Legal advice for farmers: Appeal Court verdict of interest for farmers
In a recent case, the Court of Appeal in Ireland overturned a 2012 High Court judgment which had ordered a man, who had been left the family pub business from his parents, to pay his older brother, as the court deemed proper provision had not been made for the brother by his parents during their lifetime.
The pub was originally owned by their father.
When the father died, the younger brother already owned a 25% share in the business.
His father left the entirety of his 75% share to his wife, who left her share to the youngest son in her own will, resulting in the son having total ownership of the pub.
The younger brother had left college at a young age, at the request of his parents, to work in the pub, and he eventually took over the running of the pub fully, when the mother was in a nursing home.
The older brother was not left any share of the pub by his mother.
Accordingly, he took an action in the High Court in 2012, arguing that his mother had failed to make proper provision for him in her will.
He succeeded in the High Court, which ordered that the younger brother pay the older brother the sum of €315,000.
The younger son argued that he had worked in the pub for his whole life, and that the pub was his sole livelihood.
The sale of the pub, he argued, would result in him receiving very little from the estate of his late mother.
The pub was valued for the purpose of administering the mother’s estate, but it was argued that the valuation was significantly inflated.
The older son had received a university education and had travelled all around the world.
The younger son argued that his mother had a moral duty to leave the pub to him, as it was his sole livelihood.
The older son argued that he should have received a share, on the basis that their father would have left him a share in his will, had he not predeceased their mother.
The mother had controlled the business until she retired to a nursing home shortly before her death.
On appeal, Ms Justice Whelan considered that the mother knew her children best, and that this was reflected in her testamentary dispositions.
The Court of Appeal considered that, having regard to all the circumstances, the moral obligation of the mother was to properly provide for her youngest son, who had given up other avenues and worked in the pub for his entire life.
He had no other means of making a living, unlike his older brother who did not make the same sort of sacrifice.
The older brother had failed to reach the high onus of proof to show that his mother had failed to properly provide for him.
Farming context
This case is important in the farming context.
Often, one child may be left the entirety of the farm, rather than subdividing, or a number of children inheriting.
This often makes sense from a financial perspective, because the majority of farms would not be viable businesses if they are split or subdivided into a number of holdings.
Typically, in Irish farming families, the son or daughter who stays at home to farm the land is the child who is given the farm.
Often, this happens during the lifetime of the parents.
They transfer the farm to a child during their lifetime, normally on the condition they have a right of residence and maintenance for the rest of their lives.
However, it still very common that the farm will be inherited by one of the children, normally through a will.
The parents may also make provision that other children who do not receive the farm are given a site on the lands to potentially build a house.
It is possible for a child to make an application under s.117 of the Succession Act 1965, where the child believes they have not been adequately provided for during their lifetime by the deceased parent, and the court may order whatever provision it feels is just, having regard to all the circumstances.
Prudent and just
The deceased parent is judged against the standard of a “prudent and just” parent, that is, what would constitute proper provision from the point of view of a prudent and just parent?
The person alleging that proper provision was not made for them must show that the deceased parent failed in his or her moral duty.
This is a high standard, and is difficult to establish.
Any gifts given to the child during the lifetime of the deceased are also taken into account.
This means that a child who was given a deposit for a house, or similar gift, during their deceased parent’s lifetime would be unlikely to make a successful application under s.117 of the 1965 Act.
The Court of Appeal judgment is reassuring from the point of view of a child who will receive the benefit of the family farm in their parents’ wills, particularly in the context of where the child has worked on the farm all their life, made sacrifices and can show the farm is their sole livelihood.
In these circumstances, the court is likely to uphold that the child is entitled solely to the farm.
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