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De facto property settlement: “Infatuation” led to unfair house gift

By November 26, 2020February 23rd, 2024No Comments

De facto property settlement: All’s not fair in love…The appeal courts have ruled that a man’s “fixation” with his younger de facto wife—and her taking advantage of it –led to him making an enormous error of judgment in gifting her his house. The couple were ordered to instead to each keep half the property. In this case, the husband’s vulnerability arising from his infatuation with the wife is “front and centre stage”.

In the case of unrequited love, an elderly man had a court take back his gift of 100% ownership of his home to his de facto partner, and instead split it evenly down the middle between the both of them. At the time of giving, the courts said, the woman had unconscionably acted to take advantage of the man’s vulnerability due to his feelings, in order to benefit financially. According to the woman, she pitied him.

She had tried to argue it was not a de facto relationship and that she was only his carer–the opposite of cases where carers claim there was a romantic relationship.  If she had succeeded in arguing they were not de factos, then the Binding Financial Agreement they had signed would be invalid. That agreement gave her only up to 50% of the house, compared to 100% of a property that he gifted her six weeks after signing the BFA.

The man, who turns 84 this year and has been in a nursing home for the past three years, met his de facto when he was 72 and she was 49. They signed the BFA prior to moving in together and spending seven years as a couple. Under the BFA, the wife would get up to 50% of the home depending on how long they were together  But soon after the BFA was signed, the man sold his home and bought a smaller property with the proceeds—and put it entirely in the woman’s sole name.

De facto couple

Both the trial judge and the appeals court said there was evidence of a sexual relationship, and the parties living together as a couple for seven years before the man was put in a nursing home. The courts found they were in a de facto relationship, even if the man came to see the woman as his carer as his health declined. She had a very different view:

“He was very, very lonely and we were just – I’m just a carer of him and even he – if he wanted to be my husband I wouldn’t want this kind of person to be my husband. Just a carer, just a carer.”

But the relationship was found to be have been one of inequal power: the wife had “domination” over the husband while he appeared “to have been willing to do whatever she wanted and to ensure that she stayed with him”.

According to the wife, she “had no real interest in any relationship with him and no affection for him whatsoever but regarded him as a lonely and desperate old man who she could not imagine wanting to live with”. By contrast the man “hoped for a normal romantic and physical relationship”.

Binding Financial Agreement

The man argued that if the court found the BFA to be invalid, despite finding that there was a de facto relationship, then his assets (she had none, he had the home and $12,000 cash) should be divided equitably and fairly under the provisions for de facto property settlement under the Family Law Act. Either way the ex should only receive half the property interest. The appeal judges agreed that even an assessment under section 90SM of the Family Law Act under equitable principles would have arrived at the same outcome.

Although the woman was successful in arguing one plank of her appeal—that the trial judge erred in concluding there was “undue influence”, the court ruled she had behaved with unconscionable conduct by taking advantage of her ex’s special disadvantage. That special disadvantage was his “infatuation”, which made him “vulnerable”. It then became irrelevant whether or not there had been an error in relation to undue influence, so the appeal still failed overall.

Why wasn’t this “undue influence”?

In the family courts, the concepts of “undue influence” and “unconscionably taking advantage of someone’s special disadvantage” have some overlap, both bending someone’s free will in favour of someone else. With undue influence though, the pressure exerted is often much more obvious, or may include things like threats of violence if someone doesn’t comply. On the other hand, someone at a special disadvantage may not even be aware of it, and may be making decisions thinking they are making them of their own free will, when that will has actually been distorted due to the influence of someone else. Direct pressure is not necessarily evident, and the exercise of will can seem independent and voluntary.

In this case, the de facto husband’s decision regarding the exclusive home transfer was “so improvident, judged in the light of the [man’s] financial position, that it is explicable only on the footing that he was so emotionally dependent upon, and influenced by, the [woman] as to disregard entirely his own interests.”

Any takeaways?

Power is an interesting thing in relationships and is rarely perfectly shared; it’s common for one party to have slightly more power, or the dynamic to gently shift continuously. But in cases where there is a gross power imbalance, this may become an issue in family law proceedings.

Another important takeaway is to note the important of keeping a record of your official date of separation, as this has legal consequences.

The ruling reinforces the legal adage, mentioned in the judgment, that “where a party is not a free agent, and is not equal to protecting himself, the Court will protect him”.

To take a closer look at the issues of undue influence, unconscionable conduct and free will in this kind of matter, you can read the entire judgment here.

For family law advice, call Canberra family lawyer Cristina Huesch or one of our other experienced solicitors here at Alliance Family Law on (02) 6223 2400.

For information on how to obtain the correct legal advice, please contact Alliance Family Law.


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