District Court New South Wales Medium Neutral Citation: Mereniuk v Wilks [2024] NSWDC 376 Hearing dates: 29-30 April, 14 June and 27 August 2024 Date of orders: 28 August 2024 Decision date: 28 August 2024 Jurisdiction: Civil Before: Gibson DCJ Decision: (1) Judgment for the plaintiffs. (2) The parties have liberty to bring in Short Minutes of Order reflecting the mathematically agreed total for each of the three sums claimed. (3) Interest and Costs reserved, with liberty to apply. (4) Exhibits retained until further order. Catchwords: LOAN – Defendant and his wife solicit the plaintiffs (her parents) for funds for a series of three family homes – repayments made over a lengthy period – whether a loan or a gift - LIMITATION OF ACTIONS - date of accrual of cause of action based on a debt - existence of confirmation of debt and operation of s 54 of Limitation Act - proceedings commenced within limitation period Legislation Cited: Limitation Act 1969 (NSW), ss 14, 54, 63 Uniform Civil Procedure Rules 2005 (NSW), r 14.2 Cases Cited: AB (personal representative of the late GH) v KL [2019] EWHC 611 (QB) Agricultural and Rural Finance Pty Ltd v Gardner (2008) 238 CLR 570; [2008] HCA 57 Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 [2022] HCA 38 Ashton v Pratt (No 2) [2012] NSWSC 3 Balfour v Balfour [1919] 2 KB 571 Bank of China Limited v CGS (Group) Pty Ltd [2009] NSWSC 397 Berghan v Berghan [2017] QCA 236 Chalik v Chalik [2024] NSWSC 117 Chant v Curcuruto [2021] NSWSC 751 Chaudhary v Chaudhary [2017] NSWCA 222 Chidiac v Maatouk [2010] NSWSC 386 Commissioner of Taxation (Cth) v Radilo Enterprises Pty Ltd (1997) 72 FCR 300 Ermogenous v Greek Orthodox Community of South Australia Inc (2002) 209 CLR 95 Hipworth v Mahar (1952) 87 CLR 335; [1952] ALR 633 In re Compania de Electricidad de la Provincia de Buenos Aires Ltd [1980] 1 Ch 146 Nadilo v Souris [2019] NSWSC 108 Ogilvie v Adams [1981] VR 1041 Plunkett v Bull (1915) 19 CLR 544; [1915] HCA 14 R v Logue (Court of Criminal Appeal (NSW), 31 March 1994, Gleeson CJ, McInerney and Mathews JJ, unrep) Reeves v Reeves [2024] NSWSC 134 Sion v NSW Trustee and Guardian [2013] NSWCA 337 Svenson v Doherty [2014] NSWDC 106 Tadrous v Tadrous [2010] NSWSC 1388 Tadrous v Tadrous [2012] NSWCA 16 Teen Ranch Pty Ltd v Brown (1995) 87 IR 308 The Stage Club Ltd v Millers Hotels Pty Ltd (1981) 150 CLR 535; 38 ALR 253 Vadisanis & Vadisanis [2015] FamCA 161 Woodhouse v Woodhouse [2022] NSWCA 240 Texts Cited: G Dal Pont, Law of Limitations (2nd ed, 2021, LexisNexis) at [17.26] Productivity Commission, Wealth Transfers and their Economic Effects, (2021) Category: Principal judgment Parties: Andrew Orest Mereniuk (Plaintiff) Robyn Judith Mereniuk (Plaintiff) Matthew Leonard Wilks (Defendant) Representation: Counsel: Mr R Quickenden (Plaintiffs) Mr D K Smith (Defendant) Solicitors: Peninsula Law Solicitors (Plaintiffs) Sage Solicitors (Defendant) File Number(s): 2022/00327953 Publication restriction: Nil Judgment Introduction 1. In Chaudhary v Chaudhary [2017] NSWCA 222 ("Chaudhary") at [7], Sackville AJA noted the difficulties of interpretation of informal intra-familial advancement of funds, particularly where these were to be used for the purchase of a home for younger members of the family who could not otherwise afford to do so: "[7] There has been much discussion in recent times about the unaffordability of housing, particularly for young people, in many parts of Australia. One consequence of declining housing affordability is that young adults very often need and sometimes receive assistance from parents (or other benefactors) to enter the housing market." 1. So widespread is the practice identified by Sackville AJA of calling upon family members in general, and parents in particular, for home financing that, according to the Productivity Commission, the "Bank of Mum and Dad" has become one of the main finance sources for real estate. The Productivity Commission's report "Wealth Transfers and their Economic Effects" (Commonwealth of Australia 2021) sets out tables demonstrating that, if "Mum and Dad" were an actual bank, it would be somewhere between the fifth and ninth biggest mortgage lender in Australia (there are similar statistics in the United Kingdom: AB (personal representative of the late GH) v KL [2019] EWHC 611 (QB) at [79] – [81]). 2. The principal difficulty lies in determining whether such assistance in the form of a loan or a gift. Unlike "real" bank loans where meticulous records are kept, these transactions are generally not recorded in writing or otherwise the subject of objective contemporaneous evidence, may involve little or no loan repayment and may be the subject of a series of loans and/or gifts on different terms over a period of years. 3. Additionally, the degree to which traditional legal concepts of the nature of financial transactions between parent and child may have changed as the "Bank of Mum and Dad" has grown in strength is problematic. The nature of family, social and domestic relationships was long considered unlikely to give rise to binding contracts, because the parties lacked the necessary intention, although the presumption was rebuttable (Ashton v Pratt (No 2) [2012] NSWSC 3 at [29] – [36] per Brereton J, referring to Teen Ranch Pty Ltd v Brown (1995) 87 IR 308 at 310 and Balfour v Balfour [1919] 2 KB 571). 4. While these traditional views may arguably be changing, that only makes the task of dealing with the informality of such agreements even more difficult (Chaudhary at [8]), as the more informal the arrangement, the more likely it is that analysis of the facts will result in a conclusion that the parties did not intend to enter into legally binding relations (Sion v NSW Trustee and Guardian [2013] NSWCA 337 at [39]). The result is that a close and objective analysis of the facts is essential and factors such as evidence of repayment, admissions as to the nature of payments and the existence of contemporaneous documentation are critical, although the very nature of the family relationship often means that such documentation is unsatisfactory or even non-existent. 5. The facts in this case illustrate many of these difficulties. The plaintiffs' claim 1. The plaintiffs, who are husband and wife, advanced moneys (principally three large sums) between April 2006 and August 2017 to the defendant and to their daughter Louise, his wife, to enable them to purchase and renovate a series of family homes for themselves and their three children. The defendant denied knowledge of any of the transactions and alternatively claimed these were all gifts to Louise, who is now deceased. 2. The evidence in support of the claim is fairly typical of the evidence seen in most claims of this nature. The plaintiffs at all relevant times kept a spreadsheet setting out each sum advanced in detail, to which they referred when issues of quantum came up. When there was a failure to keep up the repayments, they sent correspondence speaking in the clearest terms of the first of these transactions being a loan. In addition, interest was paid regularly over a period of a number of years in relation to the first and second of the advances. 3. The difficulty in this case is that, at a time when payment of the second advance from the proceeds of sale of the second home (and there was still a small portion of the first advance outstanding), Louise was diagnosed with Stage 3 bowel cancer. The plaintiffs say that there was no question of their seeking loan repayments after the date of this diagnosis, which had resulted in her ceasing to work, undergoing extensive medical treatment and then dying in early 2019. Their position is that the parties agreed that the money would be repaid when the third and final property purchased by the defendant and Louise was sold. 4. As noted above, the defendant disputed that he was a party to any loan, or that he gave authority to Louise to make him a party to any such loan. He claimed that there was never any intention to enter into legal relations and this was a pure family arrangement, although at the same time (and inconsistently) asserting that he was never consulted or included about any of these transactions. He initially denied knowing that there were regular repayments made and says that if the sums advanced were a loan, they were a loan to Louise only. In the alternative, he relied upon the provisions of the Limitation Act 1969 (NSW) in relation to two of the claimed loans and disputes the calculation of the repayable quantum. 5. The defendant became the only surviving borrower on 8 January 2019, when Louise died intestate, following which her joint tenancy in their final home at Tumbi Umbi passed to him on survivorship. He sold the property on 19 December 2019 and kept the proceeds, save for the sum of $154,000 which has been retained in a solicitor's trust account pending the outcome of these proceedings. There is no cross-claim against Louise's estate (if there is one). 6. The plaintiffs commenced proceedings on 2 November 2022, which they say is well within the limitation period under s 14 of the Limitation Act, which they assert commenced to run on 19 December 2019, the date on which the property the subject of the final financial transaction was sold, Louise having died on 8 January 2019. 7. The defendant argues that the first two of the three loan transactions should be considered individually and that the limitation period commenced to run from the date of the final interest payment (first advance) or the date of the loan (the second advance), with the result that the first two of these claims are time-barred. 8. If it were to be accepted that the date for the commencement of the proceedings occurred outside the limitation period, the plaintiffs rely upon s 54 of the Limitation Act which creates an exception where the recipient confirms the cause of action by actions such as making "a payment in respect of the right or title of the person to whom the payment is made" or otherwise "acknowledges" the cause of action (s 54(2)). The pleadings 1. There are three loans pleaded in the amended statement of claim ("statement of claim") filed on 10 April 2024. These are as follows: 1. An "offset" loan agreement (paragraphs 5 to 10 of the amended statement of claim) arising from payment on 6 May 2008 of the sum of $169,000. There were substantial repayments to reduce this sum to $28,254. 2. The "Kellyville" loan (paragraphs 11 to 19 of the amended statement of claim) where the plaintiffs advanced sums to the defendant and to Louise to purchase the Kellyville property where there were, once again, substantial repayments resulting in the amount outstanding being reduced to $40,000 (or alternatively $27,015, if a deduction for a payment of $12,985 is made, which the plaintiffs now agree to be the case). 3. The "Tumbi Umbi" loan (paragraphs 20 to 25 of the amended statement of claim), some advanced for the purchase of a third home after Louise was diagnosed. The plaintiffs' advanced money in three tranches totalling $50,000 together with further added amounts totalling $80,000. The defendant argues that $30,000 of this sum was in fact paid by Louise and is not an advance from her parents. 1. In the amended defence dated 29 April 2024 (the first day of the hearing), the defendant pleaded as follows: 1. He denied being a party to any loan or to giving any authority to Louise to make him a party to any loan, and denies receiving any benefit for the advances. 2. In paragraphs 5(d), 11(d) and 20(c) he alleges that the advances were gifts, but not gifts to him. 3. He disputes that there was any enforceable loan agreement as there was no intention to enter into legal relations. As noted above, he now acknowledges that the first advance was a loan. 4. Alternatively, he relies upon a defence under s 14 of the Limitation Act in relation to the first two transactions. 5. Quantum is in dispute. 1. The defendant did make some admissions, although not in the defence. In his evidence, he admitted knowing about some repayments of the sum of $169,000 and the fact that $169,000 was advanced. He was similarly aware of $76,000 being advanced in relation to the Kellyville property and some of the repayments of this sum. He knew that $80,000 had been advanced for the Tumbi Umbi property and said that he recalled a conversation where the plaintiffs gave this to Louise as a gift (affidavit, paragraph 57). His evidence was, however, to the effect that he played no part whatsoever in any of the loans and was not event present when these were discussed, and played no part whatsoever in banking or financial matters, to the extent of never consulting any bank statements. 2. After he made the admission (in submissions, not in his evidence) that the first transaction was a loan, he did not seek to reopen his case to explain why it was, if the first transaction was a loan that was not only repayable but substantially repaid, he thought the position had changed in relation to the second and third transactions, which he still argued were gifts. 3. During submissions, the defendant abandoned an argument that the plaintiffs cannot counter the limitation defence because they failed to amend the statement of claim setting out reliance on s 54 of the Limitation Act. Mr Quickenden submitted that s 54 of the Limitation Act did not need to be pleaded, as it is a response to the defence and does not require to be pleaded in the statement of claim. This was accepted by Mr Smith as a correct statement of the law at the hearing. In addition, it was conceded that no defence of waiver had been pleaded and no claim of waiver was made. The approach to fact finding 1. As noted above, care that must be taken in approaching the factual circumstances in cases such as these, and I have been guided by the helpful summary of the authorities contained in Ward J's judgment in Chidiac v Maatouk [2010] NSWSC 386. Mr Smith adds that I must take into account the warning of Leeming JA in Nadilo v Souris [2019] NSWSC 108 at [79] that the court will "not readily in family arrangements, particularly in informal family arrangements" find that the requisite intention to enter into legal relations should be drawn. I accept this as a binding principle of interpretation, but it may be that, in the future, courts may consider that the phenomenon of the "Bank of Mum and Dad" may be interpreted differently. Nevertheless, I must follow existing precedent. Preliminary observations concerning the evidence 1. One of the principal issues in claims of this nature is the role played by contemporaneous documentation in determining the intentions of the parties: Chidiac v Maatouk at [104]-[106] (but note [211]); Chalik v Chalik [2024] NSWSC 117 at [43]. The keeping of a register or other record of sums advanced may be considered significant: Berghan v Berghan [2017] QCA 236 at [25]. 2. There three main areas of documentation tendered by the plaintiffs were as follows: 1. There is a pattern of repayments over more than a decade, demonstrated by banking records (also tendered), where many such repayments have been acknowledged by the defendant (repayments were not sought for the period following which Louise was diagnosed with cancer). Mr Smith could not draw to my attention any judgment where there had been repayments of this length and kind where the court had nevertheless held that there was no intention to enter into legal relations. 2. These advances and repayments were recorded in writing on a spreadsheet by the first plaintiff which he first commenced keeping in 2006, before the first loans were made. The importance of the keeping of such financial records has been noted in Tadrous v Tadrous [2012] NSWCA 16 (see also Berghan v Berghan). While the accuracy of this document is challenged, there is no contradictory documentary evidence, such as bank accounts, or concessions in cross examination, in relation to the vast bulk of these. That is not to say that there were no mistakes; once again, the "Bank of Mum and Dad" is prone to errors of the kind that no bank would make. Errors amounting to approximately $6000 were attended to during the trial and (for reasons explained in more detail below) I am satisfied that Mrs Mereniuk put the wrong total owing for the third advance in a statutory declaration because she had left the conduct of these transactions to her husband; I doubt that any bank employee would proffer such an explanation, which is yet another difference between formal borrowing and family lending. 3. There is a contemporaneous document referring to the sum advanced as being a loan, namely the plaintiffs' email to their daughter and to the defendant on 28 February 2011 concerning the "loan" that had been made to them and their failure to keep up with repayments. This document could not be clearer in terms of setting out the terms of the loan and the dissatisfaction of the plaintiffs in the failure to make repayments. 1. As to the oral evidence, it is necessary to treat the uncorroborated evidence of distant conversations with a natural caution, especially in the context of family disputation: Tadrous v Tadrous [2010] NSWSC 1388 at [12]; Chidiac v Maatouk at [102]. 2. Although this is not a claim involving testamentary disposition, I note generally the desirability of exercising caution concerning evidence of statements said to have been made by Louise, particularly where these are disputed, and I have treated them with caution; where possible, I have looked for some corroboration: (Chalik v Chalik, citing Plunkett v Bull (1915) 19 CLR 544; [1915] HCA 14 and Chant v Curcuruto [2021] NSWSC 751 at [263]–[264]). The evidence 1. Mr and Mrs Mereniuk gave evidence in the form of affidavits and were cross-examined, as was the defendant. There were three properties the subject of requests to the plaintiffs from the defendant and Louise for financial assistance: 1. A property at Baulkham Hills, which the defendant and Louise wished to renovate as they had a growing family. Monies were advanced ("the offset loan") and the defendant acknowledges that this sum was a loan. 2. A property at Kellyville, bought because the previous home was too small for their family. 3. After the defendant and Louise and their children decided to live on the Central Coast and sold their Kellyville property, Louise was diagnosed with Stage 3 cancer. The defendant and Louise went ahead and bought a property at Tumbi Umbi with the benefit of a further advancement from the plaintiffs. Payments made while the parties were residing in the Baulkham Hills property 1. The defendant admits, in paragraph 5(a) of the defence, that "the plaintiffs paid money into the joint mortgage/offset account in relation to the Baulkham Hills property". It was not in issue that the sum of $169,000 was paid on 6 May 2008 into two mortgage offset accounts, the offset loan account and the offset monies account. 2. It was also not in dispute that at the time this money was advanced, the defendant and his wife were struggling financially (defendant's statement at paragraph 41). They were unable to buy basic household items and both she and the defendant were living off credit cards, according to the second plaintiff's evidence. At the same time, work needed to be done on the home in which the defendant and his family were living. 3. The purpose of the sum advanced in May 2008 was to reduce the mortgage payments as well as to provide the defendant and Louise with cash to enable them to purchase items they were currently unable to purchase. 4. Although the defendant now concedes that these sums were loans, it is necessary to set out the competing versions of the evidence as this evidence not only demonstrates the similarity of the two subsequent sums advanced but also demonstrates the unreliability of the defendant's evidence. How discussions of the first advance began 1. The evidence of Mr Mereniuk at CB 72 to 73 in respect to how the credit/loan/repayment agreement began is as follows: "20. In early April 2006 I was at the Baulkham Hills property with my wife, Louise, Matthew and their daughter Sarah. To the best of my recollection we were upstairs in the living room area: Matthew said: We want to remodel this area. It will require converting the upstairs bathroom and toilet into two bathrooms with the old bathroom becoming an ensuite. I said: You will need to remove a wall and block the door of the old bathroom and perhaps cut a new doorway into the bathroom where you can add a toilet. Matthew said: We are both working fulltime. It will have to be over a period. I said: I can help. Robyn and I are retired. Matthew said: We don't have the money to purchase all the material required for the remodel. I said: We can purchase the material and you and Louise can pay us back when you can afford it. Matthew said: Okay. That would be good. Louise said: Thank you. 21. I commenced work on the remodel on or about 25 April 2006. I recorded the purchases and the repayments made on the remodel. I created and maintained a spreadsheet (the spreadsheet). A copy of the spreadsheet is annexed hereto and marked with the letter "A". 22. I maintained the spreadsheet for the period 25 April 2006 to 1 January 2019 recording not only purchases but also monies loaned to Matthew and Louise during that period. In the spreadsheet I recorded purchases or money transferred in black and repayments in red. [There is no paragraph 23]. 24. Repayments made by Matthew and Louise were made to either our Teachers Credit Union account or the NAB account. 25. Between 25 April 2006 and 1 November 2006 I recorded in the spreadsheet the purchases made on behalf of Matthew and Louise and the repayments made by Matthew and Louise for the remodel under the heading in the spreadsheet "Renovation of bathrooms done by Louise's father". 26. During the period 25 April 2006 to 1 November 2006 Louise and Matthew's surname was still "Butt" and I recorded this as such in the spreadsheet. Between 26 April 2006 and 1 November 2006 we also recorded some minor items that Louise asked us to pay and said she and Matthew would pay us back such as dog food and some clothes for Louise. In the main this was for convenience purposes at any particular time. These were generally recorded in the spreadsheet." 1. It is clear from this explanation that there are sums in the spreadsheet which are not the subject of any claim. What, if anything, does the failure to claim for these items as part of the loan mean? 2. Mr Smith sought an explanation from Mr Mereniuk, who stated, in cross-examination (Tcpt 43 and 64), that these "minor items" included in the loans were not the subject of a claim in these proceedings. Mr Quickenden submits that the circumstances in which the plaintiffs have elected not to sue for these items are to the plaintiffs' credit as "taking up the court's time on renovations or minor loans was not in anyone's interest" (submissions, 1 July 2024, paragraph 5). 3. Both plaintiffs stated that the defendant was present at each of the three loan conversations. The correctness of this is self-evident, particularly in relation to the first transaction, as the defendant's contribution included a discussion of the kind of renovations necessary (which Mr Mereniuk turned into a model for the renovation work, as is set out in the extract from his affidavit) as well as working alongside the defendant when the renovations were carried out. 4. The spreadsheet and the evidence of Mr and Mrs Mereniuk confirm that although there were three specific loans relating to home renovation (the first transaction), a home purchase (the second transaction) and the purchase of the Tumbi Umbi property after Louise became ill, there was a continuous advancement of money for a variety of reasons which was noted up in the spreadsheet. Repayments are made 1. The principal contact between the plaintiffs and the defendant was between Mr Mereniuk and Louise. Both Louise and the defendant would have known from these ongoing discussions that Mr Mereniuk was keeping a spreadsheet on behalf of himself and his wife and that repayment was expected. An example occurred in November 2006, when the defendant and Louise were unable to pay their credit cards, and Louise asked her parents for $12,000 (CB 77). Mr Mereniuk told them that they had already borrowed $4,016 and that "you will both need to start making regular repayments" (CB 77). Louise replied that they would start paying $620 a month from next month, a promise made on behalf of both herself and the defendant. The entry in the spreadsheet does say "sent Louise money" rather than "sent Louise and Matt money" but, as the defendant now conceded these sums were loans to both parties, nothing significant should be read into this. I also note that a promise to pay amounts to consideration (Berghan v Berghan at [41]) whether there is payment or not. 2. Another example in Mr Mereniuk's affidavit, corroborated by the spreadsheet Schedule 1, included the following: "On 2 October 2008, I received an email from Louise, a copy of which is annexed hereto and marked with the letter "B". On receiving the email from Louise I contacted Louise by telephone and advised her that the balance was not $156,700 but it was $156,420." (CB 77 para 48) 1. Louise (and thus the defendant) would have been aware that these figures came from the spreadsheet that her father was keeping in relation to the sums advanced. The defendant's evidence 1. The defendant does not now dispute that repayments were made as set out in the spreadsheet at CB 84 ff. These were for varying amounts between 6 May 2008 and 24 October 2008 (CB 86) but for the period October 2008 up until 27 February 2011, a fixed monthly payment of $1720 was made regularly (CB 86 – 97). 2. However, his evidence was that he "wasn't involved" and thus knew absolutely nothing about there being a loan or repayments: "Q. Do you remember the question I just asked you? A. Are you saying that is - you asked me if it was a loan or what do you think it was? Q. Yes, what did you think it was? A. I didn't know what it was at the time. Q. But you knew that $169,000 had been paid into your joint account, reducing your mortgage to the NAB Bank, you knew that, didn't you? A. Yes. Q. You were aware, weren't you, that between 2008 and 2011, that payments were being paid from your joint account to the Mereniuks repaying that money, weren't you? A. I wasn't involved in the payments, no. Q. That wasn't the question. You were aware— A. I was aware-- Q. No, I haven't finished, I apologise. You were aware those repayments were being made to the Mereniuks in reduction of the $169,000 between 2008 and 2011, weren't you? A. I was aware of some payments. Q. You were aware between those dates, that some of that money, some of the $169,000, to the extent of $35,000 was taken and used for your and Louise's purposes, weren't you? A. When I received that letter. Q. That's the letter of 28 February 2011? A. Yes. Q. You had asked Louise in 2008 to repay that $169,000 hadn't you? A. Yes, because I didn't want a bar of it. Q. You would have realised between 2008 and 2011 that the whole amount hadn't been repaid, wouldn't you? A. I was made aware of that later on, yes. Q. But as you've said, you were aware that some repayments were being made? A. Some repayments were being made. Q. But by February 2011 when you received this letter, you realised that there was still moneys owed, hadn't you? A. Sorry, could you repeat that? Q. Yes. When you got this letter on 28 February 2011 you realised there were still moneys owed in respect of that advance of $169,000 to the Mereniuks? A. Yes. Q. And you realised that the moneys that were being repaid were from your joint account with Louise? A. Yes." (Tcpt, 30 April 2024, pp144 – 145) 1. Alternatively, he simply claimed to be unable to remember: "Q. The sale of Baulkham Hills and the purchase of Kellyville were going to be on the same day, correct? A. Yes. Q. Let me suggest to you that that was when the discussion occurred about the $76,000 that the Mereniuks would advance to enable that? A. At what time do you say this discussion took place? Q. At about the time of the purchase of Kellyville, which was about February 2012? A. It's a long time ago, so I couldn't tell you when a discussion took place. Q. Let me suggest to you in your affidavit you've said that there was no discussion about the Mereniuks advancing $76,000 to help you and Louise out in respect of the sale of Baulkham Hills and the purchase of Kellyville? A. There was no discussion that I was at. Q. Did Louise ever say to you, "Mum and dad are advancing $76,000 to help us out with Kellyville and Baulkham Hills", she ever say that? A. I do remember something about $76,000, but, sir, as I said, it's a long time ago. Q. Do you remember the discussion being about the acquisition of Kellyville? A. If there was a discussion, I don't know. Q. You can't remember, is that right? A. I can't remember, no. It's a long time ago." (Tcpt, 30 April 2024, p 148) 1. Mr Quickenden pointed out to the defendant that there was a difference between positively asserting that an event had not occurred and saying he could not remember: "Q. If you said in your affidavit, which was sworn on 24 January this year, that there was no discussion about the $76,000, that's not accurate, is it? A. Well there was no discussion at the time about $76,000 that I was involved in. That's what I was stating there. Q. I just thought you said you couldn't remember in evidence? A. I said regarding the timing of this conversation." (Tcpt, 30 April 2024, p 148) 1. This was a disingenuous answer; the defendant had not restricted his failure to remember to the "timing" of such a conversation. He continued to alternatively deny that there was a loan while saying that he could not remember: "Q. I want to put to you that you were fully aware in about April 2012 that $76,000 was being loaned by the Mereniuks to you and Louise to help you with the purchase of Kellyville? A. I disagree. Q. I want to put to you that you were fully aware that $36,000 of the repayment of the $76,000 was made shortly after the settlement of Baulkham Hills and Kellyville? A. Sorry, could you repeat that, sorry? Q. Yes. In about April 2012 you were fully aware that after the settlement of Baulkham Hills and Kellyville $36,000 was repaid from the $76,000 that had been advanced by the Mereniuks, weren't you? A. I can't remember that, no. But if you're saying so-- Q. You say you can't remember, is that right? A. I can't remember what - if the - I have no knowledge of that. I don't remember if that did occur or not." (Tcpt, 30 April 2024, pp 148 – 149) 1. The defendant claimed in his evidence to have been unaware not only of any agreement to provide this substantial amount of financial assistance, but also of its banking into his bank account (although acknowledging he did find out about it some weeks later: CB 129), but also of there being repayment. He said that this was because, despite using his bank account to run his business, he never accessed, or used, or even looked at, documents of any kind in relation to his bank account. He told the court that each time he wanted to withdraw money, instead of checking his balance at the ATM, he would telephone Louise to ask if there was enough money in the account to purchase a particular item: "Q. How did you know that there was enough money in the bank for you to be able to pay for something? A. I used to ring my wife. Q. You rang her up every time you were going to buy something— A. No, I'd say I'd be-- Q. --to see what money was in the account? A. No, no, your Honour, I didn't. I would say, "Is there money available to do this? I need to get this. Q. And you never looked at your own bank records? A. I would look at a receipt after I pull money out of the bank. No, I did not go through bank statements and that, your Honour. Q. If you pulled money out of the bank and you got a receipt, it would just give you a balance, wouldn't it? A. That's what I'm saying." (Tcpt, 30 April 2024, pp 139 – 140) 1. The concession that he would look at the receipt to ascertain the balance was all he would admit to in relation to checking bank accounts. This meant, he argues, that he had no knowledge of any repayments being made from the day on which the advance was made in May 2008 up until February 2011. 2. It was because he kept these records that Mr Mereniuk had an accurate statement of how much was owing as at 2 May 2011 (namely $34,480: CB 78) and was accurately able to observe that between 2 May 2011 and 9 April 2012, no further payments were made (CB 78). 3. By February 2011, the defendant can have been in no doubt as to the sums involved and as to the plaintiffs' opinion that the monies advanced were in the form of a loan. He knew this because on 28 February 2011, the plaintiffs sent him a copy of the following email to their daughter Louise. The email to Louise was as follows: "Hello Louise, Attached is a letter that Mum and I have written. Please print it off and discuss it with Matthew. Feel free to ring us if you need to discuss the situation. Regards, Dad PS. I will also email the letter to Matthew to ensure that he gets the message as I don't see why you should shoulder all the responsibility." 1. The document that was sent to Matthew's email address that same day was sent under the cover of the following: "Hello Matthew, Attached is a letter that I and Robyn have composed. I have sent it to Louise but knowing her, she likes to cover up for you, and you might not have been able to read what we had to say. Regards, Andrew PS. You are welcome to ring and discuss anything and everything that we mentioned in the letter." 1. The enclosed document was as follows: "Dear Louise and Matthew, Mum told me that there ls a substantial] shortfall in the amount of money that we lent you and when I learnt what it was I was very much surprised and disappointed. The $35000 over three years means that you both are spending around $12000 a year more than you two earn. Or, you have thrown caution to the wind, and are spending it like it was your own. The reason that we lent you the money in the first place was to help you both out and it appears that we have certainly accomplished that in that you both have helped yourselves to it. The latter was not our intention nor desire. We could understand if you two had balanced the amount against the redraw amount but that has not been the case. You both have gone even further than that by $15000 according to your calculations. It will be interesting to see whether even that is correct. Have you two stopped budgeting? Is Matthew spending what he earns on himself? Smokes, drink, lunches etc.? What were you two thinking, that you were going to repay it, and if you were, in what time frame? How were you going to repay it, with the redraw account? Well that is already overdrawn. Selling the truck? We don't want you to sell the truck but if you did then you might be lucky to get around $25000 for it. Earlier I mentioned that you overspent by $12000 a year which means roughly $250 a week, You two need to sit down and nut out what can be eliminated and what can be reduced otherwise you two will lose your house ln the long run or you will need to downsize. We are not here to prop you up nor save your marriage. There are a number of small things that you could start with such as get Fid of the fax line, $27.50 per month. Change the other line to Home Budget, $20. 95 per month. Get rid of the answering service on Matthew's mobile, another $10 per month. The latter might be convenient for Matthew but in your current financial position, it is a luxury that you two cannot afford. Matthew keeps on saying that this is only this small amount here and that ls only a small amount there, but the sum of these amounts does, in the end, add up to a considerable amount. Matthew might even have to stop smoking as this amounts to probably $30-40 a week. You two will need to consult one another whenever you want to purchase something rather than Louise being seen as the controller. Basically, Matthew will also have to shoulder the fiscal responsibility and fiscal restraint. We are not bitter nor are we baying for the full return of the money. What we want though, is the return of the balance of the money from the two offset accounts. We also want a commitment from both of you that you are not going to touch the redraw amount. If you cannot make that commitment then you might as well take the money out and return that also to us. The reason we are not asking for the redraw amount at present Is because it will increase your mortgage repayments and we do not wish you greater hardship. After considerable discussion between us we have decided the following: According to our records, $109980 is the amount still outstanding. Take away the $35000 leaves $74980 as the amount that you are able to return, lf that is correct then please transfer that amount to our NAB account. A R Mereniuk Account Number 463205811 If the amount is less than that then I guess you will have to transfer a lesser amount. Regards, Dad/Andrew (depending as to who is reading it)." 1. It is not in dispute that following receipt of this letter, from 7 March 2011 to 2 May 2011, repayments totalling $75,500 were made by the defendant and Louise. After that, the unpaid balance was $28,254. Paragraph 12 of the defendant's submissions reads as follows: "Following receipt of this letter [i.e. the letter set out in the previous paragraph of this judgment] repayments in a total sum of $75,500 were made by the Wilks to the Mereniuks in accordance with Andrew Mereniuk's request. After that repayment, the unpaid balance was $28,254." 1. As I have noted several times, the defendant now concedes that there was a "legally enforceable loan" (submissions, paragraph 6; see also the plaintiffs' submissions in reply at paragraphs 4 and 5) between the parties. The repayments of $75,500 par admitted to, as is the quantification of the unpaid balance which is $28,254 (submissions, paragraph 12). Most importantly of all, the defendant concedes that these repayments were made by "the Wilks", namely by himself and his wife Louise. However, he still appears to argue that the remainder of the sums advanced were not loans but gifts, and gifts made only to Louise and not to him (although this latter point is not free from doubt) in circumstances where he was neither consulted nor involved. 2. It was in these circumstances, namely an acknowledged loan that was to be repaid, that Louise and the defendant then decided wanted to buy the Kellyville property. Before determining the evidence raised in relation to the second transaction (the Kellyville loan), it is important to note the impact of the defendant acknowledging that the first in time of these three financial transactions was in fact a loan and one which had been largely repaid in a series of payments made by his wife (to whom he acknowledged he deferred in financial matters) from their joint account. The relationship between the offset loan and the two subsequent financial transactions 1. The offset loan was the first in time and may be argued to have set the pattern for the two later transactions. The parties have made submissions about the evidence which is consistent with this approach. 2. First, the plaintiffs assert that the defendant was present during the conversations they had with him as well as their daughter about the loans (submissions, paragraph 38) and the defendant has responded (at paragraph 5): "The defendant denies being present at the small number of oral conversations which are relied upon by the plaintiffs to make out their case. It must be established that he was present at those discussions. The claim cannot be made out by reference to oral conversations with Louise only." 1. The consistency of the defendant's presence (or absence) is only the first of these patterns. The second is that at all relevant times the defendant agreed that he had given Louise complete authority to enter into the transactions with her parents. He did not express any views or wishes as to what the nature of those transactions should be, or were. The third consistency is that the result of these financial transactions were favourable to the defendant and to his family in that they were for the purchase of the house in which he lived with his family. The fourth consistency is that the defendant acknowledged that he was on good terms with the plaintiffs at all relevant times up until the year before Louise's death. The fifth consistency is that the plaintiffs stated (Tcpt 66 and 99) that all loans were made out of love and affection for the defendant, Louise and their grandchildren. 2. Where there are family transactions of this nature, it is not uncommon for a series of sums to be provided over a period of time. For example, in Chidiac v Maatouk, funds were advanced on at least two occasions in 2002 – 2003 (at [15] – [16]). The informality that is such a hallmark of family-based financial transactions of this nature (where there is no written loan agreement) is part of the explanation. However, the advancement of further sums later in time does not, without more, mean that the earlier advance is forgiven or forgotten. Whether that has occurred will depend on the facts of the case. 3. Taking into account these consistencies over the whole of the period of these advances, it would be wrong to consider each of the transactions without regard to these ongoing consistent factual circumstances. The Kellyville property purchase 1. Between 7 March and 2 May 2011, a total of $75,000 had been deposited into the plaintiffs' NAB account by way of sums paid from the M & I Wilks account, the bank account held by the defendant and Louise. The balance outstanding of the loan was $34,480. Those repayments stopped in May 2011 and, as Mr Mereniuk stated in paragraph 53 of his affidavit (CB 58) no further payments were made for the period up to 9 April 2012, which was after the purchase of another family home at Kellyville to which the plaintiffs again contributed funds. 2. The purchase of the Kellyville property was motivated by the birth, on 29 December 2011, of their third child. The defendant and Louise wanted to move to a larger home as their Baulkham Hills home was not large enough for three small children. They began looking around and put their own home on the market. When they saw a property at Kellyville for $752,000, they wanted to buy it, but did not have enough money. This led to the following conversation, according to Mr Mereniuk (CB 78): "Louise said: I don't think we have enough money. Mr Mereniuk said: I thought that might be the case. I've already spoken to mum and we're prepared to lend you the money. Louise said: I don't know how we can pay you back. I said: We will work out how much you need and then we can work out the repayments. Matthew said: Will I make an offer? Louise, Robyn and I said: Yes." 1. The offer made by the defendant for the purchase was accepted. On 3 April 2012 the plaintiffs transferred $76,000 to the joint account held by the defendant and Louise. Mr Mereniuk notes in his affidavit that as at 26 March 2012, the date of the offer for the Kellyville property, the balance owed by the defendant and Louise to the plaintiffs was $110, 480. 2. The defendant and Louise paid back two sums. The first of these was the sum of $3,000, paid on 10 April 2012, and the second was the sum of $33,000, paid on 8 May 2012. By this date, the balance owing was $74,480. 3. Between May 2012 and August 2015 only the most desultory of repayments were made: $2,000 on 13 September 2013, $400 on 25 January 2014, $1,000 on 17 March 2014 and $2,000 on 15 January 2015. Over this period and up to February 2016 the plaintiffs continued to give the defendant and Louise assistance by purchasing items; no claim is made for these sums. However, on 17 August 2015, this changed. Between 17 August 2015 and 14 March 2016 regular payments were made each month, generally for the sum of $500. By April 2016, the total paid in this fashion was $7,200. 4. Unknown to Louise, the defendant had met another woman some time in 2015. It is unclear when he commenced his affair with her, but there seem to have been some issues in the marriage. The defendant and his wife began to discuss moving to the Central Coast. Among other attractive features, it was closer to where the plaintiffs lived. 5. There were preparation costs involved in selling the Kellyville property. The plaintiffs say that they advanced $12,675 as a loan for this purpose, and that a series of payments were made between 17 May 2016 and 1 November 2016 for this purpose. Mr Mereniuk said that these sums were paid after he told the defendant and Louise: "Mum and I can lend you the money to prepare the house for sale and then you can repay what you owe us, plus the other money outstanding, when the house sells." (CB 83) 1. It was during this time, namely in August 2016, that Louise was diagnosed with cancer. What changed when Louise was diagnosed with cancer? 1. The plaintiffs say that Louise's cancer diagnosis in August 2016 changed everything and that they did not seek repayment due to Louise's cancer diagnosis (CB 80). 2. It is not in dispute that, after the Kellyville property was sold in November 2016, she and the defendant went to live in the plaintiffs' home, with the defendant nominally living there but continuing to work from Sydney. She commenced treatment for cancer in January 2017 and continued to have treatment up until her death on 8 January 2019. 3. Louise and the defendant repaid the plaintiffs the sum of $12,000 on 2 February 2017, which was $675 short of the sum borrowed. At this stage, the amount the plaintiffs considered was owed was $82,059 (CB 83). Apart from this sum of $12,000, no other repayment was made to the plaintiffs for any of the other sums advanced for the period from her diagnosis until her death. Mr Mereniuk described the reason for paying the $12,000 as follows: "Q. The Kellyville house was sold in November 2016. A. What about it? Q. Do you agree with me that it was sold in November 2016? A. Yes, yes. Q. And according to you, you should have been repaid everything at that time, is that correct? A. No. Q. You'd only required to be paid the $12,000 in that for the sale preparation, correct? A. Yes. The reason for that is simply they had sold the house and that money could be repaid straight away. The rest of the money would need - would needed to be to - for the next house. Q. And the Tumbi Umbi loan was made in August 2017, correct? A. Yes. Q. What had happened is they sold Kellyville in November 2011 and they were living with you for a period of time, weren't they? A. Seven or nine months. Q. Nine months, right. At the time the Tumbi Umbi loan was made Louise had been diagnosed with cancer? A. She had been diagnosed in June, not in June, in 2016. Q. And she needed somewhere to live and you were happy she was going to be living near you? A. Yes. Q. You held the view in August 2017 when you advanced the Tumbi Umbi money that Louise and Matthew were not good with money. A. Right. Q. You agree with that? A. Yes. Q. They were constantly under financial stress weren't they? A. They were under stress. Q. Under financial stress. HER HONOUR Q. As well as everything else, so one of the stressors they were under was financial, as well as all the other stressors, do you agree with that? A. Before they bought the house they shouldn't have been because Matthew was working and Louise was getting a monthly instalment from her work and they had the money in the bank from the sale of the house. I don't see why they should have been financially stressed. The, the only stress that I could see was that Louise was sick and she was really sick. Q. So were they living with you at the time, is that right? A. In 2017 they were living with us from actually right just before Christmas in 2016 right up to whatever period it is in 2017, which was about nine months I think it was. Q. I see, so they were living with you. Matthew was working, Louise was getting a monthly payment from her job. A. Yes. Q. And they had the balance of the sale of the house they had that invested. A. Yes." (Tcpt, 29 April 2024, pp 68 – 69) 1. The arrangement for the family to continue to live in the plaintiffs' home was not intended to be permanent. Their intention was to purchase another property, not to stay in the plaintiffs' home for the foreseeable future. In those circumstances the plaintiffs say they accepted the return of the $12,000 but did not seek the balance as it was to be put towards their next home purchase. 2. The defendant submits that the payment of the $12,000 but not the balance is indicative that the balance was seen as a gift. This is mere supposition on his part. He gave no evidence capable of contradicting the plaintiffs. 3. Louise and the defendant discussed the purchase of a property at Tumbi Umbi. Once again, they did not have sufficient funds, and the plaintiffs say they were once again asked to advance money. The Tumbi Umbi property purchase 1. While the conduct of everyone was affected by the shattering news of Louise's cancer, the defendant and Louise still wanted to go on planning a life for themselves and their children, and those plans centred around a family home. Whatever secret extramarital activities the defendant may or may not have been having at this time made no difference to this stated aim. As Mrs Mereniuk said (Tcpt 105), at this time everyone was still hopeful about Louise's prognosis. 2. Mr Mereniuk described his conversation with the defendant and Louise about the $80,000 was as follows: "Matthew said: We don't have enough money. I said: How much do you need? Matthew said: $80,000. I spoke to Robyn after which I came back to Matthew and Louise and said "mum and I have spoken, we will lend you the $80,000 and then on the sale of the Kellyville [corrected to Tumbi] property, the total amount you owe us, plus the $80,000 that we lend you for this property, will have to be paid back." 1. Mrs Mereniuk (CB 111 – 112) described the conversation she had with her husband as follows: "Andrew came to me and said: Andrew said: Matthew and Louise have been talking. They are $80,000. We can lend them the money. I said: What about the other money they still owe us? Andrew said: The condition will be that when they sell the Tumbi Umbi property they can pay us back everything they owe. When I spoke to Andrew, we were in another room of our house. I followed Andrew to the dining room where Matthew and Louise were seated." 1. Mrs Mereniuk then states that the conversation was as follows: "Andrew said: We will lend you the money so you can purchase the Tumbi Umbi property. Louise said: But how can we pay you back? Andrew said: You can pay us back what you owe us, plus what we lend you being $80,000, when the Tumbi Umbi property sells. Louise said: Are you sure? Andrew said: Yes. At the time the conversation occurred I observed Matthew was present." 1. Louise was seriously ill and unable to work. The terms of this conversation clearly took this into account. This was not a loan repayable on demand, but one which was contingent upon the house being sold. Credibility issues 1. Mr Quickenden notes (submissions, paragraphs 61 – 68) that both parties in this litigation have not only a financial interest in the outcome but also a degree of hostility motivating them. The plaintiffs believed (correctly, as it turned out) that the defendant's absence during the six months prior to Louise dying of cancer was because he was having an affair with another woman. The plaintiffs appear to have stepped into a parenting role in relation to the three children of the marriage, although the defendant stated in his evidence that he telephoned the children regularly. Mr Quickenden also refers to the confirmation of the second plaintiff's suspicion that the defendant would misspend the funds the children received from their mother's superannuation fund (Tcpt 169), which were to be held in trust by him, by his admission in evidence that he had used these funds to buy himself a caravan. I have carefully excluded consideration of these issues as they are not relevant to any issue in this case, including the credibility of the defendant. 2. While the plaintiffs are clearly angry with the defendant, they were not caught out on any misrepresentations of the evidence. Nor did they demonstrate an unwillingness to make concessions where appropriate or otherwise demonstrate that their anger towards the defendant had warped their honesty. I am comfortably satisfied that each of them was entirely truthful, at times painfully so, in that the distress they were in was obvious. They remained, however, honest and frank at all times. 3. It was put to the first plaintiff that certain of the contents of the spreadsheet were dishonest in that they were not contemporaneously kept records at all (Tcpt 20-30) and that this was confirmed by inconsistencies and omissions such as the loan of $45,000. The first plaintiff's explanation was as follows: "Q. The $43,500, why doesn't that appear in your spreadsheet? A. Simply because I was too preoccupied with what I was doing at, at, at home and at that time I was doing the, the surroundings around the pool. And by the way I notice what you're getting at, you're saying the $43,000, we lent her money during that period, it's in the ME Bank account's bank statements. If I had known you were going to ask me that question, I would have presented you with the ME statements which do lend her - in the, in the period 2018, we actually lent them around $45,000." 1. He went on to explain that he stopped using the spreadsheet after the defendant, Louise and their children moved in to their home for a period (Tcpt 41). 2. There is no doubt the spreadsheet contains errors, as was acknowledged by the first plaintiff, who relied upon Excel formulae and appears to have made errors as a result. The first plaintiff agreed that six entries were erroneous (Tcpt 44 – 49). He explained the spreadsheet had been set up for the following reasons: "A. I, wait a minute, I started to - the reason I started this spreadsheet in 2006 was because we had worked out, I, Matthew and Louise and, and myself thought that we could convert the existing bathroom and a toilet into a, a bathroom and a - I'm sorry, I'm losing - next, next to a bedroom-- Q. An ensuite. A. An ensuite. So the, so that, they then told me they didn't have the money. I said, "Okay, look, I'll just list all the items as I use them, and then later you can repay me." And I started that spreadsheet in 2006 when I started the bathroom renovations. I, I went through it, and then we had the loans for the, for the houses, and so I kept on going with this spreadsheet, and then at, at the, when they moved in to our place, we decided to share the expenses of them living in our place, and that was when we, tried to work out where was the money for the shared expenses going to go, and we suggested that Louise put the money into an account of her own so that we could see exactly how much money was being accumulated. But that was our money in there. And then—" (Tcpt, 29 April 2024, p 51) 1. The first plaintiff denied having recreated this document at a later date, adding an explanation as to the document's properties which would confirm that this was the case: "Q. The mistakes have been made because this table was altered at a later date, wasn't it? A. No. Definitely not. And, and if you wish to check whether that was started in 2006, all you need to do is click, right-click on the file, and select, "Properties," and then from there, "Details," and you'll actually see 2006 on there." 1. The keeping of this running spreadsheet over the years when funds were advanced is an important activity by the first plaintiff, as it is part of the factual matrix corroborating his statement that the sums he advanced were a loan and not a gift. I am satisfied that both plaintiffs gave evidence honestly not only in relation to the transactions in question but also in relation to the keeping of this particular record. 2. Additionally, the objective family circumstances favour the plaintiffs' evidence. The defendant agreed that generally important financial decisions for himself and his wife were discussed with the plaintiffs and he agreed that he gave complete authority, including loan authority, to Louise (Tcpt, 30 April 2024, p 146), although attempting to claim that he generally did not know what was going on. 3. The defendant was, however, a wholly unreliable witness, whose account of events was not simply implausible but at times knowingly false. I note the following examples of evidence which must clearly have been known by him to be false: 1. While acknowledging that up until the year before Louise died his relationship with the plaintiffs had been good, he inconsistently asserted he had not even been present, let alone known about, any of these financial transactions. This picture of constant exclusion from discussion of buying and selling the family homes (including discussions about what the defendant and Louise could or could not afford), in circumstances where the plaintiffs were not simply advancing money but constant visitors, who not only helped out financially with purchases but assisted with renovations and played a very significant role in the family's activities. 2. The defendant's claim that he never knew how much he had in the bank or consulted his banking or financial records, but instead rang up Louise each time he wanted to make a purchase or take out money, is completely implausible, the more so because he was running a business at this time which would have required regular access to the bank and consideration of banking records. 3. At the same time as claiming to know nothing, the defendant also asserted that if these advances were gifts to his wife but not to him. This is not only inconsistent with his own evidence about his relationship with the plaintiffs but also implausible and should not be accepted. 4. The defendant's explanation for the inconsistency between Exhibit D and what Mr Smith calls "the defendant's instructions in these proceedings" (submissions, paragraph 66) is similarly implausible. 1. The consequences of making such a finding are set out in Chidiac v Maatouk, where Ward J stated: "[189] Where the veracity of part of a witness' evidence is not accepted (or is in doubt), a careful assessment of the rest of that evidence is required in order to determine its honesty and reliability (per Handley JA in Malco Engineering Pty Limited v Ferreira & ors (1994) 10 NSWCCR 117, there a case where a finding of perjury had been made on one part of the evidence), though this does not mean that the balance of that witness' testimony can never be accepted without corroboration (Heydon JA, as his Honour then was, in Makita (Australia) Pty Limited v Sprowles (2001) 52 NSWLR 705, at 719). [190] For the reasons set out above, I do not accept George's denial of the fact that there was a loan and hence I do not accept his evidence that the provision of funds to him by his father was a gift. I consider that the circumstances of the provision of funds support the inference that there was a loan. While that does not mean that I must necessarily reject George's evidence as to the purpose of the subsequent payment of $160,000 to the joint loan account, it does call for careful assessment of all the evidence." 1. In the present case, the testimony of the defendant suffers from a second difficulty, in that his answers to questions frequently resulted in his saying that he could not remember. While I acknowledge the caveat in Ward J's judgment as to the potential for evidence from such a witness to be accepted, that is a difficult submission for the defendant to make when he has repeatedly said he does not remember (R v Logue (Court of Criminal Appeal (NSW), 31 March 1994, Gleeson CJ, McInerney and Mathews JJ, unrep) per Gleeson CJ). 2. I have accepted the evidence of the plaintiffs and, where that evidence is in conflict with the evidence of the defendant, I have accepted their account of the situation, unless otherwise indicated. This is, for the reasons explained by Ward J, an important part of the fact-finding necessary for determination of the question of whether the moneys advanced were a gift or a loan. A loan or a gift? 1. The onus lies upon the plaintiffs to prove objectively that there was an intention to enter into legal relations (there are no longer presumptions involving family relationships where funds are advanced: Ermogenous v Greek Orthodox Community of South Australia Inc (2002) 209 CLR 95). 2. In Reeves v Reeves [2024] NSWSC 134, albeit in the context of estoppel and will construction, Meek J set out how financial transactions in "the context of family circumstances" (at [466]) should be approached, adding at [468]: "Whether any, and if so what, representation has been made is to be judged "objectively according to the impact that whatever is said [or done] may be expected to have on a reasonable representee in the position and with the known characteristics of the actual representee": Q v E Co at [15], quoting Mance LJ in MCI WorldCom International Inc v Primus Telecommunications Inc [2004] EWCA Civ 957; [2004] 2 All ER (Comm) 833 at 844; see also Thorner v Major at [24]-[27] per Lord Rodger of Earlsferry and at [80], [84]-[86] per Lord Neuberger of Abbotsbury; in this Court, see Galaxidis v Galaxidis [2004] NSWCA 111 at [93] per Tobias JA; Sullivan v Sullivan [2006] NSWCA 312 (Sullivan) at [85] per Hodgson JA; and Evans v Evans [2011] NSWCA 92 at [124] per Campbell JA; see also Ashton v Pratt (2015) 88 NSWLR 281; [2015] NSWCA 12 (Ashton v Pratt (CA)) at [224] per Meagher JA, citing Ermogenous at [24]-[26] and also Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; [2004] HCA 35 at [22]." 1. What is a "loan"? In Commissioner of Taxation (Cth) v Radilo Enterprises Pty Ltd (1997) 72 FCR 300 at 313, the Full Federal Court (Lee, Sackville and Lehane JJ) considered an appeal that centred on the question as to whether the payment of a dividend to the respondent by a third party company was equivalent to the payment of interest on a loan. In resolving that question in the negative, their Honours, Sackville and Lehane JJ had regard to the defining characteristics of a 'loan': "A loan involves an obligation on the borrower to repay the sum borrowed. The matter is put this way by Dr Pannam (C L Pannam, The Law of Money Lenders in Australia and New Zealand (1964), p 6): A loan of money may be defined, in general terms, as a simple contract whereby one person (the lender) pays or agrees to pay a sum of money in consideration of a promise by another person (the borrower) to repay the money upon demand or at a fixed date. The promise of repayment may or may not be coupled with a promise to pay interest on the money so paid. The essence of the transaction is the promise of repayment. As Lowe J put it in a judgment delivered on behalf of himself and Gavan Duffy and Martin JJ: "'Lend' in its ordinary meaning in our view imports an obligation on the borrower to repay" (Ferguson v O'Neil [1943] VLR 30 at 32). Without that promise, for example, the old indebitatus count of money lent would not lay. Repayment is the ingredient which links together the definitions of "loan'' to be found in the Oxford English Dictionary, the various legal dictionaries and the text books. In essence then a loan is a payment of money to or for someone on the condition that it will be repaid." 1. The essence of a loan is the promise of repayment. Mere promise to repay may be sufficient: Vadisanis & Vadisanis [2015] FamCA 161 at [123], [128]. Where there is actual repayment, as has occurred in each of these three transactions (and I note the existence of a loan now appears to have been admitted in relation to the first of these) there is no likelihood, other than in the most compelling circumstances, of a court finding that the sum advanced amounted to a gift. 2. Were they three loans, or an ongoing line of credit? I accept the defendant's submissions that the plaintiffs should be held to their pleadings, but the importance of the other two advances following the transaction acknowledged to be a loan is that the similarities in these two subsequent transactions suggest that this was seen by the parties also being a loan. Were these advances a line of credit or three separate transactions? 1. The statement of claim treated the three transactions as a continuous line of credit but the amended statement of claim states at paragraph 7 that "the plaintiffs rely upon three loans to the defendant". Mr Smith (submissions, paragraph 10) submits that the plaintiffs should be held to their case as pleaded. 2. What these transactions amount to, whether considered individually (as urged upon me by the defendant) or in "the family context" of all three loans, as put by Mr Quickenden (submissions in reply, paragraph 17) are an "intra-family arrangement" (Chidiac v Maatouk [2010] NSWSC 386 at [22]) where a close factual analysis is required to determine whether a loan or a gift was intended. In Chidiac v Maatouk, Ward J (as her Honour the President of the Court of Appeal then was) paid particular attention to the pattern of repayments as a relevant feature. 3. The first of these transactions is agreed to be a loan. The question is what, if any, difference in terms arose in relation to the second and third of these advances, particularly in light of the impact on these arrangements of the discovery that Louise has Stage 3 cancer at the time that the proceeds of the second property sale became available. 4. Although courts call for careful analysis of the facts of each case, there is often considerable difficulty in determining these where the nature of the family relationship intrudes, particularly in cases such as the present, where the serious illness and death of a family member makes it difficult to speak frankly. 5. I have been guided by the observations of Meagher JA in Woodhouse v Woodhouse [2022] NSWCA 240. In particular, the question of whether each of these loans were repayable on demand needs to be seen in the context that, before the limitation period had expired, there had been a life-changing event for all parties, namely that Louise had been diagnosed with cancer, in circumstances where it is obvious from that the plaintiffs were not going to call for repayment of the sums advanced. 6. The plaintiffs did in fact go on to make a further advance so that the defendant and Louise could purchase the Tumbi Umbi property, the rationale being that the accumulating loans from all transactions could be repaid from the sale of this property when that occurred. It is not to be expected in such circumstances that the plaintiffs would be having discussions in which they would have said "when Louise is dead" and it is not to be inferred that their failure to spell this out means that they abandoned their entitlement to seek recovery of these funds when this in fact occurred and the Tumbi Umbi property was sold. The status of admissions 1. Both parties rely upon asserted admissions made in the course of without prejudice. 2. The defendant's previous solicitors, Sage Solicitors, claimed that the Kellyville moneys were "by way of gift to Louise to facilitate the purchase of the Kellyville property" but went on to add: "Notwithstanding the above, we are instructed that our client has knowledge of the advance to Louise and acknowledges that the amount was used for payments of the deposit." (Exhibit D) 1. Mr Quickenden submits that, at para 34 of his closing written submissions, Mr Smith conceded that the evidence could establish a legally enforceable loan in relation to the Kellyville advance of $76,000. 2. What was said was as follows: "The position was that the Wilks needed extra money to purchase the Kellyville property and the Mereniuks gave it to them. Even if there was some discussion in the most general terms that repayments might be made, the arrangement was entirely informal." 1. The asserted informality of this loan agreement needs to be seen in the context of the series of transactions between the parties where there is prior documentation calling this money a "loan". 2. On 20 March 2020 Sage Solicitors, a firm of solicitors previously acting for the defendant, responded to the solicitors for the plaintiffs' correspondence about the transactions the subject of this claim. The contents of that letter, in relation to the Tumbi Umbi claim, were as follows: "Tumbi Umbi Out client acknowledges the agreement in respect of household expenses for Tumbi Umbi and receipt of the further advance of $50,000 and he agrees that he is liable for the sum of $80,000." (Exhibit D) 1. The defendant submits that Exhibit D was created for the purpose of settlement negotiations and should not be construed as any kind of admission (submissions, paragraph 66). Mr Quickenden submits that it must materially undermine the probative value of the defendant's evidence on this issue. 2. The better view is that not only are "without prejudice" statements not capable of amounting to admissions (G Dal Pont, Law of Limitations (2nd ed, 2021, LexisNexis) at [17.26]) but that even admissions made in open offers should not be viewed as capable of amounting to an admission where that settlement does not occur. Accordingly I do not propose to give any weight to either of the defendant's asserted admissions. 3. Mr Smith similarly seeks to rely upon solicitors' correspondence in terms of the letter from Cleary Partners dated 13 February 2020 and upon Mrs Mereniuk's statutory declaration (Exhibit C) to the effect that the difference between the $76,000 and the $40,000 was that the defendant and Louise only needed $40,000 and that nothing should be read into the fact that they refunded the balance of $36,000 (submissions, paragraphs 12 – 17). 4. I do not consider that either of these statements take the matter much further. The letter from Cleary Partners is similarly part of an exchange of correspondence trying to settle the matter and Mrs Mereniuk's statutory declaration is merely identifying the amount actually used by the defendant and Louise. Neither of these documents should be given any weight as being an admission. Waiver 1. Unlike the defence brought under s 14(1)(a) of the Limitation Act, there is no express pleading of waiver in the defence and in oral submissions Mr Smith expressly denied reliance upon it. Nevertheless, the defendant's written submissions assert that the contents of the letter of 28 February 2011 and certain answers given in cross-examination amount to an acceptance that the defendant and his wife were not going to be able to pay the offset balance or the Kellyville advances. Despite the apparent abandonment of this line of defence I propose to deal with very briefly with the question of whether waiver occurred. 2. The evidence pointed to is as follows: 1. The 28 February 2011 letter does not state that the Offset Balance would need to be repaid at some later time. I note, however, that it is clear from this letter that the Mereniuks appreciated that the Wilks could not repay the Offset Balance in their current financial situation; what the plaintiffs were pointing out was that the defendant and Louise were outspending their means. The plaintiffs referred to the prospect that the Wilks might lose their house or need to downsize as a further potential disaster and not as a reason for accepting and waiving the continued failure to pay. 2. The defendant suggests, alternatively, that the plaintiffs had accepted that the defendant and Louise would repay the amount remaining in the offset accounts and that would be the end of it. While Mr Mereniuk did not dispute that the Offset Balance was not going to be paid and there was nothing that could be done to recover it, he did not agree that he had abandoned this sum either at the time or later. The best that the defendant can do is to point to Mr Mereniuk's answer: "Look, how could I know the state of my mind at that – what, 13 years ago?" In a similar vein, it was put to Mr Mereniuk that the $75,500 would be repaid and that would be the end of the matter and his answer was: "I wouldn't know". Mr Mereniuk agreed that there was never any discussion of the Offset Loan after 2 May 2011 but it is no longer put that he had waived the loan. 3. Mr Smith also noted that there is no mention of the Offset Loan or the Offset Balance in any subsequent document. No further repayment was ever made in relation to it. It is not identified as a loan owing to the Mereniuks in their letter to Louise's superannuation trustee. In response to a question from the bench, Mr Mereniuk was unable to provide any explanation for that omission. 4. At the time the Offset Loan was made in April 2008, there was no discussion about when the loan would need to be repaid in full. Robyn Mereniuk says nothing about repayments at all. Andrew Mereniuk says only that it was agreed that there were to be monthly repayments of $1,720. That is unlikely where repayments were initially made in varying amounts, though repayments later settled into a pattern of $1,720 per month. 5. These last three points are, however, a common feature of "Mum and Dad" loans: Berghan v Berghan. This is what the first plaintiff meant when he said that "Somewhere along the line, I would hope that they would have replaced – repaid – the money" (Tcpt 59). The first plaintiff was asked why he had only required to be repaid the $12,000 for the sale preparation, to which he replied: "Yes, The reason for that is simply that they had sold the house and that the money could be repaid straight away. The rest of the money would need – would needed to be to – for the next house" (Tcpt 68). 1. A waiver of a right is an unequivocal decision by a party, communicated to the other party, not to insist upon a right or not to exercise a power: Allianz Australia Insurance Ltd v Delor Vue Apartments CTS 39788 [2022] HCA 38 at [28]. There was no express or implied intention of the plaintiffs to abandon a right of seeking the outstanding offset loan claim. 2. There is no evidence which, objectively considered, could amount to a waiver of the offset balance. I am satisfied that no such waiver occurred. 3. If what the defendant was attempting to say was that the balance of this loan had somehow been "forgiven", there is no defence of forgiveness of this kind known to the law: see Gummow, Hayne and Kiefel JJ, Agricultural and Rural Finance Pty Ltd v Gardner (2008) 238 CLR 570; [2008] HCA 57 at [95]-[96]. The Limitation Act argument 1. Where a loan is repayable on demand, the lender's cause of action arises instanter on receipt of the money by the borrower, so that the lender's cause of action becomes statute barred at the expiry of six years after the receipt of the money – Ogilvie v Adams [1981] VR 1041 at 1043; Chidiac v Maatouk & Anor at [234]-[236]. 2. The defendant submits that the limitation period expired on either 30 April 2014 or 2 May 2017, with the result that the claim is now extinguished under s 63(1) of the Limitation Act. The limitation period of six years commenced to run from the date the cause of action accrued, which was the date of the advance (no later than 30 April 2008, or when the first repayment was made on 6 May 2008). 3. The defendant accepts that the plaintiffs may argue inter alia that the repayments of first loan constituted a confirmation of the debt under s 54(2)(a)(ii) of the Limitation Act. The defendant has now abandoned the arguments that a proper pleading to this effect, including in particular limitation periods, is required under UCPR r 14.2. The defendant submits that if such a claim is permitted in the absence of pleading, the limitation periods for the first and second loans would expire outside the limitation period. 4. However, for the limitation period to run at all, I must be satisfied that the offset loan was in fact repayable on demand and/or whether there was some understanding to the effect that notice of such a demand should be given. In Woodside v Woodside Meagher JA stated: "[117] Had there been a loan agreement, but not one expressed to be for a fixed term, it did not follow that the loan had to be payable on demand. First, it was to be considered whether as a matter of construction of the oral contract it was necessary for business efficacy to imply a term that the loan was not repayable without notice (see VL Finance at [53]). That was certainly an arguable proposition having regard to the circumstances in which and the purpose for which the loan was made. If such a term was implied, the relevant limitation period would not have commenced to run until demand was made." 1. Further, in return for lending further moneys, the defendant and Louise stated that existing loans would be repaid, so each new promise gives the plaintiffs the benefit of several different contractual promises to pay the same debt: see Bryson AJ in Bank of China Limited v CGS (Group) Pty Ltd [2009] NSWSC 397 at [34]. 2. I have accepted the evidence of the plaintiffs that the payments were loans which did not become repayable until the sale of the property for which each had been advanced, in terms where this agreement as to the date of sale was, after Louise was diagnosed with cancer, to be the sale not of the Kellyville home but the home she and the defendant next purchased, namely the Tumbi Umbi property. This means that the limitation period did not commence to run until that occurred, namely 18 December 2019. These proceedings were therefore commenced within time. Does s 54(2)(a)(2) require an acknowledgement in writing? 1. The defendant refers, in closing submissions, to the desirability of putting something in writing (at paragraphs 71 and 74), which I interpret as an oblique reference to s 54(2) of the Limitation Act. It is common ground that the defendant and Louise were never asked to sign any acknowledgement of there being a loan. The parties did not provide me with submissions on this issue, but it is one that I consider needs to be referred to. 2. This question arose in Svenson v Doherty [2014] NSWDC 106. Cogswell SC DCJ (at [27]) considered the adequacy of financial records to establish acknowledgement, referring to the argument in The Stage Club Ltd v Millers Hotels Pty Ltd (1981) 150 CLR 535; 38 ALR 253 ("Stage Club") that a corporation's indebtedness to a creditor was acknowledged by the corporation's balance sheet given to an officer of the creditor who was on the corporation's board, noting that a similar issue arose in In re Compania de Electricidad de la Provincia de Buenos Aires Ltd [1980] 1 Ch 146, a case referred to by Wilson J (with whom Murphy J agreed) in Stage Club. Financial documents as an acknowledgement were also considered sufficient in Hipworth v Mahar (1952) 87 CLR 335; [1952] ALR 633. 3. Applying those principles to this case, financial records such as the plaintiffs' spreadsheet would be such a document, since it was repeatedly referred to and, it would appear, produced at some of the discussions about finances. The acknowledgement by Louise on behalf of the defendant as to the correctness of this record would be binding on him as he delegated financial matters to her. 4. I am satisfied that each of the payments made was a payment in respect of the right or title of the plaintiffs within the meaning of s 54(2)(a)(ii) and that neither of the first two claims are statute-barred. Conclusions concerning liability 1. I am satisfied that on a series of occasions from 2006 to 2017 the plaintiffs advanced to the defendant and to Louise sums intended to be provided as ongoing loans and not a gift. While there were three separate occasions involving the purchase or renovation of a home, and each loan must be considered separately, each is made in the context of any earlier transaction. 2. The plaintiffs were giving the defendant and Louise financial assistance in the form of a series of separate loans for separate purposes, but as "the Bank of Mum and Dad", not "the Giftshop of Mum and Dad". They expected repayment but at the same time took issues relevant to love and affection into account; in particular, while Louise was dying of cancer and the marriage clearly in trouble, they forbore to ask for funds in circumstances where I am satisfied that there was an understanding that further repayments would not fall due until the Tumbi Umbi property was sold. That did not occur until 18 December 2019, which is well in time, and these loans never lost their characteristics as loans that the plaintiffs expected the defendant and Louise, sooner or later, given her health issues, to repay upon the sale of the Tumbi Umbi property. Quantum 1. The defendant initially did not dispute the sums paid by the plaintiffs into the joint account of the defendant and Louise at the relevant times alleged by the plaintiffs, namely: 1. The sum of $169,000 paid in April 2008 (defendant's opening submissions, paragraph 2(a)), from which the sum of $28,524 remains outstanding. 2. The sum of $76,000 paid in April 2012 (defendant's opening submissions, paragraph 2(b)). However, the question of whether the quantum outstanding is $40,000 or $27,015 is as set out below. 1. However, the defendant now disputes $30,000 from the total sum of $80,000 paid in August 2017 in relation to the Tumbi Umbi property (submissions in reply, paragraphs 18 – 24) despite having earlier agreed to this (defendant's opening submissions, paragraph 2(c)). The Kellyville quantum 1. The question of the amount outstanding on the Kellyville loan may arise from the plaintiffs' arithmetical errors in the spreadsheet. It is common ground between the parties that $36,000 had been paid from the $76,000 advanced in April 2012 by way of repayments, and that would leave a total of $40,000. However, payments made between 9 May 2012 and 1 November 2016 total a further $12,985. If this sum is deducted from the $40,000 remaining, that leads to a total of $27,015. Mr Quickenden now accepts this figure, as the Schedule of Damages he provided to the Court on 27 August 2024 confirms. 2. Mr Quickenden also notes that this sum excepts the $12,000 paid on 20 February 2017, which was the sum advanced by the plaintiffs for preparation of the Kellyville property for sale, a matter not in dispute in the evidence (paragraph 10, fn 7), and I formally note this for the benefit of the parties. The $30,000 coming from Louise's account for Tumbi Umbi 1. The defendant's quantum argument is that the sum advanced for $80,000 for the Tumbi Umbi purchase was actually $50,000, and that statements to the contrary in Exhibit D should be ignored, because part of the loan came from moneys separately placed in an account for household expenses during the nine-month period that the defendant, Louise and their children had been living in the plaintiffs' home. 2. Those expenses did not include any form of occupation fee or rent, nor were they moneys belonging to Louise personally. The account (Exhibit E) opened by Louise confirms it was set up for the payment of household expenses that it was agreed would be subsequently used as part of the loan to assist in the Tumbi Umbi purchase. The fact that it came from an account she had opened for this purpose does not mean that these sums lost their quality of being a loan when they were then used for the purchase of Tumbi Umbi. The household expenses part of the $80,000 loan was $30,000. 3. The statutory declaration of Mrs Mereniuk sworn on 4 December 2019 refers to this loan in the same terms, but in the different figure of $50,000. The explanation for this loan being referred to as $50,000 and not $80,000 is set out in Mr Quickenden's submissions at paragraphs 57 - 58. I am satisfied that Mr Mereniuk was at all times the person who dealt with these financial matters and that Mrs Mereniuk did not have the full picture; her reference to $50,000 is an error. 4. Both plaintiffs say that the Tumbi Umbi advance was a loan because Louise had proposed to repay it should she receive retrenchment moneys, as is set out in Mrs Mereniuk's statutory declaration. It is not in dispute that she did. 5. Paragraph 71 of the defendant's submissions asserts that there is no contemporaneous document supporting this explanation. Leaving aside the fact that the statutory declaration is such a document, the circumstances in which Louise had discussions with her parents along these lines is wholly consistent with the plaintiffs' conduct as well as that of Louise. The defendant's admissions (Tcpt 163 – 4) about the reasons for setting up this account confirm this. 6. I also note that it was put in cross-examination of Mr Mereniuk that $45,000 of this loan had been paid off (Tcpt 72). As Mr Quickenden explains at paragraph 33 of his submissions, those payments occurred after the defendant and Louise separated. This line of argument has not been the subject of further submissions to the contrary. 7. I am satisfied that the quantum for the claim for the Tumbi Umbi loan is $80,000. Schedule of amounts to be awarded Offset loan $ 28,254 Kellyville loan $ 27,015 Tumbi Umbi loan $ 80,000 TOTAL $135,269 1. Pre judgment interest is also claimed from the date of settlement of the Tumbi Umbi property (19 December 2019) which is the time when the defendant should have repaid the loans. Mr Quickenden provided a calculation but at Mr Smith's request I have not dealt with interest in this judgment and have instead granted liberty to apply. Concluding observations, interest and costs 1. The evidentiary problems due to the lack of formal documentation, the distress of the parties and the increasing complexities in this area of the law having regard to societal changes concerning "Mum and Dad" loans have made this a difficult judgment to write. I was fortunate to receive a great deal of assistance from Mr Quickenden and Mr Smith (and those who instruct them) at all relevant times, and I thank them for it. 2. I have given the parties leave to bring in Short Minutes of Order for the judgment sum in case interest can be mathematically agreed. I have not placed any time limits on the liberty to apply in relation to interest and costs. Orders 1. Judgment for the plaintiffs. 2. The parties have liberty to bring in Short Minutes of Order reflecting the mathematically agreed total for each of the three sums claimed. 3. Interest and Costs reserved, with liberty to apply. 4. Exhibits retained until further order. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 August 2024