Pearce & Pearce (No 3) - [2022] FedCFamC1F 418

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Pearce & Pearce (No 3) [2022] FedCFamC1F 418

File number(s): SYC 2654 of 2017

Judgment of: CAMPTON J

Date of judgment: 10 June 2022

Catchwords: FAMILY LAW – PROPERTY – Discrete issues – Where the intervener, being the husband’s mother, asserts she advanced funds to the husband and wife by way of loan – Where determination of this discrete issue is necessary to ascertain the pool available for distribution between the husband and wife – Where the wife contends the advanced sums were a gift to the husband and wife’s children or alternatively were held by the intervener on trust for the husband and wife’s children – Where the intervener advanced funds to the husband and wife on the husband’s assurance that the funds would be repaid – Finding that funds advanced by way of loan – Where the agreement reached between the husband and the intervener did not provide for security – Where it would be unconscionable to permit the husband and wife to depart from that promise and retain the benefit of the intervener’s advance.

Legislation:
Evidence Act 1995 (Cth) s 136

Family Law Act 1975 (Cth) ss 79, 106B

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 10.10

Cases cited:
Ashton v Pratt (No 2) [2012] NSWSC 3

Chaudhary v Chaudhary [2017] NSWCA 222

Darmanin v Cowan [2010] NSWSC 1118

Gray v O’Donnell [2009] NSWSC 259

Heydon v The Perpetual Executors Trustees and Agency Co WA Limited (1930) 45 CLR 111; [1930] HCA 26

Pearce & Pearce [2022] FedCFamC1F 170,

Pearce & Pearce (No 2) [2022] FedCFamC1F 193

Picwoods Pty Ltd v Panagopoulus [2004] NSWSC 978

Division: Division 1 First Instance

Number of paragraphs: 197

Date of hearing: 7 – 9; 22 March 2022

Place: Sydney

Counsel for the Applicant: Mr Scarlett

Solicitor for the Applicant: Hudson Law Pty Ltd

Counsel for the Respondent: Mr Roberts

Solicitor for the Respondent: Barkus Doolan

Counsel for the Intervener: Mr Stapleton

Solicitor for the Intervener: Watts McCray
ORDERS

SYC 2654 of 2017

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:
MR PEARCE

Applicant

AND:
MS PEARCE

Respondent

MS R PEARCE

Intervener

ORDER MADE BY:

CAMPTON J

DATE OF ORDER:

10 JUNE 2022

THE COURT ORDERS THAT:
1.Within seven days of the date of this Order the husband and the wife do all things as are necessary to pay to the intervener or as she may direct in writing the sum of $751,244.90 from the NAB account of the husband and the wife ending #...82.
2.The costs of all parties of and incidental to the Response to Initiating Application filed by the intervener on 13 March 2019 be reserved.
3.The proceedings be listed for case management and directions by Microsoft Teams at 9.30 am on 10 August 2022.

Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Pearce & Pearce has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CAMPTON J:
INTRODUCTION

This decision is as to a discrete issue determined pursuant to r 10.10 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) being whether the second respondent Ms R Pearce (“the intervener”) is to be repaid funds she contends she advanced to:
(a)Mr Pearce (“the husband”) and Ms Pearce (“the wife”) in the sum of $751,244.90 on 6 August 2014 (“the first advance”); and to
(b)The husband alone in the sum of $200,000 on 22 January 2016 (“the second advance”).
The intervener is the mother of the husband.
Prior to the commencement of the trial, the intervener sought the immediate recovery of both advances from funds currently held in two joint National Australia Bank (“NAB”) accounts of the husband and wife with current balances of $1,035,000 and $222,879.18. These monies were produced from the sequential sales of a property of the husband and the wife at T Street, Suburb P in New South Wales (“T Street”) pursuant to orders made on

17 April 2019 and of their home at Q Street Suburb P in New South Wales (“Q Street”) pursuant to orders made on 29 November 2019 (collectively, “the Q & T properties”).
By the end of the trial the intervener’s position as to the immediate recovery of the second advance had shifted from being sought as part of this discrete issues hearing to being recovered in the context of the substantive s 79 determination. The recast by the intervener was recorded as being a recovery of the second advance from “any monetary interest identified as belonging to the husband, after taking into account the [second advance] as a contribution of the husband to the matrimonial assets.”
The husband “admits” the intervener provided the first and second advance by way of a loan and that repayment of the loans is secured upon the monies forming the two joint NAB bank account balances holding the proceeds of sale of the real properties. He did not seek any specific orders in respect of the intervener’s application.
The wife seeks that the intervener’s application be dismissed.
For the reasons that follow, orders will be made that the husband and the wife pay to the intervener or as she may direct the sum of $751,244.90 from the NAB accounts holding the proceeds of sale of the Q & T properties. No orders will be made as to recovery of the second advance; the intervener shall elect the role she proposes to pursue as to that claim in the substantive s 79 hearing, including whether she continues as a party to these proceedings. I will reserve the costs of all parties of the intervener’s Response to an Initiating Application filed on 13 March 2019.
BACKGROUND
The intervener was born in 1946. She is presently aged 75.
The husband was born in 1975. The wife was born in 1975. They are both aged 47.
The husband and wife commenced living together in April 2009. They married in the United Kingdom in 2010. They have two children together, being:
(a)X, who was born in 2010 and is currently aged 11; and
(b)Y, who was born in 2013 and is currently aged 8.
The husband has a child from a prior relationship, Z, born in 2005, currently aged 17. He lives with his mother in the UK. For the purpose of this judgement, I shall refer to Z, X and Y collectively as (“the children”).
The husband has a further child from more recent relationship, W, born in 2019, currently aged two. He lives with his mother, Ms D, in Sydney. The husband’s relationship with Ms D broke down in October 2019. In August 2020 the husband married Ms AA. He and Ms AA are now separated.
The husband, the wife and X migrated from the United Kingdom to Australia in 2013, shortly prior to Y’s birth.
The husband and wife separated on 11 December 2016. An Order for divorce was made in 2018 and became absolute.
On 4 May 2017 the husband filed an Initiating Application in this Court seeking orders as to parenting and property adjustment. The wife filed a Response to an Initiating Application on 16 June 2017.
On 28 February 2019 an order was made granting intervener leave to intervene in the proceedings. The intervener filed a Response to an Initiating Application on

13 March 2019.
Judgments had been delivered in the matter by Ryan J on 17 April 2019 and

29 November 2019. Those judgments record that from at least late 2019, the intervener was in a position to prosecute her relief by way of her Response filed on 13 March 2019.
Final consent parenting orders as to X and Y were made on 28 November 2019. They provide for the X and Y to live with the wife and spend alternate weekends and half of each school holiday with the husband.
The matter first came before me for trial management on 2 November 2021. Trial directions were made on that day so that s 79 relief sought by each of the husband and the wife together with the claim of the intervener would proceed for final determination over four days commencing on 7 March 2022.
The matter came before me again for trial management on 11 February 2022. On that date each of the husband and wife informed me that the single forensic accounting expert evidence would not be ready in time for the anticipated trial dates. Directions were made facilitating the progression of that evidence relevant to the s 79 dispute. In circumstances where the intervener had been delayed for more than two years in prosecuting the discrete relief contained in her Response, that part of the proceedings was listed for hearing commencing on 7 March 2022 as recorded earlier in these reasons.
On the morning of the first day of the hearing an oral application of the intervener for leave to amend her relief was refused. These reasons for judgment assume familiarity with the

ex tempore judgment delivered on that date being Pearce & Pearce (No 2) [2022] FedCFamC1F 193.
EVIDENCE
The intervener relies on the following documents:
(a)Response to Initiating Application, filed on 13 March 2019;
(b)Her affidavits, filed on 24 April 2019 (“the April 2019 affidavit”) and 3 December 2019 (“the December 2019 affidavit”);
(c)A Case Outline, filed on 28 February 2022 and marked as Exhibit “I1”; and
(d)A statement of contended findings of fact and legal conclusions, dated 16 March 2022 (“the intervener’s statement of contentions”).
The husband relies on the following documents:
(a)His affidavit, filed on 3 February 2022;
(b)His Financial Statement, filed on 3 February 2022;
(c)A Case Outline, filed on 4 March 2022 and marked as Exhibit “H1”; and
(d)A statement of contended findings of fact and legal conclusions, dated 16 March 2022 (“the husband’s statement of contentions”).
The wife relies on the following documents:
(a)Second Amended Response to Initiating Application, filed on 23 December 2021;
(b)Her affidavit, filed on 21 February 2022;
(c)Her Financial Statement, filed on 21 February 2022;
(d)A Case Outline, filed on 4 March 2022 marked as Exhibit W1; and
(e)A statement of contended findings of fact and legal conclusions, dated 16 March 2022 (“the wife’s statement of contentions”).
A direction was made at the commencement of the trial pursuant to s 136 of the Evidence Act 1995 (Cth) such that no documents in the tender bundles of each party or exhibits to any affidavit would constitute evidence of any fact adverse to the case of the other, unless that document and the proposition of fact to be proved or inferred from the document had been put to the other party or relevant witness in cross-examination.
On the first day of the trial, the husband made an oral application to rely on two affidavits filed in the proceedings on 22 May 2019 and 3 December 2019. For reasons given in the ex tempore judgment, Pearce & Pearce [2022] FedCFamC1F 170, his application was refused.
THE AGREED FACTS
On 8 March 2022, being the second day of the trial, the parties provided a “Statement of Agreed Facts” which was marked as Court Exhibit 1. It recorded the agreed facts in this case as follows:
1.On 14 June 2014, the husband exchanged contracts to purchase S Street, Suburb P for $400,000.
2.On 28 June 2014, the parties exchanged contracts to purchase T Street, Suburb P for $992,000.
3.On 6 August 2014, the intervener deposited $751,244.90 into the Commonwealth Bank account number …19 in the name of the husband.
4.On 7 August 2014, a cheque in the sum of $897,215.58 was withdrawn from the said bank account. This represents the payment of the balance of the purchase price of T Street, Suburb P.
5.The purchase of T Street, Suburb P settled on 8 August 2014.
(As it was recorded)
HISTORY AND FINDINGS
In 2008 the intervener provided funds to the husband by way of loan to assist him with the purchase of a property at CC District in the UK. The intervener said that in 2011 the husband repaid to her the loan of $330,000. The wife did not challenge the fact of the familial loan agreement or the fact of the repayment of the funds advanced. She contended that the value of the loan was 300,000 GBP.
The intervener’s mother passed away on 30 June 2013. She received a significant portion of her mother’s estate. The husband received an inheritance from his grandmother of $240,000. This was deposited into his bank account in July 2013.
In July 2013, the intervener established five accounts with BB Bank. She deposited $250,000 into each account (“the BB Bank accounts”).
Upon arrival in Australia, neither of the husband or the wife were in paid employment.
In early 2014 the husband advised the wife that he wanted to invest in real property and started to view investment properties in Sydney. It was not controversial that the husband and the wife discussed together the possibility of purchasing an investment property around this time, and that the husband and the intervener also discussed that possibility with one another. A series of emails passing between the husband, the wife and the intervener from the period in early June 2014 were exhibited into evidence with their contents being put to the wife in cross-examination:
[INTERVENER’S COUNSEL]:          it was also your joint desire to buy investment properties together?
[WIFE]: [The husband] wanted it faster than I was ready to, yes.
[INTERVENER’S COUNSEL]:          Sure. That – which suggests that, yes, you were also on board with the idea, but maybe at a slightly slower pace?
[WIFE]:  Yes.
[INTERVENER’S COUNSEL]:          Great. And so it’s true, isn’t it, that there were discussions between you and [the husband] that you both had maybe a slightly different pace, but at the end of the day you wanted to make investments and that you had limited borrowing capacity, so you had to come up with a different plan?
[WIFE]:  No, I wanted to get a job first.
[INTERVENER’S COUNSEL]:          Okay. But here, he’s talking about you trying to buy a property with [the intervener’s] money, in effect, helping you to do so?
[WIFE]:  …That was his plan.
[INTERVENER’S COUNSEL]:          Sure. But he was involving you in that, wasn’t he? By mentioning this to you by email?
[WIFE]:  Yes.
[Intervener’s counsel]:  If you can turn over to page 4. Actually, I beg your pardon, just go back to page 3. If you just have another look at the bottom, there’s an email from you now dated – at 12.42 pm which is just after the email you received before which is 12.39 pm?
[WIFE]:  Yes.
[INTERVENER’S COUNSEL]:          So three minutes later, approximately. And you write back to [the husband] and say: Do you mean at 1.1? Now – so you’re responding to [the husband]’s idea at the time and, using your undoubted ability, you worked out that what he really meant was the amount he had to borrow was 1.1 million, not 1.2?
[WIFE]:  Yes.
[INTERVENER’S COUNSEL]:          And you calculated that?
[WIFE]:  It’s written here, yes.
[INTERVENER’S COUNSEL]:          And you said: You want to borrow it all from her? Yes?
[WIFE]:  Yes.
[INTERVENER’S COUNSEL]:          And that’s because what you were understanding was he was suggesting that for you to both buy an investment property together, you would have to borrow that money from [the intervener]?
[WIFE]:Yes. I would have thought it was a stupid         idea, I think, yes.
…
[INTERVENER’S COUNSEL]:          But you knew that your earning capacity meant that if there was to be an investment, you had to borrow money from [the intervener]?
[WIFE]:Well, he – he was going to bid on properties without my consent. Presumably, he was doing it without hers too.
[INTERVENER’S COUNSEL]:          Well, that wasn’t really what I asked you. What I was asking you was if you wanted to buy property at or about this time, in order to do so, you had to borrow money from [the intervener] because you didn’t have borrowing capacity from a bank together, did you?
[WIFE]:Yes. That’s correct.
I find that by early June 2014 both the husband and the wife knew that if they were to acquire an investment property valued in the range of $1 million they had insufficient funds themselves to complete any such acquisition, that they could not source that quantum of funds from a bank and would need to borrow such funds from the intervener. Additionally, the intervener had offered to assist the husband and wife financially in their endeavour to acquire an investment property, including an offer made by way of an email to the husband and wife on 11 June 2014 which recorded:
You may use the properties I own as guarantees.
In cross-examination the wife denied having any recollection of receiving this email or of its contents. She did not say she did not receive it, or that it was not sent, or that she did not read it. I find that such email was sent, and more likely than not read by the wife, such finding being grounded from the evidence recorded in paragraphs 32, 40, 41, 42, 98 and 131 of these reasons.
The husband was the successful bidder at auction on 14 June 2014 to purchase a property at S Street, Suburb P (“S Street”) for $400,000. The husband paid a

10 per cent deposit of $40,000 on entering the contract. It was the wife’s evidence that she knew nothing of its purchase until after the husband had signed contracts and did not agree to him acquiring the property. That was not materially disputed by the husband. It was the wife’s uncontested evidence that she and the husband had not yet commenced paid employment at the time of the exchange of contracts for S Street.
On 28 June 2014, two weeks after the S Street exchange of contract, the husband telephoned the wife advising that he was the successful bidder at auction of another property, being T Street, at a purchase price $992,000. On that day the wife attended at the offices of the real estate agent and at the husband’s request was recorded on the contract as a joint purchaser of the property with the husband. The husband and wife paid on exchange $99,200 from their joint savings being the 10 per cent deposit on the property.
By 28 June 2014 the husband had obtained employment at a start-up company “DD Business”, earning a salary in the range of $100,000 and $120,000 per annum. The wife was not working. The husband and the wife at the time of this exchange had no finance approved to complete the acquisition of either S Street or T Street.
On 24 July 2014 the husband and wife successfully obtained a loan approval from NAB in the sum of $280,000 to assist in completion of S Street to be secured by way of mortgage on that property.
Both the husband and wife gave evidence that they were unable to fund the balance of the purchase price of T Street scheduled for settlement in early August 2014 by their own savings and that their incomes at that time were insufficient to secure further borrowings from a bank. Notwithstanding the impending settlement date with the requirement for them to source the funds to completed the purchase looming large on the immediate horizon, around this time the husband and the wife elected to:
(a)Take the children on an international holiday to Country EE during late July 2014 for 10 days; and
(b)Purchased a 1/8^th share in a boat.

It was the wife’s oral evidence that she was anxious about her and the husband’s inability to complete the purchase of T Street:
[INTERVENER’S COUNSEL]:          Now it’s true, isn’t it, that as soon as you were a party to the contract the reality of you both not having enough money to complete that purchase hit you?
[WIFE]:  Yes.
[INTERVENER’S COUNSEL]:           And you became very anxious about that?
[WIFE]:  Yes.
[INTERVENER’S COUNSEL]:          And you knew that, between the two of you, you didn’t have enough money to settle it yourself without borrowing money from somewhere else?
[WIFE]:Again, I didn’t have control of or access to   the bank accounts. I was informed that there   wasn’t enough in the account.
…
[INTERVENER’S COUNSEL]:          …you knew you couldn’t borrow any money so you agreed with [the husband] that [the husband] would speak to [the intervener] about borrowing some money from him, didn’t you?
[WIFE]:  He said he would speak to [the intervener].   Yes.
…
[INTERVENER’S COUNSEL]:          …because [the intervener] and you and he had been talking earlier about potentially borrowing some money for another property?
[WIFE]:  Yes.
[INTERVENER’S COUNSEL]:          And you were aware already at that point that               [the intervener] had some money from her              inheritance?
[WIFE]:  Yes.
[INTERVENER’S COUNSEL]:          Yes. And you thought that if [the intervener] was willing to agree with [the husband] to release some of that money then you could use that to purchase Q Street?
[WIFE]:  Yes.
[INTERVENER’S COUNSEL]:          And you had one or two conversations in person with [the intervener], didn’t you, throughout July about your concern about the inability to settle on the contract?
[WIFE]:I don’t recall specific conversations. It’s likely. Yes.
…
[INTERVENER’S COUNSEL]:          So you knew that you had to take a while and so you needed money desperately on about 26 July and you needed it by 8 August. You knew that? Yes.
[WIFE]:  Yes.
[INTERVENER’S COUNSEL]:          So you have got about 12 days to get about 800 – well, about $750,000 to help settle the property. Correct?
[WIFE]:  Yes.
[INTERVENER’S COUNSEL]:          And you and [the husband] were talking about that at home or in Country EE?
[WIFE]:  Yes.
[INTERVENER’S COUNSEL]:          You are aware from conversations between you and [the husband] that [the husband] was going to approach his Mum about borrowing some money?
[WIFE]:  Yes.
[INTERVENER’S COUNSEL]:          And you’re aware that the idea of borrowing the money was for a short period in order to allow you to settle and then for you to get a job and then get a mortgage on the property?
[WIFE]:I don’t know… what he discussed with [the intervener] but I knew what we needed which, if you’re asking me what did we need, yes, I knew what we needed.
[INTERVENER’S COUNSEL]:          Okay. You – what you needed was, you needed an advance from [the intervener] for a very short time?
[WIFE]:  Until I could get a job. Yes.
[INTERVENER’S COUNSEL]:          Yes. And you consented to [the husband] speaking to [the intervener] about borrowing that money from her?
[WIFE]:  I didn’t have a choice but yes.
[INTERVENER’S COUNSEL]:           So you agreed that that would be okay?
[WIFE]:  Yes.
[INTERVENER’S COUNSEL]:          And you effectively said… whatever [the husband] could agree with [the intervener] you would agree too because that’s what he was trying to do to help you both?
[WIFE]:I have to object to the word “borrowing”, though. You used the word “borrowing”. I don’t know what terms he agreed – I don’t know what he agreed with her. We needed some money.
[INTERVENER’S COUNSEL]:          No…What I’m interested in asking you… is, that you had consented to [the husband] talking to [the intervener] about having money… money from [the intervener] that you could use to settle the property for a short time?
[WIFE]:  Yes.
It was the wife’s case that she had no direct input with the intervener as to the terms (if any) of the first advance she and the husband desperately required to complete the purchase of settlement of T Street. She deposed to representations made to her by the husband at paragraph 137 of her affidavit, being:
Don't worry about it. I will convince [the intervener] to allow me to liquidate the children's shares to complete the sale in the short term. You will need to take any job you're offered, no matter how unsuitable. We need a job offer document to show the bank to secure a mortgage. We can then release the money back into the share accounts for the children.
She gave oral evidence as to the last sentence of the paragraph of the affidavit as follows:
[HIS HONOUR]:  … do I take it that you agreed to that course?
[WIFE]:  Yes.
[HIS HONOUR]:  Right. And that’s consistent with what you’ve just said, get some money, put the money back where it came from?
[WIFE]:  Yes.
I find arising from this evidence, from the content of the June 2014 emails between the husband, the wife and the intervener, and from the wife’s evidence as recorded in paragraphs 60, 72 and 98 of these reasons, that in the period immediately prior to the first advance of funds the wife:
(a)Knew that $750,000 was required in “about 12 days” to complete the T Street purchase; and
(b)Was aware of, and agreed to, the husband sourcing funds from the intervener to be applied to settle the purchase of T Street; and
(c)Was aware that any access to and use of such funds would be for a short–term, with any funds accessed were to be repatriated to their source after she secured a job and the husband and wife could complete a refinance; and
(d)Was otherwise accepting of the terms of any arrangement the husband could reach with the intervener to access the funds.
On 6 August 2014, on the liquidation of three sets of share portfolios, a sum of $751,244.90 was transferred from the intervener’s personal BB Bank account to the husband’s Commonwealth Bank account ending #…19. This is the first advance.
On 8 August 2014 the husband and the wife completed the purchase of T Street as joint tenants using their savings and the first advance. The husband caused the sum of $897,215.58 (being the balance of the purchase price of $892,800 together with other acquisition costs) to be withdrawn from his Commonwealth Bank account ending #…19 and paid to the vendor. The property was unencumbered by way of mortgage security at the time of its acquisition.
During August 2014, after the completion of the purchase of T Street, the wife obtained employment.
On 29 August 2014, being before the S Street purchase was completed, the husband and wife exchanged contracts to jointly purchase a third property at Q Street for $2.15 million.
On 9 September 2014 the husband completed the S Street purchase by way of the $280,000 NAB mortgage advance with the balance being funded from the savings of the husband and the wife. The property was registered in the husband’s sole name. The property at T Street remained unencumbered. It was not used as security for the bank loan used to complete the S Street acquisition.
On 12 September 2014, the husband and wife obtained a loan secured by way of mortgage on T Street from NAB in the sum of $793,000.
They did not advise the intervener as to the fact of or quantum of this loan or mortgage security. This was the first secured finance transaction with a bank undertaken by the husband and the wife on any of their three properties other than those simultaneously entered on completion of S Street and Q Street.
In October 2014 the husband and the wife completed the purchase of T Street. The wife gave evidence in her affidavit, not materially put into issue by the husband, that settlement of the purchase of the home at Q Street was funded in part by way of a loan obtained from NAB in the sum of $1,700,000, such loan being secured by way of mortgage on the subject property, and that the balance was met by the husband and the wife applying their savings and the funds of $793,000 raised by way of NAB loan secured by way of mortgage on T Street. I so find.
The value of the three NAB loans at early December 2014 was $2,773,000, made up of:
(a)$280,000 secured on S Street;
(b)$793,000 secured on T Street; and
(c)$1.7 million secured on Q Street.
The acquisition costs of the three properties, without stamp duty or other purchase costs, combined to be $3,542,000. The value of three mortgages and the first advance was $3,524,44.90.
On 12 December 2014 the husband and wife increased the S Street loan from $280,000 to $384,000 and the T Street loan from $793,000 to $960,000. The total value of the three secured loans from NAB increased by $271,000 and was then $3,044,000.
The husband and wife did not advise the intervener as to the fact or quantum of this refinance. This was the second set of secured finance transactions undertaken by the husband and the wife on the three properties.
The husband and wife undertook significant renovations to each of their real properties commencing in late 2014, including:
(a)To T Street in 2014, installing a new kitchen, ensuite bathroom, and ducted air conditioning, tiling the balcony and repainting the internal walls of the property. The cost of those renovations was approximately $186,000;
(b)To S Street, installing a new kitchen, bathroom, and carpets, re-tiling the lounge and kitchen areas and undertaking plumbing and electrical work. The cost of those renovations was approximately $61,000;
(c)To Q Street, installing a new kitchen and appliances, redoing bathroom fixtures, converting a wine cellar to a study, renovating a pool and undertaking landscaping work. The cost of those renovations was approximately $296,000.
In February 2015, the husband and wife further increased the NAB loans held on T Street and on Q Street by a total of $140,000. In doing so, they changed the mortgage security arrangements such that each of the three loans were secured against each of the three real properties.
They did not advise the intervener as to the fact of or quantum of this refinance. This was the third set of secured finance transactions undertaken by the husband and the wife on the three properties.
On the intervener’s affidavit evidence, she was unaware of the husband and the wife having refinanced the properties until at least late 2015. Her April 2019 affidavit records:
17.In late 2015, [the husband] and [the wife] said to me words to the effect of, "We are thinking of going FF Town, Country GG in August next year with the kids. We are going to pick up Z from the UK as well. It's going to be expensive, around $60,000, so we might have to refinance one or more of the properties."
18.Following this conversation, I became concerned about whether and when [the husband] and [the wife] would be in a position to repay the monies advanced by me, given their extravagant lifestyle and the fact that they were considering refinancing their properties to facilitate the same.
In August 2015, the intervener’s solicitor drafted three documents identified as “deed of agreement for unsecured loan” in the sums of $263,659.84, $263,670.03 and $223,916.03 respectively, totalling $751,244.90 (“the draft agreements”). Each of the draft agreements record the husband and wife as the borrowers. The first draft agreement, being for the sum of $263,659.84, records the lender as “[the intervener] on trust for [X]”. The second draft agreement, also being for the sum of $263,670.03, records the lender as “[the intervener] on trust for [Y]”. The third agreement, being for the sum of $223,916.03, records the lender as “[the intervener] on trust for [Z]”.
The intervener requested that the husband and wife sign each of the three draft agreements. During the intervener attending upon the wife and the husband with the draft agreements, it was the wife’s evidence that she said to the intervener:
177.… “I am not prepared to sign a debt arrangement for an asset I did not have carriage of. A better way to protect the children's share money would be to return it to the accounts in the children's name held by [the intervener] as it was held originally rather than obliging me to sign debt arrangements."
178.… “You are attempting to obligate me to pay money to you from assets I own when [the husband] now holds the shares in accounts he controls. I will not agree to that. I am not threatening the children's money.”
The wife further gave evidence that, upon requesting that the wife and husband sign the draft agreements, the intervener said:
184.… "I want to protect my gift to the children, not that I want the money back. I am concerned that [the husband] is out of employment again and spending a lot of money on boats and cars. I am worried about your marriage. You're always arguing. I want the money to be for the children".
The intervener in cross-examination denied this portion of the conversation as alleged by the wife.
The wife refused to sign the three draft agreements. The intervener requested to meet with the wife on at least four occasions to achieve this objective. The wife met with her on two, the first being in about August 2015 when the intervener first provided them to the wife and the husband and the second being over coffee in November 2015.
In cross-examination the wife conceded that at or about the time that the intervener first requested that she sign the draft agreements she had attended upon a divorce lawyer for advice.
The husband and intervener executed three documents entitled “Deed of Agreement for Unsecured Loan” on 2 December 2015 (“the written loan agreements”). They record the intervener in her personal capacity as the lender, and the husband alone as the borrower. They each record the date of the advance of the loaned funds as being on 30 July 2014, noting that such advance was made “to assist [the husband] and [the wife] to fund the purchase of either or both of [S Street] and [T Street].” Other terms as recorded are:
(a)That no interest is payable on the loan(s); and
(b)That the husband must repay the advanced monies within 12 months of written demand from intervener, or upon the intervener’s death; and
(c)There is no recorded security for the advances.
The intervener paid $200,000 into the husband’s Commonwealth Bank account #…19 on

22 January 2016 by way of bank cheque. This is the second advance.
The husband and the intervener entered into a further deed of agreement for an unsecured loan as to the $200,000 advance on 3 March 2016. It records the husband as the borrower and the intervener in her personal capacity as the lender. The loan is said to be repayable within 12 months of written demand, or upon the Intervener’s death.
In cross-examination it was put to the wife that $80,000 of the second advance was deposited into the husband and wife’s self-managed superannuation fund. The wife said she thought the amount deposited into the fund was $140,000. The evidence suggest up to $61,997 of the advance may have been deposited to the husband’s share trading accounts. The use and application of the second advance will be determined in the hearing of the s 79 application.
In March 2016, the husband and wife refinanced their mortgage loans owing to NAB such that they were left with two loans, the first for the sum of $2.42 million, and the second for the sum of $1.3 million. Each of these loans were secured on each of the three real properties. Their total debt to NAB was at that time approximately $3.72 million. This was the fourth set of secured finance transactions undertaken by the husband and the wife on the three properties.
The wife’s uncontroversial evidence was by that time “the loans were intermingled such that it was not possible to deal with one loan without affecting the other loan.” I accept and find that by the time of the third refinance, the three secured NAB loans on the properties were intermingled such as to make it impossible to deal with any one loan without affecting the others.
The wife conceded in cross-examination that by the time of the fourth advance she was aware of the intervener’s desire to have the first advance repaid but did not propose to repatriate funds from the fourth refinance. Emails between the husband and the wife dated 23 March 2016 put to the wife in cross-examination record the wife agreeing to further refinance on the basis that:
Fine provided I can book the holiday and get the money to replace my necklace…
We will be paying more interest and less principle though, so hopefully we can invest some of it into asset growth
An email in response by the husband indicated the husband and the wife intended distribution of the funds produced on the fourth refinance of the real properties, as follows:
$100k buffer, $400k to kids accounts - $220k to Z, $180k split between X and Y, balance for holiday and your necklace.
(As it was recorded)
The wife answered a string of questions in cross-examination in relation to the application of the fourth refinance as follows:
[INTERVENER’S COUNSEL]:          So from that refinance, you were both willing or agreeing, I should say, that of the 560,000, 400,000 of that would go to the kids’ accounts?
[WIFE]:  Yes.
[INTERVENER’S COUNSEL]:          Right. And you knew the money had come                   from [the intervener] in the first place, didn’t            you? Some of the money had come from [the           intervener].
[WIFE]:  Yes.
[INTERVENER’S COUNSEL]:           Well, true?
[WIFE]:  Yes.
[INTERVENER’S COUNSEL]:          But you knew 750 approximately had come      from [the intervener]?
[WIFE]:  Yes. Yes.
[INTERVENER’S COUNSEL]:          So you didn’t say, “Well, don’t we have to        pay it back to [the intervener]”, did you?
[WIFE]:  Not in these emails. No.
[HIS HONOUR]:   But you knew… at that time that [the intervener] wanted the money back, didn’t you?
[WIFE]:  I hadn’t spoken about it with [the intervener],   so I don’t…
[HIS HONOUR]:   In 2015… you were presented with the loan   agreement?
[WIFE]:  Yes. That is correct.
[HIS HONOUR]:   You spoke to a lawyer about it sometime in   2015?
[WIFE]:  Yes.
[HIS HONOUR]:   So in March of ’16 you knew that she wanted   the money back?
[WIFE]:  I knew we had loan agreements. Yes.
It was the wife’s evidence that a total of $400,000 from the fourth refinance had been paid into share accounts with Commsec in the children’s names. Implicit in her case was that this formed part of the repatriation of funds to the children’s accounts accessed in 2014. It was her case that the value of these share accounts had accumulated to $795,010.66 at 13 January 2017, being one month after separation. In cross-examination the wife gave three distinct versions of how the money were repatriated, the first (being consistent with her affidavit evidence) was that these funds were applied to share portfolios in the children’s names, the second being that they were applied to share portfolios in the husband’s name, and the third being that the she did not know where or how the funds were applied. Her evidence on this matter was not consistent or cogent. She conceded:
[INTERVENER’S COUNSEL]: And what I’m putting to you… is when you signed this affidavit attesting it to be true, you knowingly knew it was not true because you knew at the time that the money was not in the children’s names?
[WIFE]:You’re correct. I’ve said three different things… I actually don’t know what the structure was of the share portfolio.
The husband in his affidavit recorded that “on 29 March 2016, [he] invested $400,988.21 of the monies loaned to both [he and the wife] by the intervener… into various share portfolios for the children on an interim basis”. This evidence was incomplete. In cross-examination the husband accepted that he transferred those funds to Commsec accounts in his name. There was no evidence before me that any monies had been “returned” to share portfolios in the children’s names or for the benefit of the children, and I so find.

The wife’s case was that the husband has now dissipated any funds purportedly ‘returned’ to the children. The evidence on this subject matter was less than satisfactory, and no findings are made in these reasons as to the use and application of those funds. That will be a matter for the final s 79 trial.
In October 2016, two months prior to separation, the husband and wife further increased their mortgage loan with NAB ending #…09 to the value of $1,292,658. This was the fifth set of secured finance transactions undertaken by the husband and the wife on the three properties.
By way of four separate letters to the husband dated 13 July 2017, the intervener demanded repayment of $263,659.84, $263,670,03, $223,916.03 (totalling $751,244.90, being the first advance) and $200,000 (being the second advance) within a period of 12 months. The demand was made 35 months after the advance of the funds on 6 August 2014, 34 months after the first refinance of T Street, 19 months after the December 2015 deeds of loan unsecured agreement entered by the husband and the intervener and 16 months after the fourth refinance in March 2016. The demands have not been met. No demand was made by the intervener upon the wife.
On 30 January 2018, the husband exchanged contracts for the sale of S Street for $575,000. The husband received a 10 per cent deposit in the sum of $57,500. Upon settlement on 16 April 2018, the wife received the sum of $55,750, and the balance of the net sale proceeds, being $460,000, was applied to reduce one of the husband and wife’s remaining mortgage loans with NAB secured on each of the three properties.
The intervener gave evidence of advancing to the husband a further $100,000 in five tranches between October and November 2018. She said those monies were a loan to the husband but accepted that she was not seeking those monies to be repaid as part of these proceedings. She caused a further deed of agreement for an unsecured loan to be drafted, recording that the loan was repayable “immediately upon written demand by the [intervener] to the [husband]” or upon her death. The deed of agreement was executed by the intervener and husband on 12 December 2018. No demand has been made in respect of this advance.
On 1 February 2019, the husband provided the intervener with an acknowledgment of debt and charge upon his interests in real properties in the sum of $951,245.90 (“the husband’s charge”). He deposed at paragraph 84 of his affidavit that the charge was in respect of Q Street and S Street. The document annexed to his affidavit and marked as Exhibit W5 plainly records the relevant properties as Q Street and T Street. The husband’s charge is grounded in the written demands made by the intervener on 13 July 2017 in respect of “loans totalling $951,245.90”. It records that the charge is made “[in] consideration of the [the intervener] forbearing to sue [the husband] for repayment of the Loans”.
The intervener lodged a caveat on the two Q Street properties on 4 February 2019, being three days after the provision of the husband’s charge and one month prior to the filing of her Response in these proceedings.
On 18 October 2019 the husband and wife exchanged contracts for the sale of T Street for $1.6 million. At the time of its sale, T Street and Q Street were security for the two loans due to NAB, the first in the sum of $1,947,828 and the second in the sum of $1,292,658. There was a dispute between the husband and the wife as to how the proceeds of sale of the property should be distributed. NAB was paid the entire proceeds of sale after selling costs.
Pursuant to orders dated 29 November 2019, Q Street was sold in December 2019 for $3,350,000. The proceeds of sale were distributed as prescribed by the orders:
(a)In payment of all costs and expenses of the sale;
(b)In payment of the outstanding NAB Loan secured against the property;
(c)In payment of all municipal and water rates outstanding; and
(d)As then recorded in Order 6, being:
6.1.the amount of $1,035,000 to paid to an interest-bearing account in the joint names of the husband and the wife to secure the intervener’s claim and expected costs (party/party) in these proceedings and the husband and the wife are restrained from drawing upon the said account without the prior written consent of each of the husband, wife and intervener or an order of this Court;
6.2.the amount of $100,000 to the wife to meet the obligation in Order 32(d) made on 17 April 2019;
6.3.the amount of $50,000 to be deposited to the trust account of Barkus Doolan Family Lawyers to meet the payment of the single experts’ fees as provided for in Order 21 made on 30 August 2019;
6.4.the amount of $50,000 to each of the husband and the wife to meet the payments as provided for in Order 21 made on 30 August 2019; and
6.5.the balance shall be deposited into an interest-bearing account in the joint names of the husband and the wife and the parties shall be restrained by injunction from drawing upon the said account without the prior written consent of the other party or an order of this Court and after having given the intervener twenty-one (21) days written notice.
Pursuant to Order 6.5 as made the amounts of $1,035,000 and $222,879.18 are currently held in joint NAB accounts of the husband and wife as recorded earlier in these reasons.
At trial it emerged that the intervener has advanced further funds of about $1 million to the husband since the commencement of these proceedings. She said that at the date of the trial, she had not advanced monies to the husband for about three years (being since March 2019). The additional funds advanced by the intervener were sourced from an inheritance she received from her Aunt in June 2018, from the proceeds of sale of a property she owned in Suburb HH, and from further liquidation of shares held in KK Company portfolios. Her oral evidence was that she was not enforcing repayment of those funds at the time of the trial and that it was “up to [the husband]” if he wished to make any repayment.
The husband and intervener are now estranged. The intervener’s evidence was that their relationship deteriorated during 2019. She said in cross-examination that she had not spoken to the husband for about three years and that they have been “completely estranged” since 2020.
THE ISSUES
A preliminary matter – the source of the funds of the first advance
The wife raised an issue as to the legal and beneficial ownership of the funds used to make the first advance.
Her Case Outline recorded her firm position at the start of the trial that the first advance funds had been gifted to the children by the intervener and hence those funds were legally and beneficially owned by them at that time. She did not explicitly abandon this contention, albeit that it was not contained within her statement of contentions filed on 17 March 2022. Her broad conclusion was that as the funds for the first advance had been gifted by the intervener to the children, there was no foundation or basis upon which the husband and wife would be required to repay such funds to the intervener.
The intervener’s unwavering case was that the funds were not gifted to the children and hence ought to be repaid to her.
Had a gift of funds been perfected to the children?
The Case Outline document of the wife said that the intervener “gifted or intended to gift” the funds to the children upon the creation of the BB Bank accounts in 2013. Monies held in those accounts were then transferred to KK Company share portfolios, and those share portfolios were therefore contended to be the property of the children. She gave evidence in her affidavit that:
512.I am aware that [the intervener] had deposited monies on behalf of each of her grandchildren and the sum for each grandchild was $250,000. I did not have any conversation with [the intervener] about the monies.
The wife’s affidavit evidence recorded that her evidence as to what she “knew” or “understood” as to the funds being gifted included:
139.I knew that [the husband] and [the intervener] jointly held shares for [the husband’s] three children, including Z…
140.I do not know when the accounts were established but it was after [the intervener] had sold a commercial property she had inherited from her mother in Suburb JJ. At around the time the accounts were established, [the husband] said to me words to the effect of:
"We have $750,000 for [the children], $250,000 for each of them. [The intervener] has also given $500,000 to Ms LL for her 2 children. Ms LL is pissed off since she has 2 kids and only gets $500,000, not $750,000 like me because I have 3 kids."
141.I understood this was a gift to the children. I was not aware of any conditions to the gift. It was never suggested to me that there were conditions to the gift or that the shares for the children were anything other than a gift. [The husband] and I discussed the gift, including with our friends, that the monies were for the children's school fees.
The wife’s evidence as to what she considered was a “gift” to the children, or when that gift perfected, became confused in her oral evidence and then disassembled. Her understanding as to the funds being a gift to the children was largely unsupported by the documentary evidence and that there was no foundation or basis upon which the husband (and/or the wife) would be required to repay any such funds to the intervener.
The relevant BB Bank account statements were not tendered into evidence. The intervener in her affidavit identified the accounts as being “accounts intended for each of [the children]” and said that they were “set up… in each of [the children’s] names’. The wife in paragraph 177 of her affidavit recorded the accounts as being “in the children’s names, held by the intervener”, albeit that she conceded she had no knowledge of the account holding prior to the commencement of these proceedings. The agreed facts record that the money for the first advance passed through the intervener’s personal BB Bank account upon it being transferred to the husband’s Commonwealth Bank account.
The relevant KK Company share account statements were not tendered into evidence. There is some support for a conclusion that those accounts were established either in each of the children’s names jointly with the intervener, or in the intervener’s name on behalf of the children, by reference to the three draft agreements provided to the husband and wife in August 2015, which contained the following recital:
A.The Lender is the trustee of a trust fund for her grandchild X being the sum of $263,659.84 (the Trust Fund), previously held by the Lender as trustee in bank account KK Company – …93- Ms R Pearce <R Pearce & Y A/C>.
Each of the three draft loan agreements are framed in the same language, but refer to different identified lenders (namely the intervener “on trust for” Z, X and Y respectively), and account names (being one account for each child).
I am unable to make a safe finding as to the identified account holders from which the funds were held in either the BB Bank accounts or the KK Company share portfolios to support a conclusion that the funds had been gifted by the intervener to the children.
The oral evidence of the wife at trial as to the gifting of the funds source to pay the first advance included that:
(a)Her belief as to fact of the gift was born from the husband’s word alone; but that
(b)She “didn’t trust” the husband; and
(c)She had not discussed the fact of, or terms attached to, the contended gift with the intervener, given that she was “always led to believe that it was an arrangement between their family and [she] shouldn’t stick [her nose] in it.”; and
(d)The extent of her knowledge of the “gift” was that she understood “the intervener [was] giving some form of money in some form for the benefit of the children in future”; and
(e)She did not know how the “gift” was held until these proceedings commenced, and that she accepted that her evidence as given in paragraph 139 of her affidavit (recorded above) to the effect that she “knew the husband and intervener jointly held shares for the benefit of the children” was incorrect; and
(f)Despite discussing the gift, including with friends, and representing that the monies were for the children's school fees, neither she nor the husband nor the children received any benefit of “the gift” until the husband approached the intervener to assist them out of an impossible financial situation; and
(g)She accepted that the intervener had in fact never represented to her that the funds were intended for the children’s school fees.
The wife’s case as to the gift, strongly and firmly asserted at the commencement of the trial, was not reasonably available to her. At its highest, her evidence permitted a conclusion that the she was largely unsure as to the nature or terms by which the first advance funds were held.
During her cross examination the wife conceded:
[INTERVENER’S COUNSEL]:          Was there any consideration in your mind at the time that the money was being advanced by [the intervener] to assist you to buy Q Street, that that money was a loan from [the intervener] that had to be repaid?
[WIFE]:  Yes.
[INTERVENER’S COUNSEL]:          There was a consideration?
[WIFE]:Well, I don’t know the terms of their agreement. I knew that there was money going into property that would need to be re-mortgaged out. I don’t know whether loan/gift – I didn’t speak to [the intervener] about the terms.
There was no explanation as to the wife’s affidavit omitting the considerations in her mind at the time of the first advance to include that it may have been a loan from the intervener.
The wife is not an unsophisticated litigant. In addition to having the benefit of experienced legal advisors, she has significant financial expertise, education and professional experience. Evidence was adduced by way of Exhibit I10, being the wife’s curriculum verite, and during the wife’s cross-examination, as to her extensive financial qualifications and experience in the commercial world. Her current role in Australia is as a manager for NN Company. There was a vacuum in the wife’s case that the wife pressed the fact of the first advance being a gift with such conviction, when she knew at the time of the advance that she and the husband were looking to borrow money and that she had considered that any funds obtained from the intervener would have to be repaid.
The wife accepted that if she was wrong about her contention as to the first advance being gifted, then the first advanced funds would represent “a debt to the intervener”. She said:
[HIS HONOUR]: If it’s the intervener’s money and not the children’s money, what difference does that make?
[WIFE]: If it’s the intervener’s money then it’s a debt to the intervener, I guess, on a – so that’s why we’re here. To talk about the loan agreements.
I find that the wife’s contention that the funds sourcing the first advance were the children’s by way of gift was made absent objective credible foundation and was unsound. It cannot be supported from the evidence to the requisite degree of probability. It is rejected.
Did the intervener hold the first advance funds on trust for the children?
This alternate position was not explicitly prosecuted by the wife prior to the commencement of the trial. The wife’s Case Outline recorded that the “share portfolios in the children’s names were liquidated” and that the “originally drafted” agreements did not provide for the intervener to be the lender.
The wife’s alternate contention, solidified by the end of the trial, was that the first advance funds were sourced from BB Bank accounts established and held beneficially for the children. Hence the intervener advanced the $751,244.90 in a capacity as trustee “from accounts in Trust for her grandchildren” (as recorded in her statement of contended findings of fact and legal conclusions).
In response to the shift in the wife’s contention during the trial, the intervener denied that a trust had been established in favour of the children. It was her final position that the funds had been “earmarked” for the children, but that she “always retained control the money… to make decisions about it in favour of [the children] at her sole discretion either on her death, or before based on her free will”.
Concessions made by both the wife and the intervener make it unnecessary to determine any factual controversy as to whether the first advanced funds were sourced from a trust that had been successfully constituted by the intervener for the benefit of the children or whether the source of the funds were legally and beneficially held by the intervener and she had “earmarked” them for the benefit of the children.
The wife’s concessions in the event the funds making up the first advance were not gifted and that the intervener held the funds in her capacity as trustee, was that the funds ought to be returned to their source, being the trust.
The wife’s contention that the ‘return of the funds to the children’ had been at achieved from the fourth refinance proceeds is the subject of the findings earlier in these reasons and is rejected. On any view, the repatriation process of the first advance funds to the intervener as trustee did not occur.
The intervener in her affidavit made a concession to a similar effect to that made by the wife, being that:
47. If an Order is made for the relevant monies to be repaid to me, my intention is to put those monies into a bank account to be held on Trust for my three grandchildren.
The intervener was not challenged as to her intention, and I accept it.
If the first advanced funds were not held on trust for the children, and remained legally and beneficially held by the intervener “earmarked” for the children as the intervener elects, then a remaining issue for determination as raised by the wife is if a loan agreement has been established, whether the loan has been forgiven.
If the first advanced funds were held by the intervener on trust, she would have a fiduciary obligation as trustee to recover the funds on behalf of the children. There is no evidence that the trustee could forgive any loan made to the husband alone, or to the husband and wife sourced from the trust fund. Such a proposition was not put to the intervener at trial.
Was the first advance provided by way of loan?
The intervener contends and the husband concedes that the first advance was:
(a)sourced from funds that were legally and beneficially held by the intervener;
(b)made by way of a loan agreement as between the intervener, the husband and the wife;
(c)with no interest to be charged;
(d)the funds advanced to be repayable at call; and
(e)they being secured or charged upon the proceeds of sale of T Street and Q Street.
The wife in her Case Outline contended at the start of the trial that:
(a)There had been no loan agreement either between the intervener and the husband, or the intervener and the husband and herself, in respect of the first advance, but that if an agreement was found:
(i)It was concluded between the intervener and the husband. The husband acted on his own accord without the wife’s agreement, and therefore his conduct and assertions could not bind the wife in the making of any loan agreement with the intervener;
(ii)The loan advance was not secured; and
(iii)Any such loan agreement was forgiven by the intervener in 2015 or 2016.
The wife did not explain during the course of the trial how she could reconcile what was recorded in her Case Outline that she had “no knowledge of any asserted loan as to the first advance” with her concessions that emerged during cross-examination as identified in these reasons.

The wife also contended strongly that the “deed of agreement for unsecured loan” executed by the husband and intervener in December 2015 were entered into:
14.… at a time when they knew the marriage was in difficulty and did so to attempt to protect against a potential claim of the wife for property altercation.
The intervener carries the onus of adducing sufficient evidence to satisfy the Court to make findings in respect of following questions by reference to the evidence:
(a)Who were the parties to the terms (if any) of the first advance, including whether the husband had capacity to enter into the alleged agreement for himself and as agent on authority of the wife?; and
(b)What were the essential terms of the agreement?; and
(c)Did the husband and the intervener by their words and conduct evinced an intention that they would be immediately bound by the terms of their loan agreement in July or August 2014? and
(d)Was there any security for the loan, and if so, what were the security terms?
(e)In the event the loan agreement was between the husband and the intervener alone, should a determination be made that the husband and the wife together bear that liability, and if so, in what proportion?
To some extent, these issues overlap.
Who were the parties to any agreement?
The intervener contended that the husband for himself and the wife entered into a partly express and partly implied agreement that was in part oral and in part in writing with the intervener to advance by way of loan $751,244.90 to enable the husband and the wife to complete the purchase of T Street, such loan to be for a period “until the parties [the husband and the wife] could refinance” at which time they would repay the advance to the intervener.
A series of emails exchanged between the husband and the intervener immediately prior to the first advance provides insight into their understanding of the arrangement at that time, those emails forming Exhibit W10 at trial. On 26 July 2014, the husband sent an email to the intervener recording:
ok we may need to sell some of the kids shares to complete the purchase on [T Street]. then remortgage when [the wife] gets her job and put the money back. the nab lent me for [S Street] but won't do [T Street] until [the wife] has a job and we won't know about her final interview until the friday before we are supposed to complete.
(As it was recorded)
The intervener responded by way of email on the same date:
How much is [T Street]?
What A waste of Money playing with the kids shares It was not set up for you to dabble into You must have been a lousy Monopoly player I am not happy!!!
When do you move out of MM Street?
(As it was recorded)
A further email chain between the husband and the intervener commencing on 30 July 2014 records the husband requesting the intervener to provide to KK Company approval to have the share portfolios liquidated:
We need to settle and can’t get the loan until the week after settlement as I have explained to you. Please get [the accountant] to sell today as it’s Wednesday… And the money goes back in the kids accounts.
… We can re-finance and return the money down the track. It’s an interim loan.
(As it was recorded)
The intervener responded by way of email on 31 July 2014:
This trust was set up for [the children] as a safe guard
Okay I’ll sell off the shares and in years to come you can tell them what you did with their inheritance,
but the money must come back. It's a loan!
(As it was recorded)
To which the husband responded:
The money will go back into their accounts as I have repeatedly said. Its' a loan until we can refinance.
(As it was recorded)
The wife was not copied in to the email chain and there is no suggestion within the emails that the husband was negotiating on her behalf. In cross-examination the intervener confirmed that the emails exchanged were only between she and the husband, and not the wife.
The intervener’s affidavit recorded:
11.In or around late 2013 or early 2014, [the husband] said to me words to the effect of, "It would be better for [the wife] and I if we could use the monies you have invested for the kids to purchase a property for us all to live in and some investment properties. We'll pay it back as soon as we can. "
12.In or around August 2014, I said to [the husband] "Ok, I agree for the monies earmarked for the children to be paid to you and Ms Pearce. Look after it, because you will need to pay it back when you can."
13 .On 6 August 2014, I sold the shares contained in my BB Bank Cash Management Accounts which had been earmarked for Z, X and Y and recovered the total sum of $751,244.90. On the same day, I transferred the whole of this Commonwealth Bank Smart Access Account #...19.
The intervener did not adduce evidence of she and the wife engaging in direct communications about the first advance before it was made. She accepted in cross-examination that she did not negotiate with the wife between the husband requesting that she liquidate the KK Company portfolios and the date of the first advance on 6 August 2014.
The husband did not give evidence in his affidavit of he and the wife discussing the purported loan from the intervener prior to the first advance, however he submitted by way of his Case Outline that an inference can be drawing from the fact of the wife having been “involved with the husband in the matrimonial finances, so that there was an express agreement between the intervener and the husband for the [first advance]”.
The husband in cross-examination gave evidence of he and the wife discussing that they would have to borrow money from the intervener to complete the purchase of T Street. It was his evidence that the wife said “sure, that’s fine, if that’s what we need to do, we can’t default”. He deposed to telling the wife that they “would have to repay it as soon as possible” and that he “thought that would be one to two years depending on the works that we wanted to do to the properties”, which he said was “a complete flow-through of what [he] discussed with [the intervener]”. He said that the plan was always to refinance the properties in order to repay the intervener.
The wife’s evidence in her affidavit was that she:
513.I do not agree that the conversations were held in my presence. I did not have any discussions with [the intervener] about the sale of the shares. I was not involved in nor present when [the husband] spoke with [the intervener] selling the shares.
The wife accepted in cross-examination that she had been privy to conversations between the husband and the intervener prior to the husband exchanging on Q Street, including on or around 11 June 2014, when the intervener offered to the husband and wife security by way of her properties to assist them to purchase a property. She denied however, that she was “actively talking” to the husband and the intervener about purchasing a property, and that she “wasn’t intending” on doing so. She was firm in her oral evidence that she resisted the husband acting as her agent and did not consider herself bound by any decisions made by him purportedly on her behalf.
It was not controversial at trial that the three draft agreements in August 2015 were prepared and executed at a time when the intervener was concerned about the husband and wife’s marriage and lifestyle. The intervener was alive to the fact of the husband and wife’s looming separation. It was the intervener’s evidence that the wife refused to sign the draft loan agreements, and that subsequently she received advice from her lawyer that she should “go ahead and have an agreement with [the husband] as it will protect your money”.
In submissions, counsel for the intervener submitted that the wife conceded in cross-examination that she would be bound by the terms of the husband’s agreement with the intervener, and that when this is coupled with the fact of the wife becoming the registered proprietor of T Street and she being in daily dialogue with the husband about how they were to complete the purchase of the property, a finding of fact ought to be made as to the husband entering the agreement for the first advance as the wife’s agent or on her behalf. I do not accept the first limb of that submission, which in my view did not reflect the evidence. The wife directly denied that she felt that she had to “go along” with what the husband said was going to happen, her evidence being that she “tried to resist him”.
The intervener at trial said that “there were plenty of emails between both [the husband] and [the wife]” as to the first advance. Those emails, if they exist, were not in evidence before me.
I am not satisfied to requisite degree that by way of the wife being in attendance during unspecified conversations between the husband and intervener in which the wife was either passive or acquiesced establishes a safe foundation to find that she was a party to any agreement.
There is no evidence as to the wife being engaging in discussions with the intervener as to the terms of the first advance prior to it being made. There was an absence of explicit evidence as to the husband conveying to the intervener that he was negotiating on behalf of himself and the wife.
There is insufficient evidence for a finding to be made that the husband was negotiating with the intervener on the basis that the wife would be bound throughout the process of negotiation of the advance. I do not accept the intervener’s case that an inference can be drawn from the fact that the wife would be bound to the husband’s process of negotiation because she was prepared to leave all dealings as to the advance to the husband and the intervener. I am not prepared to infer that he was exercising an implied authority to contract or agree on her behalf.
This finding is supported by the fact that:
(a)The wife did not sign the draft loan agreements in 2015; and
(b)The funds for the first advance were paid only into the husband’s bank account and not into and account of the husband and the wife; and
(c)The intervener’s demands for repayment being only made to husband and not to the husband and the wife.
The evidence satisfies me and I find that the husband was negotiating with the intervener for access to funds for the benefit of both he and the wife, but not as agent of the wife.
Was there a loan agreement, and if so, what were the essential terms?
The husband elicited the intervener’s advance of funds on the assurance that he would “put the money back” upon the wife obtaining employment and a refinance of T Street being completed. The husband twice confirmed to the intervener that he would repay the advance with an inference being drawn that such repayment would occur as soon as he and the wife were in a position to do so (that is, the advance was an “interim” loan). By way of her concessions identified in these reasons, the wife accepted and I find that she was aware of this assurance given by the husband.
Upon the intervener advancing $751,244.90 to the husband on 6 August 2014, she recorded the withdrawal in a handwritten ledger which she has “maintained for some 30 years”. The page of the ledger records the advance as a “loan” and that the lender is recorded as being the “children”. The entry of the transaction is separate from the other more usual recordings of expenditure entries on the ledger page, being transactions undertaken by the intervener personally. I find that the intervener’s keeping of a ledger is subjective confirmation of the fact of a loan arrangement.
The essential terms of the agreement between the husband and intervener are found in writing within the emails exchanged between them as recorded in paragraphs 120 to 124 above and by way of the conversations between the intervener and the husband evidenced in paragraphs 11 through to 13 of the intervener’s affidavit recorded above.
I find that the essential terms of the agreement made between the intervener and the husband, being partly in writing and partly oral were:
(a)It was made at or about the last week of July or the first week of August 2014;
(b)Between the intervener and the husband; and providing that
(c)The intervener would advance funds upon the liquidation of the three KK Company portfolios to the husband; and such advance was made
(d)On the husband’s assurance that it would be repaid to that source upon the wife getting a job and the husband and the wife refinancing T Street; and
(e)The sum of the advance was $751,224.90 deposited into the husband’s Commonwealth bank account on 6 August 2014; and
(f)The purpose of the loan was for the benefit of the husband and the wife; and
(g)That the advance would not carry any provision for interest; and
(h)That there was no part of the agreement that included security for the advance.
I am satisfied on the evidence that the wife was aware of some but not all of the essential terms, including that the intervener would advance funds in the sum of about $750,000, to the husband for the benefit of she and the husband, and that the husband had assured the intervener that the advance would be repayable upon the wife getting job and T Street being refinanced.
The wife submitted, and I accept by reference to the emails and terms of the conversation between the husband and intervener, that there was no express provision for the intervener to demand repayment of the advance at the time the agreement was made in late July or early August 2014.The wife further submitted that at this time there was no fixed time period for any money advanced to be repaid to the intervener. Arising from the email evidence and the conversation, I accept that the term for repayment was not fixed and was infected by some uncertainty. The intervener contended that in the event of such uncertainty, the loan became repayable on demand.
Justice Rothman in Gray v O’Donnell [2009] NSWSC 259 confirmed that:
18.…the courts have long distinguished between a debt “payable on demand” and a debt which arises from a loan which is payable only on the satisfaction of a condition of some kind, including the satisfaction of a condition that a demand is actually made. It will very much depend upon the terms of the contract…
21.… the term “on demand” is a much settled term which, absent express words to the contrary (or words of necessary intendment), must be read as “immediately due”, and as a consequence, the cause of action accrues at the time that the moneys are advanced.
Justice White in Picwoods Pty Ltd v Panagopoulus [2004] NSWSC 978 observed the principle that there is no reason that there cannot be a binding agreement in circumstances where some matters are left to be determined by one contracting party, such principle being limited in that it cannot be left to a party the option of whether there should be any performance at all, as distinct from the determining the mode of performance to be adopted. This is apposite to the facts in this case. The terms of the bargain struck on the husband’s assurance was for the advance to be repayable in a short-term, implicitly only a number of weeks. I find that in the circumstances of this particular agreement, any uncertainty as to time for repayment by not being a fixed date at the time of the entry into the agreement, did not infect the agreement so that it would not be binding. This conclusion is reinforced in that the obligation rested with the husband, and insofar as was necessary, the wife, to convey to the intervener the satisfaction of the conditions so as to trigger the repayment of the advance being immediately due. As recorded in these reasons, they individually and collectively failed to discharge this obligation. The fact of the refinance not being communicated to the intervener by the husband or the wife, being the circumstance upon which the loan became due and payable, raises the spectre of unconscionable conduct as will be identified later in these reasons.
Consistent with the above authorities, I find that the first advance was repayable on the satisfaction of the conditions of the wife obtaining a job and the refinance of T Street. The last of these conditions was satisfied on 12 September 2014. I find that upon satisfaction of those conditions, the first advance became repayable on demand.
At the time that the husband and the intervener signed the written loan agreements in December 2015, the loan was already due and repayable. I find more likely than not that the intervener knew that a refinance of the properties had already been effected by this time. She gave evidence of the husband and wife telling her that they were thinking about refinancing one of the properties in late 2015, which caused her “concern about whether and when [they] would be in a position to repay the monies advanced”.
It was the intervener’s case that the execution by she and the husband on 2 December 2015 of the three written loan agreements for a total of $751,244.90 “did not vary the prior agreement between [the intervener] and the wife”, and that “by procuring the husband’s agreement [to the entry of the three written unsecured loan agreements] the intervener obtained a separate agreement pursuant to which the husband would ([n the event of default by the wife] repay the whole of the first [advance]”.
The distinction as to whether the written loan agreements executed in December 2015 varied or imposed additional terms to the first agreement made in July or August 2014 is not material having regard to the findings made in these reasons. Neither agreement attached security to the advance. The written agreements are entitled “Deed of Unsecured Loan Agreement”. That express fact, together with there being no term or notation contained in the agreement to suggest an intention of the husband or the intervener to provide or seek out security for the advance, grounds a safe finding that the loan remained unsecured. Similarly, neither agreement claimed interest on the advance (although this term was made express by way of the written loan agreements).
The ‘differences’ or further terms contained in the written loan agreements included:
(a)To the extent that there was any uncertainty about the identity of the lender of the first advance, the loan agreements identified the lender as being the intervener in her personal capacity. I find that the amendments to the written loan agreements from the draft loan agreements originally obtained by the intervener in August 2015 reflect the intervener’s subjective understanding that the funds had been “earmarked” for the children but ultimately remained in her control, and were not held beneficially on trust for the children in a legal sense; and
(b)The written loan agreements specified the husband was obliged to repay the first advance within 12 months of written demand being issued from the intervener, or upon the intervener’s death. As identified in paragraph 148 above, the first advance was repayable on demand by operation of the July or August 2014 agreement. By way of the written loan agreements, the first advance became repayable on 13 July 2018 being 12 months after the intervener’s demand for repayment on 13 July 2017.No interest is payable on the loan. Hence, any variation to the terms of repayment
Having regard to the findings made in these reasons, neither of these terms had any material effect on the husband’s obligations owed to the intervener.
Did the husband and the intervener evince an intention to be bound?
The arrangement between the husband and the intervener was reached in a familiar context. Justice Ward (as she was then) in Darmanin v Cowan [2010] NSWSC 1118 (“Darmanin”) said of such contexts:
206.There is a rebuttable presumption (being a presumption of fact) that arrangements or agreements made in [a social context] context are not intended to have legal force. The rationale or justification for making an assumption that there is no intention to create legal relations in such a situation is that, at the time of making the alleged promise, the parties would not have regarded their arrangements in terms of legal consequences.
207.The presumption that, due to the nature of the relationship between the parties, they did not intend to create legal relations, has been applied beyond the family context to other social and domestic arrangements.
208.In Teen Ranch Pty Ltd v Brown (1995) 87 IR 308, Handley, JA (p 310) indicated that family, social, and domestic arrangements do not normally give rise to binding contracts because the parties lack the necessary intention, referring to Balfour v Balfour [1919] 2 KB 571.

The burden of discharging the assumption that the arrangement between herself and the husband was not intended to have legal force, and was a loan arrangement, rests with the intervener (see Heydon v The Perpetual Executors Trustees and Agency Co WA Limited (1930) 45 CLR 111 at 113).
Whether the husband and intervener have evinced an intention to create legal relations is to be determined by an objective assessment of the evidence and not by reference to their subjective perceptions (see, e.g., Chaudhary v Chaudhary [2017] NSWCA 222 (“Chaudhary”) at [100]). Relevant to this assessment is “the subject matter of the agreement, the status of the parties to it, their relationship to one another, and other surrounding circumstances… and the certainty with which the parties have expressed their agreement” (see Darmanin at [213]).
The first advance was made in the context of the husband and wife facing dire financial circumstances. They had insufficient savings, limited income, and no other means of financing the completion of T Street. It was not controversial that save for the intervener’s assistance, the husband and wife would have forgone a substantial deposit paid on the property and faced other pecuniary losses had the vendor perused damages against them.
There is no evidence that the intervener would have otherwise advanced the funds she had earmarked for the children to the husband and wife at that time save to avoid their imminent financial crisis: there was no suggestion that she had offered money to the husband and wife by some gesture of good will or absent the husband’s express request that she do so. Each of the parties gave evidence as to the husband eliciting the advance from the intervener, of him approaching the intervener and of him requesting monies in the first instance.
I find that emails recorded in these reasons reveal the intervener’s manifest intention at that time to create obligations with the husband in respect of the monies to be advanced. She was clear in her direction to the husband that the funds “must come back”, a condition of the advance to which he expressly agreed. There was no vagueness to this promise. The wife was aware as to the fact and that term of this promise.
The husband and intervener’s subsequent conduct and communications may be considered in an assessment of whether any binding agreement had been reached between them (see Ashton v Pratt (No 2) [2012] NSWSC 3 at [35]). I am satisfied that their conduct after August 2014 is consistent with their understanding of the existence of a legal agreement between them.
There is no evidence to suggest that either the intervener or the husband said or did anything to indicate that they did not intend to be immediately bound by their agreement to advance monies from and repay monies to the intervener.
I am satisfied that the intervener has discharged the onus on her to displace the presumption referred to above that arrangements between family do not normally amount to binding contracts. I am satisfied that when the intervener agreed to liquidate the shares, she intended that the funds would be repaid. There is no suggestion that she has shifted from that intention.
Has the loan for the first advance been forgiven?
By way of her contentions, the wife submitted that any agreement between the intervener and the husband to advance and repatriate funds was forgiven in either 2015 or 2016. Her case as to forgiveness was not based on any express agreement by the intervener but rather was grounded in four facts from which she said that inference as to forgiveness could be drawn, being:
(a)That the intervener had not demanded the repayment of the third advance made to the husband for his benefit after separation; and
(b)That since separation and until at least early 2019, the intervener continued to advance further funds to the husband, which she estimated to have totalled in excess of $1 million; and
(c)That the intervener advanced funds to the husband’s sister (the intervener’s daughter) approximately equivalent in quantum to the funds advance to the husband, and the intervener had not made any demand for repayment from the husband’s sister; and
(d)That in 2020 the intervener amended her will to exclude any provision for the husband, and record that she had “not made provision for [the husband] as [she had] made more than adequate provision for his lifestyle and benefit during [her] lifetime as recorded in [her] books of account.” Those books of account referred to the intervener’s ledgers which recorded the first and second advance (among other advances).
The intervener was firm in her oral evidence as to the recovery of the first advance. She deposed that even if the Court held the husband to be solely liable for the first advance funds, she would still seek to enforce the debts owing against him.
The intervener has gone to great lengths to enforce the repayment of the first advance. As part of her steadfast intention to achieve repayment of the first advanced funds, she:
(a)Actively sought the recovery of the debt in 2015, prior to the commencement of these proceedings, including instructing her solicitor to draft loan agreements for execution;
(b)Requested of each of the husband and wife to sign the loan agreements; and
(c)Pressed that the husband sign an agreement for the repayment of the earmarked funds even when the wife refused to do so, and to facilitate this, provided instructions to her solicitor to draft a separate set of documents recording only the husband as the borrower; and
(d)Lodged a caveat over each of the Q & T properties to protect her interest in the properties created by way of the husband’s charge on 1 February 2019; and
(e)Sought leave to intervene in the proceedings to prosecute the recovery of the first and second advance; and
(f)Remained party to these proceedings for some three years, in circumstances where her evidence was that she was estranged from the husband for almost all of this time; and
(g)Prosecuted her claim through to a final hearing event, in which she briefed experienced solicitors and counsel, incurring significant costs; and
(h)Gave evidence that upon repayment of the funds she will repatriate them to the accounts earmarked for the children, the origins of such monies having a different character to subsequent advances she has made. This is consistent with her firm evidence that funds advanced to her daughter that she had earmarked for her daughter’s children will also need to be repaid to their source by her daughter.
Objectively, I find on balance that the evidence does not support an inference that the intervener intended to forgive, or has forgiven the first loan advance. I find that the loan remains outstanding to be repaid.
Security
At the outset of the trial the intervener’s case was that the agreement reached between she and the husband (and, she contended, the wife) in July or August 2014 was unsecured. By way of her statement of contentions, her case shifted to that the agreement between her and the husband in July or August 2014 was secured by way of “an equitable charge in favour of the intervener” arising from “the parties’ property becoming expressly and or constructively made liable and specifically appropriated to the discharge of the debt”. The husband’s case was aligned completely with the intervener and he adopted her submissions on this matter.
One foundation for security over the proceeds of sale of Q Street and T Street exists in the charge given by the husband on 1 February 2019. The charge was grounded from the terms of the loan agreement made in the last days of July or early August 2014. It provides security on the loan by way of an express term that the husband “charge in [the intervener’s] favour all of [the husband’s] interest” in Q Street & T Street. The husband said he provided the charge in response to the demands made in writing of the husband dated 13 July 2017. The charge is silent as to the wife’s interests in the Q & T properties and accordingly I reject any contention that the it provides security upon both the husband and the wife’s share of the proceeds of sale of the two properties.
It was an agreed fact at trial that the husband and wife held the proceeds of sales in the two NAB savings accounts as tenants in common in equal shares and that half of the value of the funds (being $628,939.59) are legally and beneficially the husband’s.
The wife’s case prior to the commencement of the trial (as contained within her Case Outline) was that the charge entered by the husband was a transaction to defeat her claim for property adjustment pursuant to s 79 of the Act, being an attempt to elevate an unsecured debt to a secured debt. That said, she did not, and continues not to, seek relief pursuant to s 106B of the Act by way of her Amended Response to set aside the husband’s charge. The fact and terms of the charge of the husband’s half-share in the proceeds of sale of the two properties was not otherwise the subject of challenge at trial.
It was submitted by the wife that “at no time did the intervener raise any issue” with the husband and wife increasing the value of the debt secured over the real properties, “which militates against any intention that her asserted debt be secured”. I find that submission is not reflective of the evidence, being that until late 2015 the intervener was not aware that the husband and wife had refinanced the properties, and that upon her learning of that fact she became anxious to ensure the repayment of the first advance.
I find that the husband’s half share of the proceeds of sale of the Q & T properties held in the two NAB accounts, being $628,939.59, is charged as security for the first advance. Of the balance of the first advance, $122,305.31 is not secured by way of the husband’s charge.
By the conclusion of the trial, the intervener contended a second foundation for security over the proceeds of sale of Q Street and T Street. It was her case that the first advance was either expressly or constructively the subject of an equitable charge in her favour from the T Street and Q Street proceeds of sale to secure that advance.
As recorded earlier in these reasons, the intervener’s attempts to amend her cause of action were refused as identified in Pearce & Pearce (No 2) [2022] FedCFamC1F 193. The claim as to an express or constructive equitable charge or as to an equitable lien evolved in the latter part of the trial and was not particularised. The intervener did not explain as to how an unsecured loan agreement converts to an equitable charge.
In my view, the evidence does not support a finding that there was at the relevant time an actual intention on the part of the intervener or the husband that their arrangement would create for the intervener a beneficial interest in the Q & T properties. I am not satisfied that foundation exists “on which a court of equity would deems such intention should exist” (see Wright & Wright & Adams (1997) FLC 92-761 at [17]).
I reject that contention in the circumstances.
Unconscionability
As recorded earlier in these reasons, the husband’s assurances that the first advance would be repaid upon the happening of the two specified events grounded the provision of the funds urgently required by the husband and the wife to avoid a financial calamity.
The fact and application of the first advance was highly beneficial to the husband and wife. Not only did it save them from losing the deposit already advanced on exchange of contracts for T Street, but it allowed them to complete the purchase of both T Street and later Q Street. I find that they would not have been able to do so without the assistance of the first advance from intervener. The acquisition and improvement of the two properties, including renovations, generated a gross capital gain on T Street of $608,000 and on Q Street of $1.2 million, totalling (prior to selling expenses) $1,808,000.
The husband made a promise to the intervener to repatriate the monies she advanced to him, which the wife tacitly accepted. It is not the breach of promise made by the husband to the intervener (of which the wife was aware and endorsed) but the responsibility of the husband and the wife for the detrimental reliance by the intervener which makes it unconscionable for them to resile from his promise to her to repay the first advance. I find that the husband and the wife were required to act reasonably, in good faith, and were bound by good conscience so as to let the intervener know of the first and each subsequent refinance
I find that to now permit the husband and wife to depart from the husband’s promise to repay the first advance, made with the knowledge and encouragement of the wife, would be unconscionable in all the circumstances of this case.
I am therefore satisfied and find that justice would require the unconscionability established be remedied by the repatriation of the all of the first advance funds to the intervener (see Hogan v Baseden (1997) 8BPR at 15,723, and Morris v Morris (1982) 1 NSWL 61 at 64).
In circumstances where the use and application of the first advance can be accurately traced, it is appropriate that this amount be repaid to the intervener from the funds held in the husband and wife’s joint NAB accounts.
Was the second advance provided by way of loan?
Each of the husband and the intervener contended that the second advance was:
(a)Made by way of a loan agreement as between the intervener and the husband for the purpose of “assisting the husband and wife with investing and maintaining the matrimonial properties”, with no provision for interest; and
(b)Repayable on 12 months of demand;
(c)Secured or charged upon the proceeds of sale of T Street and Q Street;
The wife contended in respect of the second advance was that there had been no loan agreement reached between the husband and the intervener, but that if an agreement was found:
(a)The advance was not secured; and that
(b)The contended loan agreement had been forgiven in 2015 or 2016.
As recorded earlier in these reasons, the wife agreed that $200,000 had been paid by the intervener into the husband’s account. She conceded that some portions of the second advance had been applied by the husband for her benefit. The use and application of the second advance will be a matter for determination at the hearing of the s 79 proceedings.
Was there a loan agreement, and if so, what were the essential terms?
The affidavit evidence of the intervener in respect of the second advance was that in around December 2015 the husband approached her and said:
24.“[The wife] and I are struggling to meet all our mortgage repayments and living expenses. Do you think you would be able to loan us some more money?”
The intervener deposed that she agreed to advance a further $200,000 on the condition that she and the husband would “sign a deed again”. Her affidavit recorded a promise by the husband to repay the second advance “as soon as we can”. The second advance funds were paid from the interveners funds into the husband’s account on 22 January 2016. The intervener and the husband did not sign a Deed of Agreement for Unsecured Loan until 3 March 2016, being six weeks later. It was the intervener’s contention that the purpose of the second advance was for the husband and wife “to use to invest and maintain the matrimonial properties after the wife stopped contributing to joint liabilities”.
It was the wife’s case that the funds advanced were a gift. She grounded that contention that an equal gift was made to the husband’s sister (being the intervener’s daughter) at the same time of the second advance. She submitted that there was “no evidence of any conversation as to the terms of the asserted agreement or loan” in respect of the second advance. That submission does not account for the intervener’s affidavit evidence recorded above. There is limited documentary or other corroborative evidence as to the terms of the purported loan, save for the written agreement entered into on 3 March 2016 and the husband’s evidence in summary form that “[in] January 2016, [the intervener] advanced $200,000 to [him] by way of a loan”. The husband’s affidavit is otherwise silent as to the second advance.
Upon the intervener advancing $200,000 to the husband on 22 January 2016, she recorded the withdrawal in her handwritten ledger as a “loan to [the husband]”. An identical entry was recorded in the ledger book, being for $200,000 recorded as a “loan to Ms LL”, being the intervener’s daughter. Again, I find that the intervener’s keeping of a ledger is subjective confirmation of the fact of a loan arrangement between she and the husband.
It was contended by each of the husband and the intervener, and I find, that the agreement concluded between them as to the second advance was partly express and partly implied. The essential terms are found in writing in the Deed of Agreement for Unsecured Loan dated 3 March 2016 and by way of the conversation between the intervener and the husband evidenced in paragraph 24 of the intervener’s affidavit recorded above.
It was not controversial that the wife was not a party to the terms of the second advance. Notwithstanding that concession, it was each of the intervener’s and the husband’s case that the husband entered into the agreement as to the second advance “on his and the wife’s behalf, to use to invest and maintain the matrimonial properties after the wife stopped contributing to joint liabilities.”
I reject that the husband entered into the agreement on behalf of both he and the wife. That contention is inconsistent with the concession that the wife was not party to the agreement and is not supported by the evidence. The husband gave no evidence of speaking to the wife about the second advance prior to it being made or communicating to her the terms of the advance. I find that his evidence recorded at paragraph 187 of these reasons, being that he asked the intervener to loan funds to “us” being he and the wife is not sufficient to establish the wife knew of or consented to being bound by the agreement. The wife was not asked to sign the Deed of Agreement for Unsecured Loan dated 3 March 2016. She was not named as a borrower on the document.
I find that the essential terms of the agreement made between the intervener and the husband, being partly in writing and partly oral were:
(a)It was made on or about January 2016 and reduced to writing on 3 March 2016; and
(b)Between the intervener and the husband; and providing that
(c)The intervener would advance $200,000 to the husband; and
(d)The purpose of the loan was to “invest and maintain the matrimonial properties”, being the two Q Street properties and S Street; and
(e)That the advance would not carry any provision for interest; and
(f)That there was no part of the agreement that included security for the advance.
I find that the fact and terms of the second advance were not vague or uncertain. I find that the fact of the unsecured liability when incurred was not unreasonable having regard to the evidence of both the husband and the wife as to the application of the funds produced from the second advance, as recorded in paragraph 68 of these reasons. Insofar as is necessary, should the contention be maintained by the wife, I find there is insufficient objective evidence to support a conclusion that the second advance was a gift and not a loan. Viewed against the prism of the executed Deed of Agreement for Unsecured Loan, I reject any contention of the wife disputing the validity of the second advance The wife by way of her statement of contentions submitted that “the husband and the intervener entered into the Deed of Agreement… to attempt to protect against a potential claim of the Wife for property altercation”. Notwithstanding that submission:
(a)The gravamen of the wife’s case as to the second advance was that any agreement was not enforceable or would not be repaid by the husband subsequent to any s 79 adjustment; and
(b)The cross-examination of each of the husband and the intervener by counsel for the wife was not directed to the fact of the contended agreement in respect of the second advance, but to its enforceability; and
(c)She did not seek relief pursuant to s 106B of the Act to set aside the purported agreement.

I find that husband’s charge on his share of the proceeds of sale of the Q & T properties insofar as it relates to the second advance has been exhausted in the context of this discrete determination as identified earlier in these reasons.
The rights of the intervener to recover the second advance as a creditor of the husband will form part of the substantive s 79 determination. The Court will determine in that hearing any priority as between the repayment of the loan to the intervener and the wife’s s 79 entitlements. It is the husband’s case in that future trial that his adjusted s 79 entitlement will be applied in satisfaction of the second advance in favour of the intervener.
CONCLUSION
For all of the above reasons, I make orders as set out in the forefront of this judgment.

I certify that the preceding one hundred and ninety-seven (197) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Campton.
Associate:
Dated: 9 June 2022

File number(s):	SYC 2654 of 2017
Judgment of:	CAMPTON J
Date of judgment:	10 June 2022
Catchwords:	FAMILY LAW – PROPERTY – Discrete issues – Where the intervener, being the husband’s mother, asserts she advanced funds to the husband and wife by way of loan – Where determination of this discrete issue is necessary to ascertain the pool available for distribution between the husband and wife – Where the wife contends the advanced sums were a gift to the husband and wife’s children or alternatively were held by the intervener on trust for the husband and wife’s children – Where the intervener advanced funds to the husband and wife on the husband’s assurance that the funds would be repaid – Finding that funds advanced by way of loan – Where the agreement reached between the husband and the intervener did not provide for security – Where it would be unconscionable to permit the husband and wife to depart from that promise and retain the benefit of the intervener’s advance.
Legislation:	Evidence Act 1995 (Cth) s 136 Family Law Act 1975 (Cth) ss 79, 106B Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 10.10
Cases cited:	Ashton v Pratt (No 2) [2012] NSWSC 3 Chaudhary v Chaudhary [2017] NSWCA 222 Darmanin v Cowan [2010] NSWSC 1118 Gray v O’Donnell [2009] NSWSC 259 Heydon v The Perpetual Executors Trustees and Agency Co WA Limited (1930) 45 CLR 111; [1930] HCA 26 Pearce & Pearce [2022] FedCFamC1F 170, Pearce & Pearce (No 2) [2022] FedCFamC1F 193 Picwoods Pty Ltd v Panagopoulus [2004] NSWSC 978
Division:	Division 1 First Instance
Number of paragraphs:	197
Date of hearing:	7 – 9; 22 March 2022
Place:	Sydney
Counsel for the Applicant:	Mr Scarlett
Solicitor for the Applicant:	Hudson Law Pty Ltd
Counsel for the Respondent:	Mr Roberts
Solicitor for the Respondent:	Barkus Doolan
Counsel for the Intervener:	Mr Stapleton
Solicitor for the Intervener:	Watts McCray

SYC 2654 of 2017
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN:	MR PEARCE Applicant
AND:	MS PEARCE Respondent
MS R PEARCE Intervener

ORDER MADE BY:	CAMPTON J
DATE OF ORDER:	10 JUNE 2022