19 April 2024

Transfer of property from father and stepmother to son ends in court – which case won?

Stacks Law Firm


Stacks Law Firm is a leading Australian legal service provider with more than 250 people operating locally in many Australian communities. We are committed to supporting the legal needs of everyday Australians and businesses across every stage of life.
This case serves as a warning to parents to know the difference between a gift and a trust.
Australia Corporate/Commercial Law
To print this article, all you need is to be registered or login on

The Facts

Elderly couple fear losing pension due to property ownership

In 1998, an elderly married couple purchased a 255-acre rural property in northern NSW. By 2004, they were receiving the aged pension and came to believe that owning the property might disqualify them from the pension.

Their belief stemmed from a conversation with their daughter, who allegedly said words to the effect: "If you own over five acres of property, you may no longer be entitled to receive the pension."

Couple transfers property to adult son for $1

Worried about losing their pension, the couple transferred the property to their adult son in May 2004 for nominal consideration of $1.

On the day of the transfer, the couple attended their solicitor's office and signed a letter confirming the son would have "no residual obligations" to the father and stepmother regarding the property. The son also signed this letter.

The transfer was then registered, legally passing ownership of the property to the son. Despite this, the couple continued living on the property.

Son's contribution to improvements to property

The son did considerable work to improve the property both before and after the transfer.

He constructed a woolshed, converted a tin shed into a residence and made significant improvements to that residence, installing suspended ceilings, insulating the walls and putting in electrical wiring, skirting boards, light switches, down pipes and tiling.

In addition, the son attended to farming activities, including drenching, dehorning and marking of cattle.

Property sold 13 years later and father and stepmother claim proceeds are held on trust

In 2017, 13 years after the transfer, the son sold the property for $350,000. The father and stepmother claimed their son held the property and sale proceeds on trust for them.

They said that in 2004, their son agreed that he would hold the property on trust for them, permit them to reside on the property for as long as they wished and account to them for the sale proceeds upon their direction.

The son insisted that no such agreement existed. He maintained the 2004 transfer was an absolute gift to him, so the father and stepmother had no entitlement to the sale proceeds.

Unable to resolve the dispute, the father and stepmother commenced proceedings in the Supreme Court against the son and his wife, seeking orders that the son held the sale proceeds on trust for the father and stepmother.


The case for the father and stepmother


The case for the son

  • We only transferred the property to preserve our pension. Our son knew this and agreed to hold it on trust for us.
  • We had several conversations with our son in 2004 where he agreed he would be "minding" the property for us.
  • The transfer documents were merely prepared by our lawyer. We didn't read them before signing them, as we trusted the lawyer.
  • The letter we signed from the lawyer stating we had no residual obligations wasn't binding. We did not read it. There was an oral agreement between us that our son would hold the property on trust for us despite the letter prepared by the lawyer.
  • While my son claims he did considerable work on the property, in fact his involvement was minimal. I did most of the work myself with the assistance of neighbours.
  • We were not making an absolute gift of our home - we intended to retain control and keep living there, which we did.
  • We should receive the proceeds of the sale of the property, as we never intended that our son would keep the money when the property was sold.
  • My father and stepmother made an absolute gift of the property to me back in 2004. The transfer documents we all signed make this crystal clear.
  • I never agreed to any arrangement to hold the property on trust, or that my father and stepmother would retain control. This story is a recent invention.
  • Their solicitor's letter, which we all signed, unambiguously states there would be "no residual obligations" to my father and stepmother after the transfer.
  • If there was some agreement that I would hold the property on trust, it would have had to be in writing and signed by my father and stepmother. There is no such written agreement.
  • I did a huge amount of work to improve both the residence and the grounds, because I believed the property was mine.
  • My father and stepmother continued living on the property after the transfer based on an informal understanding, not due to any legal right.
  • Given that it was an absolute gift, the sale proceeds are legally mine. My father and stepmother have no claim to that money 13 years later.

So, which case won?

Cast your judgment below to find out

Anneka Frayne
Disputes and litigation
Stacks Law Firm

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

See More Popular Content From

Mondaq uses cookies on this website. By using our website you agree to our use of cookies as set out in our Privacy Policy.

Learn More