This appeal arose from a dispute over the ownership of a property in Upper Colo, NSW that was owned by Dame Leonie Kramer after her husband’s death. The respondent, David Stone, had farmed the property under an oral share farming agreement since 1975. Stone claimed he was entitled to the property based on an alleged representation by Dame Leonie that he would receive the property when she died, following earlier representations by her late husband Dr Kramer.
The primary judge found the property was held on constructive trust for Stone, based on an equitable estoppel arising from Dame Leonie’s representation. The judge found Stone had relied on the representation by continuing to farm the property for 23 years, expecting to inherit it. The judge held Dame Leonie ought to have known this, so it was unconscionable for her estate to deny Stone the property. However, the judge considered it unequitable for Stone to receive both the property and his $200K legacy under the will, so ordered the declaration of trust over the property in lieu of the legacy.
The main issues on appeal were whether the judge erred in: (i) finding Dame Leonie made the representation; (ii) finding the representation was an assurance rather than a revocable promise; (iii) failing to find Dame Leonie did not encourage reliance; (iv) finding actual knowledge of reliance was unnecessary if constructive knowledge was established; (v) finding Dame Leonie had constructive knowledge of reliance; (vi) finding it was unconscionable to deny Stone the property despite the legacy; and (vii) finding Stone’s reliance was reasonable.
The Court dismissed the appeal, finding no error in relation to the above issues. The Court held the finding that the representation was made was open on the evidence. Objectively, in context a reasonable person would understand it as an assurance not a revocable promise. The representation itself could constitute encouragement. Knowledge of reliance goes to unconscionability, so no need to determine if actual or constructive knowledge was required. The constructive knowledge finding was not glaringly improbable. The property was not wholly disproportionate given the expectation engendered. Reliance was not unreasonable as Dame Leonie made the unsolicited representation.