Gifts and Loan from Wife’s parents Long Marriage – wife receives property settlement approximately 75% of net assets

30/11/2015

Joanne approached Richard Watson an experienced family lawyer of Watson & Watson after separating from Paul after 20 years of marriage.  Joanne and Paul had numerous discussions including mediation as to the possible division of the assets of the marriage before approaching Watson & Watson.  However, the matter could not be resolved.  Joanne with the assistance of Dennis Grant, an experienced family lawyer at Watson & Watson was able to consider the matter and after filing an Application in the Family Court of Australia, at the Conciliation Conference, was able to resolve the matter on the basis that Joanne received something in the vicinity of 75% of the net assets and Paul received 25% of the net assets. 

The most significant asset of the marriage was the home on the North Shore of Sydney.  Soon after the marriage, Joanne’s parents offered a significant sum to help Joanne and Paul to purchase a home which was to be their matrimonial home.  The property was purchased in the names of both Joanne and Paul.  Paul said the money from Joanne’s parents was a gift to each of them and Joanne has said that the money was given to her by her parents.

Also during the marriage Paul and Joanne started an electronic service company business which was funded by money provided by Joanne’s parents.

Joanne’s parents were happy to provide money to assist the purchase of a house but were concerned about providing money for a business which was not a proven business.  At that time of the advance for the business, a formal Loan Agreement and Mortgage over the home was prepared and each signed those documents. 

At the time of separation the significant assets consisted of the home on the North Shore and the business.  The business had some debt.

Paul wanted to keep the business and have the home sold and that the net proceeds from the sale of the house should be divided 50% to Paul and 50% to Joanne.  Paul’s position was that this would allow Joanne to purchase a new home in the area and that Paul would use his half share to continue the business and pay off some of the business debt.  Joanne did not think this was a fair resolution as her parents had put up most of the money for the house, whereas Paul’s extended family had not contributed.  Joanne also felt that the poor performance of the business was Paul’s fault and that he had wasted the money her parents had given them. 

In the circumstance, the issue of the property settlement between Paul and Joanne is determined in accordance with the principles as set out in the Family Law Act 1975, which set out the relevant factors to be considered.  However, in general terms all matters other than minor insignificant matters and other than the reason why the marriage or the de facto relationship failed are considered in determining the allocation of the property between the parties to the marriage or defacto relationship.

The Family Court looks at the financial contributions of Paul and Joanne and those on behalf of Paul and Joanne to the acquisition, maintenance and improvement of the matrimonial property.  The property in this case consisted of the matrimonial home and the business and there were no other significant assets. 

The Court also considers non-financial contributions of each of the parties in relation to the acquisition, maintenance and improvement of the property and also the non-financial contributions such as care for the children and other matters.

The first critical issue is to determine whether the moneys advanced by Joanne’s parents were by way of gift or by way of loan.  If it was the advance by way of loan then it would be a liability of the parties which would have to be repaid before the allocation of the net pool of assets between Joanne and Paul.  In this case, for Joanne we could establish that the moneys advanced for the business was by way of loan and accordingly it was repayable to Joanne’s parents by Paul and Joanne from the pool of assets before allocating the net assets between Paul and Joanne.

The moneys advanced by Joanne’s parents for the acquisition of the matrimonial home was by way of a gift which was acknowledged by the parents.  However, such is regarded as a financial contribution on behalf of Joanne. 

An analysis of the financial contributions showed that the overwhelming financial contributions came from Joanne by reason of the contributions made on her behalf by her parents.  Her entitlements on a division of property were in our view well in excess of a 50/50 split as was sought by Paul. 

Though the financial contributions made by Joanne or on her behalf were more significant than Paul’s financial contributions, Paul had made some contributions in terms of setting up the business and caring for the children.

Dennis Grant a senior family lawyer at Watson & Watson prepared the necessary Application which was filed in the Family Court of Australia.  Thereafter Dennis Grant prepared for the Conciliation Conference with the Registrar of the Court.  This is at a relatively early stage in the Court process.  The matter was resolved at Conciliation on the basis that Joanne received something in the vicinity of 75% of the net assets and Paul received 25% of the net assets. 

Even though many lawyers who practice in family law can recite the various factors that are taken into consideration in the determination of the net assets and the allocation as between the husband and wife or the partners to a de facto relationship, it is the experience of the solicitors at Watson & Watson that can provide you with the likely outcome in the event that you and your partner do not resolve the matter.  This is usually available at an early stage and it is important at that early stage appropriate attempts be taken to resolve the matter. 

Please contact Richard Watson for an initial conference to discuss your matter and what is the appropriate process, approach and possible outcome having regard to all the matters to be considered including advances of funds by family members to either you or your partner or spouse.

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