A recent listing of a Tiffany & Co engagement ring on Facebook Marketplace has raised debate over the legality of selling gifts you gave or received from your ex. In that Facebook Marketplace post, the vendor said, “I do, now I don’t”. This has sparked a debate about whether the ring should be retained or returned to the purchaser or whether it is an outright gift, and one should not seek that a gift be returned. There is what happens in the modern world and then there is the law. The following is not intended to be commentary on the Facebook vendor’s situation but is more general in nature, and as always, we would recommend any potential client obtain specific legal advice relating to their situation.
How does the Family Law Act deal with gifts?
In general, if you have given someone a gift, that item belongs to the recipient. However, if you are married or in a defacto relationship, the Family Law Act 1975 (Cth) sets out how the property of those in a relationship are dealt with after separation. In short, any gifts will be considered as a part of the property pool and will be subject to negotiation between you and your ex as a part of property settlement.
Generally, you and you ex will negotiate to determine who keeps what as a part of the property settlement. For gifts of more significant value, such as jewellery, a car or luxury goods, you may seek for the property to be valued, so that the value of the asset can be considered as a part of the property pool. Then if one party wishes to retain a specific item, the value of that item in then taken into account as part of their share of the pool of assets.
What if my ex sells the gift?
If you are negotiating a property settlement, neither you nor your ex should dispose of any possessions of great value, even if you received it as a gift from them. If you are aware that your ex has sold a gift and that gift is of significant value, you may seek that the sale value of the gift is taken into consideration when property is being divided.
It is important however that you consider if the value of the gift is worthwhile to pursue in contrast with the legal fees you may expend trying to recoup the gift.
What if we were never married?
The Family Law Act only applies to married couples and de-facto couples. If you wanted the gift to be considered a part of the property pool, you would need to establish that your relationship was in fact a de-facto relationship.
Can my finance sell the ring if we didn’t get married?
At law, yes the ring can be sold. There is nothing in the Family Law Act that prevents her from selling the ring unless injunctive relief is sought to restrain the seller and prevent the sale. This is provided however the applicant has legal standing to bring such an action – that is the applicant satisfies relating to having been in a de facto relationship. If the matter were in the Family Courts, if the ring has intrinsic value then it is “property” which would form part of the pool of assets to be considered by the Court. If the couple cannot resolve who is keep what from the pool, then the Court is asked to determine the division.
If she has sold the ring, the former de facto husband may be able to seek that the Court make orders which includes the proceeds she received for the ring. This could be taken into account as part of the property settlement pursuant to s 90SF(3)(2) noting that the High Court decision of Stanford v Stanford [2012] HCA 52; 247 CLR 108 emphasised that the Court has the power to make orders only in relation to those assets which exist at the time of the dispute.
S90SF(3)(2) may afford some relief given the Court is permitted to take into account matters more generally:
any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account
If she did sell the ring, the value of the ring would then be what she sold it for provided she did not sell it for less than its market value. If she sold it to the purchaser for value then she may be held accountable for the proceeds of the sale.
And it is likely that it will be the sale value, which is relied on used for family law proceedings, provided that the ring was not grossly undervalued at the point of resale.
If she sold the ring for less than its value, then action can be taken to set aside the transaction and in certain circumstances, the eventual purchaser of the ring could be joined to proceedings particular if the sale was undertaken to defraud the former de facto partner.
Once engaged, who is the owner of the engagement ring?
The recipient of the gift is the owner of the ring. The man gives the ring with the intention of it being a gift in which case, the act of giving is not conditional, and ownership would flow with the gift.
However, if the couple qualify as a de facto and the Family Law Act applies, then all property owned by both parties is subject to adjustment by the Court pursuant to s 90SM(1) regardless of who the owner is at law.
A ring constitutes property and as engagement rings can be valuable the question of who is to retain what is in the realm of negotiation and failing negotiation – determination by the Court.
What about the value of a ring – does that alter how the Court determines the issue?
Depending on the value of any engagement ring, the parties may indeed decide its value is such that is worthwhile to consider the ring an asset in property settlement negotiations. The more expensive the ring, the more likelihood there will be a dispute in relation to it. If it is still in one party’s possession, agreement as to value has to be reached or an independent valuation obtained. Then there is the issue about whether the value is such that is worth their while having a dispute about the ring. If valuable enough, then the purchaser may well want its worth included in the pool.
Again, it is a matter for the parties to negotiate in the realm of the law to determine who will keep what assets and if an asset has been liquidated then who keeps what cash – noting that contributions to assets by both parties will play a significant role in deciding who keeps what from the pool.
What if the Vendor provided a refund for the ring?
In terms of refund, if a refund were made, it is the cash which compromises the refund which is then relevant. The question is whether the cash used to purchase, and therefore the refund is the sole property of the purchaser. In many de facto relationships, income and assets are pooled so whilst one half of the couple may have gone to purchase the ring, the source of the funds are in fact joint funds.
If the couple were never in a defacto relationship and there was no pooling of resources, but were only dating ahead of the engagement, it is hard to see how the fiancé would be entitled to a share of the refund.
It would be a matter entirely up to the purchaser of the ring whether they insist on the ring being returned and them retaining the refund or whether they leave the ring with the former betrothed to keep.
Ultimately if a sensible resolution cannot be reached, and hopefully one can be using mediation services, then both parties need to weigh up the legal costs v value of the ring as well as the angst of a dispute on the heels of a relationship that has ended.
The information in this blog does not constitute legal advice and cannot be relied upon by you. If you require advice specific to your situation you must contact Caroline Counsel Family Lawyers. The contents of this blog are relevant as at 11 October 2022. We recommend you obtain specific advice relevant to you and your family’s situation.
Nguyet Cao is a lawyer with Caroline Counsel Family Lawyers and works with clients to help them resolve their property matters.
Caroline Counsel appeared on Channel 7 News on 11 October 2022 to discuss this matter in detail.
If you would like advice from a family lawyer in relation to this issue, you can contact Caroline Counsel Family Lawyers on 03 9320 3900 or [email protected] to arrange an appointment.
