The answer is a startling “yes”, but in limited circumstances.
In an extraordinary NSW Supreme Court case a son made substantial payments to his father to assist in meeting his father’s mortgage repayments over the family home.
The son (Daniel) gave evidence that from the time he was about 11 years of age he had numerous conversations with his father (Terry) during which Terry said:
• the family home was owned by the 5 of them (Terry, Daniel and his 3 brothers)
• Daniel had to “hurry up and start working so that he could help to pay for the mortgage”
• “If you don’t want to work we might as well sell the house because I can’t afford it myself”
• “This isn’t only my house, it’s yours and your brother’s so everyone needs to help”
Terry admitted under cross-examination that he said to Daniel and his brothers:
• “This is everyone’s house and as long as we stick together we will be okay”
• “This isn’t only my home, it is yours and your brother’s, so everyone needs to help”
• “It is not just my money and your money. We all own the house so we all pay for it as a family”
• “It’s not my house it is yours and your brothers”
• “As long as you all have this house, you’ll always be okay financially”
• “Whatever you do, always keep the house and you’ll be okay”
In March 2007 Daniel commenced university, and began working at an accounting firm.
Until December 2012 all of the income made by Daniel ($204,000) was paid into a bank account operated and controlled by Terry.
Terry used those funds to meet his mortgage obligations to the bank.
Daniel gave evidence that at various times after he commenced work:
“… I told Dad I wanted to handle my own funds and enjoy my life. However, Dad always became hostile when I made these comments.
He would also reiterate that he and my brothers couldn’t afford to keep the Family House without my wage and that my “brothers would be out on the street” if I didn’t allow him to use my earnings.
Dad would also say that if I left, they couldn’t afford to keep the mortgage over the Family House and I would have to explain to Andrew and Mark why I wouldn’t help them keep their house.
This – me asking Dad if I could handle my own funds and Dad’s responses – occurred at least 2 or 3 times a year from approximately 2007, when I first raised the issue of independence and moving out / managing my own funds …”
In December 2012, at the age of 24, Daniel left the family home following an incident with Terry.
In January 2013 Daniel asked Terry to include his name on the title to the property, which Terry rejected:
“In response, I said to Dad words to the effect of “then repay me the value of my wages since I started working since you told me that you needed it to keep the house, and you said that the house was all of ours and the Family’s”.
However, Dad refused and said words to the effect of “that’s right the house is the family’s and since you’re no longer part of the family, you don’t own it anymore”.
An argument followed where I repeatedly told Dad that I wanted him to either repay me the value of my wages or put my name on the title for the house, however Dad refused to do this.”
Findings and Result
The NSW Supreme Court held that:
• it would be unconscionable for Terry to deny that Daniel had any interest in the family home. Daniel had an equitable interest in the property because he had contributed to the mortgage in reliance on a common understanding or intention shared by him and Terry that he had a joint interest in the property
• Terry was prevented from denying that Daniel had a joint interest in the family home, on the basis of an equitable proprietary estoppel. (This arises when an owner of property encourages another to alter his position in the expectation of obtaining a proprietary interest and that other, in reliance on the expectation created or encouraged by the property owner, changes his position to his detriment.)
The Court held that the title to the family home should be charged for the repayment of $120,000 within a particular period of time, representing:
• 1/5 of the net value of the property (Daniel being one of 5 family members); and
• a reasonable reflection of what Daniel had contributed towards meeting the mortgage repayments “beyond what could be expected or a son living at home”.
Terry’s appeal was dismissed.
If you have children living at home who are contributing to the mortgage, make sure that you expressly discourage any expectation or understanding of ownership. Unless, of course, this is your intention.
Behman v Behman  NSWSC 1787, and Behman v Behman  NSWCA 295.
Greg Carter is a freelance litigation lawyer based in Perth, specialising in fixed-fee commercial dispute resolution.
Greg offers a FREE consultation and a ‘no obligation’ quotation.
For more information please call Greg on 0422 406 929 or email email@example.com.
Or see his website www.gregcarter.com.au.