Anna Roiser and Eri Horrocks consider how the courts approach loans from family members in financial remedy proceedings, in Family Law

The full article was published on 04 November 2021 and can be found here.

This article considers how the courts approach (purported) loans from family members in financial remedy proceedings, and the variety of situations in which disputes can arise. Whilst in some cases there may be a dispute as to whether there was ever a transaction at all, in most cases it is the nature of a transaction which is in issue.

Debate is generally framed around whether a transaction was a ‘soft’ or ‘hard’ loan, with the line between a soft loan and a gift narrowing almost to extinction in some cases, but remaining distinct in others. An examination of the caselaw illustrates that the significance of how a family loan is characterised can be felt in two ways: firstly whether it will be included in the overall asset computation, and secondly whether provision for repayment should be made in the order.

The article concludes by looking at the issues to be considered when advising a matrimonial client who is considering borrowing from a family member, and by reviewing the procedural issues arising where a family loan is alleged, including the role of the ‘lender’ in the proceedings.