The lender sold the security property and paid the surplus into court.
There were four competing claims for the surplus:
- The husband;
- The wife;
- The husband’s mother;
- The ex partner of the husband.
The husband claimed his half of the surplus. His mother also claimed the surplus, on the basis that her son had borrowed $40,000 as a deposit for the house. The wife claimed her half of the surplus as joint-owner but also the husband’s half of the surplus on the basis that she had Family Court orders for a property settlement. The husband’s ex-partner, and the mother of his children, claimed his half of the surplus on the basis that he had a significant child support debt that was unpaid.
The Court stated that in order to make a claim, a person must not merely be an unsecured creditor but must have a proprietary interest in the funds in court.
All parties consented to the joint borrower the wife being paid half of the surplus to which she was entitled as joint owner of the property. That order was made, and the dispute concerned the remaining half of the funds.
The Judge decided that the mother’s claim failed – she was (if anything) merely an unsecured creditor. Moreover, she did not appear at the hearing and so there was no evidence she had in fact paid the amount to her son.
The Judge decided that the ex-partner of Mr McKane had not strictly proved her entitlement to the surplus. The costs to which she was entitled (as part of her child support judgment) had not yet been agreed or assessed. Furthermore, there was no beneficial interest established as to the monies paid into court.
Mr McKane opposed his ex-partner Ms Wells receiving any of the additional half of the surplus funds only the basis that he had a Family Court appeal that might result in the variance of the order of which she was seeking payment.
The Judge decided that he would resolve the matter by ordering that half the surplus be paid to Ms Wells immediately and the payment of the remainder to be stayed pending determination of Mr McKane’s Family Court appeal. If it was unsuccessful, then that amount would be paid to her. If it was successful, then the issue of payment could be revisited subject to what orders were made on the appeal.