In many Chinese families, the name on the title is not the whole story. A flat in Shenzhen is registered to a mother “for” her son. Shares in the family company are held by a cousin. The Melbourne home was bought with money from parents in China, described years later as a “loan”. The business sits in a Hong Kong company, owned by a BVI company, owned by someone else again.
When a couple separates, these arrangements become the battleground. Australian family law looks at substance and control, not just legal title, but it also respects assets that genuinely belong to the wider family. This article explains how courts approach nominee (代持) arrangements, private and offshore companies, and family loans. For discretionary trusts specifically, see our article Family trust divorce in Australia: Kennon v Spry and trust control.
Nominee arrangements (代持)
Holding property or shares in another person’s name is common, and usually undocumented. On separation, the argument can run in either direction.
“It’s in my mother’s name, but it’s really his”
The other spouse may argue that property registered to a relative is held on trust for their spouse and belongs in the property pool. Courts look at evidence such as:
- who paid the purchase price and the deposit, and from which accounts;
- who receives the rent and pays the mortgage, rates and strata levies;
- who makes decisions about leasing, renovating or selling;
- messages, emails and WeChat conversations describing the arrangement; and
- how the asset was described to banks, accountants and tax authorities.
“It’s in my name, but it really belongs to my parents”
A spouse may argue that property registered in their own name is held for parents or siblings and should be excluded. Courts approach these claims carefully, especially when they first appear after separation. A contemporaneous written declaration of trust, consistent tax treatment and a history of the relative actually controlling the asset carry much more weight than after-the-event statements.
Where a third party’s interests are affected, the parent, sibling or company may need to be joined to the proceedings so that orders can bind them. If the asset is overseas, the practical question of enforcement also arises: see How overseas property is valued and divided.
Private and offshore companies
Shares in an Australian, Hong Kong, BVI, Cayman, Singaporean or PRC company owned by a spouse are property and must be valued. Where a company is wholly owned or controlled by a spouse, the court can look through the structure to the underlying assets and income. Common issues include:
- Layered structures. A PRC operating company owned by a Hong Kong company, owned by a BVI company, owned by a trust. Disclosure must cover every layer, and documents may be in Chinese.
- Loan accounts and related-party transactions. Money moved between group companies, or loans to and from a spouse, can change the value of the pool significantly.
- Retained profits. Whether profits are left in the company or paid out affects both the value of the shares and each party’s income and earning capacity.
- Minority interests. A spouse with a minority stake alongside parents or siblings may hold an interest that is valued at a discount, or treated as a financial resource rather than property that can be divided.
- Control in practice. A spouse who is not a registered shareholder but in practice runs the company and decides on distributions may be treated as controlling it.
Money from parents: gift or loan?
Many Chinese-Australian couples bought their first home with help from parents. After separation, one side often says the money was a loan that must be repaid before the pool is divided; the other says it was a gift. Courts consider:
- whether there is a written loan agreement made at the time, and its terms;
- whether any repayments or interest were ever paid;
- whether the lender ever asked for repayment before the separation;
- whether it is realistic that the lender would sue to recover the money; and
- how the money was described when it was transferred, including on foreign exchange and bank records.
Undocumented, unsecured family loans that nobody expected to be repaid are often treated as gifts, or as debts unlikely to be enforced, and given little weight. Even if the money is treated as a gift, it is still relevant: a gift to one spouse from their own parents is usually recognised as a contribution by that spouse.
Changes made around separation
Transfers of shares to relatives, new “loans”, changes of directors, or relatives suddenly asserting ownership around the time of separation are closely examined. The court can set aside transactions made to defeat a claim, add value back into the pool, and grant injunctions to stop further dealings. See Overseas and hidden assets in Australian divorce.
Planning ahead
Families who want certainty should document arrangements when they are made: a written declaration of trust for nominee holdings, a proper loan agreement (ideally secured) for family loans, and shareholders’ agreements for family companies. For family members entering a marriage or de facto relationship, a binding financial agreement can set out what happens to family interests if the relationship ends. See Prenuptial agreements for wealthy families.
Frequently asked questions
My spouse’s flat in China is in his mother’s name. Can it be included?
Yes, if the evidence shows your spouse is the real owner. You will need evidence of who paid for it and who controls it, and his mother may need to be joined to the case.
My spouse’s shares are held by a Hong Kong company. Can the Australian court deal with them?
Yes, if your spouse owns or controls the company. The court can value the interest, make orders against your spouse personally, and adjust the division of other assets.
My parents lent us money to buy our home. Will it be repaid first?
Only if it is a genuine loan likely to be enforced. Undocumented family loans are often treated as gifts or given little weight, though a gift from your own parents may still count as your contribution.
How we can help
We read Chinese-language company records, property certificates and bank documents directly, work with forensic accountants who understand group structures across Australia, Greater China and Southeast Asia, and act in the estates and trusts work that often sits behind these arrangements. We work in English, Mandarin and Cantonese.
To arrange a confidential consultation, please contact our Melbourne office on +61 3 9602 3988 or submit an enquiry.
Related reading
Justin Chua 蔡智勋, lawyer and mediator, Chua Tan Associates, Melbourne. General information only, not legal advice.
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