Hypothetical by Manny Wood published in the Coffs Coast News Of The Area on 2 October 2020.
Anthony owns a considerably large rural property. He and his three sons operate a family farming business on the property, which is leased from Anthony.
The farming business operates successfully for 10 years until Anthony’s relationship with his sons breaks-down after a heated confrontation. He tells them that he is going to sell the property, terminate the lease and disinherit them.
The sons commence action in the Supreme Court.
The sons claim the benefit of a “proprietary estoppel”, meaning that Anthony should be prevented from changing his mind, given that they relied on an expectation that the business could use the property until Anthony’s death and that the property would ultimately pass to them as an inheritance.
Anthony argues that he did not make any “express” promises and that the sons merely assumed that they would inherit the property. He argues that his sons did not rely on an expectation of inheritance when they decided to join the business and that they had already received significant financial benefits by doing so.
The Court finds that due to the irreparable breakdown of their relationships, it was necessary to “accelerate” the sons’ inheritance and accordingly orders the immediate transfer of the property to them.
The Court imposes conditions, that the sons pay rent to Anthony at market value in the amount that he would have received over the balance of his life expectancy and that they pay Anthony the fair value of his share in the business.
The Court assesses the rent payable per year as $80,000 over a 15-year life expectancy.
The Court also notes that the books of the business record a $2 million debt to Anthony and orders that this also be paid to him.
If YOU would like a particular issue addressed please email Manny at manny.wood@ticliblaxland.com.au or call him on (02) 6648 7487.
