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‘Complex issues’ highlighted by mother’s victory in court fight over £6m family farming estate

Last month (March 2020), an 88-year old mother won a court fight against her ‘wealthy’ son for a share of the £6million, 540-acre family farming estate in Huntingdon, Cambridgeshire. John Rouse, partner and a succession expert in Lodders’ Agricultural law team, explains why the case highlights the complicated issues for family-owned farms, and what farming families should do to avoid similar problems.

Marion Horsford, 88, mounted a legal challenge over the 540-acre family estate when her 54-year-old son Peter Horsford, laid claim to the entire land and insisted he had been promised it would “all be his one day”.

Hearing the case at London’s High Court was Judge Murray Rosen QC, who ruled that Mrs Horsford rightfully owns part of the estate, and that her son Peter must pay her £2.52 million if he wants the land.

This case highlights a number of problems. Firstly, the complicated issue around family farms and especially family partnership situations. And secondly, the problems where one child works on the farm and there are other non-farming children in the family; in this scenario, it is particularly important for families to have clarity on the intentions of all family members, and consider what might happen if a change in circumstances occurs.

Often, family fall-outs and disputes over land and property come about when a parent dies. However, the Horford family case involves a family where the parents are alive but are no longer married, and one party, the mother, wants to withdraw capital.

The case was based on the principle that a partner can withdraw their capital even where the remaining partners feel there is a general intention that the farm should stay with the partners. It also supports the notion that a partner can change their mind at a later stage, both during lifetime and in their will planning. For partners in a business, this leaves it open for a partner to withdraw their capital, and also carries serious difficulties for the remaining partners who want to keep the family farm going.

Partnership agreement

What the Horsford family should have had and which would have helped prevent this situation and the fallout, is a proper partnership agreement. Such an agreement sets out the procedures and processes when a partner wants to retire and withdraw their capital. It can be used to put in place arrangements over the pay-out such as a phased pay-out over a period of time.

Communication

The case also illustrates the importance of communication between family members and business partners, so everyone’s intentions for future planning have been raised, discussed, and ideally agreed. If the Horsford family had communicated their views on what should happen to the family estate at key events for the whole family and more generally, its succession, the son would have been made aware of his mother’s intention that all her children should benefit from the estate – Mrs Horsford told the court she had always wanted her “darling girls” — daughters Helen and Liz — to inherit part of the family wealth.

Peter Horsford could have put insurance in place to help pay out a lump sum to be used to fund a buyout of the partnership property.

Succession planning

For parents and / or the most senior generation in a family farm or enterprise, the case makes the importance of letting the family know the wider plan startlingly clear, and the value of considering succession planning at an early stage and building in flexibility to take into account changing circumstances.

Lessons learnt

What family-owned farms and estates must learn from this case is the importance of putting in place a proper partnership agreement, communicating with all parties, and having a clear and mutually-agreed succession plan in place. After all, the courts do not want to get involved in moral judgements of what is “fair” or “equal”.

More information

Contact Lodders’ Agriculture team, Rural Sector team, or Private Client team, which has a national reputation for excellence and top tier rankings from both Chambers guide to the UK Legal Profession and the Legal 500.

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Get in touch...

For more information, please contact John Rouse on 01789 206167, or via email.