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Acknowledgement of Debt, Gifting

Gift or loan – that old chestnut …

This blog might just as easily be entitled “No-one ever said if only we hadn’t documented that loan agreement”.  Zhang and Li v Li relates to an advance of $335,500 from Ms Li’s parents to Ms Li and her husband. After Ms Li and her husband separated her position was that the advance was a loan, his was that it was a gift.

In analysing the matter Simon France J noted a pattern of gifts between Ms Li and her parents.  Also noted is the fact that intra family loans are often informal.  A “clumsy” attempt by Ms Li to document the loan was disregarded but the comment made regarding back dated documents always causing alarm should be noted.

The minutia of relationships was analysed and the Court was satisfied that the advance that represented a significant portion of Ms Li’s parents’ retirement funds were in fact a loan.

On different facts the court might be less sure.

Document and record.  Friends and family one day.  Plaintiffs and defendants the next.



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