The Presumption of Advancement
Under the presumption of advancement, the law presumes that, in certain circumstances, where person A purchases property in the name of person B, they intended to make a gift to person B.
Particular relationships will trigger the presumption of advancement, for example where a husband purchases property in the name of his wife or a parent in the name of their child. The presumption extends to a purchase by a man in the name of his fiancé but not to a purchase by a man in the name of his de facto spouse.
The 1984 High Court case of Calverley v Green is authority for the presumption of advancement not applying to de facto couples. However, as de facto property settlements are now dealt with in the same way as for married couples, it is likely that if this matter were to come before the High Court today, it would be decided differently. However, for the authority of Calverley v Green to be overruled, a similar case would first need to proceed to the High Court of Australia.
Rebuttal of the presumption
Even if an appropriate relationship exists, the presumption may be rebutted by evidence of the purchaser’s actual intention which is inconsistent with the application of the presumption (i.e. evidence that, at the time of the purchase, the purchaser did not intend for the property to be a gift). The onus is on the purchaser to provide this evidence. The evidence must relate to the purchaser’s intention at the time of the purchase. It will not be sufficient to show that the purchaser subsequently had a change of heart.
Vadisanis & Vadisanis
In this case, the Husband’s mother advanced money to the Husband before marriage and to both parties during the marriage which was used in various property transactions. She intervened in the parties’ matrimonial settlement, seeking declarations that the Husband and the Wife were indebted to her. The Wife appealed Orders made by the Trial Judge declaring that the Husband and the Wife were indebted to the Husband’s mother in the amount of $329,397.63.
As the transactions in question occurred between a parent and child, the presumption of advancement applied in this case. It was, therefore, up to the Husband’s mother to rebut the presumption by proving that she intended to acquire a beneficial interest in the property which was purchased using the funds she advanced. Although the Trial Judge was satisfied with the Husband’s mother’s evidence in this regard, finding that the presumption of advancement had been rebutted, the Full Court of the Family Court of Australia disagreed and accordingly allowed the Wife’s appeal. The matter was remitted for rehearing.
Whether or not the presumption of advancement is found to apply could have a direct impact on a party’s entitlement to a property settlement upon separation. For this reason, it is advisable to document all property dealings, even between family members, to ensure that the nature of the transaction (i.e. a loan or a gift) is clear. If you are unsure about the legal effect of advancing funds or purchasing property for relatives, you should seek legal advice.
For more information
This article reflected the state of the law at the time of publication. But the law is a living creation which is constantly changing and adapting. These articles should be treated as an information resource only and not as a substitute for specific legal advice in respect to your particular problems and circumstances.
Liability limited by a scheme approved under professional standards legislation.