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Parents out of pocket after judge rules daughter doesn’t have to pay back R540,000 loan

06 July 2022 - 12:53
Without being able to prove the existence of a formal loan agreement with their daughter, her parents have lost a court case trying to get her to repay them.
Without being able to prove the existence of a formal loan agreement with their daughter, her parents have lost a court case trying to get her to repay them.
Image: Siphiwe Sibeko/Reuters

Parents who lent R540,000 to their daughter while she was going through a divorce to buy her husband out of their marital home are now ruing their decision. 

This after they failed to prove to the Free State high court that the money was a contractual loan.

In 2018, when the daughter was divorcing her husband, she approached her father to help her with an amount equal to half of the value of the property so that she could buy her husband's share. .

The father pleaded in his claim that he advanced his daughter the money “as a parent who was looking after the interests of his child”, but had expected her to pay back the money after the divorce.

The daughter said she received an amount of R300,000 from her father, who was the first plaintiff, and that she received an amount of R240,000 from her mother, who was the second plaintiff in the case, as this portion was paid from her bank account. 

The daughter admitted that she received the money but she argued that her parents failed to produce sufficient evidence to establish that when they gave her the money, she had any intention of repaying them.

For the parents to have succeeded with their claim, they had to prove the existence of the loan and the specific terms of the loan agreement.

The action was dismissed with costs. According to the judgment, the father failed to prove the creation of contractual obligations and failed to prove the establishment of a contract from which rights may flow. The father also conceded during cross-examination that he and the daughter had not reached an agreement about a repayment date.

Judge AJ de Kock said the father could not show “the existence of either a written, oral, or tacit loan agreement”.

“No material terms and conditions of the alleged loan agreement were pleaded. In particular the date or time period for repayment of the alleged loan amount, and consequent breach of the alleged loan amount by virtue of the [daughter’s] failure to make repayment on an agreed date or time period has not been pleaded.

“The onus rested on the father to prove the existence of a loan agreement, its terms and consequent breach thereof on a balance of probabilities,” said the judge. “However, no prima facie evidence was presented to show that the money was advanced to and accepted by the daughter as a loan for consumption to be repaid.”

De Kock found the father “most certainly failed in proving the existence of a loan agreement containing a contractual term stipulating when the alleged amount was due and payable” by the daughter.

“Taking all into consideration his claim stands to be dismissed without further ado,” said the judge. 

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