A recent case in the NSW Supreme Court provides a timely reminder of the potential problems that can be encountered if a Contract does not spell out all of the terms agreed upon by the parties. In this case the irrigated farming land sold recorded the sale of the land but was silent in relation to the water entitlements.
The Walsh family had farmed irrigated land since the 1950s. Family members were involved together in farming partnerships until 2000 when it was decided that those partnerships would be dissolved and the irrigated farming land would be sold.
Prior to selling the land, Graham and Maurice were co-owners of the farm. By Contract for Sale of Land, Graham sold his interest in the farm to Maurice. At the time of this sale Graham and Maurice also jointly held shares in the water entitlements used to irrigate the farming land. Both Graham and Maurice treated Graham’s interest in the water entitlements as having been transferred with the land. However following the sale of land, it was discovered that the water entitlements had not been transferred to Maurice and there was no express reference to the transfer of water entitlements in the Contract.
Maurice claimed that the Contract transferred the water entitlements from Graham to Maurice at the same time as the title to the farm was conveyed between them.
Graham claimed that he still held a half interest in the water entitlements.
Ultimately the court found in favour of Maurice that Graham held his interest in the water entitlements in trust for Maurice, who was then entitled to an order for the transfer of that interest to him.
Whilst a favourable result was achieved for Maurice in the end, it was a time-consuming and stressful process for Maurice to undergo. A lot of turmoil can be avoided by ensuring that matters are not left to chance and the terms of your agreement are clearly recorded in the Contract before you sign it.
At Everingham Solomons, we have the expertise to assist you with all aspects of your sale or purchase of land because Helping You is Our Business.
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