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The Assessment of Gifts Donated Later in the Relationship

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The Assessment of Gifts Donated Later in the Relationship

Introduction

Property disputes in the family law context sometimes engage different areas of law. The Full Court’s decision in Stone v Stone [2015] FamCAFC 18 is an example of the interaction between family law and equity in relation to the court’s assessment of the parties’ respective contribution-based entitlements.

Background

The husband entered into an agreement with his sister whereby he purchased her future interest in their mother’s property. This agreement was predicated upon the fact that property in question would be devised to both the husband and his sister under their mother’s will. Prior to the death of the husband’s mother, the husband and wife made significant improvements to the home, costing them approximately 1 million dollars. The husband received what would otherwise have been his sister’s interest in his mother’s home as an inheritance near the end of his relationship. The trial judge assessed the parties’ contributions at 60/40 in favour of the Husband. This assessment caused the husband to appeal the decision on the basis that the trial judge had not accorded due weight to the husband’s inheritance given that he received the inheritance late in the relationship.

The Full Court’s Reasoning

The Full Court determined that the trial judge’s assessment of the parties’ respective contributions fell within the scope ‘the generous ambit in which reasonable disagreement is possible.’ The husband’s legal interest in his mother’s home did not crystallise because he did not have title transferred to him until probate over his mother’s estate was granted. This occurred towards the end of the relationship. He did, however, acquire an equitable interest in the home worth approximately 50% of the home’s value under a constructive trust. The trust arose by virtue of the renovations to the house that he and his wife commissioned, the costs associated with the renovations and the funds expended on the acquisition of the sister’s future interest in the home.

Final Thoughts

This case suggests that arguments in support of party receiving a greater contribution based entitled on account of having received an inheritance late in the relationship can be mitigated under the following circumstances. Namely, the relevant party had an equitable interest in the property devised to them well before the end of the relationship.