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High steaks: Fairyland dispute headed for the High Court

20 July 20 - In the News

Author: Holding Redlich partner Kylie Wilson and special counsel Nicole Treacey
Publication: Queensland Country Life (Australia)
Publisher: Fairfax Media
Publication date: 20/07/2020

A recent Queensland Court of Appeal decision illustrates the need for effective forward-planning to save farming families time and costs later.

This dispute involves a farming property at Cracow known as ‘Fairyland’, and has been ongoing since 2013. The dispute is between Douglas and Juanita Birch and Douglas’ mother Betty, via her litigation guardian Geoffrey Birch, another of Betty’s sons. 

In August 2011, Betty decided to gift her 1/3 share in Fairyland to her son Douglas. The transfer was allegedly in recognition of the labour and financial contributions made by Douglas and his wife towards the farm. In some circumstances, this can be an effective estate planning strategy where there is a risk that another family member might challenge the will later for further provision from that person’s estate. One of the main issues in dispute was that, at the time, Douglas was also Betty’s attorney under an enduring power of attorney. Under the Powers of Attorney Act 1998 (Qld), there is a presumption of undue influence where there is a transaction between an attorney and the principal the attorney is appointed to act for.

Arguments were raised about whether or not Betty had been influenced by Douglas, and whether she understood the effect of the gift to Douglas. The Queensland Supreme Court decided Betty did understand, was properly advised by a lawyer, and upheld the transaction. An appeal was made to the Queensland Court of Appeal, which was also unsuccessful. 

Geoffrey Birch has now, on behalf of his mother (Betty), applied for special leave to have the matter heard by the High Court. 

The costs that would have been involved in going through two full hearings, and now a third one in the High Court (particularly if leave is granted) would be significant. There is also a huge emotional toll and trauma on the family.

In some cases, families will fight no matter what you do. However in many cases, there are a number of ways in which these types of costly disputes can be avoided or at least minimised:

  1. Do not delay in seeking specialist advice – incapacity and death are continuing to cause large disputes about family farms. Agreements put in place early about the intentions for the farm can limit the prospect of dispute, the costs of which may ultimately mean the end of the business
  2. Set clear expectations at the outset and document them – these may include details like payment of wages, handover or retirement age (where there will be an intergenerational transfer) and recording details of all contributions made
  3. Transparency – don’t be afraid to involve the whole family as part of the discussion around succession. It may be the first time siblings who have not worked in the business really hear about the contributions their other sibling(s) have made.

© 2019 Thomson Reuters. No claim to original U.S. Government Works.

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