Some of the most complex land that the legal sector has to handle is agricultural land. What may seem like a simple set-up in practice, or what may appear as a nice and concise Register of Title, can be riddled with inconsistencies and layered with ownership discrepancies and different understandings that exist beyond the paper title. Very often, this lifts the lid on disputes and contention.
Even though the legal title identifies whose name appears on the registered title or conveyance, it does not always address the deeper consideration of who is entitled to enjoy the land’s value, income, occupation of the land or even the proceeds of sale.
The law of equity looks behind the formal registered title and asks whether another person has acquired rights. These rights may have been acquired through contribution, agreement, acts of reliance or trust.
The distinction between the legal title and the equitable entitlement is especially important in farming families where land may be registered in one name but treated for many years as part of a shared family enterprise. However, this distinction is not often considered until such time as a dispute arises, often triggered by a significant event such as a sale of the property, development or diversification discussions.
As such, it is worth understanding the equitable principles that underpin a legal title as they can significantly undermine the rights of the registered proprietor.
Trusts and family arrangements
Trusts are central to equitable disputes over agricultural land primarily because farms are often held, managed and inherited through informal family arrangements.
Examples of some common informal arrangements include:
- Siblings may farm land together without any formalised or written agreement recording who is to derive the benefit
- A parent may hold land for the benefit of some or all of their children
- A partnership (often comprised of family members) may use land legally held and owned by only one family member
In these circumstances, if the evidence shows that the beneficial ownership differs from the legal title paper ownership, then the law of equity may recognise the existence of a trust.
It is not an immediate and obvious conclusion drawn by the Courts or Tribunals. Each situation is treated on the facts and the Court and Tribunal often have to examine decades of conduct, financial contributions, succession planning, farming accounts, and family expectations and understandings to determine who truly owns the beneficial interest, irrespective of what the paper title actually records.
Proprietary estoppel and broken promises
The equitable principle of proprietary estoppel is particularly significant in farming cases and centres on broken promises.
It commonly arises where one person is assured that they will inherit or receive an interest in agricultural land, relies on that assurance and suffers detriment as a result. The most common example is often when a child works long hours for modest pay based on the assurance or promise that the farm will one day be theirs.
As with trusts, the determination of this equitable principle is fact-sensitive. If a Court or Tribunal believe that it would be unconscionable for the landowner to go back on that promise, equity may intervene.
My colleague Natalie Dean has previously prepared an article – ‘Promissory estoppel in agricultural partnerships.’ That in itself is also an equitable principle and it is also a relevant consideration when there is an existing relationship in existence.
The unifying equitable principle between promissory and proprietary estoppel is unconscionability. In both scenarios, equity intervenes because it would be unfair for one party to resile from an assurance after the other party has relied on it. The practical and legal distinction is more comprehensively addressed in Natalie Dean’s article.
Modern pressures on rural land and the impact on equitable considerations
Modern agricultural land disputes are shaped by pressures that extend the boundaries beyond traditional farming. Land value increases, land development potential, biodiversity schemes and environmental land use arrangements, to give some examples, all work to heighten the stakes of ownership disputes.
Land that was once valued mainly for arable farming may suddenly acquire substantial strategic or ecological value, which, in turn, exposes differing agendas and intentions of those working and managing the land.
These ‘modern’ pressures can expose and bring to a head old or subsisting uncertainties in family arrangements, partnership structures, succession plans, and informal promises – making the equitable analysis of ownership more important than ever.
Why the underlying principle of equity is central to rural land justice
You can see from the very simple examples above and also in Natalie Dean’s article why the law surrounding equitable interests renders the paper title as being largely indicative as to ownership, rather than categorical. Agricultural ownership is often built on relationships, reliance and long-term conduct rather than formal written documents alone. Equity acknowledges that the register of title does not always reflect the whole story.
By examining trusts, family arrangements, beneficial interests and both proprietary and promissory estoppel, equity enables the Courts and Tribunals to prevent unconscionable outcomes and to give effect to the realities of the agricultural arrangements that have arisen.
The law of equity provides a framework for deciding not only who holds the legal title, but who, in fairness, truly owns the land.
Our specialist team can support you with compliance awareness so that you do not get caught out. Contact Catherine Gregson or Natalie Dean today for help.