Traditionally the main catalyst for such disputes has been poor succession planning however differing views on diversification projects and a move away from traditional farming activities are now also increasing reasons for dispute. Given the often complex nature of these disputes, the value of the assets involved and most importantly the personal relationships at stake it’s absolutely vital that that if you find yourself in this position then you set out to have a good dispute. This can often be easier said than done, however if nothing else the following principles should make for a good starting point.
The first and perhaps most important thing that should be done in trying to have a good dispute can often be the hardest and that is seeking legal advice. This can be difficult for all sorts of reasons; cost worries, a reluctance to tell someone out with the family about the dispute and a desire not to further strain family relations. Legal advice however is confidential, can take the heat out of dispute (helpful in salvaging relationships) and ensure that any agreement is formalised and enforceable, rather than something parties agree and then renege on hours later.
This seeking of legal advice is also where you start to build your own team. It’s common for farming businesses to have longstanding relationships with professional advisers such as accountants and lawyers. However, in dispute situations these advisers will be in a position of conflict, their client being the farming business and not the individual partners or directors. Accordingly any advice they seek to tender around settlement options whilst well intentioned will be with the business interests at heart, leaving you as an individual faced with a deal which could have disastrous personal tax and financial consequences.
Whilst your lawyer and other professional advisers will work to build your case and work to negotiate an acceptable settlement for you, it is recognised that the day to day farming operation cannot and should not be put on pause. This is perhaps the most difficult part of farming disputes when compared with disputes in other sectors. The hands on nature of farming means that you often have no choice but to work in close proximity and contact with those you are in dispute with, often inflaming and further straining matters. Despite this, it is incredibly important that whether you are the person wishing to run the farming operation alone, or be bought out of the business that you continue to make good business decisions and essentially try and act as if there was no dispute going on. Why you may ask? Well from a settlement point of view, bad decisions could lead to a downturn in business and the business receiving a lower valuation. For the outgoing partner this could mean receiving a lower settlement payment, for the remaining partner this means a fight to rebuild the business and its profitability. Additionally, deliberately bad business decisions could be viewed as a breach of your legal duties as a company director (where the business is run through a limited company) or a breach of your fiduciary duties (where a farming partnership). Such actions are challengeable in the courts and the financial implications too large to spell out in this article, needless to say they are best avoided.
Finally, time and patience are critical. Time is of the essence when it comes to seeking advice and help in a dispute situation to ensure you do not prejudice your position. Patience however is needed when it comes to achieving a resolution. The right resolution requires proper investigation and advice being tendered before the commencement of any settlement negotiations. Without these initial steps, what may seem like a good settlement option could actually be a raw deal. Accidentally created agricultural tenancies, notices to quit not served in time and problematic terms in option agreements are just a few of the examples of things that are best discovered and dealt with prior to negotiating a settlement.
Anecdotally some have described farming as a form of “professional gambling”, but a farming dispute need not be. With the right advice, a good dispute and more importantly a good settlement is more than achievable.
