On 26 March 2026, Justice Austin of the Federal Circuit and Family Court of Australia sitting in its Division 1 Appellate Jurisdiction rejected the husband’s appeal in the case of Han & Han [2026] FedCFamC1A 54, and as a corollary his purported family loan in the quantum of $4.66 millions, which, if accepted, would have reduced the value of the matrimonial asset pool the subject of the property division.

 

Case facts, and decision

The husband claimed that he had owed millions to his parents and family-controlled companies under a written loan agreement dating back to 2007, which was even supported by a registered caveat securing the alleged debt.

Despite this, the Court had refused to deduct the debt from the property pool because a) the alleged creditors had taken no meaningful steps to enforce repayment; b) the evidence about the debt lacked strength; c) the arrangement appeared more “family accommodation” than a commercial loan; and d) the Court was not satisfied that the liability would have realistically been enforced.

This is not the first time the Australian Family Court jurisdiction has dealt with family loans. In Biltoft & Biltoft (1995) FLC 92-614, it was already held authoritatively that the Court is not bound to deduct every alleged, or even proven, debts mechanically from the matrimonial asset pool. Key factors determining this ‘deduction’ include vagueness/uncertainties, likelihood/willingness of enforceability; reason for incurrence; and availability of evidence.

 

Implications

It has always been the Court’s position that treatment of liabilities in family court property proceedings is discretionary, and not automatic, even for documented loans.

Parties to such proceedings therefore need to pay particular mind to the above factors when deciding their forensic directions when litigating in Court; while individuals contemplating asset protection mechanics should also be wary of the many pitfalls of improperly implemented measures.

 

Author: Stephanie WONG, Partner