Skip links

Farming Company Sisters High Court Schism

In a sad example of a family-orientated corporate structure proving anything but a panacea, the High Court has ordered the winding up of a farming company due to the inability of its directors – three sisters – to put aside their personal animosity in the company’s best interests.

FarmFarmer, Bryan Harding, spent a lifetime building up his agricultural business, Brand & Harding Limited, before his death, aged 73, in 2001. In his will, he had expressed the desire that his company’s 242 arable acres – worth up to £2.5 million – should be kept within the family.

His widow, Janet Harding, owned 26% of the company but was stricken by dementia and Parkinson’s disease. His oldest daughter, Elizabeth Edwards, owned 16.75% and her sisters, Sally Harding and Rosemary Walton (the petitioners), owned 32.75% between them. The balance of the shares was held in a family trust.

Speaking of the ‘growing schism’ between the petitioners on one side, and Mrs Edwards on the other, the Court observed that the sisters had proved ‘unable to disentangle their personal animosities’ and focus on the company’s welfare. The split shareholdings had left the company effectively deadlocked and even usually straightforward business decisions had become ‘mired in hostility’.

Winding up the company at the petitioners’ request, the Court found that there was no realistic alternative to that course. The schism between the sisters was apparently incurable and future disputes over the eventual destination of their mother’s shares were likely to ‘make matters worse’.

Mrs Edwards was more involved than her sisters in managing the company but the petitioners’ case was that their dealings with her had ‘over recent years have been marked by accusations and counter-accusations of misconduct, descending into bitter acrimony’. The Court observed: “They cannot seem to pull themselves out of the mess into which the company’s affairs have fallen or agree any matters relating to the future governance of the company”.

The petitioners had particularly objected to the extent of the involvement of Mrs Edwards’ husband in the management of the company. However, she had accused her sisters of ‘taking little interest’ in the business. She argued that the company was ‘profitable and successful’ and that she was willing and able to continue running it for the benefit of all the shareholders ‘if her sisters would leave her alone to do so’.

Mrs Edwards and her husband had twice attempted to remove the petitioners as directors of the company but the Court noted: “Mr and Mrs Edwards cannot simply expunge the petitioners from the company, much though they would wish to do so.”

The Court concluded: “If the petitioners were content to leave all the management in Mrs Edwards’ hands, then the company might be able to proceed. But they have never been content to do that and now they do not trust Mr or Mrs Edwards to act in the best interests of the company. The petitioners are not prepared to take a back seat and Mrs Edwards’ desire to be left to get on with managing the farm is not a desire that is capable of being satisfied. I am therefore firmly of the opinion that it is just and equitable that the company should be wound up.”