Case Study: Why you shouldn’t make handshake deals when it comes to the family farm
By Sebastian Hill
Handshake deals between family members are a common precursor to many intergenerational farming disputes. As a disputed estates lawyer, I deal with the fall-out of handshake deals every day. Most notably, I was the instructing solicitor for one of South Australia’s largest intergenerational farming disputes in recent times, Roberts v Roberts [2021] SASC 72.
The Facts
The dispute was between a father and son, whereby I acted for the applicant Mr Grant Roberts (Grant), the son of respondent Mr Jack Roberts (Jack). The dispute regarded an alleged oral contract between Grant and Jack, for the purchase of the family station, Pulgamurtie, for $2.6 million. Pulgamurtie is approximately the same size as Singapore and located outside of Broken Hill in remote New South Wales (NSW).
Over the years, and particularly in the four years Grant engaged me to work for him, Pulgamurtie increased significantly in value. By the time of trial, it was more than three times the value of the oral contract. Jack denied any agreement or discussion about the sale of Pulgamurtie to Grant for the originally agreed price of $2.6 million.
Grant had dedicated his life’s work to Pulgamurtie, always with the intention of one day owning the station. Our legal team argued that Grant had improved, maintained, and worked on Pulgamurtie, he also purchased plant and livestock. Grant acted to his detriment in reliance on Jack’s representations and encouragement that he would be the owner.
The Outcome
It was a privilege to act for Grant and direct a team of seven staff over four years through numerous applications, conferences, trial, and appeal court proceedings. My team was successful in arguing that Grant had established the elements of a cause of action in proprietary estoppel.
It was ordered that Grant be transferred title to Pulgamurtie for $3.8 million; based on the agreed purchase price adjusted for a change in value over nine and a half years since the first agreement.
How to avoid handshake deals
The situation above arose from a simple handshake deal that was never properly dealt with. Handshake deals are usually a verbal promise in conversation that is never settled in a legal agreement and can be common among family members. If the promises aren’t kept, disputes can arise, and families end up in court. In Grant’s case, his parents and his brother and sister all gave evidence at trial.
The only way to avoid future disputes is to have an agreement prepared that expressly states everyone’s intentions. Now, that is much easier said than done. Often there is a very delicate balance of power between family members which should be carefully navigated to avoid raising any red flags.
Getting advice early is the number one way to avoid disputes, and your lawyer will be able to help you find ways to raise this in a sensible manner with your family members.
Sebastian Hill is the Managing Partner at Boylan Lawyers and specializes in disputed estates, intergenerational farm disputes and transfers, family law, and other practice areas. In 2022, Sebastian was named a finalist in the Partner of the Year Awards Wills and Estates category for his work on Roberts v Roberts.
Contact us today to organise a free 30-minute consultation with Sebastian Hill by calling 08 8632 2777 or email [email protected].
