Australia: E-alert: A gift or a loan? The perils of giving money to family members

Last Updated: 24 November 2017
Article by Lachlan Amerena

The saying "never mix family and money" rang true in the recent Queensland Court of Appeal decision Berghan & Anor v Berghan.1 In this case, elderly parents were successful in claiming $286,471.09 with interest from their son, who refused to pay back an alleged loan. The son, at first instance in the District Court was successful in arguing that the monies were given to him by his parents as a gift. However, the Court of Appeal held that the amounts given to the son were loans, which, objectively the parties intended would be repaid.

Background of the Transactions

Throughout 2009, the son's company was under significant financial stress. After the son approached his parents, his father caused $98,000 to be transferred to the son. Soon after, the son continued to request money. The father complied and caused further transfers of money to the son.

Then in late 2012, when the son was struggling to pay his bills due to an injury, the son asked to borrow his father's credit card and incurred $13,471.09 of debt.

The evidence accepted by the trial judge2 was that:

  • Before the first transfer of money in 2009 a conversation took place whereby the money was described as a "loan" which was agreed to be repaid.
  • Each of the 12 transfers thereafter were preceded by similar conversations, whereby an undertaking was taken by the son to repay any money transferred in his favour.
  • The use of the credit card was on the basis that all expenses incurred would be repaid.

The Decision at First Instance

While the trial judge accepted this evidence, his Honour found that the Plaintiff parents had failed to discharge the onus proving that there was an intention by the parties to create a legally binding agreement for the loans. His Honour concluded this on the grounds that:3

  • The son's statement to repay the loan was premised on the ground that he would also look after the parents in old age. His Honour concluded this general statement was a moral obligation which was also encompassed in the obligation to repay the loan, as opposed to a legally binding requirement.
  • Because the parents had not maintained a ledger of the transfers as alleged loans, this behaviour indicated that the parents did not intend to have the money repaid.
  • The parents in making the payments to the son, for the benefit of the company, were simply discharging their maternal obligations because their daughter was an employee at the son's company. The transfers were therefore of a charitable nature, as the motive of the parents was to ensure that the son's company did not fail, so in turn their daughter could retain her job.
  • The parents allowed their son to use the credit card when he was injured and impecunious. These circumstances were therefore of a charitable nature rather than as part of any intention to form a legally binding agreement.

The Decision on Appeal

On Appeal the Court4 determined the issue to be whether both parties at the time of the transactions had objectively demonstrated that the payments were made by way of a loan agreement.5 Based upon the evidence accepted by the trial judge, the Court determined:

  • The circumstances that no ledger had been kept by the parents of the money owed by the son could not be a fact which counted against an agreement for a loan forming. The parents would not have had in their mind that one day they would be required to formally prove the payments in a court against their own son.6
  • The lengthy period it took the parents to make a demand for the money should not count against their assertion that a breach of contract existed. The Court held post contractual conduct cannot be taken into account when interpreting the terms of a contract.7
  • The motive the parents had in transferring their son the money, be it "charitable" or otherwise, was not relevant. Rather, of relevance was what the parties' objective intentions were when making the transactions.8

The Court set aside the decision of the District Court. The Court observed that once it was determined on the evidence that the monies were paid with an understanding that they would be repaid, that it was an "inescapable conclusion" that the transactions were a contract of loan.9 The Court gave judgment in favour of the parents for all the transactions and for the credit card debt in the sum of $286,471.09, with interest.

Points for Consideration

This case offers a number of timely reminders:

Firstly, the decision highlights the perils which may arise when informal transactions between family members occur.

Secondly, it gives rise to the issue of elder abuse, which, with Australia's ageing population, has become a fast growing issue.10

Thirdly, parties will be legally bound to an agreement because of their intention to form contractual relations, not because of their motivation. This is so even if the intention arises through a domestic or social context.

Family members entering into financial agreements (such as loans or guarantees for example) with other relatives should always firstly seek legal advice and have such arrangements documented.


1[2017] QCA 236.
2 Berghan & Anor v Berghan [2017] QCA 236, [2]-[6] and [22].
3 Berghan & Anor v Berghan [2017] QCA 236, [23].
4 Sofronoff P and Philippides JA and Boddice J.
5 Berghan & Anor v Berghan [2017] QCA 236, [24].
6 Berghan & Anor v Berghan [2017] QCA 236, [25].
7 Berghan & Anor v Berghan [2017] QCA 236, [26]. See particularly: Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570.
8 Berghan & Anor v Berghan [2017] QCA 236, [27].
9 Berghan & Anor v Berghan [2017] QCA 236, [31].
10 Although cases involving elder abuse are not new to Australian courts, see for example: Commercial Bank of Australia v Amadio (1983) 151 CLR 447.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Lachlan Amerena
Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions