Gifts from Family During a Relationship

When dealing with financial matters, it is common for gifts between partners to form each party’s respective personal effects when considered as part of the couple’s asset pool. However, it is not uncommon for family members, such as parents, to make substantial gifts to one party or to the couple during their relationship. When this occurs, it may be necessary to consider such gifts as a financial contribution by one party.

Case law on gifts during a relationship

Two leading legal authorities to be relied upon when considering contributions to the asset pool derived from a gift or inheritance are Gosper & Gosper (1987) and Kessey & Kessey (1994).

In the case of Gosper & Gosper (1987) a father transferred land to the parties jointly. The gift of the land was determined to be a contribution by the wife on the basis that it is common that gifts in these circumstances are made “only because of the relationship and in reality, as a means of benefiting that relative in that marriage”. It was determined that if the evidence before the court enables the court to determine whether a gift was given to one or both of the parties, that is an important first step in determining who should retain the item. It was held that it was important to look at whether the giver of the gift had an intention for both parties to benefit or whether the benefit was only intended for the child of the particular parent who had given the gift.

In the matter of Kessey & Kessey (1994), the wife’s mother gave the parties $75,000 for the purpose of improving the matrimonial home, which was held in the wife’s sole name. The court found that “a contribution by a parent of a party to a marriage to the property of the marriage will be taken to be a contribution made by or on behalf of the party who is the child of the parent unless there is evidence which establishes it was not the intention of the parent to benefit only his or her child.”

Presumption gift is for the benefit of the family member

If a party cannot set out that there was no intention for them to also benefit from the gift, the court relies on the presumption that the gift giver intended to benefit their own child, and therefore a gift or inheritance received during the relationship or marriage is a contribution made on behalf of the party who is the child or family member of the donor. Any consideration to the weight of such a contribution is assessed in accordance with the usual factors in the Family Law Act 1975, such as the amount received compared to the balance of the asset pool and when the gift was given.

The recent case of Mabb & Mabb & Anor (2020) sets out a transfer of 60 acres of property by the husband’s parents to the parties. The wife argued the husband’s parents made the gift on the basis that the parents would build a house on the property and that the parties would look after the husband’s parents together if this was required in the future. The wife set out that she and the husband’s parents shared a good relationship and this relationship continued after the parties separated.

After receiving the transfer of the property, the parties established a business on the land, and this also had a retail business associated with it. Following separation in or about 2011, the wife and the husband’s mother undertook most of the work in the business for a number of years. The business had some difficulties and was closed in 2018.

The court took the view that the parties’ contributions during the relationship were equal, but after separation, it was determined that the wife made significantly greater contributions.

The husband appealed this decision and challenged the determination that the property had been gifted to both of them and argued that the gift was made by his parents to him. He relied on the decisions made by the court in the cases of both Kessey and Gosper. The court did not accept that the case of Kessey applied to these circumstances because in Kessey, the gift was money applied to renovations on a property held in the sole name of one of the parties and also there was no evidence led in relation to the intention of the donor.

The court relied on citations from the case of Gosper and said that “Normally where title to a property is transferred to one or both of the parties that would be the strongest indicator of the intention of the donor” and “whether as the husband contends, the gift of the land was to benefit him alone depends on the intention of his parents at the time of its transfer”.

The husband was of the view that the wife was meant to prove the intention of his parents, but the court found that each party had the onus to establish the facts to support their respective arguments. The court further said that while it would be reasonable to assume that the presumed intention of the donor is to advantage their child, that presumption can be rebutted by evidence of the actual intention that accompanied the gift and in the case of Mabb the transfer of the land to the parties jointly was a strong indicator of the intention of the donor.

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