The significance of gifts or contributions made by third parties
When determining an application to divide assets and liabilities between separated spouses/de-facto partners, the Federal Circuit and Family Court of Australia considers who made the contributions to the acquisition, maintenance and improvement of property.
What is a Contribution?
The court will only make an Order for property division if it is satisfied that, in all the circumstances, it is just and equitable to do so. In determining whether an Order should be made, the court looks at the contributions the parties made to the property pool. Contributions can be financial or non-financial and:-
- may be made directly or indirectly by or on behalf of a party to or a child of the marriage/ relationship to the acquisition, conservation or improvement of their property; or.
- made by a party to the marriage/relationship for the welfare of the family.
However, it is not always a party to or a child of the marriage/relationship who makes contributions.
Contributions by someone who is not a party to the marriage/relationship
Contributions can be made by third parties, most often the parties’ parents. Contributions made by or on behalf of a party to the marriage/relationship are taken into account. Contributions made by a third party must be attributed to one (or both) of the parties to the marriage/relationship.
Who gets the “credit” for contributions on behalf of a party can make a big difference to the outcome of property proceedings.
Who can make a contribution and who gets the benefit?
The most common example of a contribution made by a third party is a gift from one party’s parents of money or property.
How will the court apply the benefit of such contribution?
What was the Intention of the third party when they made the contribution?
The intention of the donor may not have been carefully considered when the gift was made. In circumstances where a property division is being considered, it is often asserted that what was intended to be a gift was actually a loan which must be repaid.
In determining the weight to be given to a gift to only one party the court may:
- allow the recipient of the gift to be credited with the value to which the gift had increased at the date of the hearing; or
- give the recipient of the gift credit for its initial value; or
- if the gift has been mixed with other contributions over a long period, not attempt to give it a particular value, but rather consider it a fact to be taken into account along with other relevant factors.
Gift to both parties?
Even where the gift by a relative of one party is made to both parties, the court may, in certain circumstances, treat it as a contribution by the party to whom the donor was related. If however the gift was clearly intended to be given to both parties, the Court will regard it as an equal contribution.
Non-financial contributions by a third party
A non-financial contribution may be made by a relative. Provision of childcare or provision of accommodation, are examples of non-financial contributions that can be made by a parent or relative and can assist one party or the other in property proceedings.
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