News

Divorce – Why it won’t cost the farm

Just under 10 years ago, a ground-breaking divorce was settled when a relatively unknown farmer’s wife helped persuade the House of Lords to pay greater weight to the contributions of wives and mothers. In doing so, she also increased her share of disputed matrimonial assets to more than £5 million from the family’s farm.

Lawyers representing Somerset farmer Pamela White, successfully argued that the courts’ traditional needs-based approach to jointly dividing acquired assets of a marriage failed to fairly reflect her contribution as a working mother with a direct role in the family business.

A judge had initially awarded a lump sum of £800,000, saying it would meet Mrs White’s reasonable needs. But when she appealed to the Court of Appeal, her settlement was increased to £1.5 million.

Both parties applied to the House of Lords. Mr White argued the £800,000 award should stand. Mrs White argued she should get an equal share of all assets amid claims she would have got a far better deal had the couple’s relationship been treated as a contractual commercial partnership.

Following the hearing, the Law Lords stressed that a wife’s claim should no longer be limited to her 'reasonable requirements' as it was Their decision overturned the courts' long-held approach in reaching settlements by simply assessing what a divorced wife's ‘reasonable financial requirement’ would be.

The Whites’ case set a significant precedent among separating farming couples. Given that a husband and wife are notionally entitled to an equal split of the assets, it could result in a strong likelihood that the farm would cease to be a viable business, or that it may need to be sold to realise its value. The courts may consider these circumstances as a good reason to depart from the yardstick of equality.

But there are exceptions - hingeing on anything from issues of inheritance to the dilemma of short-term illiquidity. We recognise that every divorce case is different and can advise separating couples on a host of options. When there is a determination on both sides, informal and equitable resolutions can often be found that avoid costly court time. Roundtable negotiations are particularly effective when trying to resolve financial claims and creative solutions can generally be found that will suit all parties.

Collaborative law, when both parties agree to try to reach a settlement without going to court, is effective at resolving family and farming matters. It hinges on openness and can produce quick, personally-tailored and cost-effective solutions. The key incentive is to achieve an agreement without having one imposed by a court.

Prevention is far better than cure and the best way to avoid disputes is to enter into clear agreements before they arise. This can include looking at everything from wills, to co-habitee agreements, pre-nuptial or post-nuptial agreements. Family-owned farming businesses can also safeguard their position with clear, custom-made, agreements, the proper incorporation of contracts, and even the protection of intellectual property rights.

Divorce and separation among farming families may be a sensitive and notoriously complex area, but equitable and fair settlements can be reached – that don’t cost the farm.

For more information about our Collaborative law and Family law services, please contact family lawyer, Sonia Bachu of the Family Law team on sonia.bachu@harveyingram.com or call him on 0116 257 6148.

Click here to visit our Family Law website.