sued for net bank transfers

I had a so called friend stay at my house for 7 months. I could not charge him rent as my house is part of my sallary package and charging him rent in the eyes of my employer would be fraud. So we made a mutual verbal agreement that he would pay incidentals like fuel,food, gas, elec and phone. He transfered the money via net bank into my account when a bill came in etc. He then assulted my wife so i kicked him out. He is now suing me for the transfered money saying he was supporting my wife.
If i just defend myself with a lawyer and dont counter sue does he still have to pay for my legal fees?
Basically i just want to know where we stand with this.

FYI - there was nothing in writing between us but i have a witness to the agreement

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I cannot see how he would win that suit.

He made the payments for some reason. He will have to lie under oath and he would not be wise to do that.

Are you in small claims court or other court? Has he actually filed?

It is small claims court. Yes he has filed already and i was given the papers and 28 days to respond, he filed on the 14th of June 07, and i recieved the papers on the 26th of Jan 08!. The only evidence he has produced so far is the reciepts he printed off from his bank account.
At this moment i have a friend who is doing an affidavit for me who was present during the agreement.
My wife has all of her bank statements that show when the money went in, and where it went.
Any more help would be much appreciated.
Thanks

Have your friend also appear in court live or the judge may not allow the writing.

its admisable to have it in wrighting if they need to they can call the whitness

In my case last month the judge refused a signed notarized letter to be seen since the person was also not at the court, for whatever that is worth,