Guest v Guest was a landmark supreme court case revolving around the infamous words “one day my lad, all this will be yours”.
To succeed with a claim for estoppel, a promise must be made, the person to whom the promise was given must have relied on that promise to their detriment, and it would be ‘unconscionable’ for the promisor to go back on the promise.
The facts of Guest v Guest are typical of a farming family: the son worked long hours with low pay on his parents’ farm on the understanding that he would inherit a large share of the farm upon his parent’s death. The relationship between the son and his parents broke down and the son was subsequently disinherited. The son commenced a court claim to seek the court’s assistance in upholding his parents’ promise.
After years of costly litigation, the case found its way to the Supreme Court. The Supreme Court decided that the son would either receive a lump sum payment based upon the value of the farm (which would be discounted as he was in effect receiving his inheritance early), or the farm would be placed in trust and his parents would receive a life interest in the farm. Therefore, he would receive his share upon their death. It was left to the parents to decide.
Almost a year on from Guest v Guest, the High Court’s decision in Spencer v Spencer has been made. This case deals with promises made by a farmer, John, to his son, Michael. The facts of Spencer v Spencer are similar to Guest v Guest.
Michael had worked on his father’s farm for the whole of his working life on the understanding that if he worked hard, he would inherit the farm on his father’s death. When John died, Michael did not inherit the farm. The court ruled in Michael’s favour and ruled that the farmland was to be transferred to Michael (albeit excluding a piece of land that had obtained planning provisions for mineral extraction after John’s death).
Spencer v Spencer serves as a reminder of the court’s power to uphold a promise made in relation to inheritance where an individual has relied upon that promise. This case demonstrates that if an individual gives up other potential opportunities, it does amount to a detriment.
Particularly in farming families, it is important that there are open discussions about succession planning and that important documents, such as Wills and Partnership Agreements, are kept under regular review.
If you are affected by similar circumstances, get in touch with our contentious probate team.