It is said that love is blind. It is also said that love can make people do some funny, perhaps even crazy things. Those observations might explain why acts are done within families and personal relationships that would not be advised by a sage, circumspect legal practitioner. Often those acts within families occur without any contemplation of the love apparently underlying those acts ever going wrong. It is usually only when that love has gone wrong that the family members seek legal advice to recover the goods, possessions and / or money that were part of the original transaction. Sober, dispassionate attention is required when considering such family arrangements and the introduction of that attention to the family fold is not always greeted with great love and affection by the family members.
Almost without exception the ultimate question the Court will ask in respect of those now seemingly controversial family arrangements is whether in all of the circumstances “the parties intended to subject their agreement to the adjudication of the courts”. (See Morais & Anor -v- Mills [2010] QDC 237 per Dorney QC DCJ at para [9])
A Court charged with the responsibility of determining whether particular family arrangements enjoy the benefits and responsibilities that derive from an intention to create legal or contractual relations will tell you that for there to be a legally enforceable duty the following must be present:
• Identifiable parties to the arrangement;
• Certainty in the terms of the arrangement; and
• Generally, real consideration for the agreement, unless recorded as a deed.
(See Morais & Anor -v- Mills [2010] QDC 237 per Dorney QC DCJ at para [7])
• Identifiable parties to the arrangement;
• Certainty in the terms of the arrangement; and
• Generally, real consideration for the agreement, unless recorded as a deed.
(See Morais & Anor -v- Mills [2010] QDC 237 per Dorney QC DCJ at para [7])
The Court will make an objective assessment of the state of affairs between the parties to determine what the terms of any family arrangements may mean, rather than enquire as to what each of the parties subjectively intended to achieve. (See Morais & Anor -v- Mills [2010] QDC 237 per Dorney QC DCJ at para [7]) The onus of proof lies on the party alleging that legal relations have been created. (See Morais & Anor -v- Mills [2010] QDC 237 per Dorney QC DCJ at para [10])
Relevant considerations for an inquiry in relation to the existence of such an intention are as follows:
• The subject matter of the agreement;
• The status of the parties to the agreement;
• Their relationship to one another; and
• Other surrounding circumstances.
(See Morais & Anor -v- Mills [2010] QDC 237 per Dorney QC DCJ at para [7]
• The subject matter of the agreement;
• The status of the parties to the agreement;
• Their relationship to one another; and
• Other surrounding circumstances.
(See Morais & Anor -v- Mills [2010] QDC 237 per Dorney QC DCJ at para [7]
Two areas where one might see family arrangements lead to enquiries about litigation are:
• Leasing real property to family and friends; and
• Lending money to family and friends .
• Leasing real property to family and friends; and
• Lending money to family and friends .
Leasing Real Property To Family and Friends
It is not uncommon for families to let out real property they might possess to family or friends. Often such an endeavour is undertaken without anyone involved obtaining legal advice as to the implications of the arrangements or perhaps even recording the arrangements in writing. Should that relationship not progress as planned, such as the tenant not making the rental payments in accordance with the agreement, the landlord might seek to enforce the tenancy agreement he or she contends is in place. In those circumstances the Plaintiff Landlord would need to demonstrate that:
• Legal relations have been created between the Plaintiff Landlord and the Respondent Tenant; and
• The subject tenancy agreement was always one where the Tenant would be sued in the courts for any outstanding rent.
A failure to do so will invariably lead to the Court concluding that no relevant intention to create legal relations existed between the parties. The Landlord would then not be able to rely upon that avenue of potential recovery.
It is not uncommon for families to let out real property they might possess to family or friends. Often such an endeavour is undertaken without anyone involved obtaining legal advice as to the implications of the arrangements or perhaps even recording the arrangements in writing. Should that relationship not progress as planned, such as the tenant not making the rental payments in accordance with the agreement, the landlord might seek to enforce the tenancy agreement he or she contends is in place. In those circumstances the Plaintiff Landlord would need to demonstrate that:
• Legal relations have been created between the Plaintiff Landlord and the Respondent Tenant; and
• The subject tenancy agreement was always one where the Tenant would be sued in the courts for any outstanding rent.
A failure to do so will invariably lead to the Court concluding that no relevant intention to create legal relations existed between the parties. The Landlord would then not be able to rely upon that avenue of potential recovery.
Lending Money To Family and Friends
Other family dealings worthy of consideration here are those that involve the lending of money to family or friends. Once again it is not uncommon for money to be loaned to family members or friends in circumstances where none of the participants involved obtain legal advice as to the implications of the arrangements. Further it is also not uncommon for those arrangements not to be recorded in writing.
Other family dealings worthy of consideration here are those that involve the lending of money to family or friends. Once again it is not uncommon for money to be loaned to family members or friends in circumstances where none of the participants involved obtain legal advice as to the implications of the arrangements. Further it is also not uncommon for those arrangements not to be recorded in writing.
Should a situation arise within that relationship whereby the lender contends that the borrower has not made relevant payments under the loan agreement, the lender may wish to have recourse to the courts in order to recover the money he / she says is outstanding under the loan agreement. Unless the Plaintiff Lender can prove that he / she would subject that Defendant Borrower to being sued in the courts for the return or repayment of the money, the Court is unlikely to find a relevant intention to create legal relations existed between the parties. What was contended by the lender to be a loan would be seen to more akin to a gift. Once again the borrower would then not be able to rely upon that avenue of potential recovery.
Conclusion
When relationships sour and/or love goes wrong the parties involved tend to look at their relevant relationships differently from when they were first created. Return or recovery of goods, possessions and/or money is sought in circumstances where it may not have been, had the relevant relationship conformed to its originally planned path. The path the court takes in such circumstances is not one similarly prone to change. If it can be demonstrated that the parties intended to subject their agreement to the adjudication of the courts, then the courts will continue to entertain the matter. A failure to demonstrate that intention to create legal relations on the part of the relevant parties will invariably leave the parties without the assistance of the courts to resolve their dispute.
When relationships sour and/or love goes wrong the parties involved tend to look at their relevant relationships differently from when they were first created. Return or recovery of goods, possessions and/or money is sought in circumstances where it may not have been, had the relevant relationship conformed to its originally planned path. The path the court takes in such circumstances is not one similarly prone to change. If it can be demonstrated that the parties intended to subject their agreement to the adjudication of the courts, then the courts will continue to entertain the matter. A failure to demonstrate that intention to create legal relations on the part of the relevant parties will invariably leave the parties without the assistance of the courts to resolve their dispute.
Those seeking to embark upon family dealings which do not manifest an intention to create legal relations would do well to consider the implications of that failure before they conclude their dealings.
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