01 July 2026
The presumption of advancement lives on: Liao v Liao and the enduring bond between parent and child The Legal Framework: Resulting Trusts and the Presumption of Advancement The Orthodox Position: England and Australia The Diverging Approach: Canada The Shifting Approach: New Zealand The Present Case: Background The Issues on Appeal The New Zealand Court of Appeal's Reasoning Comment
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In Liao v Liao [2026] NZCA 250, the New Zealand Court of Appeal has confirmed that the presumption of advancement continues to apply to transfers from parents to adult children in New Zealand, regardless of the child's age or financial independence.
The Court dismissed the appeal on the evidence, holding that the evidence of the parties' intentions clearly displaced the presumption of a resulting trust without recourse to the presumption of advancement. The decision follows several recent New Zealand decisions drifting from the traditional English common law position, which the Court of Appeal has now reaffirmed. In reaching that conclusion, the Court weighed the orthodox English common law position against the diverging Canadian approach in Pecore v Pecore, which it considered but declined to follow.
The resulting trust principles are well settled. Where a person makes a voluntary payment to another, or advances the purchase price of property registered in another's name, equity presumes the transferor intended to retain the beneficial interest: Westdeutsche Landesbank Girozentrale v Islington London Borough Council. That presumption is easily rebutted either by the counter-presumption of advancement or by direct evidence of an intention to make an outright transfer (see the New Zealand authority of Potter v Potter [2003]).
The presumption of advancement operates as a counter-presumption. In certain relationships, historically husband and wife, or parent and child, it is presumed that the transferor intended to make a gift, displacing the resulting trust. Historically, the presumption rested on two notions: the obligation to support the other person, and the natural love and affection presumed to arise from the relationship. Over time it was extended to anyone standing in the position of a parent.
In England and Australia, the presumption of advancement between parent and child remains part of the law, even if its strength has been questioned. In Laskar v Laskar, the English Court of Appeal confirmed that the presumption still exists between parent and child, though it described it as relatively weak, and weaker still where the child was over 18 and managed their own affairs. The Privy Council reaffirmed its relevance in Enal v Singh, holding that, although much criticised as based on outdated assumptions, the presumption continues to form a relevant part of the Court's inquiry into what the parties intended.
The High Court of Australia took a similar line in Nelson v Nelson (1995), accepting that the presumption applies to adult children, though its practical importance may be limited where the evidence allows a positive finding of actual intention.
The Canadian Supreme Court took a different approach in Pecore v Pecore. The majority held the presumption should not apply to transfers from parents to adult children, for three reasons(per Rothestein J):
1. the parental obligation to support does not extend to independent adults;
2. the common Canadian practice of ageing parents placing assets in adult children's names for financial management warranted a rebuttable presumption that the child holds the property on trust; and
3. making dependency the threshold would create unacceptable uncertainty, given the variety of circumstances in which an adult child might be viewed as dependent.
The majority also rejected parental affection as a basis, observing that affection arises in other familial relationships, such as between siblings, where the presumption has never been applied.
Abella J, in dissent, took a fundamentally different view. Her Honour's examination of the historical authorities demonstrated that resting the presumption on obligation alone narrowed and somewhat contradicted the historical rationale. Parental affection, no less than parental obligation, had always grounded the presumption. What distinguishes the parent-child relationship from other bonds of affection is not financial dependency, stated Abella J, but ...
The Court dismissed the appeal on the evidence, holding that the evidence of the parties' intentions clearly displaced the presumption of a resulting trust without recourse to the presumption of advancement. The decision follows several recent New Zealand decisions drifting from the traditional English common law position, which the Court of Appeal has now reaffirmed. In reaching that conclusion, the Court weighed the orthodox English common law position against the diverging Canadian approach in Pecore v Pecore, which it considered but declined to follow.
The resulting trust principles are well settled. Where a person makes a voluntary payment to another, or advances the purchase price of property registered in another's name, equity presumes the transferor intended to retain the beneficial interest: Westdeutsche Landesbank Girozentrale v Islington London Borough Council. That presumption is easily rebutted either by the counter-presumption of advancement or by direct evidence of an intention to make an outright transfer (see the New Zealand authority of Potter v Potter [2003]).
The presumption of advancement operates as a counter-presumption. In certain relationships, historically husband and wife, or parent and child, it is presumed that the transferor intended to make a gift, displacing the resulting trust. Historically, the presumption rested on two notions: the obligation to support the other person, and the natural love and affection presumed to arise from the relationship. Over time it was extended to anyone standing in the position of a parent.
In England and Australia, the presumption of advancement between parent and child remains part of the law, even if its strength has been questioned. In Laskar v Laskar, the English Court of Appeal confirmed that the presumption still exists between parent and child, though it described it as relatively weak, and weaker still where the child was over 18 and managed their own affairs. The Privy Council reaffirmed its relevance in Enal v Singh, holding that, although much criticised as based on outdated assumptions, the presumption continues to form a relevant part of the Court's inquiry into what the parties intended.
The High Court of Australia took a similar line in Nelson v Nelson (1995), accepting that the presumption applies to adult children, though its practical importance may be limited where the evidence allows a positive finding of actual intention.
The Canadian Supreme Court took a different approach in Pecore v Pecore. The majority held the presumption should not apply to transfers from parents to adult children, for three reasons(per Rothestein J):
1. the parental obligation to support does not extend to independent adults;
2. the common Canadian practice of ageing parents placing assets in adult children's names for financial management warranted a rebuttable presumption that the child holds the property on trust; and
3. making dependency the threshold would create unacceptable uncertainty, given the variety of circumstances in which an adult child might be viewed as dependent.
The majority also rejected parental affection as a basis, observing that affection arises in other familial relationships, such as between siblings, where the presumption has never been applied.
Abella J, in dissent, took a fundamentally different view. Her Honour's examination of the historical authorities demonstrated that resting the presumption on obligation alone narrowed and somewhat contradicted the historical rationale. Parental affection, no less than parental obligation, had always grounded the presumption. What distinguishes the parent-child relationship from other bonds of affection is not financial dependency, stated Abella J, but ...