What started as a mutually beneficial family arrangement with parents Robert and Joscelyn Willems helping son Daniel and his then partner Georgia get a foot on the property ladder turned into a nightmare, with Daniel later strong-arming his parents into gifting him a greater share of their jointly owned Nelson purchase and then forcing a sale.
In 2019, Daniel’s parents agreed to financially support his plans to buy a home.
Discussions jelled into a proposal where they would jointly buy a house where all could live.
The arrangement saw Daniel’s parents putting up some $158,000 cash as the downpayment on a home at Turner Place in Wakefield. Daniel provided no cash.
At the last minute, his parents had to contribute a further $55,000 to clear personal debts incurred primarily by Daniel’s then partner Georgia; the bank would not advance any mortgage finance unless these personal debts were first cleared.
The deal saw Daniel and Georgia registered as owners of Turner Place as to a one-quarter share; Daniel’s parents a three-quarter share. All four were liable on the mortgage.
Turner Place has two separate living areas, enabling the two generations to live close together, but separately. Property outgoings were shared equally between each generation.
The High Court was told this mutually beneficial family arrangement fell apart within a year, after Georgia left, going to Australia.
Georgia’s departure frustrated subsequent attempts to refinance the bank loan at a lower interest rate and to draw down a further $40,000 when Daniel’s parents sought to buy a new car. She was no longer around as part-owner to sign the required variation of mortgage.
She willingly signed over her ownership interest on being released from the mortgage, with family agreeing Daniel’s ownership share would increase to one third, his parents’ share reducing to two thirds.
Evidence was given that Daniel’s share instead was increased to one half; this after he refused to sign off on any new financing arrangement which included a $40,000 advance to his parents unless his share was increased.
Within a year, Daniel and his new partner had left Turner Place and he was demanding the property be sold.
He sued for a Property Law Act forced sale. His parents’ failure to file a statement of defence meant they were barred from defending the case.
Justice Boldt ordered a sale, stating a forced sale was inevitable, given the circumstances.
With the wisdom of Solomon, he set out a formula for progressing a sale given the fact each side no longer talked to the other.
Daniel has two weeks to obtain a registered valuation of Turner Place, with his parents given the chance to buy out his half interest at that valuation less the outstanding mortgage debt.
If they do not accept this valuation, they have a further two weeks to obtain their own valuation with Daniel given the opportunity to sell his half share to them at an average of the two valuations.
If this fails, Turner Place is to be listed for sale.
In the final wash-up, Daniel’s parents are to be given credit for both their original $158,000 cash contribution and the extra $55,000 put in from the start to clear Daniel’s and Georgia’s personal debts, Justice Boldt ruled.
He dismissed Daniel’s claim that the $40,000 borrowed by his parents to buy a car should be excluded as their personal debt when calculating net equity in the property. It is part of the mortgage debt secured over the home, Justice Boldt said.
Willems v. Willems – High Court (12.11.24)
25.029