Farming divorce cases

Divorce|May 6th 2016

Being based in Harrogate, North Yorkshire, I am often instructed in farming divorce cases.  These can be some of the most difficult to resolve. As a result of these experiences, I’d like to offer a few good legal tips to those farmers and/or their spouses.

Establishing ownership

Firstly, it is important to establish the ownership of the farm.  Farms can be held by tenant farmers, as owner/occupiers, in partnership or by a tenant company.

Valuations

In the vast majority of cases, it is important to ensure that a specialist valuer is instructed.  It is essential to ensure that all aspects of the farm are valued – including land, buildings, farm machinery (also known as ‘deadstock’), livestock, and also any single farm payment (EU subsidies).  Single farm payments can often be overlooked but they are usually ascribed a capital value for the purpose of valuation reports.  This can make a big difference to the value of the farm. It is also prudent to consider any potential planning applications that might be feasible and which could enhance the value of land.

Capital rich, income poor

It is quite common for farmers to be capital rich but income poor.  This of itself can create problems.  For instance, if a farm doesn’t generate a good return on its capital value, it could be argued that it should be sold either in part or in whole if that would generate a better return on a capital investment.

It is also important to remember that whilst income can appear poor, quite often the farmer’s household bills, such as oil, gas, electricity, water, and so forth, are often subsidised by the farm business itself.  This can mean that a farmer’s income needs aren’t as great as they might otherwise be because they do not need to use the profit that they generate from the farm in order to pay such household bills.

Dynastic farms

In some cases, farms have been passed down the family for generations.   In the case of P v P (Inherited Property) [2015] 1FLR 576, the Judge stated:-

Fairness may require a different approach if the inheritance is …… a landed estate that has been within one spouses’ family for generations and has been brought into the marriage with an expectation that it will be retained in specie [as they are] for future generations…..That said, the reluctance to realise landed property must be kept within limits”.

Therefore it can be argued that the value of the farm shouldn’t be shared equally on divorce, and that the spouse who inherited the farm should receive a much greater share subject to the needs of the other party.

Specialist advice

It is important in farming cases to seek specialist divorce advice.  The family lawyer in question should have particular experience of dealing with farming cases.

Author: David Milburn

David Milburn is the Managing Partner at the Harrogate office and a formidable divorce lawyer. He deals with all work relating to the breakdown of relationships with a particular focus on divorce. He has extensive experience of the division of matrimonial finances and cases involving high-value assets, often with complex business structures or trust elements.

Comments(3)

  1. Andrew says:

    The “landed estate”question provides yet another reason why pre-nups should be recognised and have cast-iron effect – subject to the needs of the children during minority.

    As for the suggestion that a man (usually) should be expected to sell his farm, and give up the only way of life he knows and the only occupation by which he can reasonably support himself . . . I will leave that sentence unfinished. The position in divorce should be as it is in other aspects of life: that it is no use talking of needing what is not there to be had.

  2. David Milburn says:

    Thank you for your response Andrew. I don’t disagree with your comment concerning Pre-Nups however I draw your attention to the case of Radmacher -v- Granatino. Insofar as a sale of a farm is concerned I have and do represent various farmers and I have run exactly that argument. It’s obviously more difficult where a farm is worth several million pounds and yet only generates a very modest income – i.e. upon sale both parties could make more money following investment of the net proceeds of sale and leave both parties with the choice to generate additional income from a work of their choice farming or otherwise.

  3. Andrew says:

    If farming is all he knows then that won’t work. If you marry someone in that position you must take your chance that if it fails there will be no pig pay-out. It’s a sort of pre-nup by implication.

    And many farming businesses are partnerships between siblings or other family members and they cannot be expected to break up their business to generate cash for a former in-law.

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