Parents' $910k 'gift' to help couple buy house ends up in court

$910,000 provided to help son and partner buy a house has been deemed a loan in court. Photo / 123RF

A couple who loaned their son and his partner $910,000 to buy a house are owed it back after the High Court disagreed with the daughter-in-law who argued it was a gift.

Six years ago, the parents advanced $910,000 to their son and his de facto partner to purchase a house in Marlborough.

The son and his partner, who were together for 11 years and had a child during that time, separated in October 2013 and are engaged in a property dispute in the Family Court.

That dispute is still live but the parties went to the High Court in April to determine the issue of the loan.

For legal reasons, the Herald is not naming the family.

The daughter-in-law told the High Court the money was a gift and she was told it did not require repayment, however the parents and the son said it was a personal loan to help buy the property.

At the time the money was given, there was some talk of an applicable interest rate being considered, and loan agreements and a deed of guarantee were drawn up by the solicitors.

These documents were not signed however, either before or after the property was purchased.

In an email from the father to the couple's lawyer, the father said he and his wife were "prepared to advance the settlement money interest free for a period".

In court, the daughter-in-law maintained the money was a gift, and said she had not been told about the loan documents nor had she been asked to sign anything.

Justice Helen Cull looked at all evidence including email correspondence and said:

"I am left in no doubt that the plaintiffs advanced the funds to [the couple] as a loan".

Justice Cull also ruled that interest was not applicable as no agreement on an interest rate had been drawn up, and the father had refused to ask the couple to pay interest on the loan, according to earlier emails.