Hold the farm!

Ben and Eileen had five children. Until his death in the mid-1990’s, Ben ran the family farm with Andrew, one of their children. Andrew knew the farm inside out.

The farm had some pine trees on it. Ben and Andrew had bought the seedlings, and Andrew planted them.

In his will, Ben appointed a professional trustee (the Executor) to administer the estate. The will said that the Executor was to pay income from the estate to Eileen until her death. After her death, the estate was to be divided between the five children.

After Ben died, Andrew continued to live in the homestead and run the farm for the next ten years. Andrew had firm views about appropriate fencing and other aspects of farm management.

When Andrew stopped farming, Eileen and the Executor leased the farm to Stephen, who owned a neighbouring dairy farm. Andrew remained living in the homestead. The lease provided that Stephen could call on Andrew (rather than the Executor) to remove any fallen trees so that Stephen could carry out fence repairs, but otherwise Andrew was not a party to the lease.

Eventually, Eileen became unable to manage her own financial affairs and the Executor began doing so under an enduring power of attorney.

After ten years, the lease ended but the Executor and Stephen rolled it over so they could negotiate a new lease.

 

Andrew’s view

Andrew complained that the Executor should have remarketed the lease of the farm, rather than just rolling over the lease to Stephen. In his view, not remarketing the farm may have lost the estate revenue.

Andrew did not think that the Executor had been carrying out regular inspections of the farm. He was worried that the farm would fall into a state of disrepair. For example, when Andrew ran the farm, the whole farm was fully electric fenced. That was not the case anymore.

Andrew also said that he was the owner of the pine trees. He was unhappy that the Executor had not recognised his ownership of the trees. Andrew wanted to harvest the trees for his retirement, and said that was always the intention.

The Executor rejected Andrew’s complaints, and Andrew complained to FSCL.

 

Executor’s view

The Executor said that the decision to roll over the lease to Stephen was in the best interests of the estate. Stephen was a well regarded local farmer and had been a good tenant. He was also a good ‘fit’ for the farm, as he was a neighbour. The Executor followed up on two other parties that Andrew suggested, but neither of those parties were interested (one did not even return calls).

The Executor said that its agents carried out inspections of the farm every two years or so. Each time, the agents confirmed that Stephen was paying an appropriate market rental, and that he was maintaining the farm property (including the fencing) to a suitable standard.

The Executor had refused to let Andrew fell the trees, because there was a dispute about ownership. Andrew’s four siblings said the trees formed part of their late father’s estate.

 

Review

We reviewed the actions taken by the Executor. We did not consider that the Executor had acted inappropriately. We were satisfied that the Executor had acted in the estate’s best interests.

We considered that it was prudent to roll over the current lease to a proven tenant. Eileen was now in her nineties and so any new lease would have to be short term only, with a condition permitting cancellation upon Eileen’s death. That is a condition Stephen had already agreed to.

We noted that neither the lease nor Ben’s will required the Executor to consult with Andrew on farm matters. We considered that it made sense for Stephen to be able to call on Andrew, who was living in the homestead and therefore ‘on the spot’, to remove fallen trees, but that provision in the lease did not confer any sort of consultancy or oversight role on Andrew.

Stephen may not have been running the farm exactly as Andrew had done, but we considered that he was not required by either the lease or Ben’s will to do so.

We considered the Court to be the most appropriate place to decide ownership of the trees. That is because we cannot resolve property ownership disputes between individuals, and our decisions are not binding on people who are not members of our disputes resolution scheme.

 

Outcome

We formally recommended that Andrew discontinue his claim.

 

Our insight

Andrew had lived and worked on the family farm his whole life, and it was hard for him to see the neighbour making changes to the farm. But Ben had arranged his affairs in a way that would be fair to his widow and all of his children, and that meant Andrew was no longer in control. The Executor had to act in the best interests of the estate, not at the whim of one beneficiary.