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The intention is critical for gifts in family law

By April 2, 2020February 23rd, 2024No Comments

A husband who disagreed with a final property settlement has had his appeal dismissed, with the courts reaffirming the importance of establishing the giver’s intention at the time of giving. The husband’s parents had transferred a property to him and his wife jointly, but he argued it had been gifted solely to him. Looking at the subject of gifts in family law, what does the court look at to work out ownership?

The appeal judges however said the trial judge had not erred, and the benefit of the gift was dependent on the intention of the husband’s parents at the time of transfer. In this case, the court said, the property was clearly intended to be gifted to both parties.

There is often confusion around gifts in family law, whether money or property or some other form of gift because the giver’s intentions can be imprecise or not spelt out. But this doesn’t mean the courts can’t determine from evidence what the true ownership should be. And one important, even critical, form of evidence is when title to a property has been transferred to one or both parties.  This is regarded as “the strongest indicator of the intention of the donor”.

The courts also looked at the motivation behind the gift and established that it had been given in exchange for an assumption that the husband and wife would therefore have a “moral obligation” to look after the parents in their old age.

The wife said, and the primary judge accepted, that the property was given to the parties on the basis that the husband’s parents would eventually build a house on the property and the husband and wife would look after them if they needed it.

In other words, both parties would share the benefit of the gift and both parties would share the moral obligation to support the parents in the future.

The husband had argued at trial that the property was given to him by his parents a long time before the start of the relationship. However, the trial judge rejected this, because not only was it inexplicable that if the husband already owned the land, it had had to be transferred by his parents into the joint names of both parties, but his argument was inconsistent with his parents having subdivided the land before transferring it to the parties. Further it was inconsistent with a documented conversation with his wife that he wanted a part of the land to start a processing business. The primary judge said this conversation showed he was not the owner of the land at the time.

There was no direct evidence from the husband’s mother about the parents’ intention when they transferred the land. However the appeal judges found it was open to the primary judge to consider the facts and circumstances of the evidence and that there was no error in this approach.

The husband argued it was for the wife to prove the intention of his parents. But the appeal judges did not agree and said each party bore an evidentiary onus to establish the facts to support their respective contentions.

They said the wife was not obliged to call evidence from the husband’s parents. (It does seem strange that neither party sought direct affidavit evidence from the parents as to their intention at the time of giving, but one can imagine this may have potentially been divisive in circumstances where the wife still enjoyed a very good relationship with her in-laws, even after the divorce.)

Contrary to the husband’s claims, the primary judge found that the land had been transferred after marriage.

The husband also tried to argue that his parents had in the past intended to give the land to him. But the court noted this “at best reflected their intentions in the past at a time apparently before he and the wife commenced their relationship. It says nothing about the intention of the husband’s parents at the time that they transferred the land to both parties”.

Ultimately what was found to be most critical in this regard was the transfer of the land into the parties’ joint names and that following case law, this was the “strongest indicator of intention”.

How a property settlement is worked out

There is no formula for property settlements as many unique factors must be considered, and each case is different according to its circumstances. But the property settlement process is fairly straightforward. Along with an assessment of assets and liabilities of the marriage (or de facto relationship), courts will determine both parties’ contributions to the marriage, whether these are direct or indirect, financial or non-financial. The assets are then divided according to the contributions made by each party. Adjustments are made if needed to account for differences in the parties’ current and future earning capacities. And gifts in family law that are received by either or both party are typically counted as a financial contribution made to the relationship.

In this case, after adjustments, the primary judge awarded the wife 70% in the property settlement. In working out the parties’ relative contributions to the marriage, the primary judge said their contributions during the marriage were equal, but since separation, the wife had made “overwhelmingly greater contributions”. Not only that but the wife had made these greater contributions in the context of her husband’s conduct making it increasingly difficult for her to do so:

“Since separation, the wife has made the overwhelmingly greater financial contribution, non-financial contribution and contribution to caring for the children. These contributions have been made more significant in the face of adversity, some of which I accept [the husband] was directly responsible for.”

For more detail on this decision regarding gifts in family law, you can read the whole case here.

Protecting gifts against divorce

To help keep a gift in one party’s possession if there is a marital breakdown, parties could agree to enter into a Binding Financial Agreement (which can be before a relationship starts or during a relationship). This means the parties can agree that the gift belongs to one spouse only and that it should not form part of the asset pool to be divided if they separate in the future.

You can read more about how parents can divorce-proof the way they help their children enter the property market on our blog here.

If you need legal advice regarding a property settlement, please call Canberra family lawyer Cristina Huesch or one of our other experienced solicitors here at Alliance Family Law on (02) 6223 2400.

Please note our blogs are not legal advice. For information on how to obtain the correct legal advice, please contact Alliance Family Law.


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