Dad sues daughter over $330,000 ‘loans’ for two properties, which she says were gifts
A father has sued his daughter for more than $330,000 in ‘loans’ which she has not repaid, but she is adamant the money was given to her as a gift.
Gregory Bernard Clark has asked the Christchurch High Court for summary judgment over what he claims were four loans he made to his daughter, Felicity Kate Clark.
Felicity Clark objected to her father’s request, saying the money was given to him as a gift – or at the very least some of the money given to him was meant to be gifts.
According to a newly published judgment, Felicity Clark first asked her parents for a loan in 2015 after buying property on Bickerton St in Christchurch as an investment. She wanted the money for the expenses related to the purchase and for the repairs.
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On August 21, 2015, she provided her parents with a form of loan agreement indicating that she intended to repay the loan within three years or as soon as possible from excess rental income. He also said she would seek to “duplicate this model” by borrowing additional funds from her parents.
The loan agreement was never signed by the Clarks, but they paid their daughter just over $68,000 about a week later.
Over the following months, three more sums were paid to him from his parents’ bank accounts: $22,500 on September 24, 2015 for a deposit on a property in Woodham Rd; $202,895 on October 22, 2015 to finalize the purchase of the Woodham Rd property and $40,000 on March 7, 2016 for the renovations of the Bickerton St property.
On March 6, 2016, Felicity and her father entered into four loan agreements regarding the four payments. The loan agreements had been prepared by Gregory Clark and effectively stipulated that Felicity would repay the money, with interest, via monthly installments over 36 months using excess rental income from the properties.
Gregory Clark and his daughter signed the agreements, but Felicity Clark never returned the money.
Around October 2018, the Woodham Rd property was sold, but none of the proceeds from the sale went to Gregory Clark and his wife.
Over a period of about nine months, the Clarks’ attorney sent three letters to Felicity Clark about getting the money back.
On July 16 last year, she emailed her parents calling their request for the money back “pure fantasy”.
In the court ruling, Associate Judge Paulsen pointed to “notable features” in the email, including that it referred to “loans and loan documents” and the “agreement” having changed significantly in during verbal discussions since the drafting of the loan documents.
Specifically, the email mentioned that Felicity Clark’s mother had verbally agreed that some of the money was to be a gift.
“This was in reference to the fact that Felicity had suffered years of physical and psychological abuse at the hands of Mr. Clark and his brother. Felicity states that she believed that Mrs. Clark was offering her the money in recognition of the treatment she had received.
The email said Felicity Clark’s mother had agreed that interest on the money would be waived and the remainder would be repaid on future real estate transactions when Felicity Clark was “sufficiently liquid”.
In light of this email, Gregory Clark went to court seeking summary judgment on the loan agreements, including interest and penalties, totaling $423,442.
Gregory Clark’s legal arguments in court relied heavily on the draft loan agreement his daughter had prepared when she requested the first payment, the loan agreements later signed by both parties, the letters of lawyers sent to Felicity Clark and her email referring to “loans” and “loan agreements”.
Felicity Clark’s attorney argued that the case was not amenable to summary judgment because there were numerous factual disputes that needed to be resolved first.
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They argued that the payments were gifts and that the loan agreements were only intended as a safeguard against claims of ownership of the relationship by Felicity Clark’s partner. She said she was forced to sign them under duress.
She further stated that the repayment terms would have been impossible to meet because the monthly repayments would have far exceeded any excess rent.
Judge Paulsen said that while he viewed Felicity Clark’s position as “weak”, there was enough difference on the factual issues for him to conclude that her defense could not be ruled out as untenable.
The motion for summary judgment was denied and the judge ordered that the case be scheduled for a case management conference to continue in court.