Loan Agreements, Family Members & Spouses

G&S Law Group have dealt with many matters whereby family members have loaned money to one another (including spouses), not bothered to spend some money getting the Loan Agreement written up by a Solicitor and ended up spending thousands trying to recover the money. 

Below are some cases dealing with whether or not Spouses can commence proceedings for recovery of a loan in the Local Court or District Court, or if it should be dealt with as part o family law proceedings in the Federal Circuit or Family Court. 

Patel v Patel and ORS [2015] NSWDC 2

Confirmed the authority in NSW & Bate v Priestly (not the Western Australian position). This was a how cause hearing in the District Court of NSW, which confirmed that:

73. Although there is no express admission by either the Husband or the Wife in their affidavits filed in connection with the Wife’s Notice of Motion or in the relevant pleadings, I am satisfied on the balance of probabilities, by having regard to the terms of the Deed itself, that at least one of its purposes was to effect an adjustment of property rights other than through the processes of the Family Court.

74. However, I am respectfully not persuaded that Bate v Priestley can on that basis be distinguished in the manner undertaken by the West Australian Court of Appeal in Sewell v Wilson – at least on the facts of the present case. In my opinion Bate v Priestley, until overruled in the High Court, continues in this State to stand for the proposition that parties to a marriage can, between themselves, and in respect of property adjustment issues, agree to provide remedies at common law outside those available under the Act. To agree to have such remedies does not purport to exclude the jurisdiction of the Family Court. If either party regularly invoked the jurisdiction of that court, it would be a matter for it to decide what effect or weight ought to be given to the Deed; and whether principles of estoppel (ANSHUN or otherwise) arose.

Decision:

75. In my opinion, therefore, this court does have jurisdiction to entertain the claim which relates to the Deed. In other words, the Wife has shown cause as to why the proceedings should not be struck out.

Bate v Priestly

The majority of the New South Wales Court of Appeal held that proceedings to enforce a deed of acknowledgment of debt by the wife against her former husband did not arise out of the parties' former marital relationship, but out of the deed.

Slattery v Slattery (1976) 2 FAM

(90-110), the Full Court of the Family Court held that the Family Court did not have jurisdiction to order the repayment of money lent by a wife to a husband during the course of a marriage, since the payment of a loan was not:

(a) a matter of maintenance since it did not involve considerations of needs and abilities to pay as required by Family Law Act 1975 (Cth) s 75; or

(b) a matter of alteration of property interests since it did not deal with any particular item of property of a party to the marriage.