To gift or not to gift

The case of Kennedy v Proctor [2021 VSC 521] concerns a dispute as to whether a horse known as ‘Ishker’ was loaned or gifted by Ms Kennedy to Ms Proctor. It was a decision appealed from the Magistrates’ Court to the Court of Appeal.

Background facts

• Ms Kennedy engaged Ms Proctor to give her daughter horse riding lessons and the two, as described by the Magistrate, developed ‘an extremely close relationship such as one that might exist between a mother and daughter’.
• Ms Kennedy, recognising Ms Proctor’s keen commitment to competitive horse riding, offered to buy her a horse, Ishker, to enable her to continue to compete.
• Ms Kennedy paid the $20,000 purchase price of Ishker to the vendor and Ishker travelled from the vendor’s property directly to Ms Proctor’s property in February 2015. Ms Kennedy also paid for the artificial insemination of Ishker, which produced Trooper.
• It was common knowledge between the parties that Ms Kennedy wished to have this arrangement hidden from her husband and daughter as she believed that they would be jealous.
• Ms Kennedy and Ms Proctor’s close relationship came to an end in September 2018. In October 2018, Ms Kennedy’s husband demanded Ms Proctor repay the debt which he claimed to know nothing about. Ms Kennedy formally demanded the return of Ishker in December 2018. No demand was ever made for the progeny of Ishker, Trooper.

The dispute

Ms Kennedy contended that Ishker was loaned to Ms Proctor for her non-exclusive use and enjoyment as a competition horse. Ms Proctor argues that Ishker was gifted to her.

Ways of making a valid gift

There are three valid ways of making a valid gift ‘inter vivos‘ (whilst alive) – via a deed, a declaration of trust and delivery. In this case, as there was no deed nor declaration of trust, the only relevant manner of making a gift was by delivery.

The requirements for a gift to be effective at law were set out in Nolan v Nolan (2003) 10 VR 626 (and upheld on appeal) and are:

1. The intention on the part of the donor to make a gift (usually expressed by words);
2. Intention on the part of the donee to accept the gift; and
3. Delivery to complete the gift.

A common misconception is that a promise to make a gift (not couched in a deed or a declaration of trust) must be perfected, however, that is not correct. Without the delivery to complete the gift, a promise to make a gift can be revoked at any time.

Evidence

The Magistrate examined the oral and written evidence put forward by the parties and made reference to the following:

1. A text message from Ms Kennedy to Ms Proctor stating that Ms Proctor ‘deserved her’ (referring to Ishker) constituted intention to make a gift.
2. A Certificate of Registration issued by Equestrian Victoria which named Ms Proctor, not Ms Kennedy, as the owner of the horse. Whilst this in of itself did not prove legal title, it was said to be an indicator that Ms Kennedy intended to make the gift and that Ms Proctor intended to accept the gift.
3. Ishker was included in a deed of settlement (concerning a family law proceeding) that itemised Proctor’s possessions for the purpose of asset division – this indicated Ms Proctor’s acceptance of Ishker as a gift from Kennedy.
4. Absence of a claim upon Trooper – the Magistrate indicated an expectation that if Ms Kennedy was genuine in her claims over Ishker, then a claim would have also been made over Trooper.

Decision

Ultimately the Supreme Court did not find error in the approach to the evidence, nor the application of the legal test applied by the Magistrate and was satisfied that on the balance of probabilities, Ms Kennedy gifted Ishker to Ms Proctor, and the appeal was dismissed.

If you would like to discuss if these developments impact you, or if you require assistance, please contact a member of our Litigation & Dispute Resolution and Wills, Trusts & Estates teams.