Failure to transfer properties causes complications in defacto case

30-November-2010 Family Law By admin

When a Dad lovingly gives his daughter two properties it seems simple enough. But what happens when he fails to sign a transfer, pay stamp duty nor change the registration details on the Department of Lands Torrens Title Registry? It gets complicated.

After the giving the gift, the Dad enters into a de facto relationship. Time passes. The Dad and his de facto separate. After the separation, the ex-de facto claims the properties as part of the ‘pool’ of assets to be divided.

The daughter approached Streeterlaw Sydney Lawyers and we agreed to help fight her case. Our argument to the Supreme Court was that the properties were hers and it was the ‘common intention’ of the parties that they be transferred. The decision of Justice Brereton was handed down on 26 November 2010. Holmes v Mack [2010] NSWSC 1365

This case started as a claim by the ex-de facto wife Laura Mack [surname changed by deed poll] against Donald Mack in the District Court of NSW seeking provision under the Property (Relationships) Act 1984. After a lengthy series of interim arguments, including an adjourned hearing date, the proceedings took an interesting twist. Streeterlaw received instructions to act for Sharon Homes, the daughter of Mr Donald Mack and the plaintiff in these Supreme Court Proceedings.

The brief facts are:

Laura came to Australia from the Philippines in early 1997 and formed a close personal relationship with Donald form August 1997. Laura’s tourist visa expired and she returned to the Philippines but then returned to Australia in December 1998 sponsored by Sharon Homes (the daughter of Donald Mack). Laura resumed the relationship with Donald. Laura & Donald initially separated in January 2005 but after an attempted reconciliation separated on a final basis in June 2006.

Laura commenced proceedings in the District Court seeking provision from the ‘property’ of Donald which included the house he lived in and a commercial property.

Although the properties were registered in Donald’s name, Sharon claimed that they in fact belonged to her and that she had entered into an agreement with her father before 30 June 1996 in which Donald transferred these properties to her.

The determination of this issue was of real significance in the De Facto Proceedings because if it was determined the properties were held on trust by Donald, for Sharon, there would be practically no property in the divisible pool for the De facto proceedings.

The Court carefully examined the historical records evidencing the purchase of the commercial property and the ‘dissolution’ of an antique business operated as a partnership between Sharon & Donald.

On 28 June 1996 Sharon and Donald, without legal assistance entered into a “Deed of Dissolution of Partnership”, which relevantly provided that, with effect from 1 July 1996, Sharon would hold the trade names and business assets, and Donald relinquished all rights and claims to the business funds, assets, stock, furnishing and fittings, plant, goodwill, books, records and real estate at the commercial property.

In respect of the residential property, Sharon and Donald entered into a “Formal Contract Agreement” on 30 June 1996. This document again was not prepared with legal assistance but was witnessed by a Justice of the Peace. This agreement purported to transfer the ownership of the residential property to Sharon, with Donald being entitled to continue to live in the property until his death. Donald gave Sharon the Certificate of Title. The consideration for this transfer was that Sharon agreed to maintain and support Donald for the rest of his life.

The purpose of the transaction was expressed to be for the purpose of “protecting the family assets from all outsiders including those directly related to the mentioned parties within this agreement”. It was noted that this occurred before Laura was ‘on the scene’.

Decision

The Court found that the written instruments of 28 and 30 June 1996, were each witnessed by the same Justice of the Peace and whose affidavit evidence as to her practice in witnessing such documents was not challenged. There was no evidence, of forensic examination or otherwise, adduced to cast any doubt on the authenticity of those documents.

The Court based its consideration on the facts and applied the following doctrines of law:

  1. A specifically enforceable agreement supported by consideration, contained in the 30 June 1996 contract.
  2. A common intention constructive trust.
  3. Doctrine of proprietary estoppels.

The Court made following findings:

The “….property is vested in Sharon to the exclusion of Donald, and Donald holds upon trust for Sharon any legal interest he has in those properties. In respect of Kogarah, Sharon’s beneficial interest is subject to Donald’s equitable right of lifetime residence. Sharon is therefore entitled to the relief she seeks.”

Comments from Mark Streeter Sydney Lawyer

Before 1 March 2010 all de facto cases in New South Wales were heard in the State Court (Local, District or Supreme Courts). However, if the parties separated after 1 March 2009, the jurisdiction for determining disputes over property was the Federal Family Courts (Federal Magistrates Court of Australia & the Family Court of Australia). In this case, the parties separated prior to this critical date.

This was obviously an excellent decision for our client Sharon. It is also a reminder of the importance of properly dealing with property transfers and the legal complications which can arise in relationships.

Streeterlaw are experts in all Family Law matters. For further information or to discuss your personal circumstances and how we can help you, call us on 81970105 or email advice@streeterlaw.com.au.

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