Section 44C: When Property has Been Lost to a Trust
Sometimes a property being put into a trust has nothing to do with the risk of a relationship property claim. Sometimes, property ends up in a trust for reasons that made sense at the time: refinancing, creditor protection or inheritance planning. But when the relationship ends, the effect of that transfer can still be unfair.
Section 44C of the Property (Relationships) Act exists to deal with exactly these situations.
This article explains:
- what section 44C is;
- how it’s different from section 44;
- what the Court looks at;
- and how it has been applied in real cases.
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What is section 44C of the Property (Relationships) Act?
Section 44C allows the court to step in where:
- property has been transferred into a trust; and
- the effect of that transfer is to reduce one partner’s relationship property entitlement — even if there was no intention to disadvantage anyone.
This is an important distinction.
Section 44C is not about blame or bad faith. It is about outcomes.
How is section 44C different from section 44?
Section 44 and section 44C are often mentioned together, but they do different jobs.
- Section 44 deals with deliberate attempts to defeat a partner’s claim. The Court has more powers up its sleeves.
- Section 44C deals with situations where the relationship property pool is smaller, because assets have been transferred into a trust. There is no evidence that the transfer had a bad intention, and the Court’s powers are more limited.
When can section 44C apply?
Section 44C may apply where:
- relationship property is transferred into a trust; and
- as a result, one partner’s share of relationship property is reduced or lost.
Unlike section 44, section 44C:
- only applies to relationship property (not separate property); and
- focuses on effect, not intention.
This means that even well-intentioned trust planning can sometimes fall within section 44C.
What can the Court do under section 44C?
The Court’s powers under section 44C are more limited than under section 44. The Court cannot simply unwind the trust or treat the property as if it were still jointly owned.
Instead, the Court may:
- order compensation from relationship property; or
- make adjustments to trust income or other interests.
The aim is to correct the unfairness as far as possible, rather than to punish or reverse the entire transaction.
Section 44C in real life – what the cases show
Because section 44C is focused on effect, outcomes depend heavily on the details. Two recent cases show how differently these situations can play out.
Brown-Douglas v Hansford (2024): When section 44C does not apply
In Brown-Douglas v Hansford, the High Court was asked to decide whether a transfer involving the family home amounted to a section 44C disposition.
What happened
- The parties were in a de facto relationship from 2011 to 2014.
- Before the relationship began, Ms Brown-Douglas had already set up a trust.
- Mr Hansford jointly owned a house with his former wife.
- On the day Mr Hansford’s property settlement with his former wife was finalised, the house was transferred so that:
- Mr Hansford owned 50%; and
- Ms Brown-Douglas’ trust owned the other 50%.
The trust paid full market value for its share, using funds from Ms Brown-Douglas’ earlier separation.
What the Courts decided
The Family Court initially found that section 44C applied, on the basis that the transfer removed part of the family home from the relationship property pool.
On appeal, the High Court disagreed.
The High Court said that, in reality:
- the trust’s half share had never been relationship property at all; and
- it had been purchased at full value using separate trust funds.
Because nothing was actually removed from the relationship property pool, section 44C did not apply.
Why this case matters
This decision shows that section 44C is not triggered simply because:
- a trust is involved; or
- the family home ends up partly owned by a trust.
The key question is whether relationship property has genuinely been lost or whether, on closer analysis, it was never there to begin with.
Golden v Herring (2023): A disposition, but still no defeated claim
Golden v Herring is another useful example of the limits of section 44C.
What happened
- Mr Herring’s parents had established a family trust.
- The trust originally owned a property.
- Before his relationship with Ms Golden began, Mr Herring bought the property from the trust.
- During the relationship, the couple lived in the house but faced financial difficulty.
- The trust later re-purchased the property at market value, and the sale proceeds were used to repay debts.
Ms Golden argued that the transfer back to the trust defeated her relationship property claim.
What the Court decided
The Court accepted that:
- the property was the family home; and
- there had been a disposition of relationship property.
However, section 44C still did not apply. Why? Because:
- the trust paid full market value;
- no relationship property interest was actually lost; and
- the transaction helped stabilise the couple’s financial situation.
Ms Golden was not left worse off by the transfer, even though the property ended up back in the trust.
Why section 44C cases are so fact-specific
Section 44C cases often turn on fine detail, including:
- when the trust was established;
- where the purchase money came from;
- whether market value was paid;
- how debts and equity were treated; and
- what the practical effect of the transfer really was.
Two cases can look very similar on paper and produce very different outcomes.
The Clean Break approach
At Clean Break, we understand that dealing with trust property after separation is not just a complicated legal puzzle. How this is resolved will significantly impact your financial situation in the future.
We focus on:
- explaining the law in language you can actually understand;
- identifying realistic options (not false promises); and
- choosing the right legal pathway for your situation.
Our approach is grounded in our three core values:
Help, never hurt
We aim for solutions that protect you without escalating conflict unnecessarily.
Excel and improve
Trust law is complex and constantly evolving. We stay sharp so you don’t have to.
Find the joy
Even in separation, clarity and fairness can create space for a better future.
Final thoughts
Section 44C recognises that unfair outcomes can arise without bad intentions. It does not apply to every trust transfer, and it does not guarantee a remedy. But in the right circumstances, it can help correct an imbalance created by the way property was structured during a relationship.
If trusts are part of your separation and you are worried about property being ‘lost’ to a trust — even where no one meant to be unfair — early advice can make a real difference.
If you’d like to talk about whether section 44C might apply in your situation, our team is here to help.
Not able to travel to our office? We can meet you online!
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