Stone and Elliott and Anor

This case concerned a dispute between the Applicant de facto Husband and the Second Respondent, who was the de facto Wife's mother, regarding the priority of debts from the net proceeds of sale of a property. The Second Respondent claimed priority for a loan she had provided, which was instrumental in the purchase of the property. The de facto Husband contested this claim, asserting his own unsecured debts.

The primary legal issue before the court was to determine the priority of the Second Respondent's claim for repayment of a loan against other unsecured debts, including those claimed by the de facto Husband. This involved considering whether the Second Respondent had established a legally recognised priority, particularly in light of the absence of a formal loan agreement and the nature of the de facto Husband's and Wife's acknowledgments of the debt.

Judge Neville applied the principle of *qui prior est tempore potior est iure* (he who is first in time takes precedence), finding that the de facto Husband and Wife's acknowledgment of the debt to the Second Respondent, evidenced by a history of repayments and the crucial role of the loan in acquiring the property, created an estoppel. This established an oral contract and an earlier equitable interest in favour of the Second Respondent, giving her loan priority over the de facto Husband's unsecured debts. The court also considered principles relating to the treatment of contingent tax liabilities and the rights of third-party creditors in family law proceedings, noting that a creditor does not gain enhanced rights through intervention in a s 79 application.

The court ordered that the sum of $14,000 be paid to the Second Respondent in priority to all other unsecured debts out of the net proceeds of sale of the property, within 45 days of the order. The Husband was also ordered to pay the Second Respondent's costs of the Application in a Case.