Judge sees no evidence for asset assurances

By Andrew Goode

Following on from my 10 January article about a Queensland case where Dario sought one third of his parents’ assets – what was the outcome?

There were seven alleged representations which were:

* At the time of the purchase of the Davies Farm in 1997 Dario’s dad told Dario and his brothers that if they worked on the family farms without wages the income generated would be applied to pay off the debts, the farms would then be divided equally between them upon his retirement, and they would be debt free.

* In May 2000, when Bill was allegedly interested in purchasing a neighbouring farm, similar promises were made, save that assurances were given that each son would receive a farm of 100 hectares.

* At a meeting at their bank in December 2004 Bill told his sons they could wait until he retired, and then they would get a debt free farm each.

* At a meeting in December 2005 at the Home Farm, Bill said the family were trying to pay off the farm mortgage, and once it was cleared Dario would receive a farm to run on his own, and that Bill would be retired in only a few more years, and the farms would belong to the sons.

* In January 2008, in a discussion about the Trust paying the partnership for harvesting of the farms, Bill said that it made no sense to charge for the harvesting, because "the farms are going to be yours when I retire" and he would retire at 70.

* In January 2009, again in the context of a conversation about harvesting costs for the farms, Bill said it was not necessary to charge commercial rates, because by next season Dario would receive his farm and "the farms are practically yours".

* Between January 2006 and November 2009 at the Home Farm, and on a monthly basis, and in the context of Dario making enquiries as to the paying off of the farms, asking when he would be likely to start earning money and stating that he needed another home for his family, Bill would reply with words to the effect "we are paying the farms off and you are going to get a farm you can build your house on", "I am retiring at 70", "It is stupid to pull money out of the farms, you are just pulling money out of your own farms, it is going to be yours", and "If you are going to pull money out now it is just going to take longer to pay off the farm."

The Judge noted one of Dario’s difficulties was that if the promises were that the farms were to be transferred after the debts were paid off, that point in time had not been reached.

Dario’s case was not helped by the fact that the Judge preferred the evidence of the other family members where there was conflict as to what was said.

Moreover, the judge was by no means sure that Dario could recollect, with any precision, the words used by his father, although the Judge then said uncertainty is not necessarily fatal to a claim. The Judge did say, in relation to the representations, that much was not in issue, in that Bill and Maria intended to help their sons but the issue was whether Dario reasonably had the expectation that he would receive an interest in his parents’ property at a given time.

While the Judge considered there had been general discussions about plans and hopes for the future he was not prepared to accept that the words used conveyed a promise of a retirement at any given age, or of a commitment that Bill would convey farms to his son at any given time. He accordingly rejected Dario’s claim.

Like all cases it depends on the facts (as well as the law). If Dario’s evidence was supported by independent witnesses (such as an accountant, family friend etc), and/or if the farms were debt free, or Dario was in his 50’s rather than early 30’s the outcome might have been different.

It does highlight the costs of family disputes where a family has been unable to successfully resolve succession issues. Perhaps this case may have been avoided if they had agreed on a detailed road map detailing their future plans and covered contingencies such as bad seasons, sickness and death.

STOCK JOURNAL ARTICLE

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

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

Practice Area: Wills & Estates , Family Law

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