NSW Is Indemnity Still Valid?

[Pauliew]

Hi there,

In 2014, I was divorced and received a bad settlement. We had a joint loan for $50k. I was under a great deal of stress and agreed to "indemnify and keep indemnified" my ex for that loan.

To note - she got the house and everything in it, I got nothing and kept the debt. I filed for a part 9 debt agreement and the bank came after her for the 50k. She then paid out the 50k in her own name and took over the debt.

For the past 2 years, I've paid a small amount to her in good faith - and because I was stupid.

My question is - is that indemnity still valid considering she took ownership of that joint loan and paid it out in her own name?

Many thanks, and thank you so much for any help.

 

[Victoria S]

Obviously I am not privy to all of the facts and circumstances here, but as I understand it, this is the very situation the indemnity was drafted for. Whether or not the settlement was fair, it was either agreed to or ordered by the court and therefore stands. The indemnity is a contractual agreement which will endure unless she agrees to relinquish her right to indemnity under it.

An indemnity is drafted so that if the party in whose favour the indemnity was drafted (your ex wife) must pay a certain sum of money, another person - the giver of the indemnity - (you) come under a legal obligation to pay it, even if you don't have the primary obligation to pay that anymore.

So in short, yes based on the information provided, as I see it, the agreement you made to indemnify your ex for the loan would still be valid.

 

[Pauliew]

Thank you Victoria for your reply.

Considering the orders said I was to solely pay the joint debt, would it not have been a breach of court orders and also contravening the orders considering she paid the debt out?

Also, my understanding from research is that a person Bankrupt or committing an act of bankruptcy can not enter into an agreement?

Many thanks,

Obviously I am not privy to all of the facts and circumstances here, but as I understand it, this is the very situation the indemnity was drafted for. Whether or not the settlement was fair, it was either agreed to or ordered by the court and therefore stands. The indemnity is a contractual agreement which will endure unless she agrees to relinquish her right to indemnity under it.

An indemnity is drafted so that if the party in whose favour the indemnity was drafted (your ex wife) must pay a certain sum of money, another person - the giver of the indemnity - (you) come under a legal obligation to pay it, even if you don't have the primary obligation to pay that anymore.

So in short, yes based on the information provided, as I see it, the agreement you made to indemnify your ex for the loan would still be valid.

 

[Pauliew]

And also,

(Sorry just thinking out loud)

Considering that debt was now paid out, would I not have to agree to a new total dollar amount and also terms of interest / length of payments, etc?

 

[Victoria S]

Was your property settlement and the indemnity court ordered or negotiated? If you agreed to the indemnity, was it before or after you entered into Part IX?

You have raised a number of technicalities but at the end of the day, the law is not all about enforcing technicalities. The family court especially will enforce orders that it believes are just and equitable. It will likely want to give effect to any orders it made at the outset, and I doubt it will hold it against your ex that she came to your aid.

 

[Pauliew]

Thankyou Victoria,

Property settlement was negotiated and indemnity also negotiated - but then were obviously enforced by court orders. Indemnity was before I entered the part IX.

 

[Pauliew]

Would the next logical step be a mediation with a possibility of a set agreement of new, clearly defined terms? (Total amount, length of payment, etc)?

 

[Victoria S]

Yes mediation would probably be a good next step.