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February 2009

Avoid doubt with family arrangements

Record it in writing

In a recent High Court decision, on an appeal from a District Court judgment, the importance of family arrangements being in writing to avoid misunderstandings later was emphasized.

The facts, as determined by the Court, were that in 1988 the mother moved into the property of the son with his consent. The mother remained in occupation for some 7 ½ years without paying any outgoings or rent. The mother and the son fell out and in December 2005 a Notice to Quit was served by the son requiring the mother to vacate by 27th January 2006. The mother sued the son.

The mother had contributed by way of purchase of carpets, vinyls, curtains, dishwasher, light shades and plants for the garden. She also claimed for providing gardening services to the property.
The mother argued that as she had purchased items for the property and had provided services to the property she should be permitted to remain at the property.

The District Court Judge held that the son only gave an “indication” that the mother could reside at the property for the rest of her life and did not create any legally binding obligation per se. The Judge termed it “an unenforceable promise”. He found that there was no intention to create legal relations and no expectation of a proprietary interest as distinct from a licence to occupy.

The mother appealed to the High Court. The High Court rejected the mother’s appeal. It held that the mother “was given an opportunity to live in the [son’s] house purely as an act of kindness to escape from substandard accommodation. There was no promise that the house would ever belong to her. She lived rent-free and is able to take some of the items [that she had purchased] away with her”. The son “has not received any significant benefit or windfall from [the mother’s] contributions”. In allowing the mother “to live in the house, he was not discharging any obligation to her, only acting out of kindness, while he may now have to buy a new dishwasher, carpet and furnishings”.

If the mother had had a formal written agreement with the son setting out the basis on which she would reside at the property, then no Court case (and no appeal) would have been required as it would have been clear as to:

  • whether she had a permanent right to reside at the property or merely a temporary right to occupy;
  • whether she was required to make contributions to the property or merely had the option to make purchases essentially for her own use; and
  • whether her intended contributions were to enhance the capital value of the property or merely being routine maintenance and purchases for her own benefit.

We strongly recommend that even for family arrangements, there should be a carefully worded agreement signed by all concerned.