Flourentzou v Spink [2019] NSWCA 315

This case is, factually, very similar to the case of Swettenham v Wild which we have summarised in these posts.

A 62-year-old mother provided what was her life savings (approximately $165,000) to assist her daughter and son-in-law to purchase and renovate a home. The mother was to live in a part of the home.

The arrangement was not recorded in writing. The relationship broke down and the mother moved out. The court had to determine what the agreement was. The children asserted that the advance of the funds was a gift.

As in Swettenham, the court found that the advance of funds by the mother was made on condition that she be given a lifetime right of occupation – the advance was not an outright gift. The court found that it was a failed to joint venture, and, as such, it would be unfair (unconscionable) to allow the children to retain the funds advanced by the mother. The court found that it was unlikely that a 62-year-old person would gift her life savings, and leave herself without means to fund her accommodation in her old age. A constructive trust arose in the circumstances.

The remedy was that the mother received equitable compensation that represented her contribution (this remedy was different than in Swettenham).

The lesson from this case is once again (it is like a broken record), that seeking legal advice and getting a written agreement would have avoided this enormously expensive court case (in fact two court cases – this case was an appeal). The difficulty with with parents making advances to children, is that the presumption of advancement applies. That is, the law presumes, absent evidence to the contrary, that when a parent provides financial assistance to a child, the advance is a gift. It is accordingly always very important to have something in writing that rebuts this presumption.