Photo of the author' s former farm at Sutton Bank
David (58) and Tanya (53) separated after a 34 year marriage - considered to be very long marriage. They met at school and were childhood sweethearts. Their two children, Grace (an independent business woman) and Jonas (who farms with his father) are both married and have children. Both they and their four children retain a close relationship with David and Tanya.
David, and his brother Neil inherited the family farm over twenty years ago on their father's death. Before he died their father had transferred a one third interest in the farm to each of his sons (to reduce taxation), and upon his death, his interest was divided equally between them, giving each a 50% holding. They continue to farm in partnership. Following their father's death, David and Neil's mother Rhona, had left the farmhouse to move into a restored bungalow on the outer perimeter of the farm. At the time of referral, Jonas, who works with his father and uncle on the farm, had also separated from his wife Joyce, and moved into one of the farm cottages. Unusually, despite emotional separation and the issue of divorce proceedings, both David and Tanya continued to occupy the family farmhouse, living separate lives in the home.
For David and Tanya, the issues were:
1. Where should Tanya live?
2. How was money to be raised to provide her with a new home and secure her future?
3. Could something be done to avoid a sale of the farm?
4. How would any arrangement relating to the farm impact on Neil?
5. What was to become of Jonas?
This presented as a difficult case, but not untypical as a family farm dispute. In legal terms following such a long marriage, Tanya could lay claim to a substantial interest in the farm which covering over 400 acres, was very valuable. Of course, only 50% of the farm and the farm business belonged to David; his brother Neil owning the other half. Whilst Neil did not live on the farm, as a younger brother, he was highly active and clearly very interested in a facilitated outcome. As Neil had never married and had no children, Jonas too was clearly highly concerned about the outcome, as he stood to inherit the lion's share of the farm.
The parties were referred to Divorce Without Pain by Grace, who was familiar with mediation facilitation in a business setting. Whilst she declared that she had no personal interest in the outcome, she was determined that court proceedings should be avoided to 'save the farm'. On the other hand, she supported her mother who she saw as extremely vulnerable, facing upheaval and uncertainty at a difficult stage of life.
It was decided that all of the family should participate in a facilitation. The instructions to the facilitator were that, should agreement not be possible, the matter should proceed as a private arbitration with written award on the understanding that all parties would abide by the outcome. In effect, the parties chose a hybrid process where both facilitation and evaluative determination would proceed simultaneously. For the purpose, the parties selected two co-mediators, on the understanding that they would produce a joint award as arbitrators if agreement was not possible.
The mediation was conducted over one day and took place at the farm. It was agreed that Grace would support Tanya and Neil would support David. Jonas would be present, but not active as a participant. David and Neil's mother Rhona was also to attend, but take no active part. Both David and Tanya were represented by solicitors at the mediation. A conveyancing partner was also on standby.
The main concern was that the farm and land was valued at £2.8m. Additionally, there was the capital value of farm equipment and crops. There were no other substantial liquid assets, although clearly the farm had borrowing potential. The parties decided against a business valuation, although they arranged for a joint valuer to be available on the telephone during the mediation meeting. It became clear that a sale of land was not an option, nor it appeared were the parties to contemplate a sale of the farmhouse.
Over a period of 6 hours, various options were explored. Much of the discussion took place in open session, preserving the visible impartiality of the co-mediators, although some caucus meetings were deemed necessary and were agreed to by the parties.
The outcome was totally surprising. The mediators focussed attention on the issue of housing and encouraged the parties to think laterally, including all of the assets that were owned within the partnership. They wisely dismissed the idea of neutralising the value of any part of the farm by transfer to Jonas (in the light of the prospective claim against him by his ex-wife), and the decision for him to have a neutral role proved wise.
Having concluded that they would wish to keep the farm intact (preserving the family relationships) they examined 'interests' rather than legal entitlement. Whilst Tanya wanted a comfortable home of her own, she did not want to move any distance away from Grace and Jonas and her grandchildren. Her main priority was to live separately from David.
The parties concluded an agreement thus:
David and Neil's mother Rhona would vacate the bungalow and move back into an adapted ground floor suite in the farmhouse (for which David would independently raise borrowing). Jonas was to retain a degree of independence in the farm cottage, which would be the subject of modest rental agreement. The life interest trust which enabled Rhona to occupy the bungalow would be terminated by agreement, and replaced with a similar trust in relation to the farmhouse suite, giving her identical security of occupation, whilst preserving tax advantages upon her death. Tanya was to be given the freehold interest in the bungalow, enabling her, should it become necessary, to sell should she wish. This had the added advantage of proximity and continuity for Tanya with her children and grandchildren. As the value of the bungalow clearly failed to meet her capital entitlement, the farming partnership was to be dissolved, replaced by a limited liability company with a share allocation to her. The parties intention was to transfer their respective shares in periodic tranches to Grace and Jonas at appropriate intervals, following the conclusion of Jonas' family finance dispute with his wife. This would go some way to mitigate inheritance tax upon their deaths. The notional loss to Neil of the transfer of interest in the bungalow to Tanya and the adaptation of the farmhouse was to be compensated within the share distribution.
In the event, the outcome was distinguished by its total simplicity and the way it met all of the family's interests. It was an outcome that would have been impossible for a judge, whether by way of time or jurisdiction to steer and make such orders. Interestingly, following the mediation, the arrangements that were agreed have been put into effect, and the family still retains a functionality that is rare following family finance disputes.