The
High Court heard evidence of Chinese custom before ruling $335,500 sent by
parents from China to help their married daughter buy a family home was not a
gift but a loan with details of the loan not yet finalised. When the marriage failed her parents could
recover their money.
Meng Li and Yi Ming
Zhao married in 2007. Ms Li had been in
New Zealand since 2001, supported financially whilst a student by her parents in
China. They provided $335,500 of the
cash needed by the newly married couple to buy a home in New Zealand. Ms Li and Mr Zhao separated after five years. The High Court was asked to decide whether Ms
Li’s parents’ $335,500 was a gift (and relationship property since it was used
to buy a family home) or a loan (repayable to the parents).
There was no
documentary evidence supporting the transfer of funds to New Zealand. Justice Simon France said intra-family money
matters are often dealt with informally, particularly so in Chinese society
where to do otherwise could be seen as disrespectful. There was no prior agreement that the funds
transfer was a loan: there was no agreement for payment of interest or for when
the funds might be repayable. Chinese
custom is that Ms Li as an only child would care for her parents in their old
age and that financial assistance in the purchase of a family home would be on
the assumption her parents would at some point live with her in the house. His Honour ruled the funds transfer amounted
to an interest free loan repayable on demand.
He ordered the former family home sold with the net proceeds divided
50/50 between Ms Li and Mr Zhao after repayment to Ms Li’s parents of the $335,500
they advanced.
Zhang
v. Li – High Court (10.02.17)
17.015