Estate dispute over family farm – promises upheld in recent decision
There has been an important case decided in the Supreme Court of South Australia about farm succession planning. The name of the case is Rodda v Rodda and it was decided on 1 July 2015 by Judge Nicholson.
In that case the Court found that over the course of a long relationship between the father and his son that various promises had been made by the father to the son about the son’s future ownership of farming land and equipment. The son relied on those promises. After a series of disagreements the father then excluded the son from the farming and business and disinherited him.
The Judge found that the son was entitled to a remedy to recognise in a just and proportionate manner the son’s unfulfilled expectation to the beneficial interest in the farm as promised to him by his father. The Judge in reaching his decision found that the father effectively owned the farming and grazing property on a constructive trust for the son. The take home message from the case is that farmers, and other family businesses need to be very careful to document and to set out in a detailed way the handover of the farm from one generation to another and that when this is not done properly and it is possible for the younger generation to successfully sue on promises made in conversations, perhaps in the shearing shed or even over the kitchen table about their future entitlement to the farming business.
It is a very significant case in Agri law. There was a very significant judgment in favour of the son.