DE FACTO PARTNER SEEKS FOR THE ESTATE OF HER DECEASED PARTNER TO PAY FOR THE BALANCE OF THE MORTGAGE

YOUNG -v- MARTIN [2020] WASC 442 (8 December 2020)

This case involves a de facto partners who agreed to purchase a home with one contributing half of purchase price and the other one paying the mortgage. The survivng partner alleges that the estate of the deceased should pay for the balance of the mortgage based on the oral agreement between her and the deceased.

Facts: Ms Young filed an originating summons commencing a new action, in which she seeks orders that the estate of Mr Jones pay all sums due on a loan and mortgage over a property at Warnbro; repay, with interest, amounts which Ms Young has paid on the mortgage since the date of Mr Jones' death; and pay or reimburse Ms Young for other amounts said to be owing by Mr Jones to her at the date of his death, or paid by her since his death. Alternatively, Ms Young seeks orders for the estate to pay half of the amounts due on the Warnbro mortgage.

The plaintiff's pleaded case is that prior to entering into the contract for the purchase of the [Warnbro] Property, the Plaintiff and the Deceased orally agreed that:

(1) each of them would contribute half of the purchase price of the Property;

(2) the Plaintiff would pay her half of the purchase price using monies she had received or would be receiving from the proceeds of her divorce property settlement;

(3) Deceased would pay his share of the purchase price via a bank loan secured by a mortgage of the Property; and

(4) the Deceased would be solely responsible for the payment of the bank loan and the liabilities under the mortgage over the Property.

Pursuant to the agreement between the Plaintiff and the Deceased, they jointly applied for and successfully obtained a loan of $185,000.00 from Australia and New Zealand Banking Group Limited ('the ANZ Bank Loan'). The Deceased used the loan amount towards payment of his agreed half share contribution towards the purchase of the Property.

Issue: Is the estate of Mr Jones liable to pay the Mortgage over a property at Warnbro?

Analysis:

The Warnbro Property was not an investment property, or a business asset, but was intended to be the couple's home. The loan and mortgage were in joint names; the title was held in joint tenancy.

It is more likely, when one looks at their domestic arrangements and what Ms Young said about what they agreed, that they reached an informal arrangement for the payment of the mortgage. Both of them were working and Mr Jones was earning sufficient income to pay it. Understandably, the arrangement did not contemplate what would happen should Mr Jones, for any reason, stop paying. It was not that sort of agreement.

In the court’s opinion, equitable principles would not require the estate to discharge the obligation of Mr Jones to pay the mortgage where it relates to property which is not part of the estate. It might have been different were the estate claiming a benefit from the payments made by Ms Young (for example, had the parties held the Warnbro Property as tenants in common). In that case, contribution would prevent the injustice that would otherwise flow to Ms Young by the estate being enriched at her expense, where she and Mr Jones had a common obligation to meet the liability which she alone now must meet.

Conclusion: The estate is not required to pay for the mortgage.