Don’t make promises you don’t intend to keep

Headshot of Lesley McDonnell - Senior Associate at Everingham Solomons TamworthDuring their lifetimes, the deceased and her late husband had a longstanding share farming arrangement with David “[T]heir aspiration to be able to enjoy an idyllic farming property depended upon their being able to secure the services of a farmer like David, who was prepared to work hard for very little income”. In 1988, after the death of her husband, the deceased represented to David that the farm was to pass to him upon her death, together with a sum of money. The deceased died in 2016. The deceased was survived by her 2 daughters Hilary and Jocelyn.  At the time of her death, the deceased was the owner of the farm that she left by her will to Hilary and a bequest of $200,000 to David in her will.

David applied to the Court alleging that by leaving the farm to Hilary in her will rather than to him, the deceased had acted unconscionably in conflict with a promise that had been made to him by the deceased to the effect that the farm would one day be his, in return for David continuing throughout the deceased’s lifetime to conduct share farming on the farm. David claimed that he continued with the share farming agreement, and undertook additional tasks on the farm, in the expectation that the deceased would uphold the promise and leave the farm to him.

Proprietary estoppel by encouragement “comes into existence when an owner of property has encouraged another to alter his or her position in the expectation of obtaining a proprietary interest and that other, in reliance on the expectation created or encouraged by the property owner, has changed his or her position to their detriment. If these matters are established equity may compel the owner to give effect to that expectation in whole or in part”.

The Court was “satisfied that David acted on the faith of that assurance to his detriment by continuing the farming operation” on the farm “for about 23 years thereafter in the belief that he would inherit that property” under the deceased’s will. “The average income received by David was in the order of one third of the average annual total male income calculated on the basis of 2020 equivalent dollars”. The deceased ought to have known that part of David’s “motivation for continuing was the expectation that he would inherit the farm”. “In those circumstances, it was unconscionable” for the deceased “not to have left the farm to David in her will”. Accordingly, David established his case and was entitled to the farm.

A promise or representation made by a willmaker to another may be enforceable particularly when another person acts on the faith of a promise or representation to their own detriment believing they will inherit property. At Everingham Solomons we have the expertise and experience to advise you on your legal rights because Helping You is Our Business.

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Dealing with Farm Debt – What are your options? – Alex Long

AJL B&W with bookcasesWith the ongoing drought, many farmers are facing situations where their creditors are seeking resolution of issues involving farm debts. Under the Farm Mediation Act 1994, creditors and farmers are required to engage in mediation prior to any enforcement actions being taken under a farm mortgage. As your solicitor, we can help prepare and advise for the mediation and to consider options realistically. Farmers are also entitled to have their solicitor represent them at the mediation. Mediation is a structured negotiation process where a neutral and independent mediator assists the parties to communicate effectively with one another and reach an agreement on the issues.

Under the Act, if the farmer’s mortgage is in default, the creditor must invite a farmer in writing to mediate. The farmer then has 20 days to respond to a creditor’s invitation. However, a farmer may also initiate a mediation under the Act, whether or not they are in default. If the farmer’s loan is in default and the creditor refuses to agree to mediate, this may result in the issue of a certificate of exemption from enforcement action.

It is recommended that farmers facing financial problems seek legal assistance early as this will enable efficient identification of the problems. Our professional services can help to advise on aspects of the process, help in succession planning and negotiating a business restructure if the informal mediation does not resolve the issues.

If your mediation is unsuccessful and you believe that your creditor has not followed the correct procedure, then we can assist in lodging a complaint directly with your creditor. If the issue is not resolved, we can assist in identifying the most appropriate forum for resolving the complaint, such as the Financial Ombudsman Service Australia, or from 1 November 2018, the Australian Financial Complaints Authority.

Under the NSW Government’s Farm Household Allowance, an Activity Supplement payment of up to $3,000.00, payable to both you and your partner (total of $6,000.00) may be used to fund our professional legal advice on the above matters.

If you require assistance with your farm debt, please contact Everingham Solomons to have a discussion with a legal practitioner today because Helping You is Our Business.

Click here for more information on Alex Long.

NSW Government Grant for Farm Succession Planning – are you eligible? – Alex Long

AJL B&W with bookcasesThe importance of having a legally drafted farm succession plan is paramount in these difficult times as forward planning becomes a crucial factor in the survival of rural farms and rural small businesses.

Under the NSW Government’s Farm Household Allowance, an Activity Supplement payment of up to $3,000.00, payable to both you and your partner ($6,000.00), can be used to obtain professional legal advice on succession planning that will help improve you and your family’s future business sustainability and secure your financial position.

In a study published in 2005, it was reported that over a quarter of Australian farms were being run by owners who are over 65 years of age, making succession planning an issue of dire importance. It has also been reported that nearly three quarters of farmers in their mid-fifties have no retirement plan in place.

We understand that Australian farmers, because of their strong work ethic, do not focus on retirement however, it is inevitable that at some stage, the older generation will need to take a step back and allow for the younger generations to step up into a position of greater control and/or ownership of the farm assets.

The discussion amongst all family members needs to begin sooner rather than later. By identifying each member’s interests and aims, and identifying a successor or successors, a retirement and succession plan can be created. Once this conversation is underway, we can assist by providing advice on your options, the procedure to achieve you goals, the likely costs particularly stamp duty and capital gains tax issues, ensuring the older generation’s financial interests are protected and assisting in the effective transfer of control to the successors.

Under the Farm Household Allowance, the eligibility requirement is that you are a farmer, or a partner of a farmer, are 16 years of age or older, you contribute labour and capital to an Australian farm, or are the partner of a farmer who does, you meet the income and assets test, are an Australian resident and have had less than 3 years of the Farm Household Allowance.

Please contact Everingham Solomons to have a discussion with a legal practitioner today about the future of your family farm because Helping You is Our Business.

Click here for more information on Alex Long.