We look at family business disputes following a case we recently concluded that allowed a son to retain the family farm after his previous solicitor told him he didn’t have a valid legal claim.
Family business disputes
Our solicitors are often asked to advise on family business disputes. These often involve broken promises, usually promises made by the owner of the family business to their children who are working in the business.
A classic example of this type of dispute involves family farms. It is common for parents to want the family tradition of farming to continue, but face problems because only one of their children is interested in farming or the farm is not of sufficient size to divide among all their children without making the business unviable. This can often be fertile ground for family business disputes to arise.
The situation can be exacerbated if one of the children works long hours on the farm for low wages (or no wages at all) and with little or no holiday on the basis of promises made in relation to the future of the farm to keep that child on side. However, if nothing is recorded in writing then arguments can arise when the other siblings, usually on their parents’ death, but sometimes before, deny that those promises were made or are enforceable.
Client had been told he didn’t have a valid claim
We dealt with one such case recently when we represented the son of a farmer who wanted to rely on the promises his father had made to him. The son had previously been put off pursuing a legal claim by a solicitor who felt that the promises were not legally enforceable. We disagreed with that assessment and took the view that the prospects of success were much better than he’d been advised.
We agreed to represent him in place of the previous solicitor and were able to negotiate a substantial settlement at mediation. Our client was therefore able to retain the family farm, subject to paying money to his father for his retirement, thereby allowing his father to provide for the other siblings on his death.
The doctrine of proprietary estoppel
At the heart of our successful legal submissions on this case was the doctrine of proprietary estoppel. This can be quite a complicated legal principle and it is always best to seek advice from specialist solicitors who are experienced in dealing with such cases. However, in simple terms to bring a proprietary estoppel case you must demonstrate that you have relied on an unequivocal promise, to your detriment, and it would be unconscionable if the promise was not honoured.
How we can help you
So, if you are involved in a family business dispute and feel the advice you are receiving is not correct or positive enough, or you simply want a second opinion then give us a call. We are always willing to review a case and discuss funding options. In the above case our involvement enabled our client to become the owner of the farm. If he had listened to his original solicitor he would have lost it.