WA Property transfer versus personal guarantee

[Mark Hamilton]

13 years ago, my now wife, agreed to a split of assets with her ex-husband that included transfer of some properties and the associated loans. The split of assets was 51% to 49% to the wife, a generous split to the husband given 2 children were to be with wife full time. The property split went well and according to court orders, but several years later a developer that was developing the complex that a villa that the wife received at settlement went in to receivership and the banks lawyers pursued all 24 of the investors to this project, as they had all signed as personal guarantors to this project. Married at the time, wife and husband had signed separately as personal guarantors to this project. In the project of 24 villas only 4 were finally completed, wife has full possession of one of these and has settled and has loan in her own name.

Wife settled on villa and still had to negotiate and pay $20,000 to banks lawyer due to personal guarantee. Husband separately negoated and paid $10,000 to banks lawyers but is now pursuing wife for this amount plus $13,000 legal fees as he is claiming this should be associated to the villa that wife settled on rather than the broader development project.

There is a paragraph in settlement orders that says that other than property transfers mentioned then each party is responsible for indemnifying themselves against anything else in their name.

Separately, husband has contributed only $3500 toward raising of two teenage children for the past 13 years. Is there a mechanism to ask for compensation of reasonable costs for raising of his children. Didn’t want to do this but if husband is persisting with the above then it seems only just to consider all reasonable costs associated with compliance with the divorce settlement orders.

Any advice greatly appreciated.

 

[sammy01]

child support is totally separate. You've got nothing on that one.

If the court orders pertaining to asset division stipulate that each party indemnifing themselves agaist anything else in their name, then put simply it is not ex-husbands problem.

So, if ex hubby maid $13 000 he should not have paid it. He might find the costs of pursuing this in court isn't worth it... $13 000 doesn't get you far in legal fees these days.

 

[Atticus]

he is claiming this should be associated to the villa that wife settled on rather than the broader development project.

I agree with Sammy.... His claim is baseless... Property settlements are determined on the basis of what is just & equitable AT THE TIME of settlement.... The confirmation & clincher is the paragraph mentioning indemnity

 

[Mark Hamilton]

Thank you to both Atticus and Sammy, we appreciate the responses as they confirm our thoughts on this position.

If I may impose one final time to be sure, the relevant paras in the Consent Orders state as follows:

Para 3b. The wife pay and indemnify and keep indemnified the husband in relation to the loans secured against Property xxxx and Villa yyyy.

Para 6. Other than as set out above each party pay and indemnify and keep indemnified the other party in relation to any liabilities in their name.

Question is, does the personal guarantee separately provided by both parties to the developer, at the start of the project, in any way qualify as a loan against Villa yyyy. Or is this seperate to the title and loan on this Villa, that is still secured in the wife’s name, and that each party should separately have managed their personal guarantee in accordance with Para 6. The developer went bankrupt almost 5 years after settlement of the Villa by the wife and total guarantee was almost $2 million. 24 guarantors had signed as jointly and severally liable. It doesn’t seem fair or just that husband is trying transfer this to wife on the basis that she was left holding this villa and we feel that Para 6 should apply to both husband and wife in this instance.

Any guidance is appreciated and we agree that husband should realise the cost of this legal activity is not cost effective, but he has become quarrelsome and vexatious and convinced himself that any legal costs he incurs can also be pursued against the wife. So far he has racked up a $13,000 legal bill to chase $10,000 that he thinks he is owed.

 

[Atticus]

My take on it (if I understand the circumstances correctly) is that the family law orders can not be used as a way of addressing the contract of guarantee, which I agree, should fall under the paragraph 6... That said, if the guarantee was signed with all parties to be held joint & severally responsible, then that could be an issue separate from the family law orders for which he has a right to pursue.... Not smart on his part to run up legal bills assuming a costs order would be granted..

I think you need to take all orders & contracts along to a professional for a proper legal opinion if you haven't already

 

[Rod]

It seems your wife should pay something. It is arguable as to what that amount should be (ie $10K or $23K). Events around the demand for payment will determine how much it is likely to be.

Possible make an offer, of say $16K to settle it. If the children are <18 or still at school, might be time to apply for child support.