Families need to follow 'road map'

By Andrew Goode, Mellor Olsson Lawyers

Hopefully, some readers had a chance to catch up with family even if they had to attend to day to day needs of the family business over the Christmas/New Year period.

While it may have been an opportunity to discuss succession planning I personally don’t think it is a good idea to raise those issues at Christmas lunch as it might come to an abrupt halt depending on whether everybody is on the same page as to passing on the family farm.

It should be talked about however with a road map agreed between family members as to the future.

Disputes in relation to succession issues continue to come before the courts. A recent 2012 Queensland Supreme Court case involved a claim by a son, Dario, seeking a right to a one third share of his parents’ assets which he said should be transferred to him free of debt. He based that claim on promises or assurance that he said his parents made, and on which he relied, and which he alleged caused him to act to his and his immediate family’s detriment.

The parents, Bill and his wife Maria, through hard work had built up substantial assets over 44 years. Their children (of whom there were three sons) had also contributed with hard work on the family farms, and according to the Judge, had indirectly at least helped increase the family assets.

The Judge noted that if Dario’s claims were accepted in full Bill and Maria would be divested of their entire assets in the farms, which had been their primary source of income for over 44 years and be left with substantial debt up to $1.5m.

Dario’s claims were denied by his parents, and not supported by his two brothers who were also co-defendants.

The Judge noted that Bill and Maria intended to do their best to set their sons up, and assuming they were to use the Judge’s words "dutiful", at some stage they would hand those assets to the children.

The Judge noted that the "real issue" in the case turned on whether that point had arrived, and whether they should hand over assets now at the insistence of one son.

Below I set out a brief summary of some of the facts of what amounted to a 32 page judgment.

Bill was 72 and Maria 64. The plaintiff Dario was 32, and his two brothers who were aligned with Bill and Maria were 34 and 39 years of age.

Dario was born in 1979 and the first farm called the "Home Farm" was acquired in 1967 before Bill married Maria, the "Mezzens Road Farm" was acquired in 1988 and the "Davies Farm" in 1997. There was also a Trust involved which owned all the crops growing on the farms.

Bill and Maria were the trustees and together with their children and grandchildren, were the contingent beneficiaries of the Trust.

The Judge noted that Dario argued there were seven representations made to him over the years by Bill which created in him an expectation he would receive a one third interest in the farms when his father eventually retired. On that basis Dario said, amongst other things, that he worked solely on the farms full time without wages from 1997 to November 2010, and that he moved into and improved a small home on the Davies Farm and remained there.

Dario said by committing to the family farming properties working, he could not hold down permanent employment elsewhere.

What were the seven representations and what was the outcome? You will have to wait until my column next month, if you are still interested.

STOCK JOURNAL ARTICLE

This was the first of two articles written for the Stock Journal. To read the second article on this topic, please click here

Contact: Andrew Goode Ph: 8414 3400 or email: agoode@mellorolsson.com.au

Practice Area: Wills & Estates , Family Law

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