If you are considering lending money to a family member—whether to help with a property purchase, a business venture, or simply to bridge a financial gap—the recent New South Wales Supreme Court decision in Li v Wang (No 4) [2026] NSWSC 668 is essential reading.
This case involved a 71-year-old woman who lent money to her brother-in-law, sister-in-law, and niece to help them buy a property in Wolli Creek, Sydney. What followed was a bitter legal dispute that ran for five years, occupied twelve days of court hearings, and resulted in a judgment against all three family members for $400,000 plus interest.
Below, we break down what happened, what the Court decided, and—most importantly—what this means for you if you are thinking about lending money to a family member.
The Background: A Family Loan
In 2016, Ms Li (the plaintiff) agreed to lend money to her brother-in-law (Mr Wang), her sister-in-law (Ms Su), and her niece (Ms Wang) to help them purchase a property in Wolli Creek for the niece.
The loan was made in two parts:
Initial sum: RMB 3,000,000 (approximately AUD 600,000 at the time)
Additional sum: AUD 203,200
The money was used to buy the property. Over time, the family members made partial repayments, but a balance of $400,000 remained unpaid.
The dispute centred on two key questions:
Who was actually liable? The niece and her mother (the sister-in-law) argued that only the father/brother-in-law had borrowed the money—they claimed they were not parties to the loan.
Was interest payable? The borrowers argued there was no agreement to pay interest. The lender said they had agreed to pay 5.5% per annum—the same rate she was earning on her own investments.
What the Court Decided
After hearing extensive evidence over multiple hearings, the Court found in favour of the lender, Ms Li, on both counts.
1. All Three Family Members Were Liable
The Court held that all three defendants—the brother-in-law, sister-in-law, and niece—were parties to the loan agreement and were jointly and severally liable to repay the outstanding $400,000.
What does "jointly and severally liable" mean?
It means the lender can recover the full amount from any one of the borrowers. If one cannot pay, the others must cover the shortfall.
The Court rejected the argument that only the father was liable. Key factors included:
Bank records showed the loan funds were transferred into accounts controlled by all three defendants.
Repayments were made by the niece, with one transfer explicitly described as "purpose is to refund a loan".
Text messages from the father referred to "Jianrong and I are your debtors" (referring to himself and his wife).
The niece was heavily involved in the transactions and benefited directly from the loan.
The Court found the niece and her mother to be unreliable witnesses, noting that the niece had a history of providing false information to banks and government authorities.
2. Interest Was Payable at 5.5% Per Annum
The Court also found that the parties had agreed to pay interest at 5.5% per annum. The lender had only agreed to lend the money on the condition that she would receive the same interest she was earning on her own investments.
Key takeaway: Even though the interest rate was not recorded in writing, the Court accepted oral evidence that it had been agreed. The lender's evidence was found to be credible, and the borrowers' denials were rejected.
The Court ordered interest to be paid from the dates the funds were advanced, amounting to $273,377.23 in accrued interest.
3. The Loan Was Governed by Australian Law
The borrowers argued that Chinese law should apply, and that under Chinese law, interest is not payable on loans between individuals unless expressly agreed in writing.
The Court rejected this, finding that Australian law applied because:
The purpose of the loan was to buy property in Australia.
The funds were transferred to Australian bank accounts.
The borrowers were residing in or moving to Australia.
Even if Chinese law had applied, the Court noted that the outcome would have been the same—the evidence clearly established an oral agreement to pay interest.
What This Means for You: Key Lessons1. Put It in Writing—Even with Family
The most important lesson from this case is that oral agreements are risky, especially within families. While the lender ultimately succeeded, it took five years of litigation and twelve days in court to prove what she said was agreed.
Our recommendation: Always document a family loan in a written agreement that clearly sets out:
Who the borrowers are
The amount borrowed
The interest rate (if any)
The repayment terms
What happens if the loan is not repaid
A simple written agreement can save years of stress and legal costs.
2. Be Clear About Who Is Borrowing
One of the central disputes in this case was whether the niece and her mother were parties to the loan. The Court found they were, based on bank records, repayment conduct, and communications.
Our recommendation: If multiple family members are benefiting from a loan, make sure all of them are named as borrowers in the loan agreement. This avoids arguments later about who is actually liable.
3. Interest Must Be Agreed—and Recorded
The borrowers in this case tried to avoid paying interest by arguing there was no written agreement. While the Court ultimately found in the lender's favour, it was a hard-fought battle.
Our recommendation: If you expect to receive interest on a family loan, state the interest rate clearly in writing. This removes any doubt and makes it much harder for the borrower to later argue that interest was not agreed.
4. Keep Records of All Transactions
The lender in this case was able to prove her case partly because she had:
Bank statements showing the transfers
Text messages and WeChat communications
A handwritten IOU note
Our recommendation: Keep a file of all documents relating to the loan—transfer receipts, emails, text messages, and any notes or agreements. These records can be vital if a dispute arises.
5. Be Aware of the Cost of Disputes
This case occupied twelve days of court time across multiple hearings over several years. The legal costs would have been substantial.
The Court ordered the borrowers to pay the lender's costs:
On the ordinary basis up to 7 June 2024
On the indemnity basis from 8 June 2024 onward
What's the difference?
Ordinary basis: The losing party pays the other party's legal costs, but only those that were reasonably incurred.
Indemnity basis: The losing party pays all of the other party's legal costs, including those that might not be strictly necessary. This is a significant penalty.
The indemnity costs order was made because the borrowers continued to defend the case after a certain point, driving up costs unnecessarily.
Practical Steps Before You Lend to a Family Member
If you are considering a family loan, we recommend the following:
Seek legal advice before you lend—not after a dispute arises.
Prepare a written loan agreement that covers all key terms.
Ensure all borrowers sign the agreement.
Keep copies of all transfers and communications.
Consider whether you want interest and, if so, specify the rate in writing.
Think about security—do you want the loan secured against property?
Be realistic about the risk that the loan may not be repaid, and consider whether you are prepared to enforce your rights if necessary.
How We Can Help
At Harriss Jones Lawyers, we regularly advise clients on family loans and other private lending arrangements. We can:
Draft loan agreements tailored to your circumstances;
Advise on interest rates and whether you should seek advice on tax implications;
Help you understand your rights if a loan is not repaid; and
Represent you in disputes, including mediation and court proceedings.
If you are considering lending money to a family member—or if you are already in a dispute about a family loan—we encourage you to get in touch.
This article provides general information only and does not constitute legal advice. For advice specific to your situation, please contact our office.
Disclaimer: This blog post is based on the publicly available judgment in Li v Wang (No 4) [2026] NSWSC 668. The names have been used as they appear in the judgment. This article is intended for informational purposes only and does not constitute legal advice.
