It is commonplace in farming communities to hear stories of
fathers saying to their sons, "one day all of this will be
yours". However, without considered and appropriate
estate planning, this intended result is often not achieved.
In addition to having a Will, many farmers incorporate
testamentary contracts into their estate plans. These contracts aim
to provide certainty for children who farm on land owned by their
parents that the land will one day pass to them. The agreements
between parents and children in these contracts may include:
an agreement to make a Will;
an agreement to include specific provisions in a Will
(including gifting provisions);
an agreement not to dispose with assets without the prior
consent of all parties; or
an agreement not to revoke a Will without the prior consent of
Priestly v Priestly  NSWSC 1096
The recent Supreme Court of New South Wales decision in Priestly
v Priestly  NSWSC 1096, highlights the key components of a
valid testamentary contract.
In this case, Gordon and Beverley Priestly were farmers who had
3 children. Their son, Duncan, was the only child that worked on
the farm. During a conversation in 1986, Gordon assured Duncan that
the farm would one day be his.
Gordon and Beverly divorced in 2004 and after several family
disputes, a settlement deed was entered into by all members of the
family. Clause 1(a) of the settlement deed provided for various
titles of land already in the sole names of Gordon and Duncan to
remain with them and for Gordon and Duncan to agree between
themselves whether to designate those properties differently.
In court, Duncan argued that when the settlement deed was made,
it was his intention and the intention of his father that he would
help his father re-establish himself on the farm by helping him
maintain and run the farm and in recognition, Gordon would leave
the farm to Duncan.
In 2007 Gordon made a will leaving his estate to Beverly and his
3 children equally. On 11 February 2012 he revoked his earlier will
and left his estate to Beverly only.
Gordon died on 19 February 2012.
White J assessed whether clause 1(a) of the deed amounted to a
testamentary contract. His assessment revealed that:
there was no agreement that Gordon would make a will in favour
there was no agreement that Gordon could not revoke a will
without Duncan's consent; and
there was no agreement that Duncan would receive the farming
property held in Gordon's name upon Gordon's death in
exchange for working on the farming property.
White J held that clause 1(a) prevented both Gordon and Duncan
from disposing of land titles in their sole names without the
consent of the other during Gordon's lifetime. However, the
clause did not go so far as to prevent the disposition of the
farming property by Gordon in his Will.
Further, White J held that although other mutual promises might
have been expressed between Gordon and Duncan, Gordon was not bound
to not revoke his will. Gordon's conduct in making later wills
evidences that he did not believe that he was under any obligation
to Duncan to not change his will.
What if a testamentary contract existed?
Priestly v Priestly demonstrates for the elements of a contract
to apply in the formation of a legally binding testamentary
contract there must be:
an offer and acceptance
intention to create a legally binding agreement
a price paid (not necessarily money)
a legal capacity to enter a contract; and
proper understanding and consent of what is involved.
If a testamentary contract existed, this would have prevailed
even though probate had been granted over Gordon's will. This
would have lead the court to a decision that the farming land
Gordon once promised to Duncan shall pass to him.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Sect.117 can deal with false statements and knowingly making false allegations of violence could justify a costs order.
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