Ham Farming Partnership Dispute: a lesson in why you need a watertight partnership agreement!

Readers may be aware of the ongoing partnership  dispute affecting the Ham family which is currently being litigated through the courts. For those who don’t know the background, the dispute is between Mr and Mrs Ham and their son John. John was originally brought into the family partnership at the age of 19 when his parents gave him a 30% profit share. This was subsequently increased to 40% before there was a falling out and John decided to retire from the partnership in his early 30s.

Leaving aside the question of how wise it was to allow such rapid accession to partnership at a young age the other mistake the family made was in not getting a proper partnership agreement drawn up. Whilst the Hams  consulted a local solicitor when John was admitted to the partnership it would be fair to say that this resulted in the creation of a rather limited (and, with the benefit of hindsight, defective!) agreement being put in place.

Sadly as matters have become so acrimonious the family are now litigating over various aspects of the partnership agreement. The most recent hearing in April 2016 determined the question of whether the farm itself was a partnership asset (significant because the family business is a substantial dairy operation).  At appeal the court has decided in favour of Mr and Mrs Ham – the farm is not to be treated as an asset of the partnership.

It would seem however that this is just one of a series of points that are being determined and it could be months, if not years, before the matter is finally resolved.  This is of course tragic for the Ham family but a cautionary tale for the rest of us (who still have time to put our affairs in order and document family partnerships whilst all parties are in agreement).

Family businesses account for 66 per cent of the UK’s SMEs and yet most struggle to successfully hand over the business. Perhaps if a succession plan had been implemented with the help of a family business advisor, the farm may have been saved for generations to come.