When a Trust is not enough: P v W

Case overview

The issue in this proceeding was whether s 44 applied to the transfer of the property which became the family home to a trust prior to the de facto relationship commencing.

Background

The parties met in 2009. At that time Mr W was married, that marriage ended in January 2010.

Around the same time as Mr W’s separation the parties’ relationship developed into aromantic relationship.

Also, around that time Mr W had a conversation with his friend/accountant about settling a trust and transferring the property to that trust. Following that conversation Mr W sought further advice.

In February 2010 Mr W asked Mr A to be a trustee.

Around this time, he also attended Ms P’s daughter’s birthday and in May 2010 the parties’ celebrated Ms P’s birthday with her children.

Mr W introduced Ms P to his friends and work colleague.

On 21 July 2010 Mr W formed a trust and entered into an agreement to sell the property to the Trust. Settlement of sale occurred on 11 August 2010.

Ms P and her children moved into the property in December 2010.

Decision

To determine whether s 44 applied, the issue was whether in August 2010 (when the property was transferred to the Trust), the parties had the clear and present intention to become parties to a de facto relationship.

In answering the question of whether he knew transferring the property would take it out of the relationship property pool Mr W answered that they weren’t in a serious relationship, so it did not come to mind. He further said that the other reason the property went into a trust was to protect it from creditors.

The Judge thought it relevant that Mr W had been self-employed for some time but had not considered a trust to protect asset loss.

The Judge found that at the time of the initial conversation about setting up a Trust in January 2010 the parties were not in a serious relationship.

However, it took time for Mr W to settle matters with his ex-wife and to establish the Trust and during that time the relationship between the parties developed further. At the time of the disposition in August 2010 there were “signs of permanence in their relationship.”

The parties had been in an exclusive relationship for approximately 8 months and had presented to friends and family as a couple.

The Judge concluded there was a clear and present intention to become parties to a de facto relationship and therefore s 44 applied.

The hearing was only for a declaration that s 44 applied, so no orders under s44(2) were made.

Takeaway

The judgment highlights the importance of the timing and intention behind property dispositions in relationship property disputes including trusts.

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