Liao v Liao - [2026] NZCA 250

Presumption of resulting trust. Presumption of advancement. Adult children. Transferor's intentions. 

The appeal is dismissed. The appellants must pay the respondents costs for a standard appeal on a band A basis together with usual disbursements. 

In 2012, Ms Liao purchased a residential property in Glen Innes, Auckland. Her parents, Mr and Mrs Liao (the appellants) contributed 10 per cent of the purchase price. Ms Liao said that the funds were advanced to her as a gift. Mr and Mrs Liao said, to the contrary, that the funds had been advanced on the basis that the property would belong to them. They bought proceedings alleging that Ms Liao held the property on resulting trust. 

Did the Judge err in treating the presumption of advancement as applying to adult children? Held: No. 

In New Zealand the presumption of advancement has continued to be recognised with respect to adult children. The Court considered the decision of the Canadian Supreme Court in Pecore v Pecore which held that the presumption of advancement no longer applied to adult children, being predicated on parental obligation to support children. Parents had no legal obligation to support their adult children, so adult children should not benefit from a presumption of advancement. However, the Court preferred the reasoning of Abella J, in dissent, to the reasoning of the majority in Pecore. The Court held that the presumption of advancement reflects the unique relationship between parent and child and the fact that the emotional ties underpinning that relationship endure regardless of age. While the parental relationship does involve moral and legal obligations, it is not reducible to them. The uniqueness of the relationship justifies a presumption that parents who advance money to their children can be assumed, absent contrary evidence, to have intended to gift them that money. 

On the facts, was the presumption of resulting trust displaced? Held: Yes

Woolford J in the High Court was satisfied that the presumption of advancement applied, such that the funds should be treated as a gift to Ms Liao. However, this Court was satisfied that the evidence was sufficient to rebut the presumption of resulting trust without recourse to the counter-presumption of advancement. Given the surrounding circumstances, it was inherently unlikely that Mr and Mrs Liao would have become interested in buying an investment property in New Zealand at the relevant time. Moreover, Ms Liao had contributed a significant amount of equity to the property and taken on a substantial mortgage liability. It was implausible that she would have done this with the sole purpose of improving her credit score (as submitted by the appellants). Some of the advanced funds had been borrowed from Ms Liao's brother (without Ms Liao's knowledge). The appellants subsequently asked Ms Liao to pay her brother back, which she did. There was no obvious reason for her to have done so if she had no interest in the property. Further, the Court was satisfied on the balance of probabilities that it was Ms Liao and her husband who met the shortfall between the rent and the mortgage, not the appellants. Again, there was no obvious reason Ms Liao would have met the shortfall without an interest in the property. The Court attached no significance to the fact that there were no contemporaneous documents describing the advance as a gift: there was no evidence before the Court that previous gifts made by the appellants had been documented.