Be careful of the promises you make….

PropertyA recent judgment handed down by the Supreme Court of South Australia has highlighted the dangers that exist in making rash promises, particularly where family members are concerned.

In Rodda v. Rodda, the Supreme Court of South Australia found that a son was entitled to a proprietary interest in the family farming business and properties as a result of promises that had been made many years earlier that the family farm would one day be his. The trial judge accepted evidence of the son that he had worked on the family farm for 18 years accepting a relatively low wage in the expectation that he would one day benefit from taking over the family business. He had conducted renovations to a house on the farm at his own expense and had not pursued any other career or form of self-employment because of the expectation that he would eventually take over the farming operations.

When the relationship between father and son broke down in 2002, the father attempted to deny the son any interest in the property and claimed that the family business was still owed $135,000.00 by the son for a loan that had been given some years earlier.

At the end of the day, the court found that the representations and promises had been made and that based on those assurances, the son had continued to work in the family business, not sought any alternate career, had expended his own time, money and energy in improving the property and had done so as a consequence of the inducements that had been made. Accordingly, it was found that it would be inequitable for the son to be denied a proprietary interest in the property.

Whilst the case is a rather extreme example, it serves as a reminder of the need to be careful about what you promise and to ensure that any commercial arrangement is well documented, less there be no misunderstanding.

Travis Schultz
Practice Group Leader
Schultz Toomey O’Brien Lawyers, Part of the Slater & Gordon Group
Ph: (07) 5413 8900
Fax: (07) 5413 8958

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