Finding a workable way forward when farm disputes escalate

Resolving disputes can be extremely challenging for family farms and other rural businesses. Decisions about succession, the future of a partnership or the value of land and property not only have financial implications, but can also impact on relationships between family members, neighbours and others who may have worked together for years.

A disagreement over how a farm should pass to the next generation may pit siblings against each other. A decision to dissolve a partnership can raise difficult questions about who gets what moving forward. Even a seemingly straightforward disagreement over a boundary can become much more difficult if the people involved have a long history.

It is the combination of commercial interests and personal relationships that can make rural disputes particularly sensitive. Once positions become entrenched, it can become very difficult to have a constructive conversation, particularly where one or both sides feel that their contribution has not been recognised or that they are being treated unfairly.

This is where mediation can play a crucial role.

Mediation is a form of Alternative Dispute Resolution (ADR) which allows the parties to resolve their dispute without going to court or using an arbitrator. It is quicker, less expensive and less stressful than litigation, not least because it gives the parties control over the eventual outcome.

Unlike a judge or an arbitrator, a mediator does not rule on what should happen in a particular case. Their role is to act as a neutral third-party, helping the parties understand each other’s position, identify what matters to them and explore whether there is a solution that both can live with.

This is an important distinction from expert determination, another form of ADR. In expert determination, the parties jointly appoint an expert who uses their professional knowledge and experience to reach a conclusion on the dispute on their behalf.

A mediator does not hand down a judgement, but instead guides people to a negotiated settlement. This means the parties remain responsible for the final decision, with the mediator helping them to find a practical way forward.

UK courts increasingly expect parties to have tried mediation before going to trial. The process is entirely confidential, so even if the dispute does end up going to court nothing said during mediation can be used in subsequent litigation.

Mediation in practice

An informal form of mediation is often used to resolve disagreements over succession planning, gathering family members around the kitchen table to thrash things out.

In these cases, the mediator’s role is to remain neutral while creating the right environment for the empathetic conversations that are needed to take place. It is about asking questions like: What is it that you want? What is this going to look like for you? If you get what you want, what is that going to mean for the other people around this table?

Where things have gone beyond the point that an informal approach will work – particularly if legal action has already started – a mediation day will be scheduled ahead of which parties must submit a position statement. This is a short document outlining the facts of the case and what each party’s goals are.

The day usually involves gathering the parties in one location and holding an initial meeting where the mediator sets out the ground rules to ensure the day can be productive. Each side then typically has an opportunity to air their grievances face to face and set out what they want the outcome to be.

The next stage is for the parties to move to their own meeting rooms and the mediator moves between them using a technique called ‘shuttle diplomacy’. This means they facilitate the negotiation by unpacking what each party really wants to achieve, putting forward offers, testing reactions and then reporting back. The fact that it is the mediator who is delivering the messages between the rooms helps to filter out emotion and level the playing field if there is any imbalance of power.

In cases where parties may be struggling to find an acceptable compromise, mediators can take what is known as an evaluative approach, whereby they use their professional expertise to gently put forward ideas which might break an impasse.

A key part of the role is listening, being able to interpret where the parties want to get to and identifying where a viable solution might rest. This is where an accredited mediator with a background in rural surveying can add additional value, coming up with inventive solutions based on their practical experience and understanding of how land-based businesses work.

For example, I have worked on a case where a mother wanted to divide a farm between her two children, but the geography and layout of the farm meant this was not straightforward. I helped to establish a split which would work in terms of maintaining the viability of the business, but this still resulted in an imbalance in each part’s value. This then raised questions about how the person receiving the more valuable slice of the farm should balance things up financially, given they did not have access to the cash to do so. Through mediation we were able to get constructive dialogue going about practical solutions to this problem, exploring options including phased payments or a profit share over a number of years.

Reality checking is also another important part of mediation. For instance, if one party insists they are only willing to pay £1,000/acre for a parcel of land the mediator will challenge them as to whether they really think that is a realistic figure. They will then guide them to consider what might be a more appropriate figure based on local land prices.

The goal is to reach a negotiated settlement by the end of the day, even if that means working into the early hours of the morning in order to maintain the positive momentum built during the day. Once an agreement has been reached, then a mediation settlement agreement is drawn up which is a legally binding document.

Although the mediation process is challenging for everyone involved, as a tool for resolving disputes it is extremely flexible. The right mediator can help families and rural businesses to find workable solutions to conflicts and to forward planning, avoiding the risks associated with letting issues fester without resolution or the cost and stress of legal action.

Strutt & Parker has three accredited mediators who can act in rural land and property disputes. Contact Tom McLaughlin, Charles Huntingdon-Whiteley or Hannah Bloxham for more information.