“. . . Those tensions boiled over in October 2013, when there was a fight between Lucy and Sarah in the milking parlour. Lucy and Stuart resigned in the following month. At the time when they left, there were about 63 cows in the dairy herd.”

So wrote the English Court of Appeal in Habberfield  v. Habberfield  [2019] EWCA Civ 890 in a farming dispute that resulted in an award of £ 1.17 million for a daughter against a mother.

A important feature of arbitration – as opposed to the courts – is the confidentiality of the dispute resolution process. Tensions in a dispute often reflect tensions that existed between the parties from before. Court proceedings have to be open to the public and publicly reported.

But is that in anyone’s interests ? A real benefit of arbitration is the confidentiality of the process that’s enshrined in rule 26 of the Scottish Arbitration Rules.

No washing of dirty linen in public. No damage to reputation. These are real benefits of the arbitration process, especially in Scotland.

So the message is : even without a written partnership agreement, dispute resolution can bring real benefits.

Appeal – delay and expense

The case was appealed up to the Court of Appeal from the judge at first instance. It took another 15 months, and goodness how much money to have the appeal heard and decided – it was unsuccessful.

Arbitration by contrast brings finality. Factual findings (e.g. who is believed) can’t be appealed at all. Legal errors (such as the one alleged in the Habberfield case) only if they are obvious blunders or raise legal issue of importance beyond the case in question.

Scots and English Business and Property Law Differences

It’s interesting to see the case decided on the basis of informal general assurances given by the deceased father to the daughter as to her taking over the farm. That’s not a safe basis for any binding transfer of a farm from one generation to another.

It’s likely the case would have been decided differently in Scotland on an entirely different legal basis with quite possibly the opposite result !

This highlights the differences between English and Scots law. It also underlines the importance of having a Scottish legal expert to decide such issues.