Farming dispute highlights the importance of written partnership agreements
- AuthorCaroline Dowding
The recent case of Wild and others , heard in August this year, once again highlights the importance of having written partnership agreements in place to avoid lengthy and costly disputes.
The background is that members of the Wild family had owned a dairy farm in Derbyshire since 1952. It consisted of a farmhouse, bungalow and 103 acres of farmland which are collectively currently worth £1.65 million.
Ben Wild inherited the farm from his parents on the death of his mother in 1973. In 1978, his son Malcolm joined him as a partner and they operated the dairy farm trading as B & M Wild. No written partnership agreement was entered in to at this time.
In 1988, Malcolm moved in to the bungalow on the farm and remains living there to this day. In 1994, Ben Wild’s other son, Geoffrey, and Malcolm’s wife, Abigail, joined the partnership, but again there was no written agreement in place.
Ben Wild and his wife, Jean, made wills in 2002, leaving everything to each other. Shortly after, in 2003, Ben died.
The brothers continued the partnership until relations broke down in 2016.
A disagreement has arisen on the winding up of the partnership, with Malcolm claiming that the farm and bungalow formed part of the partnership assets and therefore should be included as such, but with Jean, Malcolm and Abigail arguing that these assets were not owned by the partnership and therefore had passed outright to Jean under her late husband’s will. The partnership accounts themselves were not very helpful, as some initially referred to buildings, and then further land and buildings, but no specific mention as to what these related.
An added layer to this was that Malcolm and Abigail argued that if the bungalow is included as a partnership asset, they would have a claim to the bungalow under the rights of proprietary estoppel, given the fact they have lived there for over 30 years and substantial renovation works have been completed in the understanding that the property would one day be theirs, although Malcolm argued that the cost of such renovation was paid by the partnership.
The judge ruled that the £1.65 million farm and bungalow did not form part of the farming business and therefore did pass to Jean Wild under her husband’s estate and as such, the assets did pass to Jean under the will.
This highlights the importance of having written partnership agreements in place, which clearly identify the land and buildings that are to be included on the partnership balance sheet, as well as ensuring that fixed assets are correctly recorded on the annual farming accounts. Had this been done from the outset, all parties would have been clear what assets were and were not part of the partnership. Therefore, they would not have been acting under false pretences, and would have saved money and time in what has been costly and lengthy litigation proceedings.
Birkett Long offers a full agricultural service, including drafting partnership agreements or altering existing agreements to suit your needs. If you need assistance with this, or any other aspect of your farming business, then please do not hesitate to contact me on 01206 2017394 or alternatively you can email me at firstname.lastname@example.org.