Family
support totalling $910,000 to buy farmland and set up an egg supply business at
Koromiko near Picton was a loan not a gift and did not form part of
relationship property.
Donna Marsh’s de facto
relationship with Andrew Schwass came to an end in 2013 after some eleven
years. She claimed a $910,000 advance made
three years previously from Andrew’s parents’ family trusts was a gift and was
relationship property. Legal documents
evidencing a loan were drawn up, but never signed. Justice Cull ruled the advance was an
interest free loan. Correspondence
between the Schwass family and lawyers acting on the purchase stated the
advance was to be a short-term loan.
There were delays while lawyers enquired whether Andrew and Donna were
to be borrowers in their own name or through a family trust. A caveat was lodged against the Koromiko
title protecting the Schwass family trusts as creditors under “an agreement to
mortgage”, but no such agreement was ever signed. Oral mortgages over land are not
enforeceable. The land cannot be sold to
recover money due.
The Schwass family
trusts were protected by the doctrine of part performance, Justice Cull ruled. Terms of the loan had been agreed as
evidenced by the correspondence plus the unsigned documents. The money had been handed over. The oral Schwass mortgage was enforceable as
a secured loan.
The $910,000 advance
was used to develop an egg farm, Koromiko Free Range Eggs Ltd.
Schwass
v. Marsh – High Court (22.06.17)
17.071