Family property dispute signals need for living arrangements to be in writing14-August-2014 Family Law Commercial Disputes Property By Mark Streeter
A case involving a farmer and his daughter and son-in-law (Milling v Hardie [26 May 2014] NSWCA 163) is a reminder of the need to put property living arrangements, even between family members, in writing.
Mr Milling is a farmer who lives in one of several rural properties he owns in central west NSW. In 1992, Mr Milling invited his daughter Mrs Hardie and her husband to move into a homestead on one of the nearby properties. Over the following years, the Hardies carried out various improvements to the homestead and its grounds. They undertook these improvements with the consent of Mr Milling but at their own expense. They paid no rent and Mr Milling paid all the rates and taxes. Mr Milling consistently refused Mr Hardie’s request to conduct farming activities on the property.
After 18 years, a dispute arose between the parties. Mr and Mrs Hardie commenced legal proceedings, claiming an entitlement to the property on the basis that Mr Milling had made promises or representations to them that he intended to transfer the property to them during his lifetime or leave it to them in his will. They claimed it was on the basis of these promises or representations that they made the improvements to the property.
Beware the pitfalls of spending money improving somebody else’s property
The Supreme Court initially found that while Mr Milling had not made the promises or representations alleged, his conduct encouraged the couple to live in and improve the farm. This gave rise to a reasonable expectation on the Hardies’ part and they acted accordingly. The Court ordered that the Hardies have a right to occupy the property during Mr Milling’s lifetime and gain ownership of part of the property on his death.
Mr Milling appealed the decision in May 2014 and was largely successful. The NSW Court of Appeal concluded that his conduct did not justify the expectation of Mr and Mrs Hardie that they would inherit or gain ownership of any part of the farm. But his conduct in inviting them to live at the homestead and consenting to the improvements they made could justify the expectation in them that they could occupy the homestead and the surrounding area for a considerable period so they could gain the benefit of the improvements they had undertaken.
The Court ordered that Mr Milling could not deny the Hardies’ entitlement to occupy the homestead and its surrounds during his lifetime but did not give them any ownership rights.
People need to avoid entering into friendly verbal agreements with family members.
One of the lessons to be learnt from this case is the importance of clear and precise evidence of any arrangement. It is not enough to rely on what you think should happen or even what you were told would happen. It is far preferable for the arrangement to be in writing. People also need to be aware of the pitfalls of spending money improving someone else’s property.
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