How a handshake deal between friends at a Sydney shopping centre delivered one $8m

Two men in Sydney who had been friends for decades made a pact at a suburban shopping centre. It would deliver one of them millions of dollars.

The handshake deal between the men was at the heart of a costly inheritance dispute in the NSW Supreme Court that exposes some of the pitfalls of relying on unwritten promises.

The elder of the pair died without a will in 2017, aged 85. He had lived frugally but left behind an $8 million estate. His wife and son had died before him.

His closest surviving relative, an elderly cousin in Adelaide who had seen him a handful of times in 65 years, stood to receive an inheritance under rules that apply where there is no will.

The shopping centre pact

But the deceased’s closest friend said he was entitled to the whole estate, based on a “deal” the pair struck when the man was alive. He brought proceedings in the Supreme Court and won.

The court found the deceased promised in 2010 to leave “all my possessions” to his friend, provided the friend cared for him until his death. The arrangement also extended to caring for the man’s wife.

It was a serious agreement worth millions of dollars. The court heard it was made in a conversation at Top Ryde Shopping Centre in Sydney’s north-west that was never reduced to writing.

The court said there was an “unstated but clear qualification” the gift would not be made if the man died before his wife. In that case, she would have inherited everything, rather than the friend. As it transpired, she died before her husband in 2012.

The court said the relationship between the men, who had met at work in the 1980s, was “quasi-familial in nature”. The deceased made further statements affirming the promise over time.

“I committed to a demanding and long‑term support until their deaths,” the friend said in court.

Justice Mark Richmond said that “the degree of care and support … went far beyond what would be expected of a friend”.

The court found the promise was made, and the friend had relied upon it to his detriment. He had retired early to care for the couple. His retirement appeared to be directly related to the promise, in light of his own “relatively insecure financial circumstances”.

He also deferred moving to Queensland to be with family members.

Value of estate

There was evidence the friend did not know the value of the man’s assets before his death, having estimated their value in official documents in 2013 at $2.9 million.

In orders made this month, the court declared the entire estate was held on trust for the friend, minus expenses and liabilities. This is expected to result in him receiving about $8 million because there are funds available exceeding that figure.

“What makes the case particularly striking is that this was not a conventional ‘contest the will’ family provision claim,” said Mary-Ann de Mestre, principal of Sydney law firm M de Mestre Lawyers and a lecturer in succession law at Macquarie University.

“The plaintiff succeeded … [by] essentially persuading the court that promises had been made over many years, that he had organised his life around those promises, and that it would be unconscionable for the estate to walk away from them after the deceased’s death.”

This involved a legal doctrine known as proprietary estoppel. It was “incredibly difficult and expensive to prove”, de Mestre said. It requires a plaintiff to prove, among other things, that there was “a sufficiently clear promise” that they relied upon to their detriment.

“Historically, surprisingly few family arrangements of this nature were formally documented,” de Mestre said.

“Parents would make statements such as ‘one day all of this will be yours’ or ‘if you look after me, I’ll make sure you are taken care of’. But cases like [this] demonstrate the enormous risk in leaving these arrangements undocumented.”

The NSW Supreme Court enforced a similar promise in a dispute over a small farming property owned by the late Australian academic and ABC chair Dame Leonie Kramer. Appeals all the way to the High Court failed.

Dame Leonie had left the property to one of her daughters. The court found it had been promised to a farmworker who made a meagre income working on the property for decades.

A couple who looked after their elderly neighbour in Birchgrove also succeeded in proving in 2020 that they were entitled to her two harbour-front properties because she had promised they would inherit them if they cared for her in her twilight years.

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