We’ve reported in the past on proprietary estoppel cases where promises to a son or daughter (or other individual) that they would, in the fullness of time, inherit the farm ultimately proved to be empty. In Kingsley v Kingsley the same levels of disappointment and anger were felt when a partner in a farming partnership died, leaving his interest to his widow who subsequently wanted to sell the farm that had been in the family for generations.
The deceased’s sister, the other partner in the partnership, wanted to buy her brother’s interest but in the process found herself defending her claim in court. There were no promises in this case just a lack of robust documentation around the nature of the business and land holdings, family enmity which bubbled to the surface following a death, and farm land worth a lot of money.
Rising land values fuel litigation
This triumvirate of issues is something that regularly plagues rural land owners and businesses particularly as significant capital appreciation in agricultural land over the last decade means that most farms are worth well over £1m and, as in the Kingsley case, often considerably more. For many this value justifies litigation – even though that value is subject to the vagaries of the market over which the landowner has little control.
Similarly it is simple fact of life that everyone will eventually die. And it is often when a major event - such as a death - occurs that the true nature of a relationship is revealed. In the Kingsley case, it would appear that the brother was able to manage the poor relationship between his wife (who was not in the farming business) and his sister. His death however, meant that the enmity between the widow and sister was no longer constrained, and was made worse by the money at stake.
This really brings home the nub of the dispute. Both widow and sister believed the significant value in the land was worth fighting for and unfortunately, the claim could not be compromised and so instead was dealt with at trial.
Put everything in writing
At this point the business’ documentation and the will of the deceased take centre stage. It is clear from the case that the deceased had not addressed matters before his demise, the direct result of which was very significant and costly litigation. There was no clear understanding of how the partnership occupied the land, what land was owned by the individuals or the partnership, or what was to happen to the business after the death of a partner.
It is not difficult for a business to understand what it owns or how it occupies land – and neither is it difficult to document it. It just needs to understand the nature of the partnership, and ensure the partnership agreement is up to date and robust. Partners can only be appointed to, or retired from, a partnership by express deed. A lack of a deed will cause a new partnership to form on the date of retirement or appointment, which can have very significant issues if a partner dies, divorces, or is overtaken by some other major life event.
Don’t risk losing your farm for the sake of a document
In short, the Kingsley dispute could have been avoided if there had been some robust business planning taking the desires of the family into account. This would have included taking proper advice on the structure and form of the partnership agreement and making sure that any wills matched the partnership agreement. Better planning and properly drafted documents will help minimise the risk of litigation for farming businesses, allowing everyone to get on with what they really want to do - farm!