Family Court Considers Division of Property after Transfer of Property by Husband’s Father on Trust

The recent case of Bagby [2015] FamCAFC 209 (6 November 2015) was an appeal of the husband from a property order made by a judge in the Magistrates Court of Western Australia involving a 25 year marriage.

The asset pool comprised of land that was owned by the husband’s father. Property A was valued at $610,000 and was transferred to the parties jointly while Property B (worth $1,950,000) was transferred to the husband. The husband argued in the Magistrates Court of Western Australia that it was not to be regarded as his property as he held title as bare trustee of a trust for the benefit of the children.

Reasons of the Magistrate

The magistrate (Magistrate Moroni) accepted that the husband’s father’s interest in Property B was settled upon the husband in his capacity as trustee. However, the magistrate concluded that Property B was to be treated as property of the husband for the following reasons:

 The trust deed initially named the husband as the sole trustee;

 The husband is a member of a class of general beneficiaries;

 The husband had power under the trust deed to settle the whole or part of the capital of trust upon any beneficiary.

 As the husband’s parents have passed away, he has not appointed any new guardian of the trust.

 The husband treated Property B as his own property by exercising his powers to borrow $170,000 against the title of Property B.

At first instance, the magistrate assed the parties’ contributions to Property A as equal, adjusted superannuation 55:45 in favour of husband to reflect his greater post-separation contributions, and assessed the wife’s interest in Property B at 30 percent without making a s 75(2) adjustment from theFamily Law Act, which are various considerations to be taken into account to assist the court in determining a just and equitable distribution of the matrimonial property.

Reasons of the Appeal

On appeal, the husband argued that the order was unjust as the order was more than what the wife had sought in her application.

It can be seen that the husband’s father intended to benefit both the wife and the husband by transferring Property A to them jointly. Property B came into the ‘pool’ as a result of the generosity of the husband’s father. Because, however, the magistrate did not consider s 75(2) adjustments for the wife, it was reasonable that the wife received 30 percent.

In other words, if all considerations including the contributions of the parties (heavily stacked in favour of the husband) and the factors that section 75(2) allows the court to take into account, the result would have been very similar given the length of the marriage and the parties’ age, health and employment prospects.

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