Gifts – are they absolute?

A Supreme Court of Queensland decision highlights the fluid nature of family relationships and the importance of documenting transactions between family members to avoid subsequent litigation.

giftIn Peterson -v- Hottes (2012) QSC, the plaintiff mother sued her adult daughter for the repayment of $71,000 (approximately) that she provided to the daughter to help her buy a house.  When their relationship later soured, was the mother entitled to expect that the monies be repaid to her? The daughter contended that the payment was a gift and that accordingly she had no obligation to repay it.

The judge observed that at the time of the mother’s payment, the parties did not appear to have given much thought as to the legal effect of the payment or discussed with each other any future implications arising from the payment.

 One relevant factor was that shortly after purchase of the house, the mother moved into the house to live with her daughter and grandson.  The mother continued to live there for six years until her relationship with her daughter broke down.

 The judge looked at all the circumstances and determined that the mother had intended the payment as a conditional gift – not an absolute gift.  Her Honour Justice Mullins said that the mother intended to make the payment (to her daughter’s knowledge and with her daughter’s acquiescence) in order to secure a continuing arrangement for her to reside with her daughter.  The court held that the “presumption of advancement”, i.e. the presumption that a parent intends a payment to their child to be an absolute gift, had been displaced.

The court also observed that it would be unconscionable for the daughter to retain the $71,000 when her relationship with her mother broke down, given that the parties had originally envisaged a continuing living arrangement. 

 The judge concluded that the daughter became liable to repay the $71,000 to her mother when the relationship broke down irretrievably.