Anthony Strik

Related party loans in Family Law : Han & Han [2026] FedCFamC1A 54

Austin J has again delivered a judgment of real practical value for family law practitioners. This decision provides clear and accessible guidance on how related party loans are to be considered in a property adjustment exercise under s 79(5) of the Family Law Act 1975 (Cth), and serves as a timely reminder of the risks associated with tethering a contributions argument to a single asset rather than adopting the orthodox global approach. It is well worth reading in full.

Overview

The Full Court dismissed an appeal by a husband from final property settlement orders made in September 2025. The appeal raised three grounds: the treatment of an alleged debt of $4.66 million owed by the husband to his mother and related corporations; the assessment of the wife’s contribution-based entitlement; and the adequacy of reasons given for a superannuation splitting order. The case contains important guidance on the treatment of related party loans in family law property proceedings.

Key Facts

The parties married in early 2018 and separated in December 2021. The combined asset pool was valued at $7,401,418. The primary judge disregarded the husband’s alleged debt of $4.66 million to his mother and associated corporations, finding he had failed to prove the quantum of the debt or the likelihood of its enforcement. The wife was assessed as entitled to 25 per cent of the total assets on a contributions basis, plus a superannuation split of $59,900 from the husband’s interest.

Ground 1 — Related Party Loans

The Debt

The husband had borrowed approximately $1.8 million from his mother and five corporations she controlled to purchase and develop a Melbourne property in 2003 and 2004. The balance of the alleged debt — approximately $2.8 million — represented accrued interest. A loan agreement was entered in 2004 and replaced in 2007. The creditors lodged a caveat over the property in November 2007, which lay dormant until the creditors sought interest repayments in September 2019 and called in the loan in November 2022, after separation. Despite that, they took no steps to recover the money — neither instituting separate proceedings nor intervening in the family law litigation.

Existing Liabilities

The husband argued that once a debt was identified as an existing liability, the primary judge was obliged to bring it to account by reducing the net equity available for division. Austin J rejected this, confirming that the court’s wide discretion under s 79(5)(e) of the Family Law Act 1975 (Cth) permits a liability to be excluded from the joint balance sheet where the circumstances warrant — including where its quantum is uncertain and enforcement is unlikely. The point is well made at the level of principle: requiring the debt to first appear on the balance sheet before being removed by discretion was dismissed as “a pointless contrivance.”

Security Is Not Determinative

The husband’s central argument was that because the debt was secured, the primary judge had no discretion to disregard it. Austin J rejected this in unequivocal terms, confirming the long-standing emphasis on the likelihood of enforcement rather than the mere presence of security. His Honour drew a material distinction between a debt owed to an unrelated commercial creditor secured by registered mortgage, and a debt owed to a close family member equitably charged over property. Quoting approvingly from Af Petersens & Af Petersens (1981) FLC 91-095, Austin J reiterated:

“It is fairly common in this Court to meet a situation where a parent has made a loan to a child which is in all respects legally enforceable, but which is not in fact enforced and would not really be expected to be enforced. It is no doubt an ‘obligation’ but if the obligation is not likely to have to be met, it should not be taken into account.”

His Honour also confirmed from Rodgers & Rodgers (2016) FLC 93-703 that:

“there is no statutory prescription which suggests that any such treatment of the liability is mandatory … what emerges from the authorities is that while there might be a ‘rule’ the application of which is appropriate in the vast majority of cases, the manner in which a particular liability should be treated is, ultimately, dependent upon the nature of the liability, the circumstances surrounding the liability and the dictates of justice and equity shaped by each.” (at [40]–[41])

The Nature of the Security

Austin J made an additional finding with practical significance: the caveat lodged by the creditors was itself improper. A charge does not create an equitable proprietary interest in land — it is a “mere equity” — and caveats do not protect mere equities. The creditors therefore held no proprietary interest in the property. An agreement to sign a mortgage upon request (which was never made) did not alter that position. The caveat simply lay dormant on title for nearly two decades without any steps being taken to enforce the underlying obligation.

Disposition of Ground 1

The primary judge’s findings that the quantum of the debt was unproven and that enforcement was unlikely were undisturbed. Austin J confirmed that those findings, taken together, meant the mere existence of the charge “did not, in the face of those undisturbed findings, impel the primary judge to take the debt into account by diminishing the net value of the parties’ property.”

Ground 2 — Contributions Assessment

The husband challenged the finding that the wife’s contributions warranted 25 per cent of the total assets, alleging legal and factual error and contending the primary judge had conflated her contributions.

Austin J rejected each limb. The assessment of contributions was conducted globally, consistently with Norbis v Norbis (1986) 161 CLR 513, and the primary judge had carefully identified the wife’s financial contributions — including earned income, capital from the sale of her re-developed property, mortgage payments after separation, financial contributions to the former family home, and payment of private school fees — alongside her non-financial contributions as primary carer of the child. The husband’s complaint of double-counting was rejected: recognising the source of funds used for a particular contribution does not amount to conflating separate contributions.

Austin J also observed that the assessment of contributions “can never be an audit” and is properly conducted on a “holistic and impressionistic” basis, citing Jabour & Jabour (2019) FLC 93-898 at [61]–[87].

The husband’s submission that insufficient weight was given to his own contributions was characterised as “essentially a bare proposition.” His contributions had been assessed by the primary judge as three times greater than the wife’s, which was “not manifestly unreasonable just because the husband audaciously assessed his contributions as being nine times greater.”

Ground 3 — Superannuation

The husband contended the primary judge gave inadequate reasons for the superannuation splitting order of $59,900. Austin J rejected this, finding the reasons were adequate. The wife’s evidence explained the methodology — splitting the net increase in combined superannuation during the relationship equally between the parties — and the husband had not meaningfully challenged that evidence when it was open. His only submission in final addresses was a bare contention that, given the short relationship, no split should be ordered at all. No error was demonstrated.

Significance

Han & Han consolidates and applies established authority on several points relevant to practitioners:

Related party loans will be scrutinised closely. Proof of quantum, the closeness of the creditor relationship, and the history of enforcement conduct are all material. The presence of security — even registered security — does not compel a court to bring a disputed debt to account if enforcement is unlikely.

The nature of the security matters. Practitioners should carefully assess whether a debt is truly secured by an equitable mortgage or merely by a charge. The distinction affects both the validity of any caveat and the weight the court will give to the security in a property adjustment exercise.

Creditor inactivity is significant. Where a creditor has sat on their rights for years and taken no steps to recover a debt after default, a court is unlikely to treat that debt as one the wife should share responsibility for.

Contributions assessments are holistic. Courts are not required to trace each dollar of financial contribution to its ultimate economic product. Non-financial contributions, including primary care of children and homemaking, are entitled to substantial recognition alongside financial ones.

Han & Han [2026] FedCFamC1A 54. Judgment of Austin J, 26 March 2026. Appeal from Han & Han [2025] FedCFamC2F 1285.

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1) APPELLATE JURISDICTION

Han & Han [2026] FedCFamC1A 54 

Appeal from:Han & Han [2025] FedCFamC2F 1285
  
Appeal number:NAA 492 of 2025
  
File number:MLC 10462 of 2022
  
Judgment of:AUSTIN J
  
Date of judgment:26 March 2026
  
Catchwords:FAMILY LAW – APPEAL – PROPERTY – Where the primary judge made final property settlement orders between the spouses – Whether the primary judge erred in excluding a loan the husband alleged he owed to his parents – Where the debt was identified to be an existing liability – Where the security for the debt found not to be determinative – Where the husband failed to prove the quantum of the debt or the likelihood of its enforcement – Where the creditors have been inactive to recover the debt –  Where the husband challenges the wife’s asset entitlement – Where the husband contended the increase in the wife’s debt secured over her real property should have diminished the assessment of her financial contribution, which is rejected – Where the primary judge explicated the wife’s significant overall financial and non-financial contributions – Where the contention the primary judge failed to give adequate reasons as to the wife’s superannuation entitlement is rejected – Appeal dismissed – Costs ordered in a fixed sum.   
  
Legislation:Family Law Act 1975 (Cth) Pts VII, VIII, s 79)
  
Cases cited:Af Petersens & Af Petersens (1981) FLC 91-095; [1981] FamCA 50Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337; [1981] HCA 1Biltoft & Biltoft (1995) FLC 92-614; [1995] FamCA 45Butler v Fairclough (1917) 23 CLR 78; [1917] HCA 9Dickons & Dickons (2012) 50 Fam LR 244; [2012] FamCAFC 154Global Minerals Australia Pty Ltd v Valerica Pty Ltd [2000] NSWSC 1143Jabour & Jabour (2019) FLC 93-898; [2019] FamCAFC 78Latec Investments v Hotel Terrigal Pty Ltd (1965) 113 CLR 265; [1965] HCA 17Linga v C & N Constructions Pty Ltd [2012] NTSC 08Mallett v Mallett (1984) 156 CLR 605; [1984] HCA 21Moy & Pao (No 2) [2025] FedCFamC1A 48Nguyen v Sage Consultant Group Pty Ltd [2021] NSWSC 753Norbis v Norbis (1986) 161 CLR 513; [1986] HCA 17Prince & Prince (1984) FLC 91-501; [1984] FamCA 7Puddy & Grossvard (2010) FLC 93-432; [2010] FamCAFC 54Roberts v Investwell Pty Ltd (in liq) [2012] NSWCA 134Rodgers & Rodgers (2016) FLC 93-703; [2016] FamCAFC 68Shinohara & Shinohara (2025) FLC 94-266; [2025] FedCFamC1A 126Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52Trustee for the Bankrupt Estate of Lasic v Lasic (2009) FLC 93-402; [2009] FamCAFC 64Wallis & Manning (2017) FLC 93-759; [2017] FamCAFC 14Winston & Winston (No 2) [2013] FamCAFC 147
  
Number of paragraphs:79
  
Date of hearing:19 March 2026
  
Place:Heard in Melbourne, delivered in Sydney
  
   
  
Counsel for the Appellant:Mr Matta and Ms Frederico
  
Solicitor for the Appellant:Fairbank Lawyers
  
Counsel for the Respondent:Ms Swann and Mr Ellis
  
Solicitor for the Respondent:Aitken Partners

ORDERS

 NAA 492 of 2025
MLC 10462 of 2022
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTION
BETWEEN:MR HANAppellant
AND:MS HANRespondent
   
ORDER MADE BY:AUSTIN J
DATE OF ORDER:26 MARCH 2026

THE COURT ORDERS THAT:

1.           The appeal is dismissed.

2.           The appellant shall pay the respondent’s party/party costs of and incidental to the appeal, fixed in the sum of $27,962.

Note:   The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Han & Han has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

AUSTIN J:

  1. These reasons explain the dismissal of an appeal brought by the husband from final property settlement orders made by a judge of the Federal Circuit and Family Court of Australia (Division 2) in September 2025.BACKGROUND
  2. The parties married in early 2018 and separated in December 2021.
  3. Proceedings under the Family Law Act 1975 (Cth) (“the Act”) were started by the wife in 2022.
  4. The parties have one child who, pursuant to consent orders made under Pt VII of the Act, lives with the wife and spends time with the husband.
  5. The parties’ financial dispute under Pt VIII of the Act proceeded to trial in August 2025. Judgment was reserved and promptly delivered in September 2025.
  6. The primary judge found the parties’ assets and superannuation were valued collectively at $7,401,418 (at [9]), though the constitution of the pool of property was the subject of considerable factual contest. The primary judge: disregarded the large debt of $4.66 million the husband claimed he owed his parents (at [13]–[53]); disregarded the debt of $100,000 the husband claimed he owed his father (at [55]); accepted the wife’s savings were only $12,906 and not $50,000 (at [56]); accepted the wife did not have an asset in the form of an unpaid loan of $25,500 owed by her sister (at [58]); accepted the husband had no proprietary interest in a vehicle owned by a corporation (at [60]); and accepted the husband did not have an asset in the form of shares worth $19,000 (at [61]).
  7. The parties held surprisingly divergent views about their contribution-based entitlements. The wife contended for her entitlement to 30 per cent of the net assets (at [96]), whereas the husband contended her entitlement should be measured at only 35 per cent of the net equity in a single asset – the former family home – which equated to only nine per cent of all assets (at [95]). The primary judge assessed the wife’s entitlement to be 25 per cent of the total assets (at [97]).
  8. In addition, the wife sought 34.6 per cent of the parties’ combined superannuation interests, which aspect of her application the husband did not meaningfully address, and so the wife’s contention was accepted (at [98]).
  9. Neither party sought an adjustment under s 79(5) of the Act, though his Honour considered an adjustment of 0.73 per cent in the wife’s favour was warranted so her overall entitlement would then equate to the value of the net equity in the former family home (at [107]–[108]).
  10. To fulfill the findings, orders were made for the wife to acquire sole title to the former family home, subject to her accepting exclusive liability for the debt secured against it (at [108]). If she is unable to re-finance the mortgage, the property must be sold to relieve the husband of any potential liability, though she will retain the net sale proceeds (at [110]). Additionally, the base amount of $59,900 was split from the husband’s superannuation interest (at [109]). Otherwise, the parties retain their own real and personal property.
  11. The husband’s application to extend the time for his appeal from the orders was granted consensually on 24 October 2025. He ultimately moved on his Amended Notice of Appeal filed on 13 February 2026.THE APPEAL
  12. The appeal challenges the order requiring the sale of the former family home in the event of the wife’s default in re-financing the mortgage (Order 3), though not the principal orders investing her with exclusive entitlement to the former family home (Orders 1–2), and the superannuation splitting orders (Orders 7–11).
  13. In effect, the husband now contends the wife should pay him $837,000 for the privilege of acquiring sole ownership of the encumbered former family home, thereby abandoning the different proposal he made at trial for her to pay him $1.088 million (at [6]) – the difference being $251,000. The husband maintains there should be no superannuation splitting order. Accordingly, he now seeks a result which is about $900,000 more favourable to him than the appealed judgment provides.
  14. There are three grounds of appeal. The first challenges the finding to disregard the debt the husband alleges he owes to his parents. The second challenges the validity of the finding made about the wife’s proportional entitlement to the assets. The third challenges the finding made about the wife’s proportional entitlement to superannuation for the lack of adequate reasons.Ground 1
  15. This ground contends the primary judge erred by “excluding” the loan the husband alleged he owed his parents in the sum of $4.66 million (referred to as being $4.77 million at some points in the reasons for judgment). Although the creditors are loosely referred to as the husband’s parents, they are in fact the husband’s mother and several private corporations.
  16. Before turning to consider the reasons why the husband contends the finding was erroneous, it is instructive to understand the premise of the finding.
  17. The husband deposed to purchasing a parcel of real property in Melbourne in 2003 for $1.15 million, which purchase was enabled by borrowing about $1.179 million from his parents and five corporations they control. He later borrowed an additional $634,072 from them to assist with construction of a home on the property. The husband entered into a loan agreement in respect of those advances in February 2004, which was replaced by another agreement made in November 2007 (at [14]–[16]). Although the capital advances amounted to about $1.8 million, the remainder of the debt (about $2.8 million) was said to constitute accrued interest.
  18. Shortly after the second agreement was struck in 2007, the husband’s mother and the five corporations registered a caveat over the title of the property alerting their asserted interest in the property pursuant to the charge granted by the terms of the agreement (at [17]).
  19. The primary judge accepted the husband borrowed money on the terms reflected in the second loan agreement (at [18]). His Honour also accepted the loan was not statute-barred (at [25]). However, the husband failed to establish either the quantum of the debt (at [26]–[32]) or the likelihood it would be enforced against him (at [38]–[52]), so the loan was disregarded as a liability for which the wife should share responsibility (at [53]).
  20. The husband contends the primary judge’s approach was flawed because, once the debt was proven to be an existing liability, his Honour was then obliged to take it into account by commensurately reducing the net equity in the parties’ assets available for division between them. He asserted well established principles precluded the primary judge from disregarding the debt when it was a secured liability.Existing liabilities
  21. The husband first argued the debt was an existing liability and so had to be taken into account in accordance with the literal terminology of s 79(3)(a)(ii) of the Act and the commentary of the Full Court in Shinohara & Shinohara (2025) FLC 94-266 (“Shinohara”).
  22. The primary judge did identify the debt owed by the husband to be an existing liability, though that finding did not oblige its treatment in the way and for the reasons he submitted.
  23. When determining whether and how to adjust parties’ property interests, the Act exhorts the Court to take account of the nature and circumstances of any liabilities incurred by the parties (s 79(3)(b) and s 79(5)). Given the findings of how the quantum of this debt was uncertain and it was unlikely to be enforced against the husband, the primary judge concluded it should not feature on the joint balance sheet to diminish the collective net equity in the parties’ property, for otherwise the wife would effectively share his responsibility for the liability.
  24. The disregard of the debt as one in which the wife should share liability is a course which falls well within the wide discretionary ambit of s 79(5)(e) of the Act. The husband accepted that proposition, so his argument the debt should first have appeared on the balance sheet before then later being removed from the balance sheet pursuant to an exercise of discretion under s 79(5)(e) of the Act was a pointless contrivance. Just as the Court has wide discretion to adjust the parties’ interests in existing assets, the Court similarly has wide power to designate the way in which the parties should bear responsibility for existing liabilities.
  25. Nothing said in Shinohara stands in the way of that analysis. The Full Court there discussed (at [95]–[101], [116]–[128] and [135]) the impermissible notional add-back to the balance sheet of exhausted property, on the pretence it is still the existing property of the parties. Clearly enough, exhausted property no longer exists and so to treat it otherwise is a paradox. The waste or exhaustion of property is instead addressed at a later stage of the adjustment process under the provisions of s 79(5)(d) and s 79(5)(v) of the Act. The Full Court in Shinohara said nothing about the use of s 79(5)(e) of the Act to regulate parties’ respective liability for debt.
  26. During the appeal hearing, the husband sought to assert it was not open for the primary judge to find it was unlikely the creditors would enforce the debt against him, given the anterior finding that the loan was genuine, but he faced several problems. First, no such submission transparently fell within the ambit of the grounds of appeal. Secondly, no such overt submission was advanced in his Summary of Argument. Thirdly, the husband did not identify any factual error in the basal findings which underpinned the ultimate finding the loan would not likely be enforced (at [38]–[52]). Fourthly, due to familial relationships, creditors do not always enforce their lawful rights under loan agreements against defaulting borrowers.
  27. The last point is germane to the discussion of the husband’s next arguments, which proceeded from the confidence he expressed in the security held by the creditors over his property.Secured liabilities
  28. The first step in any financial cause under the Act is to determine the parties’ existing property and liabilities (Stanford v Stanford (2012) 247 CLR 108 at [37] and [50]; s 79(3)(a) of the Act).
  29. It has been long-standing practice to identify and ascertain the gross value of the parties’ assets and to deduct their secured and unsecured liabilities from the assets to then establish the net value of the divisible property (Biltoft & Biltoft (1995) FLC 92-614 (“Biltoft”) at 82,124; Moy & Pao (No 2) [2025] FedCFamC1A 48 at [14]–[16]).
  30. The adoption of that practice avoids subordinating creditors’ claims to the spouses’ individual claims for the adjustment of their property interests, which principle was adumbrated by the High Court in Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 at 354 in these terms:… [I]t would be unreasonable to impute to the Parliament an intention to give power to [the Court] to extinguish the rights, and enlarge the obligations, of third parties … but it does not follow that Parliament intended that the legitimate interests of third parties should be subordinated to the interests of a party to the marriage, or that [the Court] should be able to make orders that would operate to the detriment of third parties. There is nothing in the words of the sections that suggests that [the Court] is intended to have power to defeat or prejudice the rights, or nullify the powers, of third parties, or to require them to perform duties which they were not previously liable to perform …
  31. In observing that principle, it has been of equally long-standing practice for the Court to be discerning about the treatment of debts owed by spouses to creditors as circumstances may require some liabilities to be disregarded or allocated exclusively to one spouse for payment from his or her individual share of the divided property (Biltoft at 82,124-82,128; Puddy & Grossvard (2010) FLC 93-432 at [62] and [101]–[111]; Trustee for the Bankrupt Estate of Lasic v Lasic (2009) FLC 93-402 at [198]–[200]).
  32. In Biltoft, the Full Court said this in respect of the departure from the orthodox practice of deducting known liabilities from the gross value of the spouses’ assets (at 82,127 – 82,128):… Notwithstanding the general practice which has developed, the Court has indicated that it may properly determine not to take into account or to discount the value of an unsecured liability in certain circumstances. Such liabilities would include but are not limited to a liability which is vague or uncertain, if it is unlikely to be enforced or if it was unreasonably incurred ……… There is no requirement that the rights of an unsecured creditor or a claim by a third party must be considered and dealt with prior to the Court making an order under s 79 [of the Act], nor is there a rule of priority as between a creditor claimant and a spouse. Those rights, however, cannot be ignored. They must be recognised, taken into account and balanced against the rights of the spouse …(Emphasis added)
  33. For present purposes, it is important to notice how the Full Court there referred only to the prospective disregard or discount of unsecured liabilities. The distinction between secured and unsecured liabilities has since been identified and adopted in numerous first-instance cases.
  34. In the appeal hearing, despite some prevarication, the husband eventually contended that no trial judge has any discretion at all to put aside a secured debt, so long as it is not a sham. The existence of security was said to compel the trial judge to take the debt into account at full value and thereby depreciate the value of the assets available for division between the spouses. The submission in such absolute terms is rejected.
  35. The discussion in Biltoft of the dichotomy between secured and unsecured debts resulted only from the need to contrast a disputed unsecured debt with uncontentious secured debts, so no further consideration by the Full Court of secured debts was necessary. It ought not therefore be presumed that secured debts must always be accorded priority over spouses’ property adjustment claims, such that the granular detail of those debts may be safely disregarded as being unimportant. Usually, a secured debt will be enforced, but not always. The significant factual issue is always the likelihood of debt’s enforcement, regardless of whether it is secured.
  36. To illustrate the point, there is evidently a material distinction between, on the one hand, a liability owed by a spouse to an unrelated commercial creditor (like a bank) secured by registered mortgage over real property and, on the other, a liability owed by a spouse to a close associate (like a family member or friend) equitably charged over the property. Both the closeness of the connection between the debtor spouse and the creditor and the type of security held by the creditor bear upon the likelihood of the debt being enforced and, hence, the way in which the debt is treated in an exercise of discretion. So much has been recognised in many cases other than Biltoft.
  37. In Af Petersens & Af Petersens (1981) FLC 91-095 (“Af Petersens”), a debt owed by a spouse to a parent, despite being partly secured by mortgage, was discounted in the financial cause between the spouses. The court there said (at 76,669):… It is fairly common in this Court to meet a situation where a parent has made a loan to a child which is in all respects legally enforceable, but which is not in fact enforced and would not really be expected to be enforced. It is no doubt an “obligation” but if the obligation is not likely to have to be met, it should not be taken into account.
  1. So too in Prince & Prince (1984) FLC 91-501 (“Prince”), a debt secured by mortgage was in issue, though the existence of the security was not decisive in determining whether the debt was deployed to reduce the value of the spouses’ property. In the discussion, Af Petersens was expressly approved.
  2. Af Petersens and Prince were both decided before Biltoft, but later Full Court decisions have never resoundingly endorsed any critical difference between secured and unsecured debts. The emphasis has always been on the likelihood of enforcement rather than the presence of security. As examples, regardless of the results in the appeals which were dependent upon the unique factual circumstances, the Full Court quoted Af Petersens, Prince and Biltoft approvingly in Winston & Winston (No 2) [2013] FamCAFC 147 and Rodgers & Rodgers (2016) FLC 93-703.
  3. The Full Court said this in Winston & Winston (No 2) at [52]:… it is clearly not the case that [Af Petersens] is authority for the proposition that whenever there are loans from family members which are not likely to be repaid such loans should in every case be written off in their totality, especially in circumstances where, as in Af Petersens and here, the loan is secured by registered mortgage …
  4. That is self-evidently true. The intrinsic circumstances of the case at hand determine whether the subject debt should be disregarded or discounted, so the result differs from case to case.
  5. The Full Court later said this in Rodgers & Rodgers without emphasising any difference between secured and unsecured debts:40.          It is in our view important to reiterate and emphasise what was said in Biltoft above: there is no statutory prescription which suggests that any such treatment of the liability is mandatory. Despite the frequency with which the “rule” is applied we have not been taken to any authority, nor are we aware of any authority, which suggests that any such “rule” has the effect of a binding rule of law. What emerges from the authorities is that while there might be a “rule” the application of which is appropriate in the vast majority of cases, the manner in which a particular liability should be treated is, ultimately, dependent upon the nature of the liability, the circumstances surrounding the liability and the dictates of justice and equity shaped by each.41.          The usual practice or “rule” sits comfortably and conformably within that rubric — in many cases, perhaps almost all, liabilities will be deducted from the “gross” value of the property because it will be clear (and even if not expressly stated, determined) that the justice and equity of the case demands that the liabilities should be met by the parties in the proportions in which the court determines the property is to be divided. Liabilities that are vague, uncertain, unlikely to be enforced and the like might be treated differently because those circumstances might, in the circumstances of the particular case, render it unjust and inequitable for liabilities to be deducted in that manner. Those so-called “exceptional cases” are but instances of the broader consideration of the justice and equity of the particular case.(Footnotes omitted) (Emphasis added)
  6. Here, the relevant creditors were the husband’s mother and some corporations controlled by his parents. He granted the creditors a charge over a parcel of real property under the terms of their loan agreement, in reliance upon which they then lodged a caveat over the title to the property. The close relationship between the husband and the creditors was significant, but so too was the form of security, though that aspect attracted little attention at first instance.
  7. The charge granted by the husband to the creditors was incapable of supporting the caveat. Charges do not create an equitable proprietary interest in the charged property for creditors in the same way as do equitable mortgages. A charge is a “mere equity” (Latec Investments v Hotel Terrigal Pty Ltd (1965) 113 CLR 265 at 277, 286 and 288–291) and caveats do not protect mere equities (Global Minerals Australia Pty Ltd v Valerica Pty Ltd [2000] NSWSC 1143 at [15]). The creditor who benefits from the charge only has a personal right of action to seek, by way of litigious remedy, an order appropriating the property to satisfy the unpaid debt (Linga v C & N Constructions Pty Ltd [2012] NTSC 08 at [24]), such as by the appointment of a receiver or an order for sale. The creditor has no direct recourse to the charged property.
  8. The husband sought to argue in the appeal that he granted the creditors an equitable mortgage over the property, not merely a charge. He cited the terms of the loan agreement, under which he charged his interest in the property in favour of the creditors and recorded his agreement to sign a mortgage in their favour if ever requested to do so (at [16]). The husband’s submission is rejected. It was common ground the creditors never requested him to sign a mortgage and so he did not do so. Although the difference between a charge and a mortgage turns on the terms of the loan agreement, a mere agreement to create a mortgage upon request does not usually grant to the creditors any proprietary interest in the subject property (Roberts v Investwell Pty Ltd (in liq) [2012] NSWCA 134 at [25]–[32]).
  9. Furthermore, caveats are only properly available to temporarily protect an asserted proprietary interest in land while the caveator proves (or not) the alleged interest. Caveats are not an intrinsic form of security which permanently impinge the indefeasibility of the owner’s title in the property (Nguyen v Sage Consultant Group Pty Ltd [2021] NSWSC 753 at [394]–[397]; Butler v Fairclough (1917) 23 CLR 78).
  10. The evidence here was that the creditors lodged the caveat in November 2007 and it just lay dormant on the title ever after (at [17]). It was not until September 2019, while the spouses were living together, that the creditors sought interest repayments (at [40]), and then not until November 2022, by which time the spouses had separated and this litigation had commenced, that the creditors called in the loan (at [46]). However, despite default, the creditors did nothing to recover the loan. They neither instituted separate commercial proceedings nor intervened as parties in the litigation below to prosecute their right to appropriate the charged property in satisfaction of the outstanding loan.
  11. Significantly, the primary judge found the husband failed to prove the quantum of the debt owed to the related creditors and it was also unlikely the debt would be enforced against him. The mere existence of the charge he granted to the creditors did not, in the face of those undisturbed findings, impel the primary judge to take the debt into account by diminishing the net value of the parties’ property.
  12. Stripped bare, the husband’s point was essentially this: it was unfair for the wife to take a proportional share in their property having a net value of $4.66 million more than it truly had. But the converse argument was equally compelling: it would be just as unfair for the wife to be confined to a proportional share in their property having a net value of $4.66 million less than it truly had. Once the primary judge found the $4.66 million debt would not likely be enforced against the husband, the latter argument inevitably prevailed.Ground 2
  13. This ground is a pastiche of indiscriminate allegations of legal, factual and discretionary errors, supposedly infecting the finding the wife’s contributions should be measured at 25 per cent.
  14. Rather extravagantly, it is alleged the finding was an error “in fact and law”, manifestly unjust, not reasonably open on the evidence, gave insufficient weight to the husband’s contributions, and conflated the wife’s initial contributions with her subsequent contributions.
  15. There was no error of law. His Honour correctly cited binding legal principles (at [8]) and then applied them by identifying the existing property interests (at [9]–[63]), determining it would be just and equitable to make adjustment orders (at [64]), analysing the parties’ contributions (at [65]–[98]), determining whether any adjustment was warranted (at [99]–[107]), and then making just and equitable orders to reflect the findings (at [108]–[118]).
  16. The husband failed to demonstrate any factual error, though he alleged two: a mistake about the value of the real property the wife took into the relationship and the conflation of her contributions overall.
  17. Significantly, no finding was made about the value of the real property which the wife introduced to the relationship in 2018 because there was no direct evidence of it. The primary judge simply accepted the wife’s evidence about its initial purchase price, the loan advance to her in 2014, her subsequent development of the property, the debit mortgage balance at the time of cohabitation in 2018, the amounts for which the developed property was later sold off in 2019 and 2022, and the use of the sale proceeds (at [68]–[69], [81] and [89]). The acceptance of the wife’s evidence was unsurprising in view of the adverse findings made about the husband’s reliability as a witness (at [83]).
  18. The husband only submitted this to his Honour in final submissions about the difficulty in quantifying the wife’s initial capital contribution:[Counsel for the husband]: Paragraph 8.3 of the outline of case records the initial contributions of the wife. In my submission, that assessment is slightly more problematic for this reason: your Honour heard evidence about the state of the [developed property]. Your Honour will recall that I cross-examined the wife in relation to the state of that property at the commencement of the relationship. The wife’s evidence is that the property was 80 per cent complete. I had taken her to her evidence in relation to that, which was an external photograph of the property. I then explored the evidence of my client demonstrating the internal condition of the property, as at or shortly after the date of the commencement of cohabitation.HIS HONOUR: I have to determine that on a straight credit point, don’t I? There’s no objective evidence that the photographs taken by your client were taken on the date that he asserts. She denies that they were taken at that time.[Counsel for the husband]: She says she doesn’t know. It wasn’t a straight denial. The difficulty that your Honour’s going to face is this: in the absence of any evidence as to the valuation of the property at that stage, your Honour is somewhat hamstrung as to what value you ascribe to her initial contributions. Now, I don’t stand here before you and say that she had no equity in that property; clearly, she did. She had purchased the freehold some years prior to cohabitation, but whether the property was valued – or what the property, rather, was valued as at the date of cohabitation is unknown. If it was to be sold in that state, indeed, the wife in her material uses the figures for both units upon the sale of those properties, which occurred well and truly during the course and into the relationship.(Transcript 28 August 2025, p.329 lines 22–45) (Emphasis added)
  19. Aside from the wife’s initial capital contributions, the primary judge noted her other contributions of this ilk: earned income (at [78] and [82]); the family’s accommodation in her property (at [80]); her primary care of the child (at [82] and [94]); her administrative work for the husband (at [82]); her joint commitment to the mortgage secured over the former family home (at [85]); her financial contributions to the construction costs of the former family home (at [90] and [92]); her payment of the mortgage over the former family home after separation (at [91]); her provision of $50,000 to the husband after separation from the proceeds realised on the sale of her property (at [89]); and her payment of private school fees (at [89]).
  20. The husband’s complaint of “conflation” is rejected. The wife’s financial contributions to the construction of the former family home and the service of the mortgage registered over it came, in part, from the money she earned at work and the capital she received from the sale of her own re-developed property in 2019 and 2022 (at [90]–[92]), but the mere recognition of that fact did not amount to double-counting or “conflating” her contributions.
  21. During the appeal hearing, the husband’s complaint devolved to his assumption the primary judge overlooked the fact that the debt secured over the wife’s real property had increased between the time of their cohabitation in 2018 and the sales of the partitioned property in 2019 and 2022, which increased debt he submitted should have diminished the assessment of her financial contributions. However, the husband’s assumption is unwarranted. The primary judge specifically referred to the debt encumbering the wife’s property (at [68]–[69] and [80]–[81]) and identified how she applied the net sale proceeds (at [89] and [92]). His Honour recognised the wife used the sale proceeds to meet school fees of $43,600, repay the husband a loan of $192,699, pay the husband a cash sum of $50,000, and contribute $450,000 to the former family home. That was the extent of her financial contributions sourced to the sale of her real property. In any event, the assessment of the parties’ financial contributions can never be an audit. The assessment of contributions, both financial and non-financial, is holistic and impressionistic (Jabour & Jabour (2019) FLC 93-898 at [61]–[87]; Wallis & Manning (2017) FLC 93-759 at [20]; Dickons & Dickons (2012) 50 Fam LR 244 at [14]–[27]).
  22. The husband also submitted insufficient weight was attributed to his contributions, but that was essentially a bare proposition. He failed to demonstrate any discretionary error, either expressly or by implication, when his contributions were assessed by the primary judge as being three times greater than the wife’s (at [97]). That assessment was not manifestly unreasonable just because the husband audaciously assessed his contributions as being nine times greater. The fluidity of his position is evident from the moderated remedial order he now seeks in the appeal.
  23. The primary judge determined to assess the parties’ contributions globally (at [66]), as is the usual course (Norbis v Norbis (1986) 161 CLR 513 at 520–523, 534–535 and 541), because doing otherwise risks giving non-financial homemaking contributions merely token rather than the substantial recognition they deserve (Mallett v Mallett (1984) 156 CLR 605 at 609, 623, 636 and 646), as the primary judge recognised (at [95]).
  24. The husband submitted this to the primary judge in his Case Outline document:7.3          Any approach to this case on a global assessment of contributions is likely to yield an outcome that distorts rather than illuminates the discretionary pathway set out in section 79 of [the Act] ……9.10        On any view of the facts of this case, the sole adjusting asset can only be the equity in the [former family home]. The Court retains a broad discretion to adjust the equity in that property having regard to matters set out in section 79(5) of the Act. However, to do otherwise would result in the Husband receiving no adjustment for his significant contributions during the period of cohabitation which is the very antithesis of the exercise of power under section 79(2) of the Act.
  25. His Honour unexceptionally said this of the husband’s submissions concerning the parties’ contributions:67.          Further, whilst [the husband’s] submission properly disavowed any suggestion that I should quarantine particular contributions, that is precisely the effect of his contention that contributions ought only assessed by reference to one asset. There is also a significant risk in his approach of impermissibly requiring a contribution to result in a positive economic result so as to be taken into account. The absence of a causal link between contributions and their financial product or value is not indicative of a party having made no contribution pursuant to subsection 79(4).(Footnotes omitted)
  26. Once the husband fails to demonstrate legal, factual or discretionary error, it is unnecessary to go any further, but it is instructive to illuminate the flaw in the case conducted by the husband at trial. He asserted the wife should only receive 35 per cent of the net equity in the former family home because that represented her proportional financial contribution to the acquisition and improvement of that particular property. The contention was wrong for two reasons. First, in final submissions he was impelled to concede her proportional financial contribution to the property measured greater than 35 per cent. Secondly, his analysis of the case on that narrow basis failed to recognise the myriad other contributions she made.
  27. In respect of the first point, the husband’s counsel had these exchanges with the primary judge:[Counsel for the husband]: During the relationship, it’s agreed that each of the parties contributed towards the acquisition and conservation and improvement of the [wife’s property]. In the case of the wife – and I’m using round figures – she says she contributed about $455,000, and in respect of my client it was somewhere between $555,000 to $580,000. The wife’s evidence of the profit she received from the two [units] was also somewhat revealing. In her assessment of that profit, she conceded that she failed to include the loan that was repaid to my client, the loans that were repaid to her family, as well as selling costs. We’re also at somewhat of a loss to understand exactly how much she received in terms of profit once she sold both of those units.HIS HONOUR: The 450 that goes into [the wife’s property] is agreed, or not?[Counsel for the husband]: It is, your Honour. It is agreed ……[Counsel for the husband]: On the basis of the 65-35 adjustment.HIS HONOUR: Well, I understand there’s a discrepancy in the capital that goes into [the wife’s property].[Counsel for the husband]: Yes.HIS HONOUR: Is that the only differential between the parties?[Counsel for the husband]: It is, your Honour, yes.HIS HONOUR: How do you get to 65?[Counsel for the husband]: We get a 65 on the basis that my client had made, obviously, the greater financial – direct financial contribution towards – – -HIS HONOUR: This is the 550.[Counsel for the husband]: Or the 580, he says.HIS HONOUR: Well – – -[Counsel for the husband]: It’s 550 on the wife’s case.HIS HONOUR: – – – I think you say 555 to 580, I think is what you said.[Counsel for the husband]: Yes.HIS HONOUR: Versus 550.[Counsel for the husband]: Yes.HIS HONOUR: So that’s 56 per cent to him.[Counsel for the husband]: And then, your Honour, the – it’s the direct contribution towards that property. It’s the fact that my client paid the deposit on the [wife’s property]. The wife’s – – -HIS HONOUR: So the 567 doesn’t include the deposit?[Counsel for the husband]: No, it does include the deposit, but I’m saying in terms of the way in which the property was acquired, it was my client’s funds that enabled the parties to acquire the property in the first place ……[Counsel for the husband]: Your Honour may disagree with the assessment of 65/35 on the equity, again, your Honour is charged with that responsibility of making or fashioning orders that are just and equitable. But, your Honour, the ambit of my submission, that adjustment, can only be on that $1,674,000 …(Transcript 28 August 2025 p.330 lines 15–27; p.332 line 24 to p.333 line 19; p.358 lines 17–20)
  28. In respect of the second point, the reasons for judgment explicate how the wife’s significant overall contributions were both financial and non-financial (at [78]–[85] and [89]–[92]), the earlier discussion of which in these reasons need not be repeated.
  29. This ground is rejected.Ground 3
  30. This ground asserts the primary judge failed to give adequate reasons for the finding that the wife should have 34.6 per cent of the combined value of the parties’ superannuation interests, which assertion is rejected.
  1. The reasons for judgment revealed the wife initially contributed superannuation of $102,297 (at [69]), which evidence the husband did not challenge in cross-examination (at [70]), whereas he initially contributed superannuation of $383,138 (at [71]), which evidence the wife did not challenge (at [72]). By the time of trial, the wife had superannuation of $250,083 and the husband had superannuation of $646,335 (at [9]).
  2. The parties therefore collectively increased their superannuation entitlements by $410,983 between the time of their cohabitation and the trial. Of that sum, the wife accumulated extra superannuation of $147,786, which approximates 36 per cent of the increase.
  3. The wife deposed this in her trial affidavit:91.          I am otherwise seeking a superannuation split of $59,900 calculated based on our respective superannuation, taking into account the superannuation we each had at the commencement of the relationship.
  4. In her Case Outline document, the wife submitted this:The Wife is seeking a superannuation split of $59,900 taking into account the increase in the superannuation of the parties from the commencement of the relationship to date.(Wife’s Case Outline filed 19 August 2025, p.10)
  5. In opening the wife’s case to the primary judge, her counsel explained this in relation to the superannuation splitting order she sought:[Counsel for the wife]: Superannuation, I think you raised with my instructor on the last occasion and myself, and we’ve modified our claim in relation to the super split and reduced it down to the 50 per cent of the net increase in relation to super. In other words, what they had at the beginning of the relationship, what they’ve got now, the increase in their collective super and divided that fifty-fifty …(Transcript 25 August 2025, p.23 lines 9–13)
  6. Consonantly with the wife’s application, the sum of $59,900 was split from the husband’s superannuation interest, in which event the wife now has superannuation of $309,983 and the husband has superannuation of $586,435. Hence, the wife’s superannuation interest now equates to 34.6 per cent of the combined superannuation interests.
  7. The primary judge explained in the reasons how the husband did not respond to or challenge the wife’s evidence about the proposed superannuation splitting order (at [98]), which is true while the evidence was still open.
  8. The husband did raise this benign challenge, but not until final submissions:[Counsel for the husband]: … But it’s still important when you look at the ….. characteristics of the superannuation entitlements. The wife seeks a very small adjustment, just over $50,000, my client says no adjustment, we say that this is a case in circumstances where it is a very short relationship, that there ought not be any splitting of my client’s superannuation in favour of the wife.(Transcript 28 August 2025, p.328 lines 40–44)
  9. No error is demonstrated by the rejection of the husband’s submission.
  10. The reasons for judgment adequately deal with the superannuation splitting order. This ground is rejected.DISPOSITION
  11. The appeal is dismissed.
  12. The wife sought her costs of the appeal from the husband, calculated on a party/party scale basis at $27,962, which the husband conceded in the event of dismissal of the appeal.
I certify that the preceding seventy-nine (79) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Austin.

Associate:

Dated:       26 March 2026

In