Many farmers are aware of the risks to their business when a dispute in the farming partnership arises. Disputes put a financial burden on the business but can also put a huge emotional strain on the individuals involved.
The case of Wild v Wild has recently been heard in the High Court and highlights the issues at hand. Here we saw a dispute between two brothers, Malcolm and Gregory. Both brothers were brought into the farming partnership at different times by their father, Ben Wild. Their father died in 2003 and the brothers continued to work together in partnership. In 2016 increasing tensions between the pair resulted in Gregory applying to the court for the dissolution of the partnership and orders for winding up (amongst other reliefs). There was no written partnership agreement. This means the terms of the partnership were dictated by law dating back to 1890.
Malcolm had been living in a bungalow on the farm which was a particular source of contention. The question before the Court was whether the farm (including the bungalow) had been brought into the partnership by Ben before he died. Was this an implied term of the oral partnership agreement?
In short, the answer was no. The Court held that the farm could operate perfectly well if Ben had retained ownership of it whilst he was alive. Although the farm and bungalow had been used by the partnership, you could not infer it had been brought into the business by agreement. This would require agreement between all of the partners and there was little evidence of such. Whilst a reference to the value of the farm property was included in the partnership accounts, that did not in itself make the property a part of the partnership. As many will be aware, farming property may be included in the partnership accounts for a variety of reasons.
The farm and bungalow were therefore not part of the farming partnership and remained the property of Ben Wild on his death ultimately passing under the terms of his will to his wife, Jean Wild.
The Wild v Wild case contains no new law. The outcome is a lengthy dispute with close family members undoubtedly resulting in a great deal of stress and worry not to mention legal costs. The case also comes with a warning which I believe many farmers will be familiar with – when it comes to a partnership agreement – write it down, consider the ownership of property, the outcomes for future generations and record your intentions. To preserve the future of any business such planning should be a priority and not an afterthought.
At Hay & Kilner, our multi-disciplinary Rural Team advise on all legal issues for farmers, rural businesses and land owners, from succession and IHT planning, to development opportunities, employment and business law issues.
For more information on any of the above, or how we can help you business, please contact Alison Hall, or call 0191 232 8345.