When parents advance money towards a deposit, everyone is usually on good terms, and documenting the arrangement is rarely the priority at the time. The difficulty is that, years later, when relationships or financial circumstances change, the question becomes: what was that money actually intended to be? This was the central question for the Court of Appeal in Liao v Liao [2026] NZCA 250, a recent decision concerning the presumption of advancement as it applies between parents and their adult children.
Family background
Mr and Mrs Liao emigrated from Taiwan to New Zealand with their three children in the early 2000s. Their daughter, Ms Liao, at the centre of the dispute, later married Mr Lam, a property developer. Over the years, Mr and Mrs Liao provided financial assistance to each of their three children from time to time.
In 2012 Ms Liao purchased an East Tāmaki investment property, using a gift from her parents towards the deposit. Later that year, she purchased a property in Glen Innes, which became the property at the centre of these proceedings. Her parents contributed $52,050 towards the deposit, Ms Liao contributed a further 10% from her savings, and the remaining 80% was funded by a bank loan in Ms Liao’s name.
In the years that followed, the parents funded three further property developments led by Mr Lam. Disputes arose between the parents, Mr Lam and Ms Liao concerning those developments, and the family relationship deteriorated.
Against that backdrop, Mr and Mrs Liao asked Ms Liao to transfer the Glen Innes property to them. Ms Liao refused, and litigation followed.
The dispute
In the High Court, Mr and Mrs Liao argued that they were the true owners of the Glen Innes property. They said they had intended to buy the property debt-free, and that Ms Liao’s role was simply to obtain finance to improve her credit rating. They said they expected to be the registered owners, with Ms Liao merely being liable on the loan.
Ms Liao’s account was very different. She said the property was her own investment, that the assistance with the deposit had been a gift, and that she alone managed the tenants, met the outgoings, and was responsible for the mortgage. She also pointed to the fact that her parents attended both the auction and the meeting with the solicitor, where it was explained, in Mandarin, that she would be the purchaser, registered owner of the property and borrower.
The presumption of advancement
The key legal doctrine at issue was the presumption of advancement. Where a parent transfers money or property to a child and a dispute later arises about ownership, the court must determine whether the transfer was intended as a gift, or whether the child was meant to hold the property for the parent. The presumption of advancement provides a starting point for that inquiry: it assumes that a parent who transfers property to a child intended to make a gift, unless the evidence shows otherwise. It is, however, rebuttable by evidence of a contrary intention.
The doctrine itself is broader than the facts of this case, and its application varies across different relationships. This article focuses specifically on its application between parents and adult children, which was the issue in dispute in Liao.
The doctrine has historically applied to transfers between parents and children, and to those standing in loco parentis. The central issue in this case was whether the presumption still applies where the child is an adult, and particularly, a financially independent adult.
The doctrine remains recognised in Australia and the United Kingdom in relation to adult children, but the Supreme Court of Canada has confined it to gratuitous transfers to minor children only, reasoning that parents no longer owe adult children a legal duty of support.
Mr and Mrs Liao argued that New Zealand should follow the Canadian approach. Ms Liao argued that the presumption remains part of New Zealand law, irrespective of a child’s age.
The High Court decision
The High Court accepted Ms Liao’s position. Woolford J, noting a “paucity of contemporaneous evidence” of the parties’ intentions at the time of purchase, found that the presumption of advancement applied and had not been displaced. The Glen Innes property was therefore Ms Liao’s alone.
The Court of Appeal decision
Mr and Mrs Liao appealed, but the Court of Appeal dismissed the appeal, ordering them to pay Ms Liao’s costs. The Court confirmed that the presumption of advancement remains part of New Zealand law and continues to apply to transfers between parents and adult children, including those who are financially independent.
Interestingly, and unlike the High Court, which had relied on the presumption to reach its conclusion, the Court of Appeal found that it did not need to rely on the presumption to decide the case at all. Looking at the evidence as a whole, including Ms Liao’s own financial and non-financial contributions to the property, the mortgage obligations, the family’s history of gifting to all three children, and the surrounding family circumstances, the Court of Appeal concluded that the payment was intended as a gift in any event.
Key takeaways
- The presumption of advancement remains alive and well in New Zealand for transfers between parents and adult children, regardless of the child’s age or financial independence.
- The doctrine is grounded in more than financial dependency. The unique and enduring parent-child relationship is central to its rationale.
- Presumptions only go so far. The Court of was ultimately persuaded by the evidence of intention, rather than by abstract legal doctrine.
It remains important to document the movement of family money. If parents are helping fund a property purchase, record whether the advance is intended as a gift, a loan or an investment. Reconstructing intention years later, once relationships have broken down, can lead to costly litigation.
If you have any questions about this case, gifting within families, or would like assistance documenting a family loan or property arrangement, please get in touch with our Private Wealth Team or your usual contact at Hesketh Henry.
