Kramer v Stone

v Percy (2003) 214 CLR 118; [2003] HCA 22 Galaxidis v Galaxidis [2004] NSWCA 111 Gillett v Holt [2001] Ch 210 Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641; [1937] HCA 58 Hopgood v Brown [1955] 1 WLR 213 In re Basham, decd [1986] 1 WLR 1498 Jennings v Rice [2003] 1 P&CR 8 Leading Synthetics Pty Ltd v Adroit Insurance Group Pty Ltd [2011] VSC 467 Lloyds Bank Plc v Rosset [1991] 1 AC 107 McNab v Director of Public Prosecutions (NSW) (2021) 106 NSWLR 430; [2021] NSWCA 298 Miller Heiman Pty Ltd v Sales Principles Pty Ltd (2017) 94 NSWLR 500; [2017] NSWCA 106 Milling v Hardie [2014] NSWCA 163 Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825; (2015) 329 ALR 1 New Zealand Pelt Export Co Ltd v Trade Indemnity New Zealand Ltd [2004] VSCA 163 Olsson v Dyson (1969) 120 CLR 365; [1969] HCA 3 Pham v Gall (2020) 102 NSWLR 269; [2020] NSWCA 116 Plimmer v The Mayor, Councillors and Citizens of the City of Wellington [1884] 9 AC 699 Priestley v Priestley [2016] NSWSC 1096 Priestley v Priestley [2017] NSWCA 155 Q v E Co [2020] NSWCA 220; (2020) 383 ALR 469 Ramsden v Dyson (1866) LR 1 HL 129 Riches v Hogben (1985) 2 QR 292 Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466 Sledmore v Dalby [1996] 72 P&CR 196 Steria Ltd v Hutchison [2007] ICR 445 Stone v Kramer (No 2) [2022] NSWSC 1716 Stone v Kramer [2021] NSWSC 1456 Stone v Stone [2014] NSWSC 1655 Sullivan v Sullivan [2006] NSWCA 312 Taylor's Fashions Ltd v Liverpool Victoria Trustees Co Ltd [1982] 1 QB 133 Thompson v Palmer (1933) 49 CLR 507; [1933] HCA 61 Thorner v Major [2009] 1 WLR 776 Trentelman v The Owners - Strata Plan No 76700 (2021) 106 NSWLR 227; [2021] NSWCA 242 Trippe Investments Pty Ltd v Henderson Investments Pty Ltd (1992) 106 FLR 214 Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1998] HCA 7 Willmott v Barber (1880) 15 Ch D 96 Texts Cited: A Robertson, "Knowledge and Unconscionability in a Unified Estoppel", (1998) 24(1) Monash University Law Review 115 Heydon JD, Heydon on Contract: The General Part (Thomson Reuters, 2019) J Hamilton, G Lindsay and C Webster, New South Wales Civil Procedure Handbook 2023 (13th ed, 2023, Thomson Reuters) K Handley, "Recent Cases" (2017) 91 Australian Law Journal 812 K Handley, Estoppel by Conduct and Election (2nd ed 2016, Sweet & Maxwell) Meagher, Gummow & Lehane's Equity: Doctrine & Remedies (5th ed, 2014 Lexis Nexis Butterworths) W Cornish et al, The Oxford History of the Laws of England (2010, Oxford University Press), Vol XI Category: Principal judgment Parties: Hilary Lorraine Kramer (First Appellant) Jaime Ferrer (Second Appellant) David Lindsay Stone (Respondent) Representation: Counsel: R Wilson SC with M McGirr (Appellants) L Ellison SC with H Bennett (Respondent)

Solicitors: Walker & White (Appellants) Lane Associates (Respondent) File Number(s): 2023/84277 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Citation: [2021] NSWSC 1456 Date of Decision: 16 February 2023 Before: Robb J File Number(s): 2017/00261027

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

HEADNOTE [This headnote is not to be read as part of the judgment] This appeal arose out of a dispute concerning the ownership of a property in Upper Colo, New South Wales (the Property). The Property was owned by the late Dame Leonie Kramer (the deceased) after the death of her late husband (Dr Kramer). Under the deceased's final will made in 2011, the Property was left to one of the couple's daughters, the first appellant. The respondent had farmed the Property under an oral share farming agreement since 1975. He claimed he was entitled to the Property on the basis of a representation allegedly made to him by the deceased (the Representation), that he would receive the Property on her death, following earlier representations allegedly made to him by Dr Kramer to the similar effect (although the first of those representations referred only to a life interest). The respondent maintained that he relied on the alleged Representation to his detriment by undertaking additional tasks on the Property and in continuing with the share farming agreement in circumstances that he would have terminated the agreement and sought more remunerative work elsewhere. The primary judge found that the Property was held on constructive trust for the respondent, on the basis of an equitable estoppel arising out of the Representation made by the deceased to the respondent. In so doing, the primary judge found that the respondent had relied on the Representation to his detriment, and that the deceased "ought reasonably to have assumed" and "ought to have known" that the respondent had continued with the share farming agreement on the expectation that he would inherit the Property, and that it was otherwise unconscionable for the deceased to have resiled from the Representation. The principal issues before this Court were whether the primary judge erred in: (i) finding that the Representation had been made; (ii) finding that the Representation was an assurance as opposed to a revocable testamentary promise; (iii) failing to find that the deceased did not encourage the respondent to act to his detriment; (iv) finding that actual knowledge by the deceased that the respondent acted to his detriment is not essential where constructive knowledge is made out; (v) finding that the deceased had constructive knowledge of the respondent's reliance on the Representation; (vi) finding that the deceased acted unconscionably in not leaving the respondent the Property despite leaving a legacy of $200,000; and (vii) finding that the respondent's reliance on the Representation was reasonable. A further issue (ix) arose on the appellants' application to rely, for the purposes of their challenges on appeal to findings made in the principal reasons for judgment, on evidence admitted for the purpose of a subsequent hearing in which the respondent applied to reopen his case. The Court held (Ward P, Leeming and Kirk JJA agreeing) dismissing the appeal:

As to issue (i) (1) It was open to the primary judge, having had regard to all of the evidence, to be positively satisfied on the balance of probabilities that the Representation was made to him by the deceased. The primary judge had the benefit of seeing the respective witnesses and clearly formed a favourable view of the respondent's credit, and (notwithstanding the delay in judgment) there was nothing to indicate that his Honour did not carefully review the evidence when he came to prepare his reasons. Nor is the finding as to the making of the Representation inconsistent with incontrovertible objective evidence: [128]-[132] (Ward P); [296] (Kirk JA). (2) There was no error in the fact-finding process adopted by the primary judge. This Court is not entitled to set aside findings made by the judge who saw the trial unfold and who was acutely conscious of the frailties of memory: [277] (Leeming JA).

As to issue (ii) (3) The primary judge did not err in concluding that the Representation made to the respondent (that the deceased would leave the Property to him) would have been understood by a reasonable person in the respondent's position as an assurance, (i.e., tantamount to a promise) rather than a mere statement of revocable intention, given what would have been objectively conveyed to a person in the respondent's position, knowing the character of the deceased: [150]-[151] (Ward P); [257] (Leeming JA); [296] (Kirk JA).

As to issue (iii) (4) Upon a fair reading of the primary judge's reasons, his Honour must have concluded that the Representation by itself amounted to the requisite encouragement, especially given his Honour's emphatic rejection of the proposition that the deceased would have made the Representation to convey a mere possibility of inheritance rather than as an assurance (as that would have been cruel and out of character for her): [166] (Ward P); [257] (Leeming JA); [296] (Kirk JA). (5) Having not run a case of acquiescence or standing by at first instance, the respondent cannot now maintain such an argument without having filed a notice of contention: [168] (Ward P); [257] (Leeming JA); [296] (Kirk JA).

As to issue (iv) (6) There is a distinction between proprietary estoppel by encouragement and by acquiescence, and in the latter, it is the defendant's knowledge of the plaintiff's reliance on the assumption or expectation that amounts to the relevant inducement or encouragement. However, if the requirement that the defendant "knew or intended" the plaintiff to act or abstain from acting in reliance on the relevant assumption or expectation is a requirement of subjective knowledge at the time of making the relevant representation, then the findings in the present case are problematic insofar as there is no express finding of such knowledge or intention. As to the question of knowledge, as a matter of principle, such knowledge may be inferred: [191]-[193] (Ward P); [291] (Leeming JA); [296] (Kirk JA). Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1998] HCA 7; New Zealand Pelt Export Co Ltd v Trade Indemnity New Zealand Ltd [2004] VSCA 163; Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247; [2016] NSWCA 105; DHJPM Pty Ltd v Blackthorn Resources Ltd (2011) 83 NSWLR 728; [2011] NSWCA 348; Priestley v Priestley [2016] NSWSC 1096; Priestley v Priestley [2017] NSWCA 155, considered. (7) The question of knowledge of detrimental reliance goes to the question of whether it would be unconscionable for the estate of the deceased to be permitted to resile from the representation; it is therefore not necessary to express any concluded view as to whether such knowledge must be actual or constructive: [201]-[202] (Ward P); [257] (Leeming JA); [296] (Kirk JA).

As to issue (v) (8) The complaint as to whether the primary judge correctly applied the "clearly ought to have known" test (assuming it applied at all) goes nowhere given the conclusion as to issue (iv): [217] (Ward P); [257] (Leeming JA); [296] (Kirk JA). (9) The primary judge's finding that the deceased ought to have known that the respondent's motivation for staying on the Property was the expectation that he would inherit it is not glaringly improbable or inconsistent with incontrovertible facts: [218] (Ward P); [257] (Leeming JA); [296] (Kirk JA).

As to issue (vi) (10) The relief granted was not out of proportion to the detriment or wholly disproportionate thereto. The authorities on relief for a proprietary estoppel make clear that the starting point is the prima facie position that the expectation be made good: [243] (Ward P); [257] (Leeming JA); [296] (Kirk JA). Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19; Donis v Donis (2007) 19 VR 577; [2007] VSCA 89; Delaforce v Simpson-Cook (2010) 78 NSWLR 483; [2010] NSWCA 84, considered.

As to issue (vii) (11) The primary judge did not err in concluding that reliance by the respondent on the Representation (by not terminating the share farming agreement and instead remaining on the Property until the deceased's death) was not unreasonable: [252] (Ward P); [257] (Leeming JA); [296] (Kirk JA).

As to issue (ix) (12) The appellants should not be permitted to rely, for the purposes of their appeal, on evidence adduced at first instance subsequent to the principal hearing, for the purposes of the respondent's application to reopen, even though the evidence was adduced before orders were made: [67]-[75] (Ward P); [258]-[275] (Leeming JA); [296] (Kirk JA).

Judgment

1. WARD P: This appeal arises out of a dispute concerning the ownership of a 100 acre property situated on the Colo River in Upper Colo, New South Wales (the Property), which (after the death of her husband, the late Dr Harry Kramer) was owned by the late Dame Leonie Kramer (the deceased). Under her final will made on 11 November 2011 (the Will), the deceased left the Property to one of the couple's two daughters (Hilary Kramer, the first appellant) (cl 2 of the Will).
2. The respondent (David Stone) had for many years farmed the Property under an oral share farming agreement. The respondent claimed that he was entitled to the Property on the basis of a representation allegedly made to him by the deceased, following earlier representations allegedly made to him by Dr Harry Kramer, to the effect that the Property would be his. The respondent maintained he had relied to his detriment on the alleged representation in undertaking additional tasks on the Property and in continuing with the share farming agreement (in circumstances where he could otherwise have terminated the agreement and sought more remunerative work elsewhere).
3. The primary judge found that the respondent had established an entitlement to equitable relief, on the basis of a proprietary estoppel arising from the making by the deceased of the third of the representations relied on by the respondent (see below), characterising the case as one based upon an estoppel by encouragement (see Stone v Kramer [2021] NSWSC 1456, the primary judgment, at [30]). His Honour found that, on the faith of that assurance, the respondent had acted to his detriment in continuing the farming operation on the Property for about 23 years in the belief that he would inherit the Property under the deceased's Will (see the primary judgment at [249]-[250]).
4. His Honour found that the deceased "ought reasonably to have assumed" ([234]) and "ought to have known" that part of the respondent's motivation in continuing the farming operation was the expectation that he would inherit the Property and concluded that, in those circumstances, it was unconscionable for the deceased not to have left the Property to him in the Will ([251]).
5. However, his Honour considered that it would not be equitable to the estate to order that the Property be transferred to the respondent in circumstances where the respondent was entitled to keep the bequest that had been made to him in the Will (a legacy of $200,000 subject to any Consumer Price Index (CPI) increase between the date of the Will and the date of payment) ([340] of the primary judgment). Hence, the orders ultimately made in February 2023 included a declaration that the executors of the deceased's estate, in lieu of the provision made for the respondent in cl 6 of the Will, hold the Property on trust for the respondent (see orders made on 16 February 2023). There is no challenge by the respondent to the conclusion by the primary judge that the declaration as to the respondent's interest in the Property should be in lieu of the legacy provided for him under the Will.

Events leading up to the proceeding at first instance

1. By way of background, the Property (valued at the time of the Grant of Probate dated 2 December 2016 at $1.5 million) is a partly cultivated property that has been used over the years variously as a citrus orchard, for grazing cattle and as a commercial vegetable farm. The respondent's father had been a share­farmer on the Property with the previous owner since 1965 and, after the Kramers acquired the Property in 1969, the respondent's father continued to share-farm the Property with them until 1974, when he left the Property. When the respondent was about 22 years old, in 1975, he commenced to share farm the Property. The respondent lived rent-free in a house on the Property while he was share farming.
2. The respondent particularised the share farming agreement he had with Dr Harry Kramer (see the particulars to [4] of the respondent's statement of claim) as being an oral agreement, the terms of which included that: the respondent would grow crops and maintain the Property; Dr Harry Kramer would pay all operating costs except fuel (which would be shared by Dr Harry Kramer and the respondent); the respondent would reside rent-free in one of the houses of the Property; and the respondent would receive a quarterly retainer ($600) and half the gross proceeds from the sale of produce and cattle. The arrangements in relation to the profit-share seem to have changed over time but nothing turns on this.
3. The respondent alleged that in the 1980s three representations were made to him (defined in the pleading as the First, Second and Third Succession Plans) as to the ownership of the Property.
4. The first representation, as pleaded, was an oral representation by Dr Harry Kramer that he would leave the respondent a life interest in the Property in his will (see at [6] of the statement of claim). The respondent's evidence as to the first representation (see [83]-[85] of the primary judgment) was that in the early 1980s the late Dr Harry Kramer said to him words to the effect: I am dealing with my Will and have decided to give the Colo Property to the girls on condition you receive a life interest, so you can work the Colo Property as your own for your life. The only other condition is that the family retain use of this cottage.
5. In cross-examination, the respondent accepted that the expression "life interest" was not used by Dr Harry Kramer (T 69.5-42) (attributing that expression to his lawyers).

Primary judgment

1. As noted above, the primary judge characterised the respondent's claim as being based on an estoppel by encouragement ([30] of the primary judgment) and there was no demur to this, although in submissions in this Court the respondent at times invokes the language of estoppel by acquiescence. The primary judge set out (from [32]) his distillation of the relevant principles governing such a claim. The primary judge, having referred (at [32]-[34]) to the judgments of Priestley JA in Silovi Pty Ltd v Barbaro (1988) 13 NSWLR 466 and Austotel Pty Ltd v Franklins Self-Serve Pty Ltd (1989) 16 NSWLR 582 (Austotel), noted that equitable estoppel operates on representations or promises as to future conduct and that it is not necessary that the representation be promissory in form (see at [35]). His Honour said that the "expanded fifth proposition" set out by Priestley JA in Austotel (as to the requirement for the creation or encouragement of an assumption and reliance thereon in circumstances where departure from the assumption would be unconscionable) may be satisfied: … if the representation by the defendant encourages the plaintiff to make an assumption that an interest will be granted to the plaintiff by the defendant, and the plaintiff relies upon the assumption in circumstances where departure from the assumption by the defendant would be unconscionable. going on to say: Subjective knowledge by the defendant that the plaintiff is acting in reliance upon the assumption encouraged by the defendant may contribute to a departure from the assumption being unconscionable. However, the issue of whether the departure is unconscionable depends upon the particular circumstances of the case, so that if the nature of the representation and the circumstances in which it is made are calculated to induce reliance by the plaintiff, departure from the assumption may be unconscionable even if the defendant does not subjectively understand that the representation has motivated the plaintiff's reliance.
2. Pausing here, this is relevant when considering the challenge to the primary judge's finding that the deceased "clearly ought to have known" that the respondent's motivation for staying on the Property was the expectation that he would inherit it. That finding (of constructive knowledge) cannot be understood as being determinative of the issue of detrimental reliance in his Honour's eyes (as opposed to being a factor going to the unconscionability of resiling from the promise), as to which I say more in due course.

Kramer (No 2) judgment

1. I have already noted that outcome of the application by the respondent to amend his claim at first instance. Relevantly, in light of the challenge here made to the credibility findings, the primary judge in his second judgment, at [62], when referring to his finding in the primary judgment as to the lack of the commercial viability of the Property as a farming operation, indicated that this was a substantial basis for the determination of the respondent's claim in his favour. His Honour, somewhat equivocally, said: It may be that a reason why the Court and [the first appellant] and her legal representatives simply accepted that the subject matter of [the respondent's] claim was the real property component of the Colo Property was that a basis of [the respondent's] claim was that the farming operation was not commercially viable, so the implicit assumption was that if [the respondent] succeeded in his claim, he would in due course sell the Colo Property and use the proceeds of sale to fund his retirement. [my emphasis]
2. As the primary judge presumably knew the assumption on which he had proceeded in the primary judgment, the equivocation in the above passage may simply relate to the position of the first appellant and her legal representatives. In any event, it is relevant to note that the primary judge at [62] of Kramer (No 2) made clear that the fundamental basis on which the respondent had achieved success in the proceeding was his Honour's finding as to the lack of commercial viability of the farming operation (a finding relevant to the detriment the respondent would suffer in reliance on the promise were the promise not to be made good; and the unconscionability of the deceased, through her executors, being permitted to resile from the promise). This was one of the matters that his Honour considered militated against the application by the respondent to amend and re-open his claim to encompass the water licence and farming equipment as part of the Property alleged to be held on trust for him.
3. At [65] of Kramer (No 2), his Honour accepted that if the claims for water licence and farming equipment had been advanced in the first hearing the respondent would have been subject to more avenues of cross-examination, with a "correspondingly increased risk" that he would have been unable to sustain his position with the same credibility that his Honour had accorded to his evidence in the primary judgment.

Appellants' application to adduce additional evidence

1. Before turning to the grounds of appeal it is convenient to deal with the application by the appellants, pursuant to r 51.51 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) and s 75A(9) of the Supreme Court Act 1970 (NSW) (the Supreme Court Act), to adduce, as additional evidence, affidavit evidence given by the respondent after the date of the primary judgment (which was published on 10 November 2021) but before final orders were made in the proceeding in April 2023 (see their notice of motion filed 24 July 2023). That evidence was adduced in support of the respondent's May 2022 notice of motion for leave to amend his pleading and to re-open the evidence at trial (see the discussion in the transcript of the hearing on the motion on 20 October 2022 from T 3.22).
2. It is also of relevance to note that the respondent made clear at the hearing on 20 October 2022 that there was no application to vary the primary judgment or order (20/10/22; T 4.47). The respondent's affidavit evidence was read insofar as it went to the re-opening application and what would be said on any future hearing (and not read to prove facts on that application) (see 20/10/22; T 5.47). On that basis, the respondent was not cross-examined on various paragraphs of his affidavit evidence that the appellant's counsel indicated he would otherwise challenge (see 20/10/22; T 5.37).
3. Relevantly, what the appellants now seek to adduce is the respondent's evidence (contained in his affidavits affirmed on 11 March 2022 and 3 May 2022) as to what he understood the Property to comprise (i.e., that he considered the "farm" to comprise the land, the farm machinery, the improvements affixed to the land, and the water licence) (see his affidavit affirmed 11 March 2022 at [15]; and his affidavit affirmed 3 May 2022 at [4]) and as to his intentions in relation to the Property (namely, that he wanted to continue to operate, manage and maintain the farm if it were transferred to him) (see his affidavit affirmed 3 May 2022 at [5]).
4. The appellants seek to rely on this additional evidence in support of their challenge to the respondent's credibility (see ground 1 of the grounds of appeal). They argue that the respondent's "new" evidence that he sought to recommence the farming operation on the Property is inconsistent with a case of fundamental commercial unviability of the farming operation (which was a substantial basis for the determination in favour of the respondent at first instance, referring to [62] of Kramer (No 2) - see above). The appellants say that this new evidence would also have opened up a further line of cross-examination had this evidence been led at the trial.

Determination

1. Pursuant to r 51.51 of the UCPR, and s 75A(8) of the Supreme Court Act special grounds must be established for evidence that was available before the hearing to be admitted on a subsequent appeal. Ordinarily, an appellant will need to satisfy three requirements: first, that the evidence is credible; second that the evidence is highly or relevantly probative; and, third, that the evidence was not previously obtainable by reasonable diligence (see Akins v National Australia Bank (1994) 34 NSWLR 155 at 160 per Clarke JA, with whom Sheller JA agreed).
2. In the present case, the evidence sought to be relied upon by the appellants is evidence that was read in the proceedings at first instance, albeit after the primary judgment had been delivered and only as to what would be adduced if the application to re-open was successful. As explained above, it was not adduced until prior to the final determination of the proceedings (and then only in the context of the application by the respondent to amend the pleadings and to re-open the evidence). In one sense, therefore, it might be said that the respondent's affidavit evidence that was read in the course of the hearing of the May 2022 motion is not evidence "after" final judgment in the matter (such that leave would not appear to be necessary for it to be relied upon in the appeal).
3. The real difficulty, it seems to me, is that the appellants seek to rely on this evidence in order to challenge the credit findings that were made by the primary judge following the first hearing (i.e., without the benefit of that additional evidence), in circumstances where at least some of the matters raised by that "additional" evidence had been the subject of challenge at the hearing itself (namely, the evidence as to the respondent not having informed the first appellant of the third representation) or were the subject of evidence that was before the Court on the hearing of the May 2022 motion (namely, the evidence as to the expenditure by the first appellant on equipment after the respondent had left the Property, on which the appellants seek to base an unfairness argument to impact on the respondent's credibility; and the evidence as to the respondent's intention to continue farming on the Property). It was presumably open to the appellants at the time of the hearing of the May 2022 motion to seek to rely on that additional evidence in order to re-open the credit findings that had been made in respect of the respondent following the first hearing, but the appellants apparently did not seek to do so; and to that extent they ought be bound by that forensic decision.

Proprietary estoppel by encouragement

1. To put into context various of the grounds of appeal, it is helpful briefly to outline the elements of a proprietary estoppel by encouragement claim, that being the equitable doctrine here invoked by the respondent (see the primary judgment at [30]).
2. Proprietary estoppel by encouragement is one of a number of discrete equitable doctrines falling within the rubric of "equitable estoppel". The elements common to such doctrines are encapsulated in the well-known formulation of Brennan J, as his Honour then was, in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428-429; [1998] HCA 7 (Waltons Stores v Maher): … [I]t is necessary for a plaintiff to prove that (1) the plaintiff assumed that a particular legal relationship then existed between the plaintiff and the defendant or expected that a particular legal relationship would exist between them and, in the latter case, that the defendant would not be free to withdraw from the expected legal relationship; (2) the defendant has induced the plaintiff to adopt that assumption or expectation; (3) the plaintiff acts or abstains from acting in reliance on the assumption or expectation; (4) the defendant knew or intended him to do so; (5) the plaintiff's action or inaction will occasion detriment if the assumption or expectation is not fulfilled; and (6) the defendant has failed to act to avoid that detriment whether by fulfilling the assumption or expectation or otherwise. For the purposes of the second element, a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs. [My emphasis]
3. While those elements are not to be applied in every case in a "mechanical fashion" (Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247; [2016] NSWCA 105 (Doueihi) at [166] (Gleeson JA, with whom Beazley P, as Her Excellency then was, and Leeming JA agreed); and see DHJPM Pty Ltd v Blackthorn Resources Ltd (2011) 83 NSWLR 728; [2011] NSWCA 348 (DHJPM) at [47] (Meagher JA, with whom Macfarlan JA agreed)), they are commonly regarded as a useful guide or check. It has been said that "if the facts of the case did not measure up to those tests, it would be necessary to think thoroughly about why not" (Austotel at 615-616 (Priestley JA), referred to approvingly in Doueihi (at [166] by Gleeson JA)).

Representation

1. The weight of appellate opinion is that there are less stringent certainty requirements for a representation or promise in proprietary estoppel, as distinct from the certainty requirements for estoppel by representation or promissory estoppel. While an express representation or promise is not necessary (indeed, the representation or promise may derive from conduct), it is necessary carefully to identify the alleged representation or promise (and this is to be assessed by reference to the circumstances of each case - see Doueihi at [186] (Gleeson JA), citing Verwayen at 445 (Deane J); see also, Thorner v Major [2009] 1 WLR 776 (Thorner v Major) at [56] (Lord Walker)).
2. In Flinn v Flinn [1999] 3 VR 712; [1999] VSCA 109 (Flinn v Flinn), Brooking JA (with whom Charles and Batt JJA agreed) concluded (at [80]) that a promise "may be definite in the sense that there is a clear promise to do something even though the something promised is not precisely defined" and made clear that uncertainty of the kind that would prevent the creation of a contract would not necessarily prevent the intervention of equity (see at [95]). Those passages from Flinn v Flinn have been cited approvingly on numerous occasions (see, for example, Delaforce v Simpson-Cook at [55]; Evans v Evans [2011] NSWCA 92 (Evans v Evans) at [121] (Campbell JA, with whom Giles JA and Sackville AJA agreed); DHJPM at [54] (Meagher JA); Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1; [2016] HCA 26 (Crown Melbourne) at [215] (Nettle J); cf [159] (Keane J)). Similarly, in Evans v Evans (see at [116] per Campbell JA) it was accepted, in effect, that the precise content of the assumption and expected arrangements flowing from the relevant representation or promise need not always be susceptible to precise legal analysis (see also Plimmer at 713).
3. The representation or promise has been said to be sufficiently clear "if it is reasonable for the representee to have interpreted the representation in a particular way being a meaning which it is clearly capable of bearing and upon which it is reasonable for the representee to rely" (Galaxidis v Galaxidis [2004] NSWCA 111 at [93] (Tobias JA, with whom Giles and Hodson JJA agreed)). See also the statement by Hodgson JA in Sullivan v Sullivan [2006] NSWCA 312 (Sullivan v Sullivan) at [85] (cited with apparent approval in Evans v Evans at [124] (Campbell JA), Doueihi at [187] (Gleeson JA) and in Crown Melbourne at [147]-[148] (Keane J); [179] (Nettle J)) that: Generally, a promise or representation will be sufficiently certain to support an estoppel if it was reasonable for the representee to interpret the representation or promise in a particular way and to act in reliance on that interpretation, thereby suffering detriment if the representor departs from what was represented or promised. Generally, if there is a grey area in what is represented or promised, but it was reasonable for the representee to interpret it as extending at least to the lower limit of the grey area and to act in reliance on it as so understood, I see no reason why the Court should not regard the representation or promise as sufficiently certain up to this lower limit.

Assumption and inducement

1. In order to rely upon a proprietary estoppel by encouragement, it must be established that the representative held an assumption that he or she would have an interest in the relevant property (Carter v Brine [2015] SASC 204 at [326] (Blue J); Doueihi at [131]; [154]; [159]-[168] (Gleeson JA)), this requiring careful identification of the nature of the assumption held by the plaintiff (Doueihi at [186] (Gleeson JA)); and, relevantly, that this assumption was induced by the representor.
2. In cases of estoppel by encouragement, the relevant assumption is "induced" by the relevant representation or promise, be it express or implied from conduct. By contrast, in cases of estoppel by acquiescence, the relevant assumption is not "induced" in the same sense. Rather, it is the defendant's knowledge of the assumption, and his or her inaction while possessing this knowledge, which supplies the element of inducement; "[t]he act of standing by without correcting the plaintiff's mistaken belief is itself an act of encouragement" (Priestley v Priestley [2016] NSWSC 1096 (Priestley NSWSC) at [109] (White J, as his Honour then was)). As Brennan J said in Waltons Stores v Maher at 429: … a defendant who has not actively induced the plaintiff to adopt an assumption or expectation will nevertheless be held to have done so if the assumption or expectation can be fulfilled only by a transfer of the defendant's property, a diminution of his rights or an increase in his obligations and he, knowing that the plaintiff's reliance on the assumption or expectation may cause detriment to the plaintiff if it is not fulfilled, fails to deny to the plaintiff the correctness of the assumption or expectation on which the plaintiff is conducting his affairs.
3. This distinction is of significance here in terms of the challenge made by the appellant to the finding of knowledge (see ground 4 below).

Reliance

1. There is no presumption of reliance; rather, reliance is a fact to be found (Sidhu v Van Dyke at [58]); and it is not necessary that the relevant assumption be the sole inducement operating on the mind of the party setting up the estoppel (Sidhu v Van Dyke at [71]; it need only be a "contributing cause" at [71]-[73] (French CJ, Kiefel, Bell and Keane JJ); [90] (Gageler J)).
2. The test for reliance has been variously expressed. On the one hand, it has been said that a plaintiff must show that he or she "would have acted differently" but for the assumption (see Gageler J in Sidhu v Van Dyke at [90]ff; Darke J in Stone v Stone [2014] NSWSC 1655 at [44]-[46]; this Court in Miller Heiman Pty Ltd v Sales Principles Pty Ltd (2017) 94 NSWLR 500; [2017] NSWCA 106 (Miller Heiman) at [37]-[49] (Macfarlan JA, with whom McColl JA and Sackville AJA agreed); White J in Priestley NSWSC, and Macfarlan JA, on appeal, in Priestley v Priestley). On the other hand, it has also been said that the question is whether the promise or representation was "a contributing cause" or "influenced" the plaintiff's action (Edelman J's reading of Sidhu v Van Dyke in Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 6) [2015] FCA 825; (2015) 329 ALR 1 at [776]-[779]; Emmett AJA in Priestley v Priestley at [136]; K Handley, "Recent Cases" (2017) 91 Australian Law Journal 812). In E Co v Q [2018] NSWSC 442, at first instance I noted my view was that the better reading of the Sidhu v Van Dyke "contributing cause" test is that propounded by Gageler J (Sidhu v Van Dyke), White J (Priestley NSWSC), and Macfarlan JA (Miller Heiman; Priestley v Priestley). I remain of that view.

Detriment

1. The basal purpose of the equitable estoppel doctrine was identified by Dixon J in Grundt v Great Boulder Pty Gold Mines Ltd (1937) 59 CLR 641 at 674; [1937] HCA 58 as being "to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting".
2. In a case of estoppel by encouragement, the relevant detriment is not the loss flowing from mere non-fulfilment of a representation or promise (Verwayen at 429 (Brennan J); and see Neuberger LJ in Steria Ltd v Hutchison [2007] ICR 445 at [125]). Rather, what must be established is that the plaintiff has suffered (or will suffer) detriment if the defendant is permitted to resile from his or her representations or promises.
3. As with reliance, there is no presumption of detriment; the fact that detriment has been suffered (or will be suffered) must be established on the balance of probabilities. However, the concept of detriment in the context of proprietary estoppel is neither narrow nor technical (Donis v Donis (2007) 19 VR 577; [2007] VSCA 89 (Donis v Donis) at [20] (Nettle JA, with whom Maxwell ACJ and Ashley JA agreed)).
4. The question of detriment is assessed as at the time a party seeks to depart from the assumption or expectation (DHJPM at [72] (Meagher JA)). Detriment may be of a kind that involves "life-changing decisions with irreversible consequences of a profoundly personal nature" (Donis v Donis at [34]; cited approvingly in Sidhu v Van Dyke at [84] (French CJ, Kiefel, Bell and Keane JJ)).

Unconscionability

1. Finally, as to the element of unconscionability, it does not exist at large (and has been said not to be a "triable issue" as such - see MGL at [17-040] and the authorities cited therein; K Handley, Estoppel by Conduct and Election (2nd ed 2016, Sweet & Maxwell) (Estoppel by Conduct and Election) at [1-027]-[1-032]).
2. The question of unconscionability requires an enquiry into the conduct of the relevant representor or promisor; and a conclusion that such conduct was sufficiently unconscionable (see, for example, Australian Securities Commission v Marlborough Gold Mines Ltd (1993) 177 CLR 485 at 506 (Mason CJ, Brennan, Dawson, Toohey and Gaudron JJ); [1993] HCA 15; Trippe Investments Pty Ltd v Henderson Investments Pty Ltd (1992) 106 FLR 214 at 231 (Kearney, Angel and Morling JJ)). The current holistic approach to unconscionability can be seen in the judgment of Allsop P, as his Honour then was, in Delaforce v Simpson-Cook at [3]: Equity will look at all the relevant circumstances that touch upon the conscionability (or not) of resiling from the encouragement or representation previously made, including the nature and character of the detriment, how it can be cured, its proportionality to the terms and character of the encouragement or representation and the conformity with good conscience of keeping a party to any relevant representation or promise made, even if not contractual in character.
3. In equitable estoppel in general, the knowledge or intention of the representor or promisor is fundamental in the enquiry as to the unconscionability or otherwise of the representor's conduct.
4. Knowledge was given prominence in Fry J's formulation of proprietary estoppel in Willmott v Barber (1880) 15 Ch D 96, 105-106 (Willmott v Barber), which included a requirement that the representor knew of the representee's mistaken belief. Brennan J's formulation in Waltons Stores v Maher suggests that intention may suffice, insofar as his Honour considered that a requisite element of equitable estoppel is that a party "knew or intended" for the other to act in reliance on the assumption or expectation. However, the standard of knowledge so required is not settled. Deane J in Verwayen suggests that an objective or constructive knowledge test would be sufficient (at 444-445): …in cases [where a party has induced the assumption by express or implied representation], a critical consideration will commonly be that the allegedly estopped party knew or intended or clearly ought to have known that the other party would be induced by his conduct to adopt, and act on the basis of, the assumption. [my emphasis]

Grounds of Appeal

1. Turning now to the particular grounds of appeal, the appellants have raised eight grounds of appeal. I deal with those in turn.

Ground 1 - challenge to finding as to the making of third representation Ground 1: The primary judge erred in finding that the late Dame Leonie Kramer ("the Deceased") made a representation in the terms of or to the effect of the third representation to the Respondent ([249])

1. The appellants' challenge to the finding at [249] of the primary judgment that the deceased made the third representation largely focuses on the asserted implausibility of the first and second representations, which is said to cast doubt on the making of the third representation, but the appellants also take issue with the primary judge's credibility findings. To the extent that the challenge is to a finding based on an assessment of credibility, the Fox v Percy test must be met (namely, that "incontrovertible facts or uncontested testimony" demonstrate that the trial judge's conclusions are "erroneous" or the conclusion at trial was "glaringly improbable" or "contrary to compelling inferences" (see Gleeson CJ, Gummow and Kirby JJ at [28]-[29] of Fox v Percy)).
2. The significance placed by the appellants on the implausibility of the first and second representations is that the terms of the third representation are predicated on there being an earlier agreement between the Kramers. That is, of course, true insofar as the respondent's evidence was that the deceased prefaced the third representation with words to the effect of "Harry and I did agree …" but in one sense whether or not there was in fact any such agreement is not material - the question is whether the deceased conveyed to the respondent that there was such an agreement.
3. As noted earlier, the appellants complain that the primary judge did not consider the acceptability of the third representation in the context of the acceptability of the first and second representations. The respondent cavils with this, pointing out that, in accepting the evidence of the respondent, his Honour stated that it was more rational to decide that the assurances (plural) were made as asserted by him or that they were not made at all ([244]). The respondent says that the first and second representations were correctly characterised as forming the background (as held at [162]) to the third representation, as they were made by Dr Harry Kramer (not the deceased) and therefore did not bind the deceased's conscience, and they were superseded by the third representation (referring to [159]-[162] of the primary judgment).

Asserted implausibility of the first and second representations

1. As to the asserted implausibility of the making of the first and second representations, the appellants point to the following matters: first, that, in the early 1980s when the first representation was allegedly made, the respondent was about 30 years old and had only been share farming on the Property since 1975; second, that the Property was owned by the Kramers jointly and hence would pass by survivorship to the deceased on her husband's death; third, that there is no reference in Dr Harry Kramer's 7 July 1988 will (or his document "Actions you must take soon after I die") to any agreement between the Kramers that the Property be transferred to the deceased on the basis that it be left to the respondent on her death; and, fourth, the evidence of Jocelyn Kramer (the deceased's other daughter) as to her conversation with Dr Harry Kramer in April 1987 when she asked him whether he would leave the Property to the respondent and his response thereto (see her affidavit sworn 14 August 2018 at [31]).
2. The appellants submit that it is implausible that Dr Harry Kramer, then in his early to mid-60s, would have spoken to the much younger respondent (who had then only share farmed the Property for five years) about a life interest in a will that he (Dr Harry Kramer) might in the future make. They argue that the respondent's evidence as to the first representation suggests that Dr Harry Kramer did not know that he held the Property jointly with the deceased or did not know the significance of a joint tenancy (contrary to the terms of Dr Harry Kramer's will, which included reference in cl 3(1)(i) to the farm property owned by his wife and himself). The appellants note that in cl 3(1)(i) of his will, Dr Harry Kramer gave the respondent a $10,000 legacy if he was share farming at the date of his death; and that in the conversation to which Jocelyn Kramer deposed, Dr Harry Kramer's response was to the effect that leaving the Property to the respondent could become awkward as the family would still want access to the farm and that it seemed the most practical to leave it to the deceased and whatever she decided to do about it later was her decision.
3. The appellants also maintain that the conversation attributed by the respondent to Dr Harry Kramer was out of character for him, pointing to the evidence that both the deceased and Dr Harry Kramer were very private persons (as to the latter reference being made to T 68.7); and that the deceased was careful as to the decisions made about her wills (reference being made to the discussions that Jocelyn Kramer had with the deceased as to her wills - see -(c) of her affidavit sworn 14 August 2018).

Challenge to the credibility findings

1. As to the challenge to the respondent's credibility (leaving aside the additional evidence that the appellants sought to adduce in relation to this, which has been considered already), the appellants say that the respondent's evidence in cross-examination in relation to the first and second representations was unsatisfactory and that this adversely affects the acceptability of his evidence concerning the third representation.
2. In this regard, the appellants point to the respondent's concession in cross-examination in relation to the first representation that the words "succession plan" were not used (T 67.45) (cf the account in his affidavit); and that the expression "life interest" was not used by Dr Harry Kramer (T 69.5) and that this was an expression he had heard from his lawyers.
3. As to the criticism of this evidence, the respondent says that he never stated that Dr Harry Kramer used the words "succession plan"; rather, that he only used those words to describe what he believed Dr Harry Kramer was raising or "bringing up" with him. Reference is made to [84], where his Honour noted that the respondent had conceded that Dr Harry Kramer had not used the words "life interest" but that the respondent had given evidence that Dr Harry Kramer had explained to him that the Property would be his to work for the rest of his life (T 69.41). It is also noted that (at [99]) the primary judge observed that the recollection of the words used by the Kramers in making the representations must be fallible, given the length of time that had passed, and did not diminish the honesty and genuine recollection of the respondent's understanding of the meaning and effect of the words used.
4. In relation to the second representation, the appellants note that the respondent maintained in cross-examination that Dr Harry Kramer had agreed to transfer the Property to the deceased even though the respondent knew that the Property was jointly owned and passed automatically to the other joint tenant (T 78.32-34).
5. As to the significance of the joint ownership of the Property by the Kramers, the respondent says that he did not know at the time the second representation was made that the Property was jointly owned by the Kramers as joint tenants, pointing to his evidence (at T 78.20-30) that "I know that now" and "I understand that now".

Import of additional evidence

1. As explained above, the appellants argue that the respondent's evidence (after the primary judgment) as to his understanding of the expression "farm" in the third representation and his intentions concerning the Property casts doubt as to the "exceptional credibility" finding made by the primary judge at [167], placing weight on the fact that the respondent failed to adduce that evidence at the first instance hearing and therefore did not expose himself to cross-examination on these matters.

Determination

1. I do not accept that the challenge to the credibility findings has been made good. The primary judge had the benefit of seeing the respective witnesses in the course of the hearing; and clearly formed a very favourable view of the respondent's credit (expressing that view in emphatic and unqualified terms). Further, although the primary judge adverted to the "increased risk" (had there been cross-examination on the matters sought to be raised by the additional evidence) that the positive ("exceptional") credibility findings would not have been sustained, the primary judge apparently did not see the need to revise his view of the respondent's credit having regard to the (untested) additional evidence that was put before him at the second hearing as evidence that would be adduced if the matter was to be re-opened on those issues.
2. Relevantly, I do not accept that the credibility finding made by the primary judge (although in uncommonly glowing terms) that the third representation was made is glaringly improbable on the objective evidence. While it is unfortunate that there was delay in the publication of the primary judgment, his Honour made clear that in preparing his reasons he had had the benefit of his notes at the time and there is nothing to indicate that his Honour did not carefully review that evidence in light of all of the oral and documentary evidence before him when he came to prepare his reasons. This is not a case where it could be concluded that the delay was such as to cast doubt on the reasoning process adopted or the findings that were made.
3. Nor is the finding as to the making of the third representation inconsistent with incontrovertible objective evidence.
4. As to the complaint that the primary judge failed to assess the acceptability of the third representation by reference to the acceptability of the first and second representations, I accept that there is not a clear finding as to the making of one or both of the first or second representations but I do not accept that this leads to a conclusion that there was error in the finding as to the third representation. Rather, the third representation is capable of standing on its own, even with the words "Harry and I did agree …"; and I consider that the significance of the evidence as to the first and second representations goes only to the context in which the third representation was made and as to what it would objectively have conveyed to a person in the respondent's position.

Ground 2 - was the third representation an assurance or a revocable statement of testamentary intention? Ground 2: The primary judge erred in finding ([244]) that the third representation was an "assurance" the Deceased would give the [Property] to the Respondent in her Will

1. Ground 2 challenges the finding that the third representation was an "assurance" (as opposed to a revocable testamentary promise). This ground of appeal raises the difficulty identified in the cases where the relevant assumption or expectation relates to testamentary intentions or promises (see, for example, Gillett v Holt [2001] Ch 210 (Gillett v Holt); Flinn v Flinn; Waltons Stores v Maher; Thorner v Major; and Priestley v Priestley).
2. In Flinn v Flinn (at [75]) Brooking JA said that: Most people, I suppose, know that the maker of a will can revoke it at any time before death. How is a promise to make a will to be understood? Surely it will ordinarily be regarded by the promisee as a promise, not merely to make a will which can be revoked at any time before death, but to make a gift by means of an instrument which will take effect upon the donor's death. In other words, the promise of a gift by will is ordinarily to be understood as meaning just that - an effective gift by will, taking effect on death, not an ineffective, because revoked, disposition. Of course it all depends on the circumstances. ...
3. In Delaforce v Simpson-Cook at [36] Handley JA made reference to the observation by Robert Walker LJ in Gillett v Holt at 227-228: …the inherent revocability of testamentary dispositions (even if well understood by the parties …) is irrelevant to a promise or assurance that 'all this will be yours' … Even when the promise or assurance is in terms linked to the making of a will … the circumstances may make clear that the assurance is more than mere statement of present (revocable) intention, and is tantamount to a promise.
4. In the context of a case premised on estoppel by encouragement, the factual question in this regard is whether the representation or conduct amounted to more than a mere statement of present (revocable) testamentary intention and was instead "tantamount to a promise" (in Estoppel by Conduct and Election at [16-031], the author notes that "[a]lthough testamentary promises are normally revocable, they become irrevocable if they are reasonably understood as being binding").

Determination

1. I am not persuaded that the primary judge erred in concluding that the representation made to the respondent that the deceased would leave the Property to him would have been understood by a reasonable person in the respondent's position as an assurance, (i.e., tantamount to a promise) rather than a mere statement of revocable intention, although I have reached that conclusion not without some hesitation. The reason for that hesitation is simply the fact that the third representation in its terms is a discrete statement of testamentary intention; there is nothing to indicate that it was linked to the respondent continuing to remain as a share-farmer on the Property (cf the terms in which the first representation conditioned the promise of a life interest on that fact); and it was not made in response to anything that the respondent had raised. Unlike the position in Gillett v Holt, it was not repeated many times over the years.
2. However, when one considers what would objectively have been conveyed to a person in the respondent's position knowing the character of the deceased, it was open to the primary judge to conclude that this was not a mere revocable statement of testamentary intention. Ground 2 should therefore be dismissed.

Ground 3 - is it necessary that there be encouragement after representation? Ground 3: The primary judge erred by failing to find the Deceased did not encourage the Respondent to act to his detriment in reliance upon the making of the third representation

1. Ground 3 raises the legal issue as to whether in an estoppel by encouragement case it is necessary that there be encouragement by the representor after the making of the representation. The appellants argue that this is required in conformity with the decision of the High Court in Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 (Giumelli) at [35] (Gleeson CJ, McHugh, Gummow and Callinan JJ); and that the failure of the deceased to encourage the respondent to act in reliance on the third representation (after the making of the representation) means that the claim should have been dismissed.
2. In this regard, the appellants say that [228] of the primary judgment (see above) contains the primary judge's only "finding" of encouragement, noting that the primary judge did not make a finding that the third representation, on a reasonable interpretation, contained the necessary element of encouragement. (Pausing here, [228] is not a finding at all; it is an exposition of legal principle.)
3. The appellants refer to Olsson v Dyson at 378-379, where Kitto J (Barwick CJ and Windeyer J agreeing) considered at 379, after observing that "what gives rise to an equity which the attempted making of the gift did not by itself create is the conduct of the intending donor after the act of incomplete gift", that: He intended to make her a gift ... but there the matter ended, without him thereafter offering her any encouragement or inducement to adopt a course prejudicial to herself, and without his doing anything else that can be held to have bound him in conscience to perfect the imperfect gift.
4. As noted above, reliance is placed by the appellants on Giumelli, where the High Court at [35] quoted with approval the observation of McPherson J in Riches v Hogben (1985) 2 QR 292 (Riches v Hogben) that "the critical element is the conduct of the defendant after the representation in encouraging the plaintiff to act upon it"; and (at [36]) noted that in Kitto J's observations in Olsson v Dyson of the two concurrent lines of reasoning in Dillwyn v Llewelyn both involved encouragement. The appellants also make reference to MGL at [17-095] where there is reference to the element of encouragement common in the lines of authority derived from Dillwyn v Llewelyn and Ramsden v Dyson, that the acts performed in detrimental reliance on the relevant expectation or belief are either encouraged by, or known to the representor.

Determination

1. I accept that there are no positive findings by the primary judge as to the element of encouragement per se; rather, the primary judge observed (in his distillation of the relevant principles (at [228])) that a bare statement that the maker will do a specified act in the future may be sufficient encouragement. Nor was there any positive finding of intention on the part of the deceased as at the time of making the third representation. However, I consider that, fairly read, the primary judge must have concluded that the making of the third representation by itself amounted to the requisite encouragement (particularly having regard to his Honour's emphatic rejection of the proposition that the deceased would have made the third representation to convey a mere possibility of inheritance rather than as an assurance, as that would have been cruel and out of character for her ([244])).
2. I agree with the respondent that the submissions by the appellants do not distinguish between encouragement constituted by the making of the representation itself and encouragement after the making of the representation; and that in that sense they conflate the two concepts. The authorities to which I have earlier referred make clear in my opinion that the act of inducement or encouragement in an estoppel by encouragement case may simply be the making of the representation itself. Indeed this will often be the case where the form of estoppel invoked is estoppel by encouragement. Accordingly, I am not persuaded that the primary judge erred in failing to find that there was encouragement after the making of the representation.
3. That said, I consider that the respondent cannot now maintain a case of acquiescence or standing by, not having run such a case at first instance and without having filed a notice of contention.
4. Ground 3 is not made good.

Ground 4 - is actual knowledge of detrimental reliance required? Ground 4: The primary judge erred in finding that subjective knowledge by the Deceased that the Respondent had acted to his detriment is not essential where she ought reasonably to have assumed (J [234]) or ought to have known (J [251]) that part of the Respondent's motivation for continuing was an expectation he would receive the [Property]

1. By ground 4, the appellants contend that the primary judge erred in applying a test of constructive knowledge to the deceased's knowledge of the respondent's detrimental reliance (see the primary judge's reasons at [234]). The appellants contend that in an estoppel by encouragement case there is a requirement of actual knowledge or intention (relying on the judgment of Brennan J in Waltons Stores v Maher at 429, extracted above, and its acceptance by this Court in DHJPM at [48] per Meagher JA (Macfarlan JA agreeing), and its later explanation in Doueihi per Gleeson JA).
2. The appellants complain that the primary judge does not explain how the "clearly ought to have known" test articulated by Deane J in Verwayen is to be expressed in terms of what a reasonable person in the position of the representor would understand was probable (see at [234]), suggesting that his Honour may there have been influenced by the discussion of constructive knowledge in Farah Constructions v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ) at [174] (which addressed constructive knowledge in second limb Barnes v Addy (1874) LR 9 Ch App 244 cases by reference to the five categories of knowledge explained in Baden v Societe Generale pour Favouriser le Developpement du Commerce et de l'Industrie en France SA [1992] 4 All ER 161).
3. The appellants submit that the requirement in a Dillwyn v Llewelyn proprietary estoppel case that the representor knew or intended that the representee act to his detriment has its genesis in the dissenting speech of Lord Kingsdown in Ramsden v Dyson at 170, which was quoted with approval by Meagher JA in DHJPM at [53]. The appellants refer to the judgments in Waltons Stores v Maher, where Brennan J quoted with approval Lord Kingsdown's statement of principle in Ramsden v Dyson and included, in the matters necessary to establish an equitable estoppel, the requirements that "the plaintiff acts or abstains from acting in reliance on the assumption or expectation" and that the defendant "knew or intended him to do so"; saying that each of the other members of the Court in Waltons Stores v Maher referred to a requirement of actual knowledge (Mason CJ and Wilson J at [406]; Deane J at [433]; and Gaudron J at [463]).

Determination

1. I have referred earlier to the distinction between the two forms of proprietary estoppel - estoppel by encouragement and estoppel by acquiescence - and, in particular, that in the latter it is the defendant's knowledge of the plaintiff's reliance on the assumption or expectation that amounts to the relevant inducement or encouragement (i.e., that the acquiescence or standing by without correcting the mistaken belief or expectation is itself an act of encouragement, in the words of White J in Priestley NSWSC).
2. However, there is a question as to the temporal nature of a requirement of knowledge or intention in an estoppel by encouragement case. If the requirement that the defendant "knew or intended" the plaintiff to act or abstain from acting in reliance on the relevant assumption or expectation (adopting the language used in the fourth of the elements set out by Brennan J in Waltons Stores v Maher at 428-429, which I have extracted at [77] above) is a requirement of subjective knowledge or intention at the time of making the relevant representation, then the findings in the present case are problematic insofar as there is no express finding of such knowledge or intention.
3. As to the question of knowledge at the time of making the representation, while there is no express finding that the deceased knew that the promise of inheritance would be relied upon by the respondent, I consider that his Honour must have inferred such knowledge (having regard to his finding at [244]) to which I have referred above; and I accept the respondent's submission that as a matter of principle such knowledge may be inferred.
4. As to the question of intention, the closest that the primary judge comes to such a finding is in the observation to the effect that it would have been cruel for the deceased to have made the third representation intending to convey that the respondent's inheritance of the Property be no more than a possibility ([244]).
5. I have difficulty seeing an evidentiary basis for an inference that the deceased intended the promise to be relied upon (and certainly not that it would be relied upon by the respondent choosing to remain on the Property) particularly where it is not suggested that the third representation was made in the context of any discussion as to the respondent's future plans in relation to the Property or the share farming agreement. It seems to me that this is a far cry from cases where the promise or representation is linked in some way to the party asserting the estoppel continuing to perform services of some kind (see, for example, the representation in In re Basham, decd [1986] 1 WLR 1498 at 1503 that "[y]ou'll lose nothing for this, doing all these jobs").

Ground 5 - challenge to finding that deceased "ought to have known" that there was detrimental reliance Ground 5: The primary judge erred in finding at J[234] that the Deceased ought reasonably to have assumed (J [234]) or ought to have known (J [251]) that part of the Respondent's motivation for continuing was the expectation he would receive the Colo property

1. Ground 5 challenges the finding of constructive knowledge and, in light of the conclusion I have reached as to ground 4, it is not necessary to determine and I propose only briefly to address it.
2. The appellants say that, despite adopting the "clearly ought to have known" test formulated by Deane J in Verwayen at 445, the primary judge did not make factual findings which conformed to the test; arguing that the factual findings at [234] that the deceased "ought reasonably to have assumed" and at [251] that the deceased "ought to have known" are materially in different terms to the "clearly ought to have known" test and that they appear to involve a lesser standard of constructive knowledge than the "clearly ought to have known" test. The appellants thus submit that there is an "arguable case" that the primary judge erred in his findings of constructive knowledge at [234] and [251].
3. As to this submission, the respondent argues that the primary judge's findings on this issue are in conformity with what was found in relation to knowledge of detrimental reliance in Doueihi (referring to the "must have known" test in Doueihi at [51]; [60] (Gleeson JA)). (In reply submissions, the appellants say that, whether or not the test of "ought reasonably have assumed" and "ought to have known" applied by the primary judge is in conformity with the "must have known" test in Doueihi at [51], [60], it is not the test of "clearly ought to have known" enunciated by Deane J in Verwayen at 445 (from which the primary judge drew authority to apply a constructive knowledge test).)
4. Leaving aside any error in the test applied, the appellants challenge the factual finding that the deceased ought to have known that the respondent's motivation for staying on the Property was the expectation that he would inherit it.
5. Complaint is made that the primary judge, in considering the issue of constructive knowledge, focused on the respondent's paucity of income (see [234] and [251]) and his own research as to what the respondent could have earned had he pursued employment that returned an average level of income (see [153]-[154]) but failed to have regard to the benefits the respondent received from the share farming agreement and his lack of complaint by the respondent (as to his working arrangements).

Determination

1. The complaint as to whether the primary judge correctly applied the "clearly ought to have known" test (assuming it applied at all) goes nowhere in light of the conclusion reached in relation to ground 4.
2. As to the challenge to the factual finding itself, I do not accept that the finding that the deceased ought to have known that the respondent's motivation for staying on the Property was the expectation that he would inherit it is glaringly improbable or inconsistent with incontrovertible facts. The very fact that the appellants' submissions are cast in terms that there must be a doubt about the deceased's awareness, or that it is far from clear that this was her awareness, suggests that what the appellants here cavil with is the ultimate conclusion that the primary judge drew from the evidence before him as to matters that would be a matter for assessment balancing the competing advantages and disadvantages of the respondent continuing to work on the Property. I am not persuaded that the primary judge erred in the conclusion he reached and thus ground 5 is not made good.

Grounds 6 and 7 - issues going to detrimental reliance and relief Ground 6: The primary judge erred in finding that the Deceased acted unconscionably in not leaving the Respondent the Colo property in her Will despite the fact that she left him a legacy of $200,000 Ground 7: The primary judge erred in finding that the Respondent is entitled to equitable relief to relieve him of the effect of unconscionable conduct attributed to Dame Leonie ([252])

1. Ground 6 raises the question whether the respondent is entitled to rely on his contractual performance of the share farming agreement as a detriment, or whether (as is alleged in ground 8) such reliance by him was unreasonable. Ground 6 also raises the question of relief and whether the respondent's equity was satisfied by the monetary legacy received under the Will. Ground 7 is also a general ground of appeal which relies upon the success of grounds 1 to 5 and 8. The submissions on grounds 6 and 7 overlap.
2. As to ground 6, the appellants invoke the statement made by Young CJ in Eq in Barnes v Alderton that contract and proprietary estoppel are mutually exclusive (his Honour there referring to the observation of McPherson J in Riches v Hogben at 301 to the effect that if there is a contractual promise then the plaintiff must resort to the law of contract in order to enforce it, it being the function of equity to supplement the law, and not to replace it.). The appellants point to the description by the primary judge of the relationship between the respondent and the Kramers as an informal halfway house between a commercial and a domestic one, even though there was an underlying commercial relationship in the form of the share farming agreement ([41]).
3. By ground 6, the appellants pose the question whether the respondent can rely on his contractual performance of the share farming agreement in order to found a proprietary estoppel, i.e., whether the respondent can rely on performance of the share farming agreement as detrimental reliance. The appellants argue that, as the purpose of an equitable estoppel is the avoidance of detriment (see Verwayen per Mason CJ at 410-411, Dawson J at 454, quoted with approval in Giumelli at [43]), that there can be no room for an estoppel in the present case since the detriment relied upon by the respondent is his performance of the share farming agreement (which the respondent was bound to perform). The appellants submit that estoppel and contract in this way are mutually exclusive.

Determination

1. Insofar as the appellants challenge the finding of detrimental reliance on the basis that the respondent cannot rely upon his contractual performance of the share farming agreement as a relevant detriment (because he was bound to perform those obligations in accordance with the share farming agreement) and argue that contract and estoppel are here mutually exclusive, I consider that this fails to engage with the basis on which the respondent maintains that there was detrimental reliance - namely, that he did not terminate the share farming agreement (as he could have done) but remained on the Property in the expectation that he would inherit it. Understood in that way it does not seem to me that the respondent's case relies on contractual performance of the share farming agreement per se; rather, it relies on the fact that he chose not to terminate that agreement.
2. It is not necessary to delve into the issue whether the appellants' submissions impermissibly characterise the rights between the deceased and the respondent from a contract perspective in the absence of a ground of appeal that challenges the finding by the primary judge at [41] (though I have some difficulty with the proposition that it suffices simply to "introduce a review" of such a finding in submissions in chief). Nothing turns on this.
3. If the expectation induced in the respondent was a contributing cause to his decision to remain on the Property and not to terminate his share farming agreement and, but for the expectation engendered in him he would not have done so (as the primary judge in essence has found), then, as a matter of common sense and likelihood as "a matter of the probabilities of human behaviour" it can comfortably be concluded that there was detrimental reliance on that expectation in the sense explained in Sidhu v Van Dyke (and in Donis v Donis).
4. As to the complaint that the relief granted is grossly disproportionate to the detriment suffered by the respondent doing what he contracted to do, again that fails to recognise that the detriment is not the continued performance of his contractual obligations but the fact that the respondent did not seek remunerative employment elsewhere.
5. As to the question of proportionality, I do not accept that the relief granted is out of all proportion to the detriment suffered.

Ground 8 - was reliance unreasonable? Ground 8: The primary judge erred in declaring that the Appellants as executors of the estate of the Deceased and in lieu of clause 6 of the Will of the Deceased dated 11 November 2011 hold the Colo property on trust for the Respondent (order 1 made 16 February 2023) in circumstances where: (a) it was unreasonable for the Respondent to have acted in reliance upon the third representation given that he and the Deceased were in a commercial relationship in the form of a share farming agreement by which the Respondent farmed the Colo property and lived in one of the cottages on it; (b) the Respondent received a legacy of $200,000 pursuant to clause 6 of the Deceased's Will dated 11 November 2011

1. Ground 8 approaches the question of detriment from a different perspective to that raised by ground 6; the appellants by this ground argue that it was unreasonable for the respondent to have acted in reliance upon the third representation given that he and the deceased were in a commercial relationship through the share farming agreement.
2. The appellants distinguish between the requirement that the representee act reasonably in relying on the promise (referring to Priestley v Priestley at [13] per Macfarlan JA; Doueihi at [77] per Gleeson JA quoting White J (as his Honour then was) at first instance at [227] in Priestley NSWSC) and the separate principle that a representation reasonably carries the meaning contended for (referring to Sullivan v Sullivan at [85] per Hodgson JA); as well as the further principle that it is sufficient if the representation was a "contributing cause" to the representee's conduct (referring to Sidhu v Van Dyke at [90] per Gageler J).
3. Again, the appellants point to the existing contractual agreement, arguing that it is unreasonable and inequitable for the respondent in effect to say that he would not perform his share farming agreement without the promise of the Property; and hence they argue that it was not unconscionable for the deceased to have resiled from the third representation.
4. Insofar as this submission is premised on the arrangement between the deceased and the respondent being a commercial relationship, the respondent again points to the primary judge's finding that the relationship was not purely commercial (namely, that a "halfway house" commercial/domestic relationship existed - see [41]). The respondent says that his Honour's finding is consistent with the absence of a number of elements from his relationship with the deceased, including that he was not an experienced businessman who could be taken to have contemplated or intended that any proprietary right could be created by a binding contract ([39] (citing Doueihi at [165]), [40]), and who was not receiving legal advice (at [45] citing Trentelman at [122] (Bathurst CJ, with whom Bell P, as his Honour then was, and Leeming JA agreed) and Cobbe at [68] (Lord Walker)).

Determination

1. I do not accept that Ground 8 has been made good. Leaving aside whether the share farming agreement was "commercial" or a halfway house between a commercial and domestic relationship (whatever that may mean), I cannot see that the primary judge erred in concluding that reliance by the respondent on the third representation (by not terminating the share farming agreement and instead remaining on the Property until the deceased's death) was not unreasonable. Nor do I consider that the respondent's claimed relief is in any way inequitable.
2. As I understand the evidence, the respondent did not make any demand of the deceased in relation to the Property; rather, the deceased made the third representation to him and his evidence, in effect, was that he simply relied on the deceased to keep her word. The flaw in the submission that his conduct was in some way inequitable because of the existing contractual agreement is that it assumes that the respondent could not lawfully have brought that agreement to an end - it is the foregoing of the opportunity to seek remunerative employment elsewhere that founds the relevant detriment (not a demand for a promise of inheritance as some price for performing his existing contractual obligations).

Conclusion

1. For the above reasons I consider that the appeal should be dismissed.
2. The appellants sought, if the appeal were successful, the costs of both the appeal and the first instance proceedings. Had that issue arisen there may have been some difficulty in that part of the issues raised at the hearing before the primary judge were determined against the appellants (and there is no challenge thereto); such as the allegations of dishonesty and incompetence in performance of the share farming agreement. Nevertheless, in light of the conclusion I have reached as to the outcome of the appeal, it is not necessary to consider this. Costs should follow the event.
3. The orders I propose are therefore: 1. Dismiss the appellants' notice of motion filed 24 July 2024 with costs. 2. Dismiss the appeal with costs.
4. LEEMING JA: I have had the large advantage of reading the reasons of Ward P in draft. I agree with the orders her Honour proposes, and, subject to the following, which is by way of elaboration rather than qualification, with her Honour's reasons.
5. The first hearing took place over six days between 20 and 27 November 2020. Judgment was reserved. No orders were made when the primary judge published reasons on 10 November 2021: Stone v Kramer [2021] NSWSC 1456. Instead, those reasons invited the parties to draft short minutes of order to give effect to them. Rather than orders being made in the following days, there was a second hearing on 18 March 2022, which served to confirm that a number of matters remained in dispute, including that Mr David Stone sought to amend his pleading so as to advance new claims over the water entitlements attaching to the land. That led to procedural orders being made (by consent) on 29 March 2022, granting Mr Stone leave to file and serve further evidence in support of his new claims, and a third hearing on 20 October 2022 following which his Honour reserved and delivered further reasons on 16 December 2022: Stone v Kramer (No 2) [2022] NSWSC 1716. Once again no orders were made, although this time 15 substantive orders were proposed with a view to the parties being heard further as to their form. The reasons recorded the primary judge's view that the application to amend should in large measure be refused, primarily on the basis of what had occurred at the first hearing, including the more limited cross-examination Mr Stone had faced, the unfairness of permitting Mr Stone to add to his success by expanding his claim without being subjected to the same litigation risk as if he had advanced the expanded claim at the first hearing, and the inevitability that the Court would be drawn into re-considering many of the issues that have been determined: at [65]-[67]. However, the primary judge did permit a limited expansion of Mr Stone's case, and thus ordered a further timetable for the determination of the "New Issue", which was defined in proposed order 7 as "the new issue raised by the amendment of [Mr Stone's] statement of claim".

Ground 1

1. I agree with Ward P that ground 1 should be dismissed. That said, it should not be thought that factual findings at first instance are insulated from appellate review merely either by concluding that a witness was "exceptionally credible", or by relying on contemporaneous notes made shortly after a trial. However, the primary judge explained, at length, that he was familiar with the distortions of human recollection, the close scrutiny of evidence required when a deceased estate is involved, the fallibility of demeanour-based findings and the need for reconciliation with the probabilities and other evidence, and attended to the fact that Mr Stone's sworn evidence of the conversation some thirty years ago was materially different from that in his affidavit. His Honour said at [182]-[183]: Notwithstanding the self-evident validity of these reservations about the wisdom of a court accepting the oral evidence of an interested witness that is not directly corroborated of statements allegedly made by a now-deceased person long in the past, the courts may from time to time have to decide cases of considerable importance to individual plaintiffs, where the plaintiff's claimed rights are based upon statements made to them in private, in circumstances where the context is one of trust between the participants, and where they have no intention to seek legal advice, to involve strangers in the transaction, or to enter into formal legal agreements. … While it is clear that the amplification of the forensic uncertainties that may attend the enforcement of non-commercial arrangements based on oral agreements in informal circumstances, where it is expected that the agreements will be honoured on the basis of trust, requires that the Court exercises exceptional care in acting on the evidence of a plaintiff that is not directly corroborated concerning oral assurances, that is a circumstance that only makes the Court's duty more onerous. The issue is always whether the plaintiff has established the claim on the balance of probabilities, having regard to all of the evidence, as well as the gravity of the matters alleged and the other considerations required to be taken into account under s 140(2) of the Evidence Act 1995 (NSW). There is no rule that the Court should not act on the uncorroborated evidence of an interested party as to the terms of historical conversations. There is scope for great injustice to be done if the Court adopts an excessively inflexible resistance to accepting oral evidence of conversations in that manner.

Ground 4

1. This ground boils down to whether a claim based on estoppel by encouragement was available if it were not shown that the representor (in this case, the late Dame Leonie Kramer) had actual knowledge of the plaintiff's (Mr Stone's) assumption.
2. The appellants maintained that the primary judge had erred in finding at [234] that: I do not accept that an estoppel by encouragement can only arise where the representor has actual knowledge that the only reason why the representee engages in the conduct that will lead to detriment being suffered if the representation is not realised is the expectation that the representation will be made good. It will be sufficient if the making of the representation is a real or significant reason for the response of the representee. Furthermore, subjective knowledge on the part of the representor is not essential, provided that a reasonable person in the position of the representor would understand that it was probable that the representee was engaging in the conduct in the expectation that the representation would be realised. …
3. The primary judge relied on what Deane J had said in Commonwealth v Verwayen (1990) 170 CLR 394 at 445; [1990] HCA 39 that "a critical consideration will commonly be that the allegedly estopped party knew or intended or clearly ought to have known that the other party would be induced by his conduct to adopt, and act on the basis of, the assumption", as adopted by Macaulay J in Leading Synthetics Pty Ltd v Adroit Insurance Group Pty Ltd [2011] VSC 467 at [67]-[69], the latter based in part upon a preference expressed by Nettle JA writing for the Victorian Court of Appeal in New Zealand Pelt Export Co Ltd v Trade Indemnity New Zealand Ltd [2004] VSCA 163 at [98]-[99].
4. The appellants contended that the primary judge was bound to find that Mr Stone's case required showing actual knowledge on the part of the representor, because of Brennan J's formulation in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387; [1988] HCA 7, which was said to have been accepted by this Court as applying in an "orthodox proprietary estoppel case". They submitted: Unlike Brennan J's general formulation in Waltons v Maher, Deane J's statement of the General Doctrine of Estoppel by Conduct has not been accepted by the NSW Court of Appeal as applying to an orthodox proprietary estoppel case. In Doueihi … Gleeson JA at [136] observed that in Giumelli the plurality noted that in Verwayen, Dawson J (at 454) and McHugh J (at 499-501) did not accept Deane J's general doctrine of estoppel by conduct and that Brennan J approached the matter on a different footing. The primary judge described this case as an estoppel by encouragement case. There is nothing in the facts to suggest it is otherwise than an orthodox proprietary estoppel case. The primary judge erred in applying a constructive knowledge test in assessing whether the Deceased knew the Respondent had acted in reliance upon the third representation. The primary judge was bound by the Court of Appeal decision in DHJPM to apply Brennan J's test of actual knowledge or intention. The primary judge should not have applied a constructive knowledge test as Deane J's formulation in Verwayen has been questioned by this Court in Doueihi, and it is only arguably applicable in a promissory estoppel case.

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