Property Dispute In Divorce Proceedings That Involves Property Belonging To Husband’s Father
Complex property disputes often arise from divorce proceedings. In one such case, the Plaintiff and the 2nd Defendant found themselves entangled in a legal battle, fighting over whether a particular property was to be included in the pool of matrimonial assets to be divided. The 1st Defendant, who is the 2nd Defendant’s father, stood as the legal owner. The property’s ownership, purchase, and the intentions behind it became the epicenter of a heated legal battle. This article examines the arguments presented by both sides, the court’s findings, and the valuable lessons it imparts about property disputes.
The Property was purchased prior to the marriage of the Plaintiff and the 2nd Defendant. Of the $820,000 in downpayment, the 1st Defendant paid $300,000 while the 2nd Defendant paid $520,000. The remainder of the purchase was financed through a mortgage, taken up solely under the 2nd Defendant’s name.
When the Property was rented out, the rental income was used to pay for the mortgage. When the Property was not rented out, the 2nd Defendant paid for the mortgage himself. The 2nd Defendant also reimbursed the income tax payable on the rental income to the 1st Defendant.
The Plaintiff’s case
The Plaintiff argued that the 1st Defendant was holding the Property on trust for the benefit of her and the 2nd Defendant. This was because the Plaintiff and the 2nd Defendant had paid for the expenses of the Property, and received all the benefits from the Property. The Plaintiff also asserted that the sum of $300,00 paid by the 1st Defendant was a loan to the 2nd Defendant There were 2 other alternative cases that the Plaintiff raised in as alternatives:-
The first alternative was that the 1st Defendant’s contribution was attributable to himself only and not a loan to the 2nd Defendant, and hence, 14.28% of the Property belonged to the 1st Defendant while the Plaintiff together with the 2nd Defendant owned the remaining 85.72%.
The second alternative was that the 2nd Defendant owned the remaining 85.72% in his own name.
The Defendants’ case
In contrast, the Defendants argued that there was no such agreement for the 1st Defendant to hold the Property on trust for the benefit of the Plaintiff and 2nd Defendant.
Their case was that the Property was a gift from the 2nd Defendant to the 1st Defendant.
The Court’s findings
The Plaintiff did not bring any evidence to show explicitly that there was an agreement for the 1st Defendant to hold the Property on trust for the joint benefit of the Plaintiff and the 2nd Defendant.
When the Plaintiff and 2nd Defendant decided to purchase the Property, they were restricted from doing so in their own names as they had to fulfil the minimum occupation period of their HDB flat. The Plaintiff sought assistance from her mother while the 2nd Defendant sought assistance from the 1st Defendant. The Plaintiff’s mother refused to assist while the 1st Defendant agreed to become the legal owner of the Property.
The Court had found that the Plaintiff was significantly involved in the purchase and the management of the Property, but her involvement was not sufficient to point to the conclusion that it was common intention between parties that the 1st Defendant would hold the Property on trust for the Plaintiff and 2nd Defendant.
On the other hand, the Court did not accept the Defendants’ case that the Property was meant to be a gift to the 1st Defendant. The Court was also not convinced that the 1st Defendant had a dream of living in a shophouse, as there was no evidence pointing to the same. The 1st Defendant also admitted that he had never lived in the Property, and never planned to do so. The Court had ultimately found that the 1st Defendant’s involvement in the purchase and management of the Property was minimal, as the 2nd Defendant would be the primary person managing the Property.
Other evidence considered by the Court included how the 1st and 2nd Defendant’s financial affairs were handled. The 1st Defendant was a person of means and had multiple properties under his name. He did not need the 2nd Defendant’s assistance in managing the Property, and had also set up trusts for his children. Further, at the time of the purchase, the 2nd Defendant was just starting out on his career with a view to getting married to the Plaintiff. It did not make financial sense to the Court that the 1st Defendant would accept such a gift from his son when it placed his son in such unfavourable financial conditions.
Hence, the Court rejected both the assertion that the Property was held by the 1st Defendant on trust for the Plaintiff and 2nd Defendant, as well as the assertion that the Property was a gift from the 2nd Defendant to the 1st Defendant. Instead, the Court had found that 14.29% of the Property belonged to the 1st Defendant while the remaining 85.71% belonged to the 2nd Defendant. The Court then left the division of the 2nd Defendant’ interest in the Property to the judge presiding over the divorce.
This case demonstrates that:-
- While the legal owner may be person A, when the ownership of the property is disputed, the Courts are likely to look at the contribution to the property. This will include the amount(s) paid towards the purchase and financing of the mortgage.
If there is no explicit evidence pointing towards a gift or some common consensus of the ownership, then persons B, C and D may well have a share in the property, if they had in some way contributed to it.
In this case, even though the father was the legal owner, the son had paid for more than 80% of the purchase, through cash and mortgage. The son was thus considered to have a share in the property.
- An asset held in the name of a different party is not completely immune from the division of assets when a married couple divorces.
The Court had rejected the daughter-in-law’s argument that the father had held the property on trust for the 2 of them, and also that the sum of $300,000 paid by the son towards the downpayment as a loan, as there was no evidence showing the same. This shows the importance of having supporting documentation in place.
While the Court had found that the property partly belonged to the father, and mostly to the son, it did not make a decision on whether the son’s share of the property was to be divided, and had left it up to the judge presiding over the divorce to determine this issue.
Informal or loose arrangements often come under scrutiny when parties dispute over property ownership. It is therefore important to keep clear records of the intention of the parties and the specifics of the arrangement at the material time, as this will then protect all parties’ interests in the event of a dispute.
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