Careful what you promise to your kids

It is not uncommon as between family members for sons to work on a family farm for a number of years in the expectation that one day the family farm will be transferred into his name or his and his then wife’s name at some future date.

This set of circumstances is one which has taken place for generations in Australian farming families.  At times, there is a general understanding that the family farm will be handed down from generation to generation.

In a recent decision in the Supreme Court of South Australia in July 2015, this general factual scenario was played out with significant consequences.

The brief facts of the matter were that a son and his wife sued his father alleging that they had worked on the family farm for over 18 years and as a result of the breakdown of the relationship between the father and his son, the son was excluded from the farming business and was then subsequently removed from the father’s Will, such that the son no longer enjoyed any expectation of receiving the farming land or any other assets in the future.

The son asserted that throughout his working relationship, the father had made representations to the son that he would one day take over the farming business and that both he and his wife relied on those representations to their overall detriment by committing their life to working on the farm.  The son and his wife sought a remedy from the Court that recognised that they had an interest in the land because of the broken promises of the father.  In return, the father denied that any such representations were made to his son and that any expectations held by the son were unfounded and unreasonable.  The father also asserted that if any such representations did occur they should not have been reasonably relied upon and that neither the son nor his wife had suffered any detriment, in that they had been properly rewarded for their contributions to the farming business over the years.

In the end, the Court found in favour of the son and his wife and held that over the course of the working relationship various representations were made by the father to his son and his son’s wife regarding the future ownership of the farming land and equipment and that both the son and his wife had reasonably relied on those representations to their detriment, and as a result were entitled to at least some if not all of the farming land and plant and equipment.

This case needs to be considered carefully in light of its own facts, but the message should be clear to those farmers who have sons (and daughters) who have been working on the farm for a long period of time in the expectation that they will receive that farm in the future.  Do not leave anything to chance.

It is best to properly document any agreement reached or make it clear that no such agreement exists and do so in writing.
 
To read the case in full:
http://www.austlii.edu.au/cgi-bin/disp.pl/au/cases/sa/SASC/2015/95.html?stem=0&synonyms=0&query=rodda

 

Ben Farmer

5 December 2016