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property and children

Family Law and the Bank of Mum and Dad

It’s common for modern entrants into the property market to have had some assistance getting there. You might have heard of the term ‘the Bank of Mum and Dad’ to refer to when parents or family members have assisted someone in helping with a deposit on a property. But how does this new type of Bank stack up when it comes to a separation with your partner?

Family law has long adopted a presumption about money coming from family members, called the presumption of advancement. In brief, that presumption says that where there is an intra-family transfer (a payment from your mother to you for example), then that is presumed to be a gift. If there is evidence to the contrary, then the presumption can be rebutted.

What does it take to rebut the presumption of advancement? There are competing schools of thought and arguments about this. One line of reasoning says that if you intended something to be a loan, then you would have all the regular features of a loan – a contract entered into before the money was transferred, terms of repayment, interest payable, the ability for whoever loaned the money to ‘call in’ the debt, and even registering an interest by way of a charge or sometimes a mortgage.

However another line of reasoning, advanced particularly in the Supreme Court of NSW, has said that family members are simply unlikely to adopt such formalities in their intra-family relations, but that this shouldn’t stop a Court taking a view that money transferred was a loan, not a gift. That is, that the level of formality about a loan in a family is going to be lower than if the Commonwealth Bank, for example, loans you some money.

These questions turn on evidence, and your conduct with the money, particularly before you separated. If you separate, and suddenly start treating money as being a loan and paying interest, it certainly looks suspicious if that’s not what was happening before. Patterns of conduct are important, as are formal documents being prepared at the time of the loan, particularly with documents showing that a partner or former partner knew exactly what was going on.

It’s easy to say all this in hindsight, but our lawyers are experts at asking you the right questions to help find the evidence that you might need to argue a loan – and if you cannot, giving you the right advice early to help you avoid going down the wrong path.

Call us now on 03 9614 7111 or email melbourne@nevettford.com.au to find out more.

Were you in a de facto relationship?

A de facto relationship is defined in Section 4AA of the Family Law Act 1975. The law requires that you and your former partner, who may be of the same or opposite sex, had a relationship as a couple living together on a genuine domestic basis. However, your relationship is not a de facto relationship if you were legally married to one another or if you are related by family.

But what counts as de facto? Does going to all the same events together, does attending family gatherings, does having a hild?

In Crick & Bennett [2018] FamCAFC 68 (13 April 2018) the Full Court (Ainslie-Wallace, Aldridge & Watts JJ) dismissed the De Facto Husband (DF Husband)’s appeal against Tonkin J’s declaration that a de facto relationship existed while he lived in the De Facto Wife (DF Wife)’s home from 2001 to 2014. He argued that despite having a child in 2003 they had lived apart under one roof since 2004, never acquiring any joint property or operating any joint account.

The DF Wife gave evidence that the parties went out to events where they ‘presented as a couple’ but the DF Husband denied this. The DF Husband accepted that the parties attended many family, social and school events with their child but denied that when they were at these events the parties ‘presented as a couple’. The Full Court indicated that the DF Husband “did not set out any facts or circumstances that could illuminate his assertion and it is impossible to attribute any probative weight to that evidence.”

In this case, the Full Court placed highest importance to the determination of whether the parties had ‘a relationship as a couple living together on a genuine domestic basis’ [s4AA(1)(c)) of the Act]. The concept of whether the parties are a ‘couple’ is part of the test. The primary Judge in this case found that between the alleged period the parties attended many social and family events including family Christmases, birthdays, events held at the parties home and at their relatives’ home as well as the child’s school functions. The Full Court continued to state “This was significant evidence of the public aspects of the . . . relationship and supported a finding that there was a de facto relationship. If the appellant wished to contend that the parties’ conduct at those events led to a different conclusion then it was incumbent on him to adduce evidence to support that proposition”.

Other than establishing that you were ‘living together on a genuine domestic basis’ you’re your former partner, you must satisfy the Court of all of the following:

  1. you meet one of the following four gateway criteria

    1. That the period for the de facto relationship is at least 2 years

    2. That there is a child in the de facto relationship

    3. That the relationship is or was registered under a prescribed law of a State or Territory

    4. When assessing property or custodial claims in cases of a breakdown of a relationship, it is recognised that significant contributions were being made by one party and the failure to issue an order would result in a serious injustice

  2. you have a geographical connection to a participating jurisdiction

  3. your relationship broke down after 1 March 2009 (or after 1 July 2010 if you have a geographical connection to South Australia only); although you may be able to apply to the courts if your relationship broke down prior to the date applicable to your state.

In the event of a breakdown of a de facto relationship, you must apply for de facto financial orders within two years of the breakdown of your relationship. After this time you need the Court's permission to apply.

If you are uncertain as to whether your relationship constitutes a de facto relationship, or if you are in one that has unfortunately broken down and you would like to discuss further what your entitlements are, please do not hesitate to contact one of our approachable and experienced family lawyers. The number to dial is 03 9614 7111, or email us out of hours on melbourne@nevettford.com.au.