protects the tenant’s right to be there, and the land owner’s rights to limit the period, use, and who is to pay for land-related costs.

Keep documents safe

If there isn’t a written agreement, surrounding documents at the time can be helpful evidence to support such an argument (such as sale of land contracts, wills, trust deeds, emails, draft agreements, or capital expenditure payment evidence). Ensure they are retained safely. Important documents can be lost or misplaced causing significant impact on a case. Many documents can be retained by lawyers for safe keeping.

Negotiate early and often

Proprietary estoppel cases often mean multiple mediations ordered by the Court, including on day one of final hearings. These are complex and difficult matters that require detailed evidence spanning decades. Judges have proven very keen to have families take control of their own destinies and try to resolve these matters without Court involvement. Doing this early in the process can help avoid costly fees.

If you have any further questions or require assistance with issues of this nature, please contact Libby Goad at Macpherson Kelley.

The information contained in this article is general in nature and cannot be relied on as legal advice nor does it create an engagement. Please contact one of our lawyers listed above for advice about your specific situation.