Farming Partnership Disputes
Disputes concerning farming partnerships are particularly difficult for all concerned often arising following the death of one party and adding to the heartache of bereavement. Whilst Agri Advisor have significant experience in dealing with such disputes, my colleagues and I endorse succession planning in advance of matters getting difficult. The preference is always to focus on avoiding partnership disputes as opposed to resolving matters.
From my experience, many of these disputes arise due to failures within the partnership and, perhaps, the wider family to discuss the financial future of the farm. In my view the undeniable increase in these disputes is attributable to the increasing value of land. Often involving more than one generation of a family, the emotional and financial stakes are therefore often high and lawyers are faced with difficult and emotive circumstances as they seek to resolve matters. Despite all efforts the reality for many is that partnership issues are incapable of resolution and, to make matters worse, in practical terms the business can be adversely affected as the partners cannot agree on operational matters.
How can matters be resolved? Depending on the circumstances, the only practical solution might be to dissolve the partnership. If the land farmed by the partnership is of sufficient acreage with suitable infrastructure by way of separate houses and buildings, it may be possible to split into two separate farming businesses. However, this is not always the case and the parties may need to consider mediation and ultimately, litigation.
Mediation will look at all aspects of a farming partnership dispute and will require careful preparation in advance. Efforts should focus on assisting the mediator by detailing all offers and counter offers, agreeing a list of issues and submitting possible solutions to the mediator on a confidential basis. Mediation may not be a quick fix and depending on the circumstances, it can involve long, hard negotiations. If agreement is not reached at mediation then litigation is inevitable.
Litigation should be the last resort as it will undoubtedly incur significant costs which may be difficult to finance. From experience, as the prospect of litigation looms large and the parties begin to appreciate the risks and costs involved in losing at trial, there is a tendency for them to become more risk averse and the prospect of ending the partnership and agreeing settlement can become more attractive.
In the event that no consensus is possible then the only option is a full trial. Partners will undoubtedly incur significant costs in this instance and recent cases have seen situations where everyone is left dissatisfied and out of pocket with some farms having had to be sold to settle costs and debts.
Whilst there are legal avenues that can be considered and may become necessary to resolve a partnership dispute, the old adage of “prevention is better than cure” is in my mind the best option for all concerned.