Informal Agreement Leads Family to Court of Appeal
Published on Jul 31, 2019
Disputes within families are very common indeed and one of the issues the courts see over and over again is where there is a family 'understanding' that ends in a disagreement.
In a recent case, the result of one such dispute was that an 82-year-old woman will be forced to sell the home she has lived in for decades.
Many such cases involve farming businesses. These traditionally pass down from generation to generation, and often one child will work on the farm for many years with the others moving away. It is commonplace in such circumstances for the business to be passed on to the child who has farmed the land. Such was the case in this instance.
The family farm is worth in the region of £4 million and was farmed by a couple for more than 40 years. One of their four children remained at home and worked the farm with her parents for little pay. When her father died in 2014, his will passed his entire estate across to the mother. However, the daughter claimed she had been promised that she would inherit the farming business, which in any event could not be carried on by her mother.
The daughter was awarded more than £1 million of the value of the farm, a sum that would force her mother to sell her house and farmland.
The mother appealed that decision, arguing that she and her husband had offered to sell the farm to their daughter years ago, but she had turned them down. However, the Court of Appeal would not accept that the rejected offer and the promise to pass the business on were related. The promise made by the couple had to be honoured: the appeal was dismissed.
If you are in business with a family member, it is essential to make sure that the legal obligations of those involved are clearly communicated and recorded. Relying on informal understandings is a recipe for disaster. Contact us for advice