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Dividing relationship property: time for change? [2017] NZLCIP 41; Dividing relationship property: time for change? [2017] NZLCIP 41; Te mātatoha rawa tokorau - Kua eke te wā?

Last Updated: 16 October 2017


October 2017, Wellington, New Zealand | ISSUES PAPER 41






Dividing relationship property:

time for change? Te mātatoha rawa tokorau

– Kua eke te wā?


October 2017, Wellington, New Zealand | ISSUES PAPER 41






Dividing relationship property:

time for change? Te mātatoha rawa tokorau

– Kua eke te wā?

General information

The Law Commission is an independent, publicly funded, central advisory body established by statute to undertake the systematic review, reform and development of the law of New Zealand. Its purpose is to help

achieve law that is just, principled, and accessible, and that reflects the heritage and aspirations of the peoples of New Zealand.

The Commissioners are:

Douglas White – President Donna Buckingham Belinda Clark QSO

Helen McQueen


The General Manager of the Law Commission is Jasmine Tietjens

The office of the Law Commission is at Level 19, 171 Featherston Street, Wellington

Postal address: PO Box 2590, Wellington 6140, New Zealand

Document Exchange Number: sp 23534

Telephone: (04) 473-3453, Facsimile: (04) 471-0959

Email: com@lawcom.govt.nz

Internet: www.lawcom.govt.nz

A catalogue record for this title is available from the National Library of

New Zealand.

ISBN: 978-1-877569-82-1 (Online) ISSN: 1177-7877 (Online)

This title may be cited as NZLC IP41

This title is also available on the Internet at the Law Commission’s website: www.lawcom.govt.nz

Kei te pātengi raraunga o Te Puna Mātauranga o Aotearoa te whakarārangi o tēnei pukapuka.

This work is licensed under a Creative Commons

Attribution 4.0 International License.

Contents

Acknowlegements




4
Have your say
5
Glossary
7
PART A – INTRODUCING THE LAW COMMISSION’S REVIEW
10
Chapter 1 – Context, scope and approach
11
Introduction
11
Social context of this review
12
Scope of this review and our approach so far
14
Structure of this Issues Paper
15
Chapter 2 – Why do we have the PRA?
19
Marriage and property practices in traditional Māori society
19
Post-colonial history of relationship property law
24
The PRA as social legislation
35
Tikanga Māori and the PRA
40
Chapter 3 – What does the PRA do?
45
The framework of the PRA
45
How it works – The PRA rules
53
Application of the PRA on death
61
How New Zealand compares internationally
62
Chapter 4 – What are the big questions of this review?
66
Is the framework of the PRA sound?
66
The big questions
72
Other general issues
81
PART B – WHAT RELATIONSHIPS SHOULD THE PRA COVER?
84
Chapter 5 – Who is covered by the PRA?
85
Introduction
85
Relationships covered by the PRA
85
The inclusion of de facto relationships in the PRA
89
Chapter 6 – The definition of de facto relationship
96
Two people who “live together as a couple”
97
Issues with the definition of de facto relationship
105
Options for reform
118
Chapter 7 – Specific relationship types and family arrangements
124
Māori customary marriages
124
Relationships involving young people
126
Relationships with and between members of the LGBTQI+ community
129
Contemporaneous relationships
131
Multi-partner relationships
134
Domestic relationships
135

PART C – WHAT PROPERTY SHOULD BE COVERED BY THE PRA?
141
Chapter 8 – What property is covered?
142
Introduction
142
The PRA’s definitions of “property” and “owner”
142
Should the PRA apply to wider economic resources?
145
Is the definition of property future-proof ?
149
Exclusion of Māori land from the PRA
153
Chapter 9 – Classifying relationship property and separate property
163
Relationship property, separate property and debts
163
The basis for classification
169
Is the basis for classification appropriate for contemporary New Zealand?
170
Options for Reform
179
Chapter 10 – When separate property becomes relationship property
183
Increasing the value of separate property
184
Applying separate property to relationship property
197
Intermingling of gifts and inheritances with relationship property
199
Implications of moving to a “fruits of the relationship” approach
205
Chapter 11 – Issues with particular types of property & debts
211
ACC and insurance payments
211
Super profits and earning capacity
215
Taonga
226
Heirlooms
233
Student loans
235
Family gifting and lending
239
PART D – HOW SHOULD PROPERTY BE DIVIDED?
242
Chapter 12 – The general rule of equal sharing and exceptions
243
Introduction
243
Equal sharing
243
Extraordinary circumstances
246
Misconduct
250
Dissipations of relationship property
256
Successive and contemporaneous relationships
260
Chapter 13: Valuation
267
Valuation of Property in the PRA’s overall Scheme
267
Determining Value
268
Issues and options for reform
274
Chapter 14 – How a court implements a division of property
280
Division orders
280
Interim property orders
291
Non-division orders
299
Protection of rights under the PRA
304

PART E – HOW SHOULD THE PRA TREAT SHORT-TERM RELATIONSHIPS?

309
Chapter 15 – The three year rule
310
Introduction
310
Should the PRA have different rules for short-term relationships?
311
How does the three year rule operate?
312
Should the qualifying period be longer?
316
Options for reform
321
Chapter 16 – Short-term marriages and civil unions
326
The property division rules
326
Issues with sections 14 and 14AA
328
Options for reform
330
Chapter 17 – Short-term de facto relationships
334
Background to section 14A
334
The section 14A(2) test
335
The property division rules
336
Issues with section 14A
336
Options for reform
344
PART F – WHAT SHOULD HAPPEN WHEN EQUAL SHARING DOES NOT

LEAD TO EQUALITY?
350
Chapter 18 – Does section 15 achieve post-separation equality?
351
Introduction
351
Historical background
352
What is section 15 trying to achieve?
354
How does section 15 work in practice?
359
Determining the amount of section 15 awards
378
Other issues with section 15
387
Chapter 19 – Options for reform
391
Is reform needed?
391
Common objectives and characteristics of section 15 reform
393
Option 1: Retain section 15 but lower the hurdles that partner A must overcome
397
Option 2: Repeal section 15 and address financial inequality in other PRA rules
400
Option 3: Replace section 15 with financial reconciliation orders
402
PART G – WHAT SHOULD HAPPEN TO PROPERTY HELD ON TRUST?
423
Chapter 20 – Trusts
424
Introduction
424
The Use of Trusts in New Zealand
425
Trusts used by New Zealand families
428
The PRA and property held on trust
433
Chapter 21 – The Issues
456
Issue 1: The priority trusts have over rights under the PRA may be causing problems
456
Issue 2: It is unclear whether an interest in a trust is property
469

Issue 3: The Supreme Court’s decision in Clayton v Clayton [Vaughan Road Property Trust] did not resolve the tension between the PRA and trusts 475

Issue 4: remedies outside the PRA to recover property held on trust are inconsistent and create procedural difficulties 478

Issue 5: Section 182 of the Family Proceedings Act 1980 481

Issue 6: whether there are adequate remedies in the wider law to deal with trusts and rights under the PRA 484

Chapter 22 – Options for Reform 487

Reform is necessary – what are the options? 487

Option 1: Revise the PRA’s definition of “property” to include all beneficial interests in a

trust 490

Option 2: Revise the PRA’s definition of “relationship property” to include some property held on trust 494

Option 3: Broaden section 44C 502

Option 4: A new provision modelled on section 182 of the Family Proceedings Act 1980 505

PART H – RESOLVING PROPERTY MATTERS IN AND OUT OF COURT 508

Chapter 23 – How are property matters resolved in practice? 509

Introduction 509

Achieving just and efficient resolution of property matters under the PRA 510

How do people resolve property matters in practice? 517

Chapter 24 – Resolving property matters out of court 523

Do people have access to appropriate information? 523

Is access to legal advice appropriate? 527

Access to dispute resolution services 530

Chapter 25 – Going to court 554

PRA proceedings in the Family Court 554

Is the Court process operating effectively? 563

Options to improve the court process 567

Chapter 26 – Jurisdiction of the courts 583

Introduction 583

The Family Court as a specialist court 583

The limited role of the High Court in PRA proceedings 587

The PRA is a (partial) code 588

Issues with the Family Court’s jurisdiction 592

Issues with the High Court’s jurisdiction 613

Options for reforming the jurisdiction of the Family Court and High Court 620

Other jurisdiction issues 628

PART I: HOW SHOULD THE PRA RECOGNISE CHILDREN’S INTERESTS?638

Chapter 27 – Children and the PRA
639
Introduction
639
How does parental separation affect children?
640
How does the PRA Fit in?
648

Chapter 28 – The case for taking a more child-centred approach under the PRA 652

How does the PRA recognise children’s interests? 652

Should children’s interests have a role in the PRA?
653
Should the PRA take a more child-centred approach?
654
Which children is the PRA concerned about?
661
Minor or dependent children
671
Chapter 29 – Options for reform that take a more child-centred approach
674
Promoting Children’s interests in the principles of the PRA
674
Section 26
678
Postponement of vesting
692
Occupation and tenancy orders
698
Furniture orders
700
Participation of children in PRA proceedings
702
PART J – CAN PARTNERS MAKE THEIR OWN AGREEMENT ABOUT

PROPERTY?
705
Chapter 30 – Contracting out of the PRA
706
Introduction
706
The law governing contracting out agreements
707
Are the contracting out provisions are working well?
718
Issues regarding what a contracting out agreement can cover
723
Other issues
733
PART K – SHOULD THE PRA AFFECT THE RIGHTS OF CREDITORS?
744
Chapter 31 – The PRA and creditors
745
Introduction
745
The rights of creditors under the PRA
745
Issues with the way the PRA treats the rights of creditors
753
PART L – WHAT SHOULD HAPPEN WHEN PEOPLE OR PROPERTY HAVE A
LINK TO ANOTHER COUNTRY?
773
Chapter 32 – Cross-border issues and the PRA
774
Introduction
774
What are cross-border issues in the PRA context?
775
The intersection of private international law and the pra
776
What is private international law?
How does New Zealand law deal with cross-border issues in relationship property matters?
778
781
Section 7
783
Section 7A
791
What happens when the current law is applied?
795
Chapter 33 – Approaches to reform
801
When should the PRA apply?
801
When will a New Zealand court decide the matter?
815
How and where can a judgment or order be enforced?
822
















Issue 4: The deceased’s personal representative does not have the same rights as the surviving



Foreword

The Property (Relationships) Act 1976 (PRA) is a crucial part of New Zealand’s social legislation. It contains the rules for the division of property when a relationship ends as a result of separation or on the death of one of the partners. The PRA is, however, now over 40 years old and is in need of review. In this review, the Law Commission asks whether the existing rules in the PRA are still achieving a just division of property at the end of a relationship.

When first enacted in 1976, the PRA challenged and helped redefine the role of women in society. When it was amended in 2001, the PRA sought fair treatment for different relationship types by extending its application to de facto relationships and same-sex relationships. The PRA has both reflected and shaped societal values in the way people enter, conduct and leave relationships. Yet we know that New Zealand in 2017 looks very different to New Zealand in 1976, and even 2001. Our Study Paper, Relationships and Families in Contemporary New Zealand: He hononga tangata, he hononga whānau i Aotearoa o nāianei, confirms that the changes have been dramatic. For example, in 1976 the marriage rate was 35 per 1,000 unmarried adults yet by 2016 that rate had dropped to 11. Children are now ten times more likely to identify with more than one ethnicity than older New Zealanders.

There have also been some broad changes to New Zealand law over the last 40 years. A more child-centred approach, particularly in

the family law context, is well-established. New Zealand law has increasingly sought to recognise tikanga Māori. Human rights law has developed and plays an important role in our legal framework. The courts have responded to New Zealanders’ widespread use of trusts

by developing remedies to recover property held on trust. All of these developments are relevant to the legal context in which the PRA operates.

Consequently, in this Issues Paper, Dividing Relationship Property – Time for Change? Te mātatoha rawa tokorau – Kua eke te wā?, we ask “if New Zealand has changed so much, is the policy of the PRA still

sound, and are the right principles guiding its rules?” Our preliminary view is that the policy and principles remain sound. We discuss these

in detail in Part A, which I encourage everyone to read before turning to specific issues.

What has emerged from our work so far are some important questions relating to the rules of the PRA and how they attempt to ensure a just division of property. These questions are:

  1. Does the PRA always apply to the right relationships in the right way?

  1. Does the PRA divide property that should be kept separate?

3 How should the PRA deal with trusts?

  1. What should happen if equal sharing does not lead to equality?

5 How should the PRA recognise children’s interests?

  1. Does the PRA facilitate the inexpensive, simple and speedy resolution of PRA matters consistent with justice?

7 Does the PRA provide adequately for tikanga Māori?

  1. How should the PRA’s rules apply to relationships ending on death?

Each of these important questions gives rise to a number of further questions. For example, in asking whether the PRA facilitates the inexpensive, simple and speedy resolution of PRA matters consistent with justice, we have looked not only at the resolution of matters in and out of court, but we have also looked at the resolution of matters involving a cross-border element such as when property or one of the parties is located overseas.

We hope that our online consultation platform and Consultation Paper (which summarises each important question) will help members of the public and interested groups to identify easily those areas that interest them and provide feedback on those areas. We also warmly invite members of the public and interested groups to attend the consultation meetings we will be holding throughout the country (details of which can be found on our website).

The PRA is likely to affect the lives of most New Zealanders. Please read this Issues Paper and share your opinions on the issues and options for reform discussed throughout. We emphasise that the

views we express are preliminary and do not preclude further consideration of the issues. The feedback we receive will influence the recommendations we make to the Government at the end of 2018.

Ngā mihi nui

2017_4100.png

Douglas White

President

Acknowledgements

The Law Commission gratefully acknowledges the contributions of the people and organisations that have shaped our views in this Issues Paper and the accompanying Study Paper, Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017). A list appears in Appendix B.

In particular we acknowledge the generous contribution of time and expertise from our Expert Advisory Group:

• Professor Bill Atkin, Victoria University of Wellington

• Judge Andrew Becroft, Children’s Commissioner

• Mr Stephen van Bohemen, Barrister

• Mr David Goddard QC, Thorndon Chambers

• Mr Greg Kelly, Greg Kelly Law

• Professor Nicola Peart, University of Otago

• Dr Jan Pryor

• Professor Jacinta Ruru, University of Otago

• Judge Laurence Ryan, Principal Family Court Judge

• Ms Renika Siciliano, McCaw Lewis

• Ms Kirsty Swadling, Barrister and Mediator

We are also grateful for the support and guidance of the Māori Liaison

Committee to the Law Commission.

Finally, we gratefully acknowledge the opportunity to participate in

the Otago University Faculty of Law’s Colloquium on 40 Years of the PRA: Reflection and Reform held in December 2016 in Auckland.

The Lead Commissioner on this project is Helen McQueen. The Advisers who have worked on this project are Emma Bassett, Alec Dawson,

John-Luke Day, Nichola Lambie, Francis McKeefry, Mihiata Pirini, Lisa Yarwood, and Karen Yates. The clerks who have worked on this project are Fady Girgis and Maddy Nash.

Have your say

This Issues Paper, a Consultation Paper and the accompanying Study Paper, Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22,

2017), are available online at www.lawcom.govt.nz.

We want to know what you think about the Property (Relationships) Act 1976 and whether reform is needed. In this Issues Paper and the Consultation Paper we ask a series of questions. You can respond to any or all of these questions, raise any issues we haven’t covered, or tell us your story. If you are sending us a submission (by email or in the post) it is helpful if you state the number of the question you are discussing.

Your feedback will help shape the Law Commission’s recommendations to the Government.

When can I have my say?

The deadline for submissions or comments on this issues paper is 7

February 2018.

How can I have my say?

You can go online to our consultation website prareview.lawcom.govt.nz and read the papers and respond to our online consultation questions (or tell us your story).

You can come along to a public meeting and speak to one of our team. Details of the public meetings can be found at www.lawcom.govt.nz.

You can email your submission to: pra@lawcom.govt.nz

You can post your written submission to:

Property (Relationships) Act Review

Law Commission

PO Box 2590

Wellington 6011

DX SP 23534

What happens to my submission?

The Law Commission’s processes are essentially public, and it is subject to the Official Information Act 1982. Therefore your submission will normally be made available on request. Any requests for withholding of information on grounds of confidentiality or for any other reason will be determined in accordance with the Official Information Act 1982. The Law Commission also complies with the Privacy Act 1993, which governs how we collect, hold, use and disclose personal information provided in your submission. You have the right to access and correct your personal information.

We will use submissions to inform our consideration of the issues that arise in this review, and in any future reviews that cover the same or related issues. The Commission may refer to submissions in its reports, but as a matter of course we will anonymise submissions from private individuals. All submissions are kept by us as part of our official records.

If you do not want all or part of your submission to be released (including your name) or referred to in any Commission publication, please tell us which parts should be withheld and the reasons why. When possible,

your views will be taken into account.

Glossary

Terms and abbreviations commonly used in this Issues Paper have the meanings set out below.

Māori terms

Hapū – Extended kin group, consisting of many whānau. Iwi – Tribe, descent group consisting of many hapū. Mana - Prestige.

Tikanga – Law, custom, traditional behaviour, philosophy.

Tupuna/Tipuna – Ancestor, grandparent.

Whānau – Family group including nuclear or extended family.

Whanaungatanga – Kinship, connectedness, a web of relationships of descent and marriage.

General terms

2001 amendments – The amendments to the PRA that came into effect on 1 February 2002 through the Property (Relationships) Amendment Act 2001.

Beneficiary – A person who has received, or who will or may receive, a benefit under a trust or an estate.

Children – Minor or dependent children, except where expressly stated.

Contracting out agreement – An agreement made between the partners, or a partner and a deceased partner ’s personal representative, under section 21, section 21A or section 21B of the PRA with respect to the status, ownership and division of their property, for the purpose of contracting out of the provisions of the PRA.

De facto relationship – Under the PRA, a relationship between two persons who are both aged 18 or older, who live together as a couple but are not married or in a civil union with one another. The PRA lists a range of matters in section 2D(2) that indicate whether two persons

“live together as a couple”, such as the duration of the relationship, the existence of a common residence and the degree of financial dependency

between the partners. Note that the definition of de facto relationship under the PRA is different to the definition used in other statutes, and for the collection of statistics. See discussion in the Study Paper.

Estate – A person’s property left after he or she dies.

Framework of the PRA – Collectively the PRA’s policy, theory, principles and rules as described in Chapter 3.

Intestacy – When a person dies without leaving a will, or where the will does not effectively dispose of the deceased’s property.

Jurisdiction – A court’s power to hear, decide and make orders in a case, including the territorial limits of the court’s power.

Māori land – Land that is defined as Māori land under the Te Ture Whenua Māori Act 1993. This includes Māori customary land (held in accordance with tikanga Māori) and Māori freehold land (Māori

customary land to which the beneficial ownership has been determined according to tikanga Māori by order of the Māori Land Court).

Non-division orders – The types of orders a court can make under the PRA that grant a partner temporary rights to use or occupy property, but do not affect each partner ’s entitlement to a share of relationship property when division occurs.

Policy of the PRA – The policy of the PRA is the just division of property at the end of a relationship, as described in Chapter 3.

PRA – The Property (Relationships) Act 1976. Between 1976 and 2001 the

PRA was called the Matrimonial Property Act 1976.

Principles of the PRA – The principles which form the basis for the PRA’s rules, including implicit and explicit principles, as described in Chapter 3.

Qualifying relationship – A marriage, civil union or de facto relationship of three or more years’ duration.

Relationship property – The property described in section 8 of the PRA, which generally includes the family home, family chattels and property acquired during the relationship.

Separate property – The property described in section 9 and section 10 of the PRA which is generally any property that is not relationship property and specifically includes any property a partner receives from a third

party by way of gift or inheritance.

Short-term relationship – A relationship of less than three years’ duration, and includes short-term marriages, short-term civil unions and short-term de facto relationships.

Stepfamily – A couple with children, where at least one child is the biological or adopted child of only one partner. Stepfamilies include couples who are married, in a civil union or in a de facto relationship. Stepfamilies also include “blended families.” Blended families are those that include children from previous relationships as well biological or adopted children of the partners.

Study Paper – The Law Commission’s study paper, Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, October 2017), published jointly with this Issues Paper.

Succession law – The system of rules that says who gets people’s property when they die.

Trust – A legal relationship in which the owner of property holds and deals with that property for the benefit of certain persons or for a particular purpose.

Trustee – A person who owns property on trust and is required to deal with the property in accordance with the terms of the trust.

Working Group – The Working Group on Matrimonial Property and Family Property established in 1988 to review the Matrimonial Property Act 1976, the Family Protection Act 1955, the provision for matrimonial property on death and the provision for couples living in de facto relationships.

Part A –

Introducing the Law Commission’s review

Chapter 1 – Context, scope and

approach

Introduction

1.1 Dividing property when relationships end is often a challenging task, and one which typically comes at a time of emotional upheaval. When relationships end as a result of separation,

both partners will generally be worse off financially, because the resources that were being used to support one household must now support two. How property is divided can significantly affect the financial recovery of partners and any children they might have. Different issues arise when a relationship ends on the death of one partner. The interests of the surviving partner may have to be balanced against competing interests, for example any children of the deceased.

1.2 The Property (Relationships) Act 1976 (PRA)1 sets out special rules of property division that apply when relationships end. These rules apply when partners separate, unless they agree otherwise. The rules can also apply when one partner dies. People can use the rules in the PRA to work out their entitlements and

come to an agreement about the division of their property, or they can ask a court to apply the rules and make a decision for them.

1.3 This Issues Paper asks whether the PRA rules are operating appropriately in contemporary New Zealand. Is the PRA achieving a just division of property at the end of relationships?

1.4 In this chapter we explain the context of this review, its scope and our process so far. The rest of Part A is arranged as follows:

(a) In Chapter 2 we explore why we have the PRA. We explain that the PRA is social legislation, and outline its history.

(b) In Chapter 3 we discuss what the PRA attempts to achieve. We describe the framework of the PRA and how it works in practice.

1 For ease of reading, we will refer to the Property (Relationships) Act 1976 as the PRA in the remainder of this Issues

Paper.

(c) In Chapter 4 we discuss the big questions we have

identified so far, and some of the options for reform that might significantly change how the PRA works in practice.

Our terminology and approach to anonymisation of court decisions

1.5 Three types of relationships are at the centre of the PRA: marriages, civil unions and de facto relationships. For readability, we use the term “relationship” unless we are referring to a specific relationship type. Likewise, we use the term “partner” to refer

to a spouse, civil union partner or de facto partner. Often the discussion in this Issues Paper takes place after a relationship ends, but for simplicity we will continue to refer to “partners” rather than “former partners”.

1.6 In Chapter 4 we ask whether the PRA should be amended to use relationship neutral terms, and invite submissions on this issue.

1.7 Many court decisions under the PRA are anonymised through the use of fictitious names or the use of parties’ initials. Some decisions are not anonymised yet are still subject to publication restrictions.2 To address this, we have replaced the names of parties with initials when our discussion of the facts of a case includes sensitive information which could identify individuals who may be vulnerable.3

Social context of this review

1.8 The PRA was enacted over 40 years ago. Since then New Zealand has undergone a period of significant change. We discuss these changes in detail in our Study Paper, Relationships and Families

in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017) (Study Paper).

1.9 New Zealand is more ethnically diverse. The Māori, Pacific and

Asian populations have more than doubled since 1976.4 In 2013,

2 Property (Relationships) Act 1976, s 35A; Family Court Act 1980, ss 11B–11D.

3 For a copy of our anonymisation policy please contact the Law Commission.

4 Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i

Aotearoa o nāianei (NZLC SP22, 2017) at Introduction citing Ian Pool “Population change - Key population trends” (5 May

2011) Te Ara - the Encyclopedia of New Zealand <www.teara.govt.nz> and Statistics New Zealand 2013 QuickStats about culture and identity (April 2014) at 6.

one in seven people identified as Māori.5 Children today are also

ten times more likely to identify with more than one ethnic group compared to older New Zealanders.6 The population is ageing, and at significantly different rates across ethnic groups, which will continue to drive ethnic diversity in the future.7 Religious identity is also changing. Fewer people identify as Christian, while almost half of the population report that they have no religion.8

1.10 These population shifts have coincided with changing patterns of partnering, family formation, separation and re-partnering.9

What it means to be partnered has changed significantly since the 1970s, when the paradigm relationship involved a marriage between a man and a woman, in which children were raised and wealth was accumulated over time. Now, fewer people are marrying and more people are living in de facto relationships.10

In 2016, 46 per cent of all births were to parents who were not married (or in a civil union).11 There is also greater recognition and acceptance of relationships that sit outside the 1970s paradigm, including same-sex relationships.12 More relationships

end in separation,13 and increasing rates of separation are driving

5 Statistics New Zealand 2013 Quickstats about Māori (December 2013) at 5.

  1. In 2013, 22.8 per cent of children under 15 identified with more than one ethnic group, compared to just 2.6 per cent of adults aged 65 and over: Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017) at Introduction citing Statistics New Zealand 2013 QuickStats about culture and identity (April 2014) at 7.

7 Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i

Aotearoa o nāianei (NZLC SP22, 2017) at Introduction citing Statistics New Zealand National Population Projections:

2016(base)–2068 (19 October 2016) at 5 and 7; and Statistics New Zealand 2013 QuickStats about culture and identity

(April 2014) at 8.

  1. Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017) at Introduction citing Statistics New Zealand 2013 QuickStats about culture and identity (April 2014) at 27–30.
  2. Data is not routinely collected in New Zealand for the specific purpose of investigating family characteristics and transitions. As a result there are some significant gaps in our knowledge. We do not know, for example, how many relationships end in separation, or how many people re-partner and enter stepfamilies. For a discussion of these limitations see Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017) at Introduction.
  3. In 2013, 22% of people who were partnered were in a de facto relationship, compared to 8% in 1986. In contrast, the percentage of partnered people who are married has fallen, from 92% in 1986 to 76% in 2013: Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 1, Figure 1b citing Statistics New Zealand Population Structure and Internal Migration (1998) at 10; Statistics New Zealand Population Structure and Internal Migration (2001) at 52; and Statistics New Zealand “Partnership status in current relationship and ethnic group (grouped total responses) by age group and sex, for the census usually resident population count aged 15 years and over, 2001, 2006 and 2013 Censuses” <nzdotstat.stats. govt.nz>.

11 In 1976, only 17 per cent of children were born out of marriage: Law Commission Relationships and Families in

Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017) at Chapter

2 citing Statistics New Zealand “Live births by nuptiality (Maori and total population) (annual-Dec)” (May 2017) <www. stats.govt.nz>.

  1. In 2013, 8,328 people recorded that they lived with a same-sex partner, up from 5,067 in 2001: Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 1 citing Statistics New Zealand 2013 Census QuickStats about families and households – tables (November 2014).
  2. For example in 2016 the divorce rate was 8.7 (per 1,000 existing marriages and civil unions), compared to 7.4 in 1976: Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i

a rise in re-partnering,14 which is leading to an increase in

stepfamilies. There has also been a significant increase in single parent families, with the proportion of single parent households almost doubling since 1976.15

1.11 These social changes have significant implications for our

review. They will have undoubtedly influenced public values and attitudes, and increasing diversity in relationships and families may affect what a “just” property division looks like today. The policy implications of increasing diversity in relationships and families are well recognised:16

Increasingly diverse and flexible family forms mean there are no longer clear universally held assumptions to be made about family circumstances; the increasing pragmatism of family law reform, aiming to offer management of family matters rather

than abstract justice based on moral or religious principles, means that it becomes ever more important for the policy maker to understand what individuals expect and value...

Scope of this review and our approach so far

1.12 In December 2015, the Minister responsible for the Law Commission, Hon Amy Adams, asked the Law Commission to review the PRA. The Terms of Reference are set out in Appendix A and are wide-ranging. They require consideration of the PRA rules and how property matters are resolved in practice.

1.13 Since then we have extensively researched the history of the PRA and reviewed case law, commentary and court data to understand how the PRA is operating in practice. We have looked at international experiences to inform our understanding of possible

Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 3 citing Statistics New Zealand “Divorce rate (total population) (annual- Dec)” (June 2017) <www.stats.govt.nz>. This does not include de facto separations, for which no information is collected.

  1. In 2016, remarriages accounted for 29 per cent of all marriages, compared to 16 per cent in 1971: Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 4 citing Statistics New Zealand “First Marriages, Remarriages, and Total Marriages (including Civil Unions) (Annual-Dec)” (May 2017) <www.stats.govt.nz>.
  2. Single parent households comprised 9% of all New Zealand households in 2013, up from 5% in 1976: Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 5, Figure 5a citing Statistics New Zealand “Household composition, for households in occupied private dwellings, 2001, 2006 and 2013 Censuses (RC, TA, AU)” <nzdotstat.stats.govt.nz>; and Dharmalingam and others A Demographic History of the New Zealand Family from 1840: Tables (Auckland University Press, 2007) at 17.

16 Mavis MacLean and John Eekelaar “The Perils of Reforming Family Law and the Increasing Need for Empirical Research,

1980-2008” in Joanna Miles and Rebecca Probert (eds) Sharing Lives, Dividing Assets An Interdisciplinary Study (Hart

Publishing, Oxford, 2009) 25 at 31.

reform options. We have also researched the social context and

published our findings in the accompanying Study Paper. We established an Expert Advisory Group to assist us in this review, and sought guidance from the Law Commission’s Māori Liaison Group on those matters that may be of particular concern to Māori.

1.14 We have also undertaken targeted, preliminary consultation with a range of interested parties (see Appendix B). This preliminary consultation identified a number of issues and options for reform that are reflected in this Issues Paper. We know there will be other perspectives, and the submissions we receive in response to this Issues Paper will help us to develop our views on whether changes to the PRA are needed and if so what form they should take.

1.15 The Terms of Reference for this review do not include other areas of family and social legislation such as the child support regime in the Child Support Act 1991, the maintenance regime in the Family Proceedings Act 1980 or the social security regime in the

Social Security Act 1964. We cannot, however, consider the PRA in isolation from these regimes, as they each play an important role in supporting partners and children at the end of a relationship.

In Part F we consider options for reform that have implications for the maintenance regime, and our discussion of the application of the PRA on the death of one partner in Part M has also required

us to consider aspects of succession law which are not part of our Terms of Reference. It is possible that our final recommendations may have implications for these regimes. In Part L of this Issues Paper we also address the rules of private international law, the full extent of which is beyond the scope of this review. We discuss the role of the PRA as social legislation, and its relationship with other areas of family and social policy, in Chapter 2.

1.16 Our final report to the Minister Responsible for the Law

Commission is due in November 2018.


Structure of this Issues Paper

1.17 This Issues Paper is divided into parts. Following on from Part A (Introducing the Law Commission’s review) the parts are as follows:

• Part B – What relationships should the PRA cover?

We look at the types of relationships to which the PRA’s main rules of division apply. We examine whether the PRA focuses on the right kinds of relationships.

• Part C – What property should the PRA cover?

The PRA requires partners to divide their relationship property. We look

at the types of property that the PRA defines as relationship property and separate property.

• Part D – How should the PRA divide property?

The general rule at the heart of the PRA is that, on division, each partner is entitled to an equal share of relationship property. We discuss whether this general rule remains appropriate. We also look at the exceptions to equal sharing and whether they apply in the right circumstances.

• Part E – How should the PRA treat short-term relationships?

If a relationship has lasted for less than three years, the general rule of equal sharing does not apply. The PRA provides special rules for short- term relationships, and de facto partners have different rights to married and civil union partners. We ask whether the special rules should continue to apply to short-term relationships and if the different rights based on relationship type are justified.

Sometimes the partners will take different roles in a relationship. If one partner has been freed up for paid work, that partner may leave

the relationship with a developed career. Conversely, a partner who has sacrificed paid work to perform unpaid roles in the relationship might not have the same income-earning opportunities after the relationship. Equal sharing may not fairly apportion the economic advantages and disadvantages each partner takes from the relationship. We look at how the PRA deals with these scenarios and whether it is effective.

• Part G – What should happen to property held on trust?

Many families use trusts to hold property. Trusts can cause difficulties if a relationship ends because trust property generally stands outside the PRA. There are, however, many legal remedies through which a partner can claim a share of the trust property, but they are not all found within the PRA. We examine this law and consider whether reform is needed.

We look at how the PRA facilitates the resolution of property matters at the end of a relationship. We look at whether the law and processes meet people’s reasonable expectations, and whether they are as inexpensive, simple and speedy as is consistent with justice.

• Part I – How should the PRA recognise children’s interests?

Children have an important interest in the way their parents divide property at the end of a relationship. We focus on whether the PRA does enough to recognise the interests of children and we look at what taking a more child-centred approach would look like in practice.

The PRA does not require all people to divide their property according to its rules. Instead, partners can make their own agreements to determine the status, ownership and division of their property in the event they separate or one partner dies. Partners can also make their own agreement to settle any differences that have arisen between them with respect

to their property. We look at how the PRA controls the way these agreements are made and how agreements are to apply.

• Part K – Should the PRA affect the rights of creditors?

The PRA has a general rule that creditors continue to have the same rights against the partners and their property as if the PRA had not been passed. There are however a few exceptions. We examine whether the general

rule and the exceptions are working appropriately.

• Part L – What should happen when people or property have a

link to another country?

Some relationships will have links with other countries, either because the partners have ties with those countries or because they hold property overseas. We look at when the PRA should apply to these relationships, when a New Zealand court will decide the matter, how and where remedies can be enforced, and whether reform is needed.

• Part M – What should happen when one partner dies?

When a partner dies, the surviving partner can choose to either take whatever provision is made for them under the deceased’s will, or apply for a division of the couple’s property under the PRA. There is also limited scope for the personal representative of the deceased to seek

a division under the PRA. These rules are complex. They give rise to difficult questions about the surviving partner ’s interest in the couple’s relationship property and the rights of other people who feel entitled to the deceased’s property. We discuss these issues and consider whether the PRA is the best statute to address these questions.

Chapter 2 – Why do we have the

PRA?

2.1 In order to understand why we have the PRA, it is helpful to look to the past and explore how property practices when relationships end have changed throughout New Zealand’s history. We look at property practices in traditional Māori society, those that were inherited from England and Wales and the series of law changes that ultimately resulted in the PRA. We then go on to explore the current social and legal context within which the PRA currently operates.

Marriage and property practices in traditional Māori society

2.2 Māori ascribe to a unique world view that governs their relationships with each other and the world around them. The roles of men and women in traditional Māori society can be understood only in the context of this world view.17

2.3 In traditional Māori society, men and women were considered essential parts of the collective whole, both formed part of the whakapapa that linked Māori people back to the beginning of the world, and women in particular played a key role in linking the past with the present and the future.18 Women were nurturers and organisers, valued within their whānau, hapū and iwi.19 Women

of rank maintained powerful positions within the social and political organisations of their tribal nations, reflected in the fact

that some women signed the Treaty of Waitangi on behalf of their







  1. Jacinta Ruru “Indigenous Peoples and Family Law: Issues in Aotearoa/New Zealand” (2005) 19 Int J Law Policy Family 327 at 327 and Annie Mikaere “Māori Women: Caught in the contradictions of a Colonised Reality” (1994) 2 Waikato LRev

125 at 125.

  1. Jacinta Ruru “Indigenous Peoples and Family Law: Issues in Aotearoa/New Zealand” (2005) 19 Int J Law Policy Family 327 at 330 and Annie Mikaere “Māori Women: Caught in the contradictions of a Colonised Reality” (1994) 2 Waikato LRev

125 at 125.

  1. Law Commission Justice: The Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at 11.

hapū.20 Women’s mana could be inherited from male and female

tupuna, as well as conferred on female and male descendants.21

2.4 Marriage was a relationship of importance not only to the spouses but also to their whānau, for it established links between the whānau and provided each with new generations.22 According to Māori custom, public expression of whānau approval established

a couple as “married”.23 A married woman remained a part of her own whānau even if she chose to live with her spouse’s whānau: her marriage did not entail a transferral of “property from her father to her spouse”.24 Spousal differences were resolved between whānau,25 and in cases where misconduct was shown, divorce was relatively simple so long as the correct procedures were followed.26

Divorce carried no stigma, and child care arrangements and support were sorted out within the whānau context.27

2.5 While Māori valued marriage, it was not given absolute precedence over other relationships because of the emphasis placed on descent.28 For Māori, descent and descent group membership are key elements in the organisation of both social







  1. Law Commission Justice: The Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at 16.
  2. Law Commission Justice: The Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at 14.
  3. Jacinta Ruru “Kua tutū te puehu, kia mau: Māori aspirations and family law policy” in Mark Henaghan and Bill Atkin (eds) Family Law Policy in New Zealand (4th ed, LexisNexis, Wellington, 2013) 57 at 62 and Donna M Tai Tokerau Durie- Hall “Māori Marriage: Traditional marriages and the impact of Pākehā customs and the law” in Sandra Coney (ed) Standing in the Sunshine: A history of New Zealand women since they won the vote (Viking, Auckland, 1993) 186 at 186-187 citing Mark Henaghan and Bill Atkin (eds) Family Law Policy in New Zealand (1st ed, Oxford University Press, Auckland,

1992). Some marriages were arranged for the purpose of building relationships between iwi, in some cases for securing peace following hostilities: Hirini Moko Mead Tikanga Māori (Revised ed, Huia Publishers, Wellington, 2016) at 177–180.

  1. Customary recognition of marriage took many different forms depending on iwi or hapū, or on the social status of the couple. Once approval was given by the whānau, the couple were considered married, even if cohabitation was delayed. The newly married couple did not set up a new household but joined an established one. See Law Commission Justice:

The Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at 19 and Jacinta Ruru “Kua tutū te puehu, kia mau: Māori aspirations and family law policy” in Mark Henaghan and Bill Atkin (eds) Family Law Policy in New Zealand (4th ed, LexisNexis, Wellington, 2013) 57 at 62.

  1. Annie Mikaere “Māori Women: Caught in the contradictions of a Colonised Reality” [1994] WkoLawRw 6; (1994) 2 Waikato LRev 125 at 127, as cited in Law Commission Justice: The Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at [77].

25 ET Durie Custom Law (unpublished confidential draft paper for the Law Commission, January 1994) at 52.

  1. Annie Mikaere “Māori Women: Caught in the contradictions of a Colonised Reality” [1994] WkoLawRw 6; (1994) 2 Waikato LRev 125 at 127, as cited in Law Commission Justice: The Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at 20.

27 Annie Mikaere “Māori Women: Caught in the contradictions of a Colonised Reality” [1994] WkoLawRw 6; (1994) 2 Waikato LRev 125 at 127.

However, the tikanga of muru was traditionally practised in circumstances that threatened the institution of marriage, including he tangata pūremu: Hirini Moko Mead Tikanga Māori: Living by Māori Values (Revised ed, Huia Publishers, Wellington, 2016) at 161 and 255.

28 Jacinta Ruru “Kua tutū te puehu, kia mau: Māori aspirations and family law policy” in Mark Henaghan and Bill Atkin

(eds) Family Law Policy in New Zealand (4th ed, LexisNexis, Wellington, 2013) 57 at 62.

life and personal identity.29 Mana, land rights and the trusteeship

of taonga all passed down descent lines.30

2.6 Māori place high value on land, or whenua.31 Māori are “tangata whenua”, or people of the land, and cultural practices or tikanga associated with birth and death emphasise links to the land.32

Land was the foundation of the social system, and continuity

of the group depended very much on a home base, called te wā kāinga, where people could live like an extended family.33 The relationship Māori had with the land was not about owning the land or being master of it:34

In the beginning land was not something that could be owned

or traded. Māoris did not seek to own or possess anything, but to belong. One belonged to a family, that belonged to a hapū, that belonged to a tribe. One did not own land. One belonged to the land.

2.7 Both men and women had the capacity to hold property:35

The position of Māori women with regard to the ownership of property was in great contrast to that of their Pākehā contemporaries. In Māori society before and after contact, use- rights over land and resources were ‘owned’ or held by women as individuals as well as by men, subject only to the overriding right of the tribal community and the mana (authority) of chief over the land and people.

2.8 Marriage “did not alter this reality.”36 A woman retained ownership of land that was hers prior to marriage, and decisions regarding

it were hers to make, subject to her whānau and hapū interests.37

29 Jacinta Ruru “Kua tutū te puehu, kia mau: Māori aspirations and family law policy” in Mark Henaghan and Bill Atkin

(eds) Family Law Policy in New Zealand (4th ed, LexisNexis, Wellington, 2013) 57 at 62.

  1. Jacinta Ruru “Kua tutū te puehu, kia mau: Māori aspirations and family law policy” in Mark Henaghan and Bill Atkin (eds) Family Law Policy in New Zealand (4th ed, LexisNexis, Wellington, 2013) 57 at 62. One of the distinctive features of Māori social organisation is that descent is traced through links of both sexes. As a result individuals have not one but many descent lines.

31 Hirini Moko Mead Tikanga Māori: Living by Māori Values (Revised ed, Huia Publishers, Wellington, 2016) at 285–286.

32 Hirini Moko Mead Tikanga Māori: Living by Māori Values (Revised ed, Huia Publishers, Wellington, 2016) at 287.

33 Hirini Moko Mead Tikanga Māori: Living by Māori Values (Revised ed, Huia Publishers, Wellington, 2016) at 288.

  1. Eddie Durie “The Law and the Land” in Jock Phillips (ed) Te Whenua Te Iwi, the Land and the People (Allen & Unwin and Port Nicholson Press, Wellington, 1987) at 78. See also Hirini Moko Mead Tikanga Māori: Living by Māori Values (Revised ed, Huia Publishers, Wellington, 2016) at 289.

35 Angela Ballara “Wahine Rangatira: Māori Women of Rank and their Role in the Women’s Kotahitanga Movement of the

1890s” (1993) 27 The New Zealand Journal of History 127 at 133–134. See also Law Commission Justice: The Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at 15; and Judith Binney and Gillian Chapman Ngā Mōrehu The Survivors (Oxford University Press, Auckland, 1986) at 25-26.

36 Jacinta Ruru “Indigenous Peoples and Family Law: Issues in Aotearoa/New Zealand” (2005) 19 Int J Law Policy Family 327 at 330. See also Law Commission Justice: The Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at 22.

37 Jacinta Ruru “Indigenous Peoples and Family Law: Issues in Aotearoa/New Zealand” (2005) 19 Int J Law Policy Family

327 at 330 and Angela Ballara “Wahine Rangatira: Māori Women of Rank and their Role in the Women’s Kotahitanga

Movement of the 1890s” (1993) 27 The New Zealand Journal of History 127 at 134.

Women could hand land down to some or all of their children,

male or female, and gifts of land were often made by parents to their daughters on their marriage.38 If a woman’s family gifted land to her husband in celebration of their marriage, his right

of occupancy would terminate and the land would revert to her family if on the woman’s death there were no children of the marriage and the husband had no blood link to the land.39

The impact of introduced law on the role of Māori women in society

2.9 At the time of the signing of the Treaty of Waitangi in 1840, Māori women were acknowledged as owners of Māori land in accordance with tikanga.40 Māori women continued to play important and active leadership roles during the latter part of the nineteenth century, particularly in the Māori land movements and the land wars.41

2.10 However the role of Māori women in society was gradually undermined in the period of colonisation that followed the signing of the Treaty of Waitangi.42 Māori collectivism was philosophically at odds with the colonial ethic of individualism.43

The role of women as nurturers and organisers was challenged

by the colonial view of men as heads of the family, while the role of women of rank as leaders was challenged by the colonial view of the subordinate role of women to men.44 The relationship of women with the land was also challenged by the colonial concept of individual land ownership and the role of men as property owners.45

  1. Angela Ballara “Wahine Rangatira: Māori Women of Rank and their Role in the Women’s Kotahitanga Movement of the 1890s” (1993) 27 The New Zealand Journal of History 127 at 134. See also Pat Hohepa and David Williams The Taking into Account of Te Ao Maori in Relation to Reform of the Law of Succession (NZLC MP6, 1996) at 29 and Law Commission Justice: The Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at 15.
  2. Jacinta Ruru “Indigenous Peoples and Family Law: Issues in Aotearoa/New Zealand” (2005) 19 Int J Law Policy Family 327 at 330.
  3. Law Commission Justice: The Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at 16.

41 Angela Ballara “Wāhine Rangatira: Māori Women of Rank and their Role in the Women’s Kotahitanga movement of the

1890s” (1993) 27 The New Zealand Journal of History 127 at 133–134.

42 Law Commission Justice: The Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at 11; and Pat Hohepa and David Williams The Taking into Account of Te Ao Maori in Relation to Reform of the Law of Succession (NZLC MP6, 1996) at 29.

43 Annie Mikaere “Māori Women: Caught in the contradictions of a Colonised Reality” (1994) 2 Waikato LRev 127 at 133.

  1. Law Commission Justice: The Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at 11.
  2. Law Commission Justice: The Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at 11.

2.11 Most Māori married according to their own custom until the early

twentieth century.46 However, the English Laws Act 185847 and successive marriage laws required Māori to conform more closely to the legal requirements for establishing marriage inherited

from England until, in the 1950s, customary marriages were no longer legally recognised.48 To avoid their children being deemed illegitimate, and to access social services (such as the widow’s benefit and housing assistance), Māori couples had to marry according to State law. This led some Māori to move away from customary marriage, although it remained common in the 1950s and 1960s.49 The Status of Children Act 1969, which eliminated the discrimination of children based on their parents’ marital status, and the growing prevalence of cohabitation among non- Māori, may have subsequently reduced pressure for Māori couples to officially register a marriage.50 Today the general rule remains that Māori have to marry in accordance with State law in order for their marriage to be legally recognised.51

2.12 Customary Māori land tenure with regard to women was progressively undermined in the late nineteenth century.52 The Native Land Act 1873 provided that husbands should be party to all deeds executed by married Māori women.53 Husbands on the other hand were free to dispose of their Māori wives’ land

46 Megan Cook “Marriage and partnering — Marriage in traditional Māori society» (4 May 2017) Te Ara — The Encyclopedia of New Zealand <www.teara.govt.nz>.

47 The English Laws Act 1858 declared that the laws of England had force in New Zealand. See Law Commission Justice: The

Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at

22.

48 Law Commission Justice: The Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at 22. The Māori Purposes Act 1951, s 8(1) and the Māori Affairs Act 1953, s 78, both provided that:

Every marriage to which a Māori is a party shall be celebrated in the same manner, and its validity shall be determined by the same law, as if each of the parties was a European; and all provisions of the Marriage Act 1908 shall apply accordingly.

The Māori Affairs Act also invalidated all future Māori customary marriages and any marriages entered into in the past, except as expressly provided by that Act (s 79).

  1. Megan Cook “Marriage and partnering — Marriage in traditional Māori society” (4 May 2017) Te Ara — The Encyclopedia of New Zealand <www.teara.govt.nz>; Donna M Tai Tokerau Durie-Hall “Māori Marriage: Traditional marriages and the impact of Pākehā customs and the law” in Sandra Coney (ed) Standing in the Sunshine: A history of New Zealand women since they won the vote (Viking, Auckland, 1993) 186 at 186; and Kay Goodger “Maintaining Sole Parent Families in New Zealand: An Historical Overview” (1998) 10 Social Policy Journal of New Zealand 122.
  2. Kay Goodger “Maintaining Sole Parent Families in New Zealand: An Historical Overview” (1998) 10 Social Policy Journal of New Zealand 122.

51 Family law statutes enacted since 1950, including the Marriage Act 1955, largely ignore Māori customary marriages.

The exception is Te Ture Whenua Maori Act 1993, which preserves the application of family maintenance in relation to marriages in accordance with tikanga Māori, but only those entered into before 1 April 1952 (s 106(4)). See Jacinta Ruru “Indigenous Peoples and Family Law: Issues in Aotearoa/New Zealand” (2005) 19 Int J Law Policy Family 327 at 334.

52 Angela Ballara “Wahine Rangatira: Māori Women of Rank and their Role in the Women’s Kotahitanga Movement of the

1890s” (1993) 27 The New Zealand Journal of History 127 at 134.

  1. This followed unsuccessful attempts by Pākehā husbands to “gain control of the lands of their Māori wives” by challenging a provision of the Native Lands Act 1869 which enabled married Māori women to deal with their land as if “feme sole” (an unmarried woman). See Angela Ballara “Wahine Rangatira: Māori Women of Rank and their Role in the Women’s Kotahitanga Movement of the 1890s” (1993) 27 The New Zealand Journal of History 127 at 134.

interests without their wife being a party to the deed.54 Legislation

enacted during this period also moved land ownership into individual (usually male) ownership rather than guardianship, again eroding Māori women’s control.55

2.13 As the Law Commission has earlier observed:56

Land alienation had profound effects on Māori society, and in particular Māori women, as it destroyed the collective whānau/ hapū unit. That the whānau/hapū unit was given less importance undermined the values that maintained its well-being. The

erosion of those values – family and tribal history, language skills, mutual caring and support – eroded the importance of the roles and of the women who traditionally performed them.

2.14 The imposition on Māori of colonial standards subordinated Māori women and contributed directly to the diminution of their value

in Māori society.57 The influence of introduced laws and culture eventually affected the core of Māori society. When the English common law was applied to Māori women, their status was the same as their English counterparts.58

Post-colonial history of relationship property law

The doctrine of matrimonial unity

2.15 Colonial New Zealand inherited its rules of marriage and divorce from England and Wales. In contrast to the role of women in traditional Māori culture, in English common law the husband was the authoritarian head of the family, with powers over both person and property of his wife and children. On marriage, the law deemed husband and wife to be one legal person, and that person was the husband. This was known as the doctrine of matrimonial unity, and it meant that most of the wife’s property

  1. Law Commission Justice: The Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at 21.
  2. Law Commission Justice: The Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at 22.
  3. Law Commission Justice: The Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at 22.
  4. Law Commission Justice: The Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at 16.
  5. Law Commission Justice: The Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at 17.

rights were acquired by the husband on marriage.59 The property

of the husband and wife could be used and, in most cases, disposed of as the husband pleased. It was also available to the husband’s creditors to satisfy his debts. In contrast, the wife could not dispose of what had been her property without the consent of her husband.60

2.16 The husband, in return for the ownership and control of property his wife brought to the marriage, had an obligation to maintain his wife and children.61 This maintenance obligation remained

even if the husband and wife ceased to live together, and could be enforced by a court.62

2.17 The importance of the institution of marriage in post-colonial New Zealand meant that it was supported and protected by the State and the justice system: “Entry to and exit from marriage was firmly controlled, and the responsibilities of husband and wife were supported by the law and the fact that the welfare system was very limited.”63

The separation of property system

2.18 In the nineteenth century, New Zealand lawmakers introduced legislation to remove many of the legal disabilities the doctrine of matrimonial unity placed on married women. In the first instance, changes were relatively modest, providing limited protections for “deserted wives”.64

59 See RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [1.4].

60 The courts did, however, develop a number of ways to mitigate the harshness of the doctrine. In particular, the courts of equity recognised that a settlement on trust solely for the wife’s benefit was not captured by the doctrine, and thus a husband and his creditors could not access those funds. This led to the widespread practice of marriage settlements

among the moneyed classes. See Ulrich v Ulrich, [1968] 1 WLR 180 at 188 (CA); W v W, [2009] NZSC 125; [2010] 2 NZLR

31 at [14]; Nicola Peart “Intervention to Pervent the Abuse of Trust Structures in New Zealand” [2010] NZ L Rev 567 at

592; John Rimmer “Nuptial Settlements: Part 1” (1998) 5 PCB 257 at 258.

61 A Angelo and W Atkin “A Conceptual and Structural Overview of the Matrimonial Property Act 1976” (1977) 7 NZULR

237 at 241–242. See also Dewe v Dewe [1928] P 113 at 119 per Lord Merivale as cited in RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [1.5]: “A husband is obliged to maintain his wife, and may by law be compelled to find her necessaries, as meat, drink, clothes, physic, etcetera suitable to the husband’s degree, estate or circumstances”.

62 Matrimonial Causes Act 1857 (England & Wales) 20 & 21 Vict c 85, s 32. In New Zealand see the Divorce and

Matrimonial Causes Act 1867, s 27.

63 Megan Cook “Marriage and Partnering - Marriage in the 19th century” (4 May 2017) Te Ara - the Encyclopedia of New

Zealand <www.teara.govt.nz> at 2.

  1. The Married Women’s Property Protection Act 1860 granted a wife who had been deserted by her husband the right to apply to court for an order to protect from her husband and his creditors the property she had acquired since desertion. Those responsible for introducing the legislation explained that the previous law was unsatisfactory as the property

of a wife who had been deserted by her husband could later be seized by the husband or even his creditors, leaving

the deserted wife destitute: (16 August 1860) 2 NZPD 320. The circumstances in which an order could be sought were enlarged by the Married Women’s Property Protection Act 1870. Section 2 granted the woman the right to seek an order when she and her husband had separated due to the husband’s cruelty, adultery, habitual drunkenness or habitual failure to provide maintenance for the wife and children. Both the 1860 Act and the 1870 Act were consolidated in the Married Women’s Property Protection Act 1880.

2.19 More significant reform came with the Married Women’s Property

Act 1884, which swept aside the doctrine of matrimonial unity and replaced it with a “separation of property” system. Parliament’s primary concern was that the matrimonial unity doctrine had allowed husbands to squander the property that their wives brought to the marriage so that women were left without any means.65 In response, the Act provided that a wife could independently acquire, hold and dispose of property as if she was a “feme sole”.66 In other words, she was an independent legal person. Wives could now acquire their own property, enter contracts in their own name, and sue and be sued.

2.20 While the previous law deemed husband and wife to be one legal person (the husband), the effect of the Married Women’s Property Act was to treat husband and wife virtually as strangers.67 The

Act looked at property as his or hers, rather than “theirs”.68 This, however, brought its own problems. The law now required a court to divide property according to each spouse’s entitlements under general property law principles. More often than not, ownership was determined based on who held legal title and had paid for each item of property. The Act therefore did little for married women as most had remained homemakers, earned no income and accordingly had no means to contribute financially to the

purchase of property.69 In reality most of the matrimonial property was in the husband’s sole name and had been paid for from his earnings. Likewise, the income on which the spouses relied was usually earned by the husband. As a result, on separation many women were left without any rights to the property used and acquired in the course of the marriage, unless they could show

a direct interest in property that they had paid for in “cold hard cash”.70

2.21 Despite the problems with the Married Women’s Property Act, its substance was retained in later re-enactments of the same




65 (5 September 1884) 48 NZPD 155.

66 Married Women’s Property Act 1884, s 3.

  1. AM Finlay “Matrimonial Property – Comparable Sharing: An explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 3.

68 Special Committee on Matrimonial Property Matrimonial Property: Report of a Special Committee: Presented to the Minister of

Justice in June 1972 (Department of Justice, June 1972) at 3.

  1. AM Finlay “Matrimonial Property – Comparable Sharing: An explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 4.
  2. AM Finlay “Matrimonial Property – Comparable Sharing: An explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at at 4.

law, and lingered well into the twentieth century.71 Amendments

in 1961 extended the principles to relationships that ended on death.72 No provision was made for de facto relationships.73

The Matrimonial Property Act 1963 – Recognising non-monetary contributions to property

2.22 In the second half of the twentieth century, concern was growing about the way in which the law disadvantaged women. There

was increasing recognition that a wife may have supported her husband for many years by maintaining the home and looking after the children. These types of contributions undoubtedly helped the husband to work, earn income and acquire property.74

However under the existing Married Women’s Property Acts these types of contributions did not create any property interest in the matrimonial property.

2.23 The Matrimonial Property Act 1963 (1963 Act) was introduced in response to these concerns. It retained the separation of property system of the Married Women’s Property Act, but with

a “superimposed judicial discretion” that enabled a court to make orders overriding the spouses’ strict legal and equitable75 interests in the property.76 When making those orders, a court was required to have regard to the contributions the husband and wife made to

the property in dispute, whether “in the form of money payments,

  1. Married Women’s Property Act 1894, the Married Women’s Property Act 1908, the Law Reform Act 1936, the Statutes Amendment Act 1939, the Married Women’s Property Act 1952. The changes made by the series Married Women’s Property Acts did not, however, affect a wife’s right to maintenance. A husband’s maintenance obligations, even after separation or divorce, lived on under separate legislation. See RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [1.8].
  2. In 1961 the Married Women’s Property Act 1952 was amended to define “husband” and “wife” to include their personal representatives, with the effect that the Act applied on the death of one spouse. See Special Committee on Matrimonial Property Matrimonial Property: Report of a Special Committee: Presented to the Minister of Justice in June 1972 (Department of Justice, June 1972) at 6.
  3. However, the purpose of the Married Women’s Property Acts was to unwind the doctrine of unity that only applied on marriage. In effect, therefore, the position of women in de facto relationships may have been similar to that of married women under the Married Women’s Property Acts. That is, women in either type of relationship could own property in their own right if she was a “feme sole”, but would be required to establish property rights based on general property law principles.
  4. The sentiment of law reformers in this era toward the dynamics of most families was famously summarised by English Judge, Lord Simon: “Men can only earn their incomes and accumulate capital by virtue of the division of labour between themselves and their wives. The wife spends her youth and early middle age in bearing and rearing children and in tending the home; the husband is thus freed for his economic activities. Unless the wife plays her part the husband cannot play his. The cock bird can feather his nest precisely because he is not required to spend most of his time

sitting on it.” (Lord Simon of Glaisdale “With All My Worldly Goods” (address to the Holdsworth Club, University of

Birmingham, 20 March 1964) at 32).

  1. A person may have an “equitable interest” in property even though they might not be the legal owner. The most common example of an equitable interest is where property is held on trust. The trustee, who is the legal owner of the property, is obliged to deal with the property for the beneficiaries. In that case, a beneficiary’s interest is an equitable interest under the trust property.

76 Matrimonial Property Act 1963, s 5(3). See A Angelo and W Atkin “A Conceptual and Structural Overview of the

Matrimonial Property Act 1976” (1977) 7 NZULR 237 at 248.

services, prudent management, or otherwise”.77 For example,

if the legal title to the matrimonial home was solely in the husband’s name, a wife could claim an interest in that property by showing contributions that would not ordinarily result in a property interest under general property law principles. A 1968 amendment clarified that it did not matter that the spouse had

not made a contribution in the form of money payments, nor did those contributions have to be of an “extraordinary character”.78

2.24 The reforms brought about by the 1963 Act were very progressive for its time, although it applied only to marriages. It was at

this point that New Zealand matrimonial property law broke away from England and Wales and took on its own distinctive character.79 The philosophy of the 1963 Act was to produce an outcome that recognised a wife’s role in the family, at a time when marriage was still a defining structure of society and a wife’s role was still largely focused in the home.80 For the first time a wife’s non-monetary efforts for her family, rather than direct financial contributions, could justify an interest in property when that marriage ended, on separation or death.81 Despite the landmark shift, however, a number of problems with the 1963 Act’s practical application emerged over the next decade.

The Matrimonial Property Act 1976 – “A new deal”82

2.25 Problems with the 1963 Act were identified in a report released in 1972 by a committee comprising members of the Ministry of




77 Matrimonial Property Act 1963, s 6(1).

78 Matrimonial Property Amendment Act 1968, s 6(1), which inserted a new s 6(1A) into the Matrimonial Property Act

1963.

  1. In England and Wales the law was later amended through the Matrimonial Causes Act 1973 (UK). That legislation introduced a regime where the court had broad discretion to make orders regarding property at the end of a marriage. Although it remains in effect, it was amended in 1984 on the recommendation of the Law Commission of England and Wales to require the court to have regard to particular matters when making property adjustment orders. See Matrimonial and Family Proceedings Act 1984 (UK), s 3, which introduced s 25 to the Matrimonial Causes Act 1973

(UK). See also: Law Commission of England and Wales Family Law: The Financial Consequences of Divorce: The Response to the Law Commission’s Discussion Paper, and Recommendations on the Policy of the Law (LAW COM No 112, 1981).

  1. For example, in the early 1960s over 90 per cent of all babies were born within marriage, and only 16 per cent of married women participated in the labour force. See P Hyman “Trends in Female labour force participation in New Zealand since

1945” (1978) 12 New Zealand Economic Papers 156 at 157; Ian Pool, Arunachalam Dharmalingam and Janet Sceats The

New Zealand Family from 1840: A Demographic History (Auckland University Press, 2007) at 225.

  1. The Matrimonial Property Act 1963 applied on death as a result of a 1961 amendment to the predecessor legislation, the Married Women’s Property Act 1952. That amendment defined “husband” and “wife” to include their personal representatives, and those definitions were carried into the 1963 Act. See Special Committee on Matrimonial Property Matrimonial Property: Report of a Special Committee: Presented to the Minister of Justice in June 1972 (Department of Justice, June 1972) at 6.

Justice and the New Zealand Law Society.83 In 1975 the Select

Committee on Women’s Rights also reported to Parliament on the way the 1963 Act was working.84 Both committees complained that the 1963 Act’s approach of requiring a spouse to show

specific contributions to identified pieces of property still caused difficulties for married women. The committees said the law should instead assume that equal contributions have been made

in respect of all assets of the marriage, especially the family home, and equal division should be automatic.85 A “coherent and rational code” was needed to replace the 1963 Act.86

2.26 There was a general political consensus that progressive reform was needed.87 The Matrimonial Property Bill 1975 (Bill) was introduced into Parliament and, despite an intervening general election and change in government, the Bill was enacted and became the Matrimonial Property Act 1976 (the 1976 Act). 88

What problems did the Bill intend to remedy?

2.27 In a White Paper published on the introduction of the Bill to

Parliament, the Minister of Justice explained:89

The law in New Zealand that now governs relations between husband and wife in property matters, despite the improvements made in the last 15 years, falls well short of achieving equal

justice in practice between married people; nor does it accord with the way in which most married people in New Zealand look on their property and treat it.

2.28 The Minister explained that the fundamental problems with the

1963 Act included:90


83 Special Committee on Matrimonial Property Matrimonial Property: Report of a Special Committee: Presented to the Minister of

Justice in June 1972 (Department of Justice, June 1972).

84 NV Douglas “Women’s Rights Committee: June 1975” [1975] IV AJHR I13.

85 Special Committee on Matrimonial Property Matrimonial Property: Report of a Special Committee: Presented to the Minister of Justice in June 1972 (Department of Justice, June 1972) at 11. NV Douglas “Women’s Rights Committee: June 1975” [1975] IV AJHR I13 at 75.

86 Special Committee on Matrimonial Property Matrimonial Property: Report of a Special Committee: Presented to the Minister of

Justice in June 1972 (Department of Justice, June 1972) at 2.

  1. Leading up to the 1975 general election, both Labour and National adopted the policy of legislating a presumption of equal sharing of matrimonial property. See New Zealand National Party National Party 1975 General Election Policy (National Party, Wellington, 1975) at 4; New Zealand Labour Party The Labour Party Manifesto 1975 (Labour Party, Wellington, 1975) at 31.

88 The only major issue which divided the two parties in the process leading to the enactment of the Matrimonial Property

Act 1976 was whether de facto partners should be included: see (7 December 1976) 408 NZPD 4564.

  1. AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 3.

(a) An applicant had to prove specific contributions to

identifiable items of property and have them quantified by a court.91 In truth, the Minister said, a wife would be seeking an award from the husband’s property, rather than

a share of “their” property. In settlement negotiations, this placed married women in an inferior bargaining position.

(b) There was a considerable measure of uncertainty in every case. The cases decided under the 1963 Act showed that results could differ “significantly” on similar facts, and could depend “a good deal” on which judge heard the case.

(c) The practice of the courts had been less than generous.

There had been cases where wives had made significant contributions to their families over a number of years but, despite such loyalty and hard work, they were awarded a share of between one quarter and one third of the family home.92

(d) The task of showing specific contributions to identifiable items of property was often impossible in practice. The non- monetary contributions of wives and husbands were of a far more general character, although no less real.

What solution did the Bill seek to provide?

2.29 The Bill was said to embody the concept of “marriage as an equal partnership between two equal persons and as the basis on which our present society is built”, and was “devised in the light of New Zealand needs and New Zealand values”.93 Spouses were no longer to be treated as strangers in law but as partners in a common



91 The courts’ approach of determining disputes by considering each item of property and making orders in respect of those items had been confirmed by the Court of Appeal in E v E [1971] NZLR 859 (CA). However the Privy Council later saw no justification or foundation for an “asset by asset” approach as taken by the Court of Appeal: Haldane v Haldane [1976] 2

NZLR 715 (PC) at 727.

  1. An Auckland District Law Society Public Issues Committee said in 1975, “Differing judges have different ideas of what as a matter of social policy is fair, some markedly favouring wives and some husbands”: Auckland District Law Society Public Issues Committee “Background Paper on the Law as to Matrimonial Property” (1975) at 2, as cited in Geraldine Callister “Domestic Violence and the Division of Relationship Property Under the Property (Relationships) Act 1976: the Case for Specific Consideration” (LLB(Hons) Dissertation, University of Waikato, 2003). See also A Angelo and W Atkin “A Conceptual and Structural Overview of the Matrimonial Property Act 1976” (1977) 7 NZULR 237 at 248-249. The authors discuss the general approach to dividing property taken by the courts under the Matrimonial Property Act 1963:

Though judicial discretions are inherently unpredictable, the pattern that the courts appear to have adopted in exercising their discretion was to grant the wife an equal share in the matrimonial home, where she could show some financial

or material contribution as well as domestic contributions, while in other cases she could normally have expected an entitlement of around about a third.

enterprise.94 The primary shift in emphasis was from the concept

of contribution to the property, to contributions to the marriage partnership, which were presumed to be equal.

2.30 The Bill was founded on the basis that a court should be permitted to look at the marriage assets as a whole and relate the contributions of the husband and wife to them, rather than to specific items of property.95 The Bill did this by introducing the concept of “matrimonial property”.96 Matrimonial property was

the property that the husband and wife could regard as “theirs”. Broadly speaking, the Bill defined matrimonial property as the family home, family chattels and all other property acquired by husband or wife after the marriage except by inheritance or gift.97

It was this matrimonial property that would be subject to equal division between the husband and wife. Separate property, in contrast, would continue to belong solely to the husband or wife and would not be eligible for sharing. All property owned by either spouse that did not come within the definition of matrimonial property was separate property.

2.31 The concept of equal division of matrimonial property, the Minister explained, “has the great advantage of reintroducing certainty, putting husband and wife in an equal bargaining position should the marriage break up, and being consistent with broad social justice.”98

2.32 The Bill expressly considered the role of Māori land, which had not been excluded under the 1963 Act. The Bill sought to protect the special status of Māori land and recognise the interests of other parties in that land by removing it from the ambit of the property sharing regime.99 There was no discussion in Parliament of the change brought about by the Bill, but it seems to reflect

the view that special rules for Māori land were necessary.100 The

exclusion of Māori land meant that if one or both of the spouses

94 Bill Atkin “Classifying Relationship Property: A Radical Re-shaping” in Jessica Palmer, Nicola Peart, Margaret Briggs and

Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

  1. AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 5-6.
  2. AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 6.
  3. AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 6.
  4. AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 7.

99 Clause 6 of the Matrimonial Property Bill 1975 (125–1) excluded Māori land within the meaning of the Māori Affairs Act

1953.

100 Jacinta Ruru “Implications for Māori: Historical Overview” in Nicola Peart, Margaret Briggs, and Mark Henaghan (eds)

had an interest in Māori land that land would not fall within the

pool of matrimonial property available for sharing at the end of the marriage.

2.33 While the Bill dealt only with dividing property on separation, the Government also considered that the rights of a surviving spouse should not be inferior in any way to those of a separated spouse.101 The Government observed, however, that reforming the law on the division of property on death presented “complex and stubborn problems”, and elected to deal with this issue separately.102

2.34 The Government also questioned whether the new equal sharing regime should apply to de facto partners.103 It observed that the same vulnerabilities married women suffered under the previous law could also affect women in long standing de facto relationships. The Minister said that for “practical and humanitarian grounds” there was a strong case for including

de facto partners within the new regime. Following a change of

Government, de facto relationships were removed from the Bill.104

The incoming Minister of Justice said that removing de facto relationships meant that “...we believe that individuals should demonstrate to those they live with a responsibility to the other partner, and a responsibility at law to regularise that union”.105

2.35 The resulting 1976 Act was recognised as:106

... social legislation aimed at supporting the ethical and moral undertakings exchanged by men and women who marry by providing a fair and practical formula for resolving the obligations that will be due from one to the other in respect of their “worldly goods” should the marriage come to an end.

2.36 In the years that followed, the general rule of equal sharing of matrimonial property became accepted in New Zealand as the new norm.107


  1. AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 13.
  2. AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 13.
  3. AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 12-13.

104 Matrimonial Property Bill 1976 (125-2) as reported from the Statutes Revision Committee.

105 Hon David Thomson MP, Minister of Justice (9 December 1976) 408 NZPD 4727.

106 Reid v Reid [1979] NZCA 30; [1979] 1 NZLR 572 (CA) at 580 per Woodhouse J. Discussed in Bill Atkin and Wendy Parker Relationship

Property in New Zealand (2nd ed, LexisNexis, Wellington, 2009) at 5.

107 See JM Krauskopf and CJ Krauskopf “Sharing in Practice: the effects of the Matrimonial Property Act 1976” (1988) 10 Fam

Law Bull 140. The authors conducted a pilot study on, among other things, the extent to which the equal sharing norms

The 2001 Amendments and the new Property

(Relationships) Act 1976

2.37 In 1988 a Working Group was established as part of the Government’s social policy reform programme, to revise and update matrimonial property and family protection laws, including the 1976 Act.108 There had been significant change in the social landscape since 1976, and the Working Group was required to consider whether equal division of matrimonial property provided a just and equitable result and whether the general approach of the 1976 Act was sound.109

2.38 The Working Group reported:

(a) It had looked at the “considerable topical concern” that equal division of matrimonial property had failed to secure an equitable result.110 The heart of the debate about equality and equity, the Working Group said,

was “the economic consequence of current sex roles in our society.”111 This could not, however, be laid at the door of the 1976 Act.112 While the Working Group recommended improvements that would “go some

way towards avoiding the discrepancies in the spouses’ standard of living”,113 it considered it was unrealisistic to expect the 1976 Act to achieve social equity between the sexes.114 Rather, the State must continue to have

a “significant role” in reducing disparities caused by

“social factors.”115


had been accepted in New Zealand one decade after the introduction of the Matrimonial Property Act 1976. The authors concluded that a “minor social and legal revolution occurred in the acceptance of the major goals of the legislation”.

108 The Working Group was convened by Geoffrey Palmer, then Minister of Justice, to review the Matrimonial Property Act

1976, the Family Protection Act 1955, the provision for matrimonial property on death and the provision for couples living in de facto relationships. The Working Group was convened to deal with the broad policy issues, rather than to produce a blueprint for new legislation: Department of Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at 1–2.

109 Department of Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at 3.

110 Department of Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at

4–15.

111 Department of Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at

12.

112 Department of Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at

12.

113 Department of Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at

14. These recommendations are discussed at paragraph 2.40 below.

114 Department of Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at

12.

115 Department of Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at

12.

(b) It was still the case that the surviving partner in a

marriage ended by death could be worse off than one whose marriage ended by separation. The Working Group observed that this had long been recognised as “unfair and untenable” and recommended that the 1976

Act should provide for the same rules of division of property on death.116

(c) Developments in other areas of law had given increasing recognition to de facto relationships. These were permanent and committed relationships in which the partners lived together as husband and wife despite not being legally married. The only way a person could claim an interest in his or her de facto partner ’s property was to commence court proceedings, which were often long and complex.117 Although not unanimous on the exact changes required, the Working Group concluded that

the 1976 Act should be reformed to extend its rules of property division to de facto relationships.118

2.39 The Working Group reported in 1988, but there was little advancement of its recommendations until 1998, when the Government introduced two reform bills into Parliament.119 Their progress through the House was slow, in part due to a general election and change of government in 1999. This resulted in substantial changes to the proposed reforms, including changes that addressed “the issue of economic disadvantage suffered by

a non-career partner when a relationship breaks down”.120 The amendments were finally enacted in 2001, and the 1976 Act was renamed the Property (Relationships) Act 1976 (PRA).

2.40 The 2001 amendments extended the PRA to cover de facto relationships, both same-sex and opposite-sex, and added a new part to the PRA to provide for the division of relationship

116 Department of Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at at 40.

  1. At this time, the de facto partner with legal title to the property retained it on separation unless their former partner could persuade a court that he or she had an equitable interest in the property, usually under a constructive trust (the leading cases being Pasi v Kamana [1986] NZCA 93; (1986) 4 NZFLR 417 (CA) and, later, Lankow v Rose [1995] 1 NZLR 277; (1994) 12 FRNZ

682 (CA)). The Working Group noted that while the courts had tried to do justice between de facto partners, they had been “hampered by the fact that the law of trusts... is not really suited to achieving a just and predictable result in most cases.” See Department of Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at 64–65.

118 Department of Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at 70.

119 Matrimonial Property Amendment Bill 1998 (109-1), which proposed amendments to the Matrimonial Property Act

1976; and the De Facto Relationships (Property) Bill 1998 (108-1), which proposed a new property division regime for de facto relationships, similar to but distinct from the regime for marriages.

120 Supplementary Order Paper 2000 (25) Matrimonial Property Amendment Bill 1998 (109-2) (explanatory note) at 71 and

74-75.

property if one partner died (either with or without a will).121

The presumption of equal sharing was extended to apply to all matrimonial property (now renamed “relationship property”), following the Working Group’s recommendation.122 New sections

15 and 15A sought to achieve greater substantive equality, by permitting departure from equal sharing to compensate for economic disparity caused by the division of functions in the relationship. The “underlying notion” of the PRA as amended in

2001 was “one of equity; that it is sometimes fair to treat people differently in order to achieve a just outcome.”123

2.41 Changes were also made to the PRA to recognise the particular significance of taonga and heirlooms, consistent with the Working Group’s recommendations.124 Both were explicitly excluded from the definition of family chattels and as such were no longer available for division.125 The Working Group noted that part of the value of taonga and heirlooms is that they have passed down from earlier generations, and this is lost if they are passed outside the family group.126

2.42 The 2001 amendments were the last time significant changes

were made to New Zealand’s relationship property law, other than the inclusion of civil unions in 2005.127

The PRA as social legislation

2.43 The PRA is social legislation. It reflects the State’s expectations as to how the wealth and resources of a family should be shared when relationships end. As former Principal Family Court Judge Peter Boshier has observed:128

The State... carries an overarching responsibility to provide a blueprint for societal values which impact the way people live, behave and interact, both with each other and with their children. Within the umbrella of family law, it is appropriate to express

121 Property (Relationships) Act 1976, Part 8.

122 Department of Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at

13-14. Under the 1976 Act the equal sharing presumption had applied only to the family home and chattels, with other matrimonial property being divided on a contributions basis.

123 Wendy Parker “Sameness and difference in the Property (Relationships) Act 1976” (2001) 3 NZFLJ 276 at 278.

124 Department of Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at18.

125 Property (Relationships) Act 1976, s 2 definition of “family chattels”.

126 Department of Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at 18.

127 Civil Union Act 2005; Property (Relationships) Amendment Act 2005.

128 Peter Boshier and others “The role of the state in Family Law” (2013) 51(2) Family Court Review 184 at 190.

such values from time to time. Accordingly, countries amend

their laws to reflect perceptions of changing social norms and obligations and this is further carried out through how the courts interpret and apply the law.

2.44 The State’s role in shaping the law to both encourage and reflect change in societal values is apparent in the history of the PRA.

It has been significant particularly in challenging and redefining the role of women in society: “nowhere is the progressive emancipation of women reflected more strongly than in the field of matrimonial property rights of married people.”129 More recent developments have sought to ensure fair treatment of different relationship types, by applying the same rules of division to de facto relationships and same-sex relationships. There has also been a growing awareness that family law policy needs to be better attuned to recognising Māori, and this was reflected, for example, in the exclusion of taonga from the PRA in 2001.130

2.45 This history emphasises the need for our review to be supported by a clear understanding of the current values and attitudes of New Zealanders.

2.46 The discussion in this Issues Paper also takes place against the backdrop of New Zealand’s domestic human rights law and its participation in a number of international conventions and declarations. The New Zealand Bill of Rights Act 1990 prohibits unjustified discrimination on a range of grounds including

sex, marital status, family status and sexual orientation, with reference to the provisions of the Human Rights Act 1993.131 This is particularly relevant to our discussion on what relationships should be covered under the PRA and how the PRA should

treat short-term relationships.132 New Zealand has ratified

the International Convention on the Elimination of All Forms of Discrimination Against Women and the United Nations Convention on the Rights of the Child.133 New Zealand has also

129 RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [1.4].

130 Jacinta Ruru “Kua tutū te puehu, kia mau: Māori aspirations and family law policy” in Mark Henaghan and Bill Atkin

(eds) Family Law Policy in New Zealand (4th ed, LexisNexis, Wellington, 2013) 57 at 57.

  1. The prohibition on discrimination is subject to “...such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society”: See New Zealand Bill of Rights Act 1990, ss 5 and 19; Human Rights Act 1993, s 21 for a list of the prohibited grounds of discrimination.

132 See Parts B and E of this Issues Paper.

  1. New Zealand ratified the Convention on the Elimination of All Forms of Discrimination Against Women (1249 UN 13 (opened for signature 1 March 1980, entered into force 3 March 1981) (CEDAW) on 10 January 1985 and the United Nations Convention on the Rights of the Child (1577 UNTS 3 (opened for signature 20 November 1989, entered into force 2 September 1990)) on 6 April 1993. To have effect in New Zealand, international obligations must be incorporated into New Zealand’s domestic law: see Legislation Advisory Committee Guidelines on Process and Content of Legislation (2014) at [8.2] and New Zealand Air Line Pilots’ Association Inc v Attorney-General [1997] 3 NZLR 269 (CA) at 280-281. Where possible New Zealand’s domestic law should be interpreted in such a way as to accord with international treaties

given its support to the non-binding Declaration of the Rights

of Indigenous Peoples.134 These commitments are relevant to our consideration of how the interests of women,135 Māori136 and children137 should be taken into account in the PRA. Any

recommendations we make in our final report will be reviewed for consistency with domestic human rights law and New Zealand’s international obligations.

The pillars of financial support available when relationships end

2.47 While the PRA addresses how property is to be divided when relationships end, it is only one part of the broader picture of how former partners and their children are supported into the future. Ideally, future needs should be met without reliance on State support or intervention. Adults should be able to provide for their families from their own incomes. Parents have legal obligations

to support their children and these are not extinguished on separation.138

2.48 The principles of whanaungatanga and manaakitanga mean that in Māori culture, separating partners and their children may be supported by their whānau and indeed their hapū and iwi in

some cases.139 Support from extended family may also be available


which New Zealand has ratified: see R I Carter Burrows and Carter Statute Law in New Zealand (5th ed, LexisNexis, Wellington, 2015) at 30.

  1. United Nations Declaration of the Rights of Indigenous Peoples (GA Res 61/295, 61st sess, 107th plen mtg, A/ RES/295 (2007)). See also the New Zealand Government’s expression of support at: “National Govt to support UN rights declaration” (20 April 2010) <beehive.govt.nz>.
  2. The Convention on the Elimination of All Forms of Discrimination Against Women defines what constitutes discrimination against women (1249 UN 13 (opened for signature 1 March 1980, entered into force 3 March 1981, art

1). State parties undertake, among other things, to ensure the practical realisation of the principle of the equality of men and women through law and other means; and to establish legal protection of the rights of women on an equal basis

with men (art 2).

  1. The United Nations Declaration on the Rights of Indigenous Peoples provides, among other things, that indigenous peoples are free and equal to all other peoples and have the right to be free from any kind of discrimination in the exercise of their rights, in particular that based on their indigenous origin or identity: United Nations Declaration of the Rights of Indigenous Peoples (GA Res 61/295, 61st sess, 107th plen mtg, A/RES/295 (2007) art 2. It is said to assist with the interpretation and application of the principles of Te Tiriti o Waitangi (the Treaty of Waitangi): Human Rights Commission The Rights of Indigenous Peoples: What you need to know (Human Rights Commission, Auckland, 2016) at 5.
  2. The United Nations Convention on the Rights of the Child sets out the basic rights of children: Convention on the Rights of the Child 1577 UNTS 3 (opened for signature 20 November 1989, entered into force 2 September 1990). It provides, among other things, that the best interests of the child shall be a primary consideration in all actions concerning them (art 3.1); that a child who is capable of forming his or her own views has the right to express those views freely in all matters affecting them, and that those views should be given due weight in accordance with the age and maturity of the child (art 12.1); and recognition of the principle that both parents have common responsibilities for the upbringing and development of the child (art 18.1).
  3. See Crimes Act 1961, s 152; Care of Children Act 2004, ss 4(1), 5(b) and 16. Parent’s obligations to care for their children are discussed in Part I of this Issues Paper.
  4. Donna M Tai Tokerau Durie-Hall “Maori Family” in Sandra Coney (ed) Standing in the Sunshine: a history of New Zealand women since they won the vote (Viking, Auckland, 1993) 68 at 69.

in other cultures, notably among Pacific people families.140 All

cultures have a vested interest in the functional relationships that determine the well-being and preservation of the family unit.141

2.49 Recognising that it will not always be possible for some partners to support themselves and their children when relationships end, the State ensures that there are other means of financial

support available. These means of support have been described as “pillars”.142 Each pillar addresses a different issue and together with the PRA they establish a framework of financial support.

2.50 When partners separate, pillars providing for ongoing support include:

(a) Maintenance: A person may be entitled to maintenance from their former partner to the extent that it is necessary to meet their reasonable needs if they

cannot meet those needs themselves.143 Maintenance is intended to provide temporary relief to enable a partner to start constructing a new life post-separation.144 Each partner should assume responsibility for meeting their own needs within a reasonable period.145 Maintenance

is usually a matter for a court to determine, although there is nothing preventing separating partners from making a private agreement as to the payment of maintenance. Maintenance is discussed in Part F.

(b) Child support: The costs of caring for any dependent children of the relationship are supported by payments made by a parent who doesn’t live with their children, or who shares the care of their children with another. The objects of the Child Support Act 1991 are set out

in section 4, and the Act affirms the right of children to be maintained by their parents, the corresponding

obligation on parents to maintain their children and the

  1. For example, one study has found that by age 4, 40 per cent of Pacific children growing up in New Zealand live in a household with other extended family members compared to 8% of European children: Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22,

2017) at Chapter 5 citing Susan MB Morton and others Growing Up in New Zealand: A longitudinal study of New Zealand children and their families. Now we are Four: Describing the preschool years (University of Auckland, May 2017) at 39.

141 John Chadwick “Whanaungatanga and the Family Court” (2002) 4 BFLJ 91.

  1. The law of many jurisdictions is based on a “pillar system” in which the package of financial remedies for a spouse on divorce is constructed on a number of pillars, each addressing a different issue. This happens in many civil law jurisdictions in Europe. See Joanna Miles and Jens M Scherpe “The legal consequences of dissolution: property and financial support between spouses” in John Eekelaar and Rob George (eds) Routledge Handbook of Family Law and Policy (Routledge, Abingdon, 2014) 138 at 141.

143 Family Proceedings Act 1980, s 64.

144 See for example: Slater v Slater [1983] NZLR 166 (CA) at 174 and C v G [2010] NZCA 128; [2010] NZFLR 497 (CA) at [31] and [32].

145 Family Proceedings Act 1980, s 64A.

responsibility of parents to ensure that their obligations

to birth and adopted children are not extinguished by obligations to step-children.146 The amount of child support payable is calculated according to a formula set out in the legislation. The formula takes into account each parent’s income, living needs, number

of dependent children and care arrangements. The Commissioner of Inland Revenue is responsible for administering the scheme and any parent can apply to the Commissioner for a child support assessment. Court proceedings are not required. The formula does not take into account the special needs of a particular child or

the special circumstances of the parents, but a parent can apply to the Commissioner for a departure from the standard formula. Child support is discussed in Part I.

(c) State benefits: The State has a role in supporting individuals under the Social Security Act 1964. This includes the financial support of single parents and jobseekers, the payment of supported living payments147 and pensions, and the provision of Working for Families tax credits for low income households. While recourse

to State benefits is generally seen as a last resort, it plays an important role in supporting families post- separation:148

There is little enthusiasm worldwide for the state

to assume responsibility for the economic fallout of relationship breakdown. In reality, where private resources are limited, one party frequently becomes at least partially dependent on state support, but this is more often the product of inevitability than design.

2.51 Where a relationship ends on death, in addition to having the right to elect an entitlement under the PRA the surviving partner may be able to access State benefits of the kind described above. They may also have a claim under the Family Protection Act 1955 against the deceased partner ’s estate which, like maintenance on separation, seeks to provide temporary relief to enable a surving



146 Child Support Act 1991, s 4.

  1. Supported living payments are for people who have, or care for someone with, a health condition, injury or disability that severely limits their ability to work on a long-term basis.

148 Joanna Miles “Financial Provision and Property Division of Relationship Breakdown: A Theoretical Analysis of the New

Zealand Legislation” (2004) 21 NZULR 267 at 272.

partner to start constructing a new life.149 Claims under the Wills

Act 2007,150 the Administration Act 1969151 or the Law Reform (Testamentary Promises) Act 1949152 may also be available to a surviving partner or any children of the deceased. These statutes are discussed in Part M.

2.52 It is clear that the State has a vital interest in both the operation of the PRA and its interaction with the other pillars of financial support. When relationships end, this usually comes at a financial cost to each partner, and that cost is ultimately borne by the State through the provision of benefits when the other pillars fail. We have been mindful in preparing this Issues Paper that the division of property at the end of a relationship can affect the need for State support by one or both partners and any affected children.

Tikanga Māori and the PRA

2.53 In recent decades there has been a growing recognition of te ao Māori (the Māori dimension) and the need to acknowledge tikanga Māori and address how it might to operate within or alongside New Zealand law.153 In 2001 the Law Commission published a Study Paper, Māori Custom and Values in New Zealand Law, in which it concluded:154

If society is truly to give effect to the promise of the Treaty of Waitangi to provide a secure place for Māori values within New Zealand society, then the commitment must be total. It must involve a real endeavour to understand what tikanga Māori

is, how it is practised and applied, and how integral it is to the

  1. The Family Protection Act 1955 allows surviving family members who have not been provided for by the deceased to bring claims against the estate under s 4 for “proper maintenance and support” where the deceased owed a “moral duty” under s 3 to provide for them.
  2. The Wills Act 2007 states the requirements for the creation of effective wills and their administration. Wills can be challenged for non-compliance.
  3. The Administration Act 1969 provides for how estates are to be administered when a person dies. It contains the rules for dividing property when a person dies without a will, including the entitlement of a surviving partner or child.
  4. The Law Reform (Testamentary Promises) Act 1949 allows a person to bring a claim against an estate where the deceased made a promise to provide for the person in a will; that person provided a service which went beyond what would normally be expected of the relationship he or she had with the deceased; and the deceased failed to fulfil the promise.

153 Law Commission Māori Custom and Values in New Zealand Law (NZLC SP9, 2001) at [117]. The Law Commission Act

1985 requires the Commission to take into account te ao Māori in making recommendations for the reform and development of the laws of New Zealand: s 5(2)(a). In a draft paper written for the purposes of the Commission’s review of Māori custom and values, Whaimutu Dewes said there is “an increasing acceptance that Māori Custom Law should

be recognised to ensure its survival and to provide Māori determined alternatives to a moncultural government legal system.” See Whaimutu Dewes Māori Custom Law: He Kākano i Ruia Mai i Rangiātea, e Kore e Ngaro (unpublished draft paper written for the Law Commission) at 11 as cited in Law Commission Māori Customs and Values in New Zealand Law (NZLC SP9, 2001). See also Jacinta Ruru and Leo Watson “Should Indigenous Property Be Relationship Property” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

154 Law Commission Māori Custom and Values in New Zealand Law (NZLC SP9, 2001) at [402], see also [403].

social, economic, cultural and political development of Māori, still

encapsulated within a dominant culture in New Zealand society.

2.54 In 2016, Sir Hirini Mead wrote that:155

... it is time for New Zealand to establish its own common law that is relevant to our people and the realities we face in this country. In other words, Māori custom law has to be an essential part of our joint common law.

2.55 David Williams has observed that a delicate balance is required of law-makers and decision makers:156

If tikanga Māori is ignored altogether, except when it needs to be obtained for the purpose of extinguishment, then the monoculturalism of the past will be perpetuated. On the other hand, if custom law is entirely removed from the community context whence it arose then it will rapidly lose its authenticity.

2.56 New Zealand legislation has, for many years, recognised various Māori concepts.157 The courts address Māori concepts in case law, taking account of tikanga Māori both through the provision of expert evidence and by taking judicial notice of it.158

2.57 Ruru identifies the challenge to the family law system and its practitioners, in “how to recognise, understand and accommodate tikanga Māori relating to the family”.159

2.58 In the context of the PRA, there are a number of specific issues

of particular interest to Māori.160 However, there is also a broader question about the recognition of tikanga Māori in the framework




155 Hirini Moko Mead Tikanga Māori: Living by Māori Values (Revised ed, Huia Publishers, Wellington, 2016) at viii.

156 David Williams He Aha Te Tikanga Māori (unpublished draft paper for the Law Commission, 1998) at 5. See also Law

Commission Māori Custom and Values in New Zealand Law (NZLC SP9, 2001) at [294].

  1. For example, the Education Act 1989 defines a wananga by reference to tikanga Māori (s 162(4)(b)(iv)), the Resource Management Act 1991 defines kaitiakitanga and tikanga Māori (s 2) and Te Ture Whenua Māori Act 1993 provides for decisions of the Māori Appellate Court on matters of tikanga Māori to be binding on the High Court (s 61(4)). Mead observes that this may evidence the increasing acceptability and popularity of tikanga Māori in the wider community: see Hirini Moko Mead Tikanga Māori: Living by Māori Values (Revised ed, Huia Publishers, Wellington, 2016) at 26. See also Michael Belgrave Māori Customary Law: from Extinguishment to Enduring Recognition (unpublished paper for the Law Commission, 1996) at 50. More recent examples of Māori concepts in New Zealand law (and proposed law) include the Oranga Tamariki Act 1989 and Te Ture Whenua Māori Bill 2016 (126-2).
  2. See Law Commission Māori Custom and Values in New Zealand Law (NZLC SP9, 2001) at [204]–[220] and [252]. See also the suggestion that a panel of experts (pukenga) could raise general levels of awareness of tikanga Māori and also be involved in court processes in David Williams He Aha Te Tikanga Māori (unpublished draft paper for the Law Commission, 1998) at 43–44. See also B v P [2017] NZHC 338, Takamore v Clarke [2014] NZLR 733 (SC).
  3. Jacinta Ruru “Kua tutū te puehu, kia mau: Māori aspirations and family law policy” in Mark Henaghan and Bill Atkin (eds) Family Law Policy in New Zealand (4th ed, LexisNexis, Wellington, 2013) 57 at 58 where she also identifies the challenges of how to understand and mediate conflict in marriages between Māori and non-Māori, and how to formulate and administer family law so that it guarantees all citizens equal consideration and respect for their cultural views and practices, given the special status of the Māori people as signatories of the Treaty of Waitangi on the one hand, and the imbalance in access of Māori and non-Māori to political power on the other.

160 See paragraph 4.48 for a discussion of Property (Relationships) Act 1976 matters where tikanga Māori is relevant.

of the PRA as it is outlined in Chapter 3. To provide context to

that discussion, we briefly describe tikanga Māori.161

What is tikanga Māori?

2.59 Tikanga Māori162 refers to the body of rules and values developed by Māori to govern themselves – the “Māori way of doing things”.163 It is sometimes described as Māori custom law.164

Importantly, tikanga Māori should not be seen as fixed from time immemorial, but is based on a continuing review of fundamental principles in a dialogue between the past and the present.165 Mead observes that “[t]ikanga Māori is adaptable, flexible, transferable and capable of being applied to entirely new situations.”166

2.60 In the Commission’s Study Paper, Māori Custom and Values in

New Zealand Law, it concluded that:167

Tikanga Māori comprises a spectrum with values at one end and rules at the other, but with values informing the whole range. It includes the values themselves and does not differentiate between sanction-backed laws and advice concerning non-sanctioned customs. In tikanga Māori, the real challenge is to understand the values because it is the values which provide the primary guide

to behaviour. Aspects of tikanga may be subject to a particular

  1. This description is necessarily brief in this introductory Part of the Issues Paper. We have referred extensively to the Law Commission’s Study Paper Māori Custom and Values in New Zealand Law (NZLC SP9, 2001) and note its own acknowledgment of work and commentaries provided by Justice (now Sir Edward) Durie, Dame Joan Metge, Dr Michael Belgrave, Dr Richard Mulgan, Chief Judge (now Justice) Joseph Williams, Whaimutu Dewes and Dr David Williams (Law Commission Māori Custom and Values in New Zealand Law (NZLC SP9, 2001) at ix).
  2. The fundamental values which inform tikanga Māori have been comprehensively examined by Sir Hirini Mead and are also discussed in the Law Commission’s Study Paper on Māori custom and values. See Hirini Moko Mead Tikanga Māori (Revised ed, Huia Publishers, Wellington, 2016) and Law Commission Māori Custom and Values in New Zealand Law (NZLC SP9, 2001) at [124]–[166].

163 Joseph Williams He Aha Te Tikanga Māori (unpublished paper for the Law Commission, 1998) at 2, as cited in Law

Commission Māori Custom and Values in New Zealand Law (NZLC SP9, 2001) at [71].

  1. Tikanga is the closest Māori word equivalent to the concepts of law and custom. For a detailed discussion of Māori Custom Law see the Law Commission’s previous reports including: Law Commission Justice: The Experiences of Māori Women (NZLC R53, 1999); Law Commission Māori Custom and Values in New Zealand Law (NZLC SP9, 2001) and Law Commission Dispute Resolution in the Family Court (NZLC R82, 2003). It has been suggested that tikanga relies on a collective sharing of decision making, tied to the community, and differs from the law which exists today with its ties to a world of individualism: see Pat Hohepa and David Williams The Taking into Account of Te Ao Maori in relation to Reform of the Law of Succession (unpublished paper for the Law Commission, 1996) at 19.
  2. Michael Belgrave Māori Customary Law: from Extinguishment to Enduring Recognition (unpublished paper for the Law Commission, Massey University, Albany, 1996) at 51 as cited in Law Commission Māori Custom and Values in New Zealand Law (NZLC SP9, 2001) at [10].

166 Hirini Moko Mead Tikanga Māori: Living by Māori Values (Revised ed, Huia Publishers, Wellington, 2016) at 355.

  1. Law Commission Māori Custom and Values in New Zealand Law (NZLC SP9, 2001) at [75]. In reaching this conclusion, the Law Commission drew extensively on the papers of all contributors to the Custom Law Project, which included Dame Joan Metge, Dr Michael Belgrave, Dr Richard Mulgan, Chief Judge Williams, Whaimutu Dewes and Dr David Williams. At [98] the Law Commission quoted Dr Michael Belgrave’s statement that:

to achieve a modern Maori consensus on the nature of customary law that is workable in the present, it is necessary to appreciate the extent to which colonisation was more than simply a catalyst for the modification of customary law. That at different times Maori customary law was denied, acknowledged, defined modified and extinguished according to non-Maori agenda casts a long shadow that cannot be ignored.

interpretation according to certain circumstances but then

reinterpreted in the light of other circumstances. Thus tikanga Māori as a social system was traditionally pragmatic and open- ended and remains so today.

2.61 While tikanga Māori was an essential part of traditional Māori society and was binding, today there are choices about how people conduct their lives, and tikanga is being revisited.168

2.62 Whanaungatanga is the underlying concept of Māori customary family law.169 It signals that in traditional Māori thinking relationships are everything, and the individual identity is defined through that individual’s relationships with others; the individual is important as a member of the collective.170 Whakapapa, which identifies the nature of relationships between all things, is the

glue that holds the Māori world together.171 It follows that tikanga Māori emphasises the responsibility owed by the individual to the collective.172 Mead characterises this as individuals expecting to be supported by their relatives near and distant, while the collective group also expects the support and help of its individuals.173

2.63 The basic social unit of Māori society is the whānau.174 Each whānau belongs to one or more hapū and iwi, although Mead observes that today, these terms “are not firmly attached to one kind of kinship grouping”, rather they are used more creatively.175

Nuclear families are submerged in and dominated by the whānau, which also include grandparents, aunts and uncles.176 Children are

considered taonga. The child is viewed as not the child of the birth



168 Hirini Moko Mead Tikanga Māori: Living by Māori Values (Revised ed, Huia Publishers, Wellington, 2016) at 7. Richard

Mulgan suggests that

...neither the modern whanau nor the modern iwi encompasses the individual’s daily life to the extent achieved by the former hapu. Given that both the extent and the flexibility of the authority of tikanga over individuals depended on their involvement in the life of the hapu, the attenuation of hapu life must set limits to the extent to which Maori customary law is appropriate for modern urban Maori. By the same token, there may be grounds for allowing a more extensive application of tikanga Maori for those Maori who choose to live in closer, more intensely Maori communities which, like the traditional hapu, encompass their economic as well as their social life.

169 Jacinta Ruru “Indigenous Peoples and Family Law: Issues in Aotearoa/New Zealand” (2005) 19 IJLPF 327 at 329. See

also Joseph Williams He Aha Te Tikanga Māori (unpublished paper for the Law Commission, 1998) at 9, as cited in Law

Commission Māori Custom and Values in New Zealand Law (NZLC SP9, 2001) at [130].

170 Law Commission Māori Custom and Values in New Zealand Law (NZLC SP9, 2001) at [130].

171 Law Commission Māori Custom and Values in New Zealand Law (NZLC SP9, 2001) at [130] citing Joseph Williams He Aha Te

Tikanga Māori (unpublished paper for the Law Commission, 1998) at 9 .

172 Law Commission Māori Custom and Values in New Zealand Law (NZLC SP9, Wellington, March 2001) at [130].

173 Hirini Moko Mead Tikanga Māori: Living by Māori Values (Revised ed, Huia Publishers, Wellington, 2016) at p 32.

174 Hirini Moko Mead Tikanga Māori: Living by Māori Values (Revised ed, Huia Publishers, Wellington, 2016) at 224.

175 Hirini Moko Mead Tikanga Māori: Living by Māori Values (Revised ed, Huia Publishers, Wellington, 2016) at 242.

  1. Jacinta Ruru “Kua tutū te puehu, kia mau: Māori aspirations and family law policy” in Mark Henaghan and Bill Atkin (eds) Family Law Policy in New Zealand (4th ed, LexisNexis, Wellington, 2013) 57 at 61 and Jacinta Ruru “Indigenous Peoples and Family Law: Issues in Aotearoa/New Zealand” (2005) 19 IJLPF 327 at 329.

parents, but of the family, and the family is not a nuclear unit

within space, but an integral part of a tribal whole.177

2.64 Alongside whanaungatanga there is manaakitanga, which Mead describes as “nurturing relationships, looking after people, and being very careful about how others are treated”.178 Mead stresses that manaakitanga is important no matter what the circumstances might be.179 Durie observes that “[k]inship bonds [compel]

support for whanau during crisis without reference to cause or

blame.”180












































177 Jacinta Ruru “Indigenous Peoples and Family Law: Issues in Aotearoa/New Zealand” (2005) 19 IJLPF327 at 329 quoting

Department of Social Welfare 1996 74-5.

178 Hirini Moko Mead Tikanga Māori: Living by Māori Values (Revised ed, Huia Publishers, Wellington, 2016) at 33.

Alternatively, Durie describes manaakitanga as “generosity, caring for others and compassion”: ET Durie Custom Law (unpublished confidential draft paper for the Law Commission, January 1994) at 6, referred to in the Law Commission Māori Custom and Values in New Zealand Law (NZLC SP9, Wellington, March 2001).

179 Hirini Moko Mead Tikanga Māori: Living by Māori Values (Revised ed, Huia Publishers, Wellington, 2016) at 33.

180 ET Durie Custom Law (unpublished confidential draft paper for the Law Commission, January 1994) at 52 as cited in Law

Commission Māori Custom and Values in New Zealand Law (NZLC SP9, Wellington, March 2001).

Chapter 3 – What does the PRA

do?

3.1 The PRA sets out rules that govern how property owned by either or both partners is divided when a relationship ends. The rules that apply when partners separate sit within a framework. The framework, illustrated in the pyramid below, also includes policy, theory and principles.181 It is important that we identify and articulate this framework before we discuss the rules of the PRA, because it explains why we have the rules, and guides the courts’

interpretation of the rules.182

3.2 While the PRA also sets out rules that apply to relationships ending on death, in some respects these rules are at odds with the framework that applies on separation. We therefore discuss

the PRA’s application on death separately, at paragraphs 3.31-3.32 below.

The framework of the PRA

3.3 The framework of the PRA is complex because it has developed over time and involves a range of different, sometimes competing, concepts.183 This problem is not unique to New Zealand. In

England and Wales, where the rules of property division on separation have developed largely though case law, the

courts recognise multiple objectives but there is no overriding

  1. As discussed below, when we refer to principles we are talking about the principles listed in section 1N but also the implicit principles that can be discerned from the Property (Relationships) Act 1976’s purpose, rules, history and supporting materials.
  2. The Scottish Law Commission also recognised the importance of articulating the framework within which the rules operate in its 1981 review of financial provision on divorce: see Scottish Law Commission Family Law: Report on Ailment and Financial Provision (SCOT. LAW COM. No. 67, 1981) at [3.37]. The Commission noted that a lack of clear principles involved not only “an abdication of responsibility by Parliament in favour of the judiciary”, but also an abdication of collective responsibility in favour of the conscience of a single judge:

... it does not seem satisfactory that questions of social policy, which have very important financial consequences for individuals, should turn on informal understandings and somewhat arbitrary rules of thumb based on no ascertainable principle...

  1. See Margaret Wilson “The New Zealand context – setting the legal and social scene” (paper presented to A Colloquium on 40 Years of the PRA: Reflection and Reform, Auckland, December 2016) at 3, where she observes that the policy of the 2001 amendments to the Property (Relationships) Act 1976 was not necessarily informed by a detailed political discussion of competing theories on how to effect the reform. The lack of a single, coherent theory, Wilson explains at

3–4, is in part due to the fact that people do not live lives according to a theory, and are not always driven by rational decision-making: “it is not surprising that in an area such as family relationships where the issues causing the conflict are complex that the remedies can be pragmatic and lacking in coherence.” Wilson goes on to say at 4: “The fundamental reason however for the lack of a coherent theoretical legislative approach in this area is the gendered nature of our relationships”.

rationale.184 In Scotland, when the Scottish Law Commission

looked at what the objective of financial provision on divorce should be, it concluded that no one objective or principle was adequate standing by itself.185 A combination of principles was appropriate, because it “corresponds to reality”.186

Policy and theory of the PRA

3.4 The policy187 of the PRA is the just division of property at the end of a relationship. By “just” we mean the broad statutory concept of justice outlined in PRA, including in the rules of division but also the rules that permit partners to enter into their own property arrangements, subject to safeguards.188 This policy is reflected in the statutory purpose and principles set out in sections 1M and

1N of the PRA189 as well as in the legislative history discussed in

Chapter 2.

3.5 But why do the PRA’s rules divide property in the way they do, and why can this division be described as just? The answers to these questions are found in the theory of the PRA. The theory ties together the policy of a just division of property and the rules that




184 Law Commission of England and Wales Matrimonial Property, Needs and Agreements (LAW COM No 343, 2014) at [3.62].

The Commission observed at [3.7] that this meant the courts have extraordinarily wide discretion, resulting in a lack of transparency and the potential for judicial inconsistency.

185 Scottish Law Commission Family Law; Report on Ailment and Financial Provision (SCOT. LAW COM. No. 67, 1981) at

[3.59].

186 Scottish Law Commission Family Law; Report on Ailment and Financial Provision (SCOT. LAW COM. No. 67, 1981) at

[3.60]:

We have seen that no single objective which is precise enough to be useful is wide enough to cover all the situations in which an award of financial provision may be called for. The reason is that an award of financial provision on divorce may be justified by one or more principles. It leads to clarity in the law to recognise this. A subsidiary advantage is that a system based on a combination of several principles can be discriminating as well as realistic. It may be, for example,

that matrimonial misconduct will be relevant in relation to some principles but not others; or that an order for periodical payments for an indefinite period will be justified by some principles but not by others.

The Commission recommended the adoption of five principles, and these remain the foundation of financial provision on divorce in Scotland today. See Family Law (Scotland) Act 1985, s 9, discussed in Jane Mair, Enid Mordaunt and Fran Wasoff Built to Last: The Family Law (Scotland) Act 1985 – 30 years of financial provision on divorce (Project Report, University of Glasgow, 2016) at 54.

187 Or purpose. We have used the term policy here so that we do not confuse purpose with the statutory purpose of the

Property (Relationships) Act 1976, in s 1M.

  1. See Martin v Martin [1979] 1 NZLR 97, where the Court of Appeal considered what was meant by the term “serious injustice” under s 13 of the Property (Relationships) Act 1976. Woodhouse J said, at 102, “in that context the reference to justice is clearly to the broad statutory concept of justice outlined in the Act and not to the varying standards that might appeal to individuals”. Richardson J similarly said, at 108, that “the justice with which the statute is concerned at so many points is justice weighed in terms of the policy and scheme of the legislation itself rather than according to an abstract ideal.”
  2. Section 1M(c) explains that one purpose of the Property (Relationships) Act 1976 (PRA) is to provide for a just division of relationship property, and section 1N(c) also refers to a just division of relationship property. We consider however that the overarching policy of the PRA is broader than the just division of relationship property. In effect, the statutory purpose in section 1M(c) explains how the PRA achieves its policy of a just division of property at the end of relationships, by limiting the rules of division to relationship property only.

implement that policy. The theory provides the reason for why the

division of property under the PRA is a just division.190

3.6 The primary theory of the PRA is based on the entitlement of the two partners. The PRA treats a qualifying relationship as an equal partnership or joint venture. The partners contribute equally, although perhaps in different ways, to the relationship. Each partner is therefore entitled to an equal share in the property of the relationship.191

3.7 Two secondary theories sit alongside the primary entitlement theory:

(a) The compensation theory recognises that in certain circumstances one partner should receive a share of the other ’s resources in order to compensate them for economic disadvantages a partner suffers from the

relationship. Section 15, which allows a partner to claim compensation when the partners’ division of functions during the relationship has led to a disparity in income and living standards after separation, reflects a theory of compensation.192

(b) The needs theory recognises that certain resources

could help meet the needs of a partner or children of the relationship. Key needs-based provisions of the PRA are those dealing with occupation of the family home and postponement of the vesting of the partner ’s property entitlements.

3.8 We discuss these theories in greater depth where relevant in this

Issues Paper.











190 For a discussion of the theoretical analysis of property division frameworks see Joanna Miles “Financial Provision and

Property Division on Relationship Breakdown: A Theoretical Analysis of the New Zealand Legislation” (2004) 21 NZULR

268.

191 See Joanna Miles “Financial Provision and Property Division on Relationship Breakdown: A Theoretical Analysis of the

New Zealand Legislation” (2004) 21 NZULR 268 at 275 and 292–293.

  1. Some other provisions allow a partner to claim compensation when his or her rights under the Property Relationships Act 1976 have been unjustly lost or defeated (see for example ss 44 and 44C which provide compensation when a disposition of property has defeated a partner ’s claim or rights under the Act) or where the partner ’s conduct merits greater entitlements (See for example ss 18B and 18C which deal with a partner ’s contributions, both positive and negative, after the relationship has ended).

Principles of the PRA

3.9 The principles form the basis for the PRA’s rules.193 Primarily, they are set out in the PRA itself: including in section 1N, which explicitly identifies four principles to guide the achievement

of the purpose of the PRA, as set out in section 1M. We do not, however, see the list in section 1N as exhaustive. It was inserted by the Parliamentary select committee considering the amendments to the PRA in 2001, and in our view its effect

was to add to, rather than replace, the implicit principles of the legislation as originally enacted.194 A fuller expression of the PRA’s principles can be discerned from its purpose, rules, history and the materials accompanying its enactment and subsequent amendment.195

3.10 We start with the four explicit principles set out in section 1N of the PRA:

(a) Men and women have equal status, and their equality should be maintained and enhanced.196 Promoting the equal status of women and men has been a principle of the PRA since it was introduced in 1976. The principle

of gender equality is enshrined in New Zealand law, and the Government remains committed to the protection and promotion of women’s rights.197

(b) All forms of contribution to the relationship are treated as equal.198 The notion that unpaid domestic and childcare responsibilities are of equal value to

  1. See the discussion on what is meant by a principle in William Dale “Principles, Purposes, and Rules” (1988) 10 Stat LR 15 at 18 and 22. Dale suggests that a principle is a first idea which is the starting point or basis for legal reasoning. A rule in a statute answers the question “what”, whereas a principle answers the question “why”.

194 In particular, the effect of s 1N of the Property (Relationships) Act 1976 was to add to the principles of the legislation

as originally enacted the principle regarding functional equivalence of different types of relationships (s 1N(b)) and the principle that a just division of property takes into account the economic disadvantages partners suffer arising from the relationship (s 1N(c)).

195 The White Paper to the Matrimonial Property Bill 1975 identified a series of principles on which that Bill was based.

We note however that some of these principles no longer apply as a result of amendments to the Bill as it progressed through Parliament, and subsequent amendments to the Matrimonial Property Act 1976. See AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 10. The 1988

Working Group similarly identified certain principles that underpinned New Zealand’s family law. See Department of

Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at 3.

196 Property (Relationships) Act 1976, s 1N(a).

197 Consistent with the New Zealand Bill of Rights Act 1990, ss 5 and 19 and Human Rights Act 1993, s 21, as well

as the Convention to Eliminate All Forms of Discrimination against Women. See Women in New Zealand: United Nations Convention on the Elimination of All Forms of Discrimination against Women: Eighth Periodic Report by the Government of New Zealand 2016 (CEDAW/C/NZL/8, 15 July 201) at [1].

  1. Property (Relationships) Act 1976 (PRA), s 1N(b). See also s 18(2), that confirms there is no presumption that a contribution of a monetary nature is of greater value than a contribution of a non-monetary nature. The PRA does not easily address what might be called negative contributions to a relationship such as the existence of family violence and we discuss this further in Chapter 12.

financial contributions further promotes the equal

status of men and women. An entitlement based on

non-financial contributions to the relationship was “not to be regarded as a matter of grace or favour, or as a reward for good behaviour, but as plain justice.”199

(c) A just division of relationship property has regard to the economic advantages or disadvantages to

the partners arising from their relationship or from the ending of the relationship.200 This principle was introduced in 2001 amid concerns that an equal division of relationship property does not always produce substantive economic equality between the partners.201 For example, when a partner takes time

out of the paid workforce to care for the children of the relationship, or leaves their job in order to move with their partner to a different geographic location with fewer career prospects, this can negatively affect how much that partner is likely to earn in the future.

(d) Questions arising under the PRA should be resolved as inexpensively, simply and speedily as is consistent with justice.202 Inherent in this principle is a preference for people to resolve property matters out of court

where that is consistent with justice.203 Avoiding court is generally in the interests of not only the partners but also any children of the relationship. Predictable outcomes encourage partners to resolve property

matters out of court; therefore straightforward rules of classification and division of property, as opposed to rules involving an exercise of discretion, are consistent with this principle.204 However situations will inevitably arise which were not contemplated by the legislation. The question is how to balance the need for some

measure of discretion to enable a just result in the

  1. AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 10.

200 Property (Relationships) Act 1976, s 1N(c).

201 See for example the discussion in Department of Justice Report of the Working Group on Matrimonial Property and Family

Protection (October 1988) at 4–15.

202 Property (Relationships) Act 1976, s 1N(d). Similar objectives are stated in the Family Court Rules 2002, r 3 and the High

Court Rules 2016, r 1.2.

  1. Self-resolution of property matters out of court may not be consistent with justice where, for example, there is a significant imbalance of power between the partners or information asymmetries.

204 Bill Atkin “Classifying Relationship Property: A Radical Re-shaping” in Jessica Palmer, Nicola Peart, Margaret Briggs and

Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

exceptional cases, but not at the expense of certainty

and predictability for the majority.205 It is also inevitable that recourse to the courts will be necessary in some cases. In order for property matters to be resolved inexpensively, simply and speedily in court, a court

must be properly resourced and court procedures need to be efficient and easy to follow. Another important aspect of ensuring property matters are resolved “consistent with justice” is the need for full disclosure between the partners, both in and out of court.

3.11 Although not stated in section 1N, the following are also implicit principles of the PRA:

(a) The law should apply equally to all relationships that are substantively the same. This principle is inherent in the core rules of the PRA which apply in the same

way to marriages, civil unions and de facto relationships of three or more years’ duration.206 The principle is driven by the idea of equality as expressed in anti- discrimination laws and is reflective of a shift in family

law policy towards greater recognition of a wide range of family relationships.207

(b) A just division of property when a relationship ends should reflect the assumed equal contributions made by both partners. This principle embodies the concept of equal sharing or the “50:50 split”. The idea of equal sharing was introduced having regard to the “great advantages of reintroducing certainty, putting husband and wife in an equal bargaining position should the marriage break up, and being consistent with broad social justice.”208

(c) Only property that has a connection to the relationship should be divided when the relationship

  1. Currently, the Property (Relationships) Act 1976 balances need for certainty and discretion by permitting departure from the equal sharing rule in very limited circumstances, which we discuss at [3.27] below.
  2. The de facto relationships we are referring to are the relationships that are of some permanence, so that they are comparable in substance to marriage and civil unions which are not affected by the rules about a marriage or civil union of short duration. Questions remain about how to assess whether relationships are substantively the same, and we discuss this further in Part B.
  3. Mark Henaghan “Legally defining the family” in Mark Henaghan and Bill Atkin (eds) Family Law Policy in New Zealand (4th ed, LexisNexis, Wellington, 2013) 1 at 5. This reflects the right to freedom from discrimination on the grounds of marital status and family status enshrined in the New Zealand Bill of Rights Act 1990, s 19 and Human Rights Act 1993, s 21.

208 AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II

ends. Just as important as “how” property is shared, is

“what” property should be shared. The principle of the PRA is that only property which is central to family life (commonly owned or used property, such as the family home and chattels, whenever acquired) and property attributable to the relationship is subject to equal sharing. Property of one partner that is kept separate from the relationship is not subject to equal sharing.

It can be a difficult task to define the property pool to which equal sharing should apply.

(d) Misconduct during the relationship is generally irrelevant to the division of property. This principle is long-standing. Speaking in Parliament on an amendment to the predecessor to the PRA, the Matrimonial Property Act 1963, the then Minister of Justice confirmed that:209

The purpose of the Act is not to reward a wife for good behaviour or to punish her for bad behaviour... To introduce an element of fault in a substantial way would be to warp altogether the concept behind the Act – the concept of marriage as a partnership.

(e) This principle was carried into the PRA210 and is consistent New Zealand’s no-fault approach to marriage dissolution.211 The PRA is generally not concerned with moral judgements about the partners’ conduct.212 Misconduct can only be considered in PRA proceedings in truly extraordinary cases, where the conduct was “gross and palpable” and it significantly affected the extent or value of the property to be divided.213 Even then, misconduct is treated merely as a negative fact diminishing or detracting from other positive contributions to the relationship, rather than warranting a penalty in the division of property.214

209 (26 November 1968) 358 NZPD 3392.

210 Matrimonial Property Act 1976, s 18(3). See discussion in AM Finlay “Matrimonial Property – Comparable Sharing: An

Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 10.

  1. Family Proceedings Act 1980, ss 37–43. The sole ground for dissolution of a marriage or civil union is that the relationship has broken down irreconcilably. This is established only if the parties have been living apart for the past two years, and no proof of any other matter shall be required: s 39.

212 RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [12.40].

213 Property (Relationships) Act 1976, s 18A(3).

  1. RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [12.40]. This principle is also apparent in other provisions of the Property (Relationships) Act 1976, for example, in the way it treats simultaneous relationships. The partner that maintains two qualifying relationships is not penalised, for example, for any deception involved in maintaining the two relationships. See Property (Relationships) Act 1976, ss 52A–52B.

(f ) A just division of relationship property should have

regard to the interests of children of the relationship. This principle is expressed in several places in the PRA, including section 1M (which sets out the purpose of the PRA) and section 26.215 It recognises that the interests

of children of the relationship may be considered sufficiently important to warrant some degree of priority over their parent’s property entitlements.216

However as we discuss in Part I, in practice children’s interests are seldom prioritised in this way.

(g) Partners should be free to make their own agreement regarding the status, ownership and division of

their property, subject to safeguards.217 The rules of division in the PRA were intended to be “subordinate to the freedom of the husband and wife, subject to proper safeguards, to regulate their property relations in whatever way they think fit.”218 The Government at the time did not want to “force married people within the straitjacket of a fixed and unalterable regime.”219

This principle was therefore an “integral feature of [the PRA’s] public legitimacy.”220 Importantly, the principle concerns relationship autonomy rather than individual autonomy. A person cannot unilaterally contract out

of his or her obligations under the PRA; they must do so by way of agreement with their partner. Safeguards ensure that both partners enter agreements with informed consent and the rights of third parties are not prejudiced. Agreements settling the partners’ property matters at the end of the relationship must be made on the same basis if they are to be enforceable in a court.

(h) A just division of property under the PRA should recognise tikanga Māori and in particular whanaungatanga. This principle is reflected in the

215 The need to have regard to the interests of children is also evident from the White Paper accompanying the Matrimonial Property Bill 1975 when it was introduced into Parliament. See AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 11.

216 See discussion in Joanna Miles “Financial Provision and Property Division on Relationship Breakdown: A Theoretical

Analysis of the New Zealand Legislation” (2004) 21 NZULR 268 at 290–291 and 302–303.

217 Property (Relationships) Act 1976, pt 6.

218 AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 10.

219 AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 11.

220 Wells v Wells [2006] NZFLR 870 (HC) at [38].

exclusion of Māori land and most taonga from the pool

of relationship property to be divided under the PRA. Instead, dealings with Māori land are governed by Te Ture Whenua Māori Act 1993 and the kaitiakitanga of taonga is governed by tikanga.221

(i) A single, accessible and comprehensive statute should regulate the division of property when partners separate. The PRA sought to provide a single, coherent, and rational code to replace the existing law on the division of property on separation.222 This recognised the undesirability of requiring partners to rely instead on general remedies in property law or equity.223 The situation is more complex for relationships ending by the death of one partner, as succession law also applies.

3.12 As highlighted throughout this Issues Paper, it is often necessary to prioritise and accommodate different theories and principles in particular situations.224

How it works – The PRA rules

3.13 The rules in the PRA set out how the policy, theory and principles (explicit and implicit) are achieved in practice. This discussion provides a high level summary of how the rules generally operate. Specific rules, and how well they work in practice, are considered in greater detail in other parts of this Issues Paper.

3.14 The PRA implements a deferred regime of property sharing. This is because the actual division of property only happens when a court makes orders dividing the relationship property, or when the partners enter into a contracting out agreement under Part 6 of the PRA dividing the property between them. Prior to division,




221 Although legal action under concepts such as constructive trusts may still be taken in relation to taonga. See for example

B v P [2017] NZHC 338 at [150], [161]-[168].

  1. AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 5. The operation of the Property (Relationships) Act 1976 as a code is enshrined in s 4.
  2. Equity is a body of law New Zealand inherited from England and Wales. In previous centuries the courts would apply equity when established legal rules would achieve unfair outcomes. Over time, the courts’ practice of applying equity evolved into distinct rules and principles. These rules and principles have become the law of equity which applies in New Zealand today.
  3. See Nicola Peart “The Property (Relationships) Amendment Act 2001: A Conceptual Change” (2008) 39 VUWLR 813; Joanna Miles “Financial Provision and Property Division on Relationship Breakdown: A Theoretical Analysis of the New Zealand Legislation” (2004) 21 NZULR 268.

the partners may deal with or dispose of any property as if the

PRA did not exist.225

3.15 It is important to note that many New Zealanders do not resolve their property affairs in accordance with the PRA rules. We know from anecdotal evidence that many partners divide their property in accordance with their own sense of fairness. Sometimes, the partners record their agreement in a way that meets the PRA’s requirements for a binding contracting out agreement. Those agreements can be made before or during the relationship to specify how their property is to be divided if they separate in the future, or after separation to resolve their property matters.226

Agreements can also provide for the division of property if one partner dies, and an agreement can be made between a surviving partner and the personal representative of the deceased’s estate.227

At other times, partners may resolve their property matters informally, with or without taking legal advice.228 In all cases, the negotiated compromises may lead to different outcomes than might have resulted if the PRA was applied.

3.16 We also know that some rules of the PRA appear significant on a plain reading, but in reality are seldom relied on by a party

or applied by a court. Section 26, which provides that a court may make property orders for the benefit of children, is a good example. This is an important power, however it is rarely used and when it is, the orders tend to relate to only a small proportion of the partners’ property.229

Who does the PRA apply to?

3.17 The PRA is concerned with three types of relationships: marriages, civil unions and de facto relationships. The general rule of equal

  1. Property (Relationships) Act 1976 (PRA), s 19. Only in limited circumstances may a partner restrain a disposition of property while the property remains undivided. Section 42 enables a partner to lodge a notice of claim on the title to any land in which a partner claims to have an interest under the PRA. The notice has the effect of freezing the title as if the notice was a caveat lodged under the Land Transfer Act 1952 (s 42(3)). Section 43 allows a partner to apply to the court to restrain dispositions of property made in order to defeat the partner ’s rights and interests under the PRA.
  2. Property (Relationships) Act 1976, ss 21–21A. When entering an agreement, the partners must comply with several requirements. These include that the agreement is in writing, each partner has independent legal advice before signing the agreement, and each partner ’s signature is witnessed by a lawyer who has explained the effect and the implications of the agreement to the partner (s 21F). A court retains an overriding power to set a contract aside if giving effect to the contract would cause a serious injustice (s 21J).

227 Property (Relationships) Act 1976, ss 21(2) and 21B.

  1. We do not know how many people resolve property matters without the assistance of lawyers, but it is likely that this accounts for a significant proportion of separating partners. By way of example, research in England and Wales identified that 47 per cent of couples divorcing or separating between 1996 and 2011 did not seek legal advice: Rosemary Hunter and others “Mapping Paths to Family Justice: matching parties, cases and processes” [2014] Fam Law 1404 at 1405.

229 Nicola Peart (ed) Brookers Family Law — Family Property (online looseleaf ed, Thomson Reuters) at [PR26.04(2)].

sharing applies to all relationships of three years or longer,

although special rules of division exist for shorter relationships.230

3.18 The PRA defines a de facto relationship as a relationship between two persons who are both aged 18 or older, who live together as a couple and who are not otherwise married or in a civil union with one another.231 Sometimes it can be difficult to determine whether partners are in a de facto relationship for the purposes of the PRA and, if so, when that relationship began. No official records of de facto relationships are kept as is the case with marriages and civil unions. The PRA therefore lists a range of matters that indicate whether two people “live together as a couple”, such as the duration of the relationship, the existence of a common residence and the degree of financial dependency between the partners.232

What property is covered by the PRA?

3.19 The first step in dividing property is to identify what is covered by the PRA. The PRA applies to all property the partners own, either individually or jointly. The definition of property in the PRA is broad, and it includes real property, personal property, estates or interests in such property, debts and other rights or interests.233

The property owner is a person who is the “beneficial” owner.234 A person can therefore have rights to property even if they are not the legal owner.

3.20 There are, however, several resources that can confer considerable financial benefits on a partner but they do not come within the PRA’s definition of property. These resources include things like

a partner ’s ability to earn income or a discretionary beneficial

interest in a trust.








  1. The Property (Relationships) Act 1976 provides special rules of division for marriages and civil unions of short duration at ss 14 and 14AA. However these special rules do not apply if partners were in a de facto relationship prior to their marriage or civil union, and the combined time living in a de facto relationship and marriage or civil union was more than three years. In respect of de facto relationships of short duration, the court can only make an order for the division of property if there is a child of the relationship or the applicant has made a substantial contribution to the relationship (s 14A).

231 Property (Relationships) Act 1976, s 2D(1).

232 Property (Relationships) Act 1976, s 2D(2).

233 Property (Relationships) Act 1976, s 2.

  1. The Property (Relationships) Act 1976 defines “owner” to mean “the person who, apart from this Act, is the beneficial owner of the property under any enactment or rule of common law or equity” (s 2).

What property is shared between the partners?


3.21 Property eligible for division between the partners when a relationship ends is what the PRA classifies as “relationship property”.235 Only property that has a connection to the relationship should be subject to division.236

3.22 Relationship property is defined in the PRA to include:237

(a) the family home and family chattels (including furniture, household appliances and motor vehicles), whenever acquired;

(b) all property owned jointly or in common in equal shares by the partners;

(c) all property owned by either partner before the relationship if the property was acquired in contemplation of the relationship and was intended for the common use or benefit of both partners;

(d) all property acquired by either partner after the relationship began;238 and

(e) the proportion of the value of any life insurance policies and superannuation scheme entitlements that are attributable to the relationship.239

3.23 Property that is not relationship property is “separate property” under the PRA,240 and is not subject to division at the end of a relationship. Separate property can include:

(a) property acquired by either partner while they were not living together as a couple;241






235 Property (Relationships) Act 1976, s 11.

  1. See paragraph (c) above. The rationale for classifying certain types of property as relationship property is, as the Minister of Justice explained in the White Paper to the Matrimonial Property Bill 1975, to avoid partners having to show specific contributions to identified pieces of property to claim an interest in that property. See AM Finlay “Matrimonial Property

– Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 5-6.

237 Property (Relationships) Act 1976, s 8.

  1. This is subject to several exceptions, including where the property acquired after the relationship began was acquired out of separate property: Property (Relationships) Act 1976, ss 8(1)(e)–(ee) and 9–10.
  2. The value that is attributable to the relationships is normally calculated by reference to the contributions made during the period of the relationship. Contributions made prior to and after the relationship are not captured.

240 Property (Relationships) Act 1976, s 9(1).

241 Property (Relationships) Act 1976, s 9(4)(a).

(b) property acquired out of separate property, for example,

dividends received from shares acquired before the relationship;242

(c) property acquired by a partner as an inheritance, gift or because the partner is a beneficiary under a trust;243 and

(d) property with a special character, such as heirlooms and taonga.244

3.24 Separate property can, however, be converted to relationship property and be divided between the partners in some circumstances. This might happen when an increase in value in the separate property, or any income or gains received from

the separate property, are due to the application of relationship property or the actions of the other partner.245 Separate property may also become relationship property if it is used to acquire or improve relationship property, or if it is mixed with relationship property so that it becomes unreasonable or impracticable to regard that property as separate property.246

3.25 The PRA also classifies debts. A debt may be a relationship debt or a personal debt.247 A relationship debt is, broadly speaking, a debt incurred for the common benefit of the partners or in the course of their common life together, and is eligible for division.248

The net value of relationship property to be divided between the partners is calculated by determining the total value of the relationship property and then subtracting any relationship debts.249

How is relationship property divided?

3.26 The general rule is that all relationship property is divided equally between the partners.250 This rule characterises the PRA as an

242 Property (Relationships) Act 1976, s 9(2); Rowney v Rowney (1981) 4 MPC 178 (HC) cited in RL Fisher (ed) Fisher on

Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [11.38].

243 Property (Relationships) Act 1976, s 10(1).

244 Section 2 of the Property (Relationships) Act 1976 defines heirloom and taonga.

  1. Property (Relationships) Act 1976, s 9A. For example, if one partner owned a holiday home before the relationship began, and the partners pay for the home to be upgraded using relationship property funds which then increases the home’s market value, that increase in value would be relationship property. See Hollingshead v Hollingshead (1977) 1 MPC

108 (SC).

246 Property (Relationships) Act 1976, ss 9A(3) and 10(2).

247 Property (Relationships) Act 1976, s 20.

  1. Property (Relationships) Act 1976, s 20(1). A personal debt is not a relationship debt. A personal debt relates solely to a partner ’s personal affairs.

249 Property (Relationships) Act 1976, s 20D.

250 Property (Relationships) Act 1976, s 11.

equal sharing regime.251 The rule is built firmly on the principles

that all forms of contribution to the relationship are treated as equal, and that a just division of property when a relationship ends should reflect those equal contributions.252

3.27 The PRA’s general rule of equal sharing is not absolute. It does not apply to short-term relationships. There are also circumstances where equal sharing can be departed from even if the relationship is three years or longer:253

(a) Extraordinary circumstances: If there are “extraordinary circumstances” that would make equal sharing of relationship property “repugnant to justice”,

a court can order that each partner ’s share of property is to be determined in accordance with the contributions they made to the relationship.254 This exception has a high threshold and will only apply in truly extraordinary cases.255

(b) Economic disparity: Sometimes the income and living standards of one partner after a relationship ends

are likely to be significantly higher than the other partner, because of the division of functions within the relationship. The obvious example is where one partner stopped working to care for children, while the other partner continued to work and progressed their career. On separation, the partner that stopped working may struggle to restart their career (particularly if they have ongoing childcare responsibilities). In these cases, a court may order the partner with the higher income and

living standards on separation to pay compensation to

  1. In conceptual terms, the presumption of equal sharing means the Property (Relationships) Act 1976 can be described as a “community of property” system in relation to relationship property (see A Angelo and W Atkin “A Conceptual and Structural Overview of the Matrimonial Property Act 1976” (1977) 7 NZULR 237 at 258. This means the relationship property is deemed to be the joint property of both partners to the relationship. There are, however, some important qualifications to make. First, New Zealand’s system is only a community of property system in respect of relationship property. It is not a full community of property system, which means all the property of the partners is jointly owned. Rather, it is only the relationship property that is equally divided under s 11 of the Property (Relationships) Act 1976 as the joint property of the partners. Second, the community of property system regarding relationship property is deferred. It is only after the partners have separated, or one partner has died and the surviving partner elects to divide their relationship property under the Act, that the interest in relationship property arises (subject to ss 42, 43 and 44 of the Property (Relationships) Act 1976 which provide some immediate protection of relationship property prior to division).

252 Property (Relationships) Act 1976, ss 1N(a) and 1N(b).

253 See RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [12.21]; Nicola Peart

(ed) Brookers Family Law — Family Property (online looseleaf ed, Thomson Reuters) at [PR11.03].

254 Property (Relationships) Act 1976 (PRA), s 13. A partner ’s contributions, within the meaning of the PRA, are defined in s

18 of the PRA.

  1. See for example Martin v Martin [1979] 1 NZLR 97 (CA) at 111 per Richardson J; and Wilson v Wilson [1991] 1 NZLR 687 (CA) at 697: “It is difficult to envisage any stronger use of language than is reflected in ‘extraordinary circumstances’ and

‘repugnant to justice’ to emphasise the stringency of the test which has to be satisfied in order to justify departure from the equal sharing regime.”

the other partner out of their share of the relationship

property.256

(c) Dispositions of relationship property to a trust: If one partner has disposed of relationship property to a trust, and this defeats the other partner ’s rights under the PRA, a court can order that the partner who disposed

of the property to the trust to pay compensation to the other partner, either from their separate property or their share of relationship property.257

(d) Settling relationship property for the benefit

of children: If the court makes an order settling relationship property for the benefit of children, that property is not divided between the partners, although

a court can reserve an interest of either or both partners in that property.258

(e) Two homes owned when the relationship began: If, when the relationship began, the partners each owned a home that was capable of becoming the family home,259 but only one home (or the sale proceeds of one home) came into the pool of relationship property, a court

may adjust the partners’ shares of relationship property to compensate for the inclusion of only one partner ’s home.260

(f ) Sustained or diminished separate property: If the separate property of one partner has been sustained by the actions of the other partner or with the application of relationship property, a court may increase the share of relationship property to be received by the other partner.261 Conversely, if the value of one partner ’s separate property has diminished in value because of the actions of the other partner, a court may reduce the other partner ’s share in relationship property.262




256 Property (Relationships) Act 1976, s 15.

257 Property (Relationships) Act 1976, s 44C.

258 Property (Relationships) Act 1976, s 26. As noted at paragraph 3.16 above, s 26 is seldom used.

  1. The family home, being the dwellinghouse used as the family’s principal family residence, is classified as relationship property (Property (Relationships) Act 1976, s 8(1)(a)).

260 Property (Relationships) Act 1976, s 16.

261 Property (Relationships) Act 1976, s 17.

262 Property (Relationships) Act 1976, s 17A.

(g) Personal debts paid from relationship property: If one

partner has used relationship property to pay personal debts, a court can adjust the shares of relationship property to be divided between the partners or make orders requiring the partner to pay compensation to the other.263

The role of the courts in dividing property

3.28 Partners can agree to divide their property in any way they think fit. They are not required to apply the PRA’s rules of division, however, if they want their agreement to be enforceable they must meet certain process requirements set out in the PRA.264

Partners can resolve their property matters in a range of different ways, including by negotiation, with or without legal advice, or by mediation, arbitration or some other dispute resolution process.

3.29 If partners cannot agree on the division of property, then the PRA provides for property disputes to be decided by the Family Court.265 A partner can apply for a determination as to the respective shares of each partner to the relationship property, or for orders dividing the relationship property between the partners.266 The Court is bound to follow the rules of division

in the PRA, but has a range of powers to implement its determination of each partner ’s share of the relationship property. In particular, the Court can order the sale of property and the distribution of the proceeds, order the vesting of any property in one partner and order the payment of money by one partner to

the other.267

3.30 The Family Court can also make a range of orders that do not affect the division of relationship property (non-division orders). These provisions are needs-based and primarily give effect to the principle that a just division of relationship property has regard to the interests of children. Non-division orders include orders postponing the vesting of any share in the relationship property,

263 Property (Relationships) Act 1976, s 20E.

  1. For an agreement to be binding it must be in writing and signed by both partners. Each partner must have had independent legal advice before signing, and their signature must be witnessed by a lawyer. That lawyer must also certify that they have explained the effect and implications of the agreement to the partner, before the partner signed. See Property (Relationships) Act 1976, s 21F.

265 Property (Relationships) Act 1976, s 22. This is subject to the Family Court’s power to transfer proceedings to the High

Court under s 38A, and the right of appeal of Family Court decisions to the High Court under s 39.

orders granting one partner a right of occupation of the family

home (or other home forming part of the relationship property), orders vesting a tenancy in one partner, and orders giving one partner the right of possession and use of furniture.268

Application of the PRA on death

3.31 When a partner dies, the surviving partner chooses between applying for a division of relationship property under the PRA rules (option A), or accepting an entitlement under the deceased partner ’s will or the intestacy rules (option B).269 If the surviving partner chooses option A, he or she does not usually receive anything under the will, as the PRA treats all gifts to the surviving spouse as having been revoked, unless the will expresses a contrary intention.270. The choice must be made within six

months of the grant of administration of the deceased partner ’s estate unless a court extends the time period.271 If the surviving partner fails to make a choice, option B is the default option.272

3.32 There are several differences between the PRA rules that apply on death and the rest of the PRA. Notably, the surviving partner can divide the couple’s relationship property on death by electing option A, while the deceased’s personal representative must seek leave of a court for a division of property and show that a failure to grant leave would cause “serious injustice”.273 If the surviving partner elects option A, that entitlement takes priority over any beneficial interest under the will or the rules of intestacy, as well as any claim made under the Family Protection Act 1955 or the Law Reform (Testamentary Promises) Act 1949.

3.33 Short-term relationships on death are treated differently. A short term marriage or civil union is treated the same way as a qualifying relationship when one partner dies, unless the court considers that would be unjust.274 Short-term de facto

relationships that end on death are treated differently, and are



268 Property (Relationships) Act 1976, ss 26A–28D.

269 Property (Relationships) Act 1976, s 61.

270 Property (Relationships) Act 1976, s 76. We understand that few wills satisfy this requirement.

271 Property (Relationships) Act 1976, s 62.

272 Property (Relationships) Act 1976, s 68.

273 Property (Relationships) Act 1976, s 88(2).

subject to the rules that apply to short-term de facto relationships

that end on separation.275


How New Zealand compares internationally

3.34 Jurisdictions around the world recognise the need for special rules of property division when relationships end, but differ on what shape these rules should take.276 Most jurisdictions that have a specific statutory scheme follow a similar structure, with rules

of classification and division, followed by adjustment provisions for the exceptional cases. There are two broad approaches, with some countries adopting a regime that has elements of both. The first is a “community of property” approach, where the property of the partners is considered to be held jointly. The second is the separate property approach, where the property of the partners

is kept separate at all times. Most jurisdictions have moved away from separate property systems and have embraced some form

of community of property regime. These regimes vary from a full community of property approach, where all property is shared,277 to a “community of surplus” approach, whereby the partners share only the property gains made during the relationship.278

3.35 A key distinguishing feature of New Zealand’s relationship property regime is the application of the same rules to de facto, married and civil union partners. Of the jurisdictions that New Zealand usually compares itself to,279 only Australia and Scotland make specific provision for the division of property between de


275 Property (Relationships) Act 1976, ss 85(3) and 85(4).

  1. Bill Atkin “Family property” in Mark Henaghan and Bill Atkin (eds) Family Law Policy in New Zealand (4th ed, LexisNexis, Wellington, 2013) 197 at 209.

277 Such as the universal property regime, found in the Netherlands until recently (the law change comes into effect on

1 January 2018) and in Portugal previously (where universal community of property was abandoned with reform of

the 1966 Civil Code in 1977). Under a full or universal community of property regime all property of the partners is in principle owned by both partners from the start of the relationship and throughout the relationship. At the end of the relationship all the property is divided equally

  1. This is also known as a community of acquests or acquisitions, or limited community of property. See RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [12.61]. See also A Angelo and W Atkin “A Conceptual and Structural Overview of the Matrimonial Property Act 1976” (1977) 7 NZULR 237 at 240. The authors note however that rarely are the spouses in a community of surplus regime sufficiently business-like in their approach to their marriage to prepare an inventory of property held at the time of marriage. Consequently the

marriage usually concludes with the spouses sharing all their property whenever acquired because of the operation of a presumption that what is not stated to have been acquired before marriage is deemed to have been acquired during marriage. We note however that behaviour may have changed since the date of publication of this article. An example of a jurisdiction that has a community of surplus or accrued gains as an option available to partners is Germany (known as Zugewinngemeinschaft).

279 Including Australia, England and Wales, Ireland, Scotland and Canada.

facto partners along similar lines to married partners.280 In other

jurisdictions, de facto partners (or “cohabitants” as they are often referred to in Europe) are required to resolve any property disputes using other general legal remedies such as constructive trust, contract or unjust enrichment.281

3.36 Different jurisdictions prioritise the theories of entitlement, compensation and needs in different ways. There can be many variations in terms of how a regime is constructed, given the large number of policy choices to be made (for example deciding what, when and how property should be divided). The scope for variation means that those countries that New Zealand often compares itself with have radically different approaches to dividing relationship property.

3.37 In England and Wales for example, there is no statutory rule that each partner has an equal entitlement to relationship assets. Rather, the courts divide property at their discretion, with the first consideration being the welfare of any minor children.282 In Australia, the courts have a significant discretion pursuant to the Family Law Act 1975 to alter the property division on the basis

of what the court considers to be just.283 A court will consider the contributions of the partners to the property, the welfare of the family and the partners’ future needs.284 In Canada there is a

presumption of equal division of “net family property”, which can

  1. In Australia, the Family Law Act 1975 (Cth) provides for de facto couples to obtain property settlements on the same principles that apply to married couples. Qualifying relationships are those of two years or more, that have a child of the relationship, are registered, or where one party made substantial contributions so that serious injustice would arise if an order was not made. The Family Law (Scotland) Act 2006 provides a presumption that cohabitants will share equally in household goods acquired during the relationship. There are limited rights relating to the family home. For example, a partner can apply for a right to occupy the family home if the other partner is the legal owner. Financial provision may also be ordered if one of the partners suffered economic disadvantage arising from the relationship.
  2. This is not to say that no legal protection is available to help cohabitants after a relationship ends. In Canada, spousal support (similar to maintenance) may be awarded on separation with regard to various factors including the length of time the partners cohabited and the division of functions during the relationship. On 29 September 2017 the Alberta Law Reform Institute published Property Division: Common Law Couples and Adult Interdependent Partners (Report for Discussion 30, September 2017) <www.alri.ualberta.ca>. This Report for Discussion is open for public consultation until 20 November 2017.We will consider this Report for Discussion and any subsequently available information from the ALRI as we prepare our Final Report. In other European jurisdictions there are varying levels of legal protection for cohabiting partners, often linked to the presence of children or the length of the relationship. For example, in certain parts of Spain cohabitants have inheritance rights and the right to some form of maintenance. In Norway, cohabitants likewise have various rights of inheritance if they have children together or have cohabited for more than five years: Inheritance Act (in force 1 July 2009) (Norway), s 28(b)–(c).

282 Matrimonial Causes Act 1973 (UK), ss 24 and 25.

  1. Family Law Act 1975 (Cth), s 79. Recently questions have been raised as to whether the discretionary nature of the property division regime in the Family Law Act 1975 (Cth) should be replaced with a system based on prescriptive principles, in order to promote greater certainty, fairer outcomes and lower costs. In 2014 the Australian Productivity Commission recommended that the Australian Government review whether presumptions should be introduced, as currently applies in New Zealand, in order to promote greater use of informal dispute resolution mechanisms: Australian Government Access to Justice Arrangements: Productivity Commission Inquiry Report (2014) at 874. In September 2017, the Australian Government commissioned the Australian Law Reform Commission to undertake a comprehensive review of the Family Law Act 1975 (Cth), including the substantive rules and general principles in relation to property division: Attorney-General for Australia “First comprehensive review of the family law act” (press release, 27 September 2017).

284 See the factors set out in s 75(2) of the Family Law Act 1975 (Cth).

be rebutted for example if equal division would be unconscionable

(in Ontario) or unfair (in British Columbia).

3.38 There are also differences in the approach when a relationship ends on death. Most European civil law jurisdictions have a default matrimonial property regime that entitles spouses to an

equal share of their matrimonial property on divorce and death.285

Succession law governs the distribution of the estate, after the matrimonial property entitlement has been accounted for, and a surviving partner may have a fixed entitlement to property from the estate.286 The surviving spouse may also be entitled

to additional financial security in the form of either capital or income provision or a maintenance claim.287

3.39 In both Australia and England and Wales, the court’s power to alter the spouses’ matrimonial property interests (discussed at paragraph 3.37 above) does not apply if a relationship ends on death. Instead, succession law governs the distribution of the deceased partner ’s estate and will determine whether and to what extent the surviving partner shares in the assets of the deceased.288 In Canada, a surviving spouse can apply to court for a division of the deceased’s estate. The court’s approach will be

province dependant. In British Columbia for example, a court can order a just and equitable amount be paid from the deceased’s estate if it considers the surviving spouse was left with an inadequate amount.

3.40 Ultimately, each country takes a unique approach not only to the division of relationship property but also to the other “pillars” of financial support that may be used to assist partners affected by the end of a relationship. Some countries will place more emphasis on private transfers between individuals (such

as maintenance or child support) while others have strong State assistance systems. The approach of each country will, as with New Zealand, be influenced by the values that each society

prioritises. For example, the degree of importance placed on the

  1. Nicola Peart “Family Finances of Death of a Spouse or Partner” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming). See also Jens M. Scherpe “The Financial Consequences of Divorce in a European Perspective” in Jens M. Scherpe (ed) European Family Law (Edward Elger Publishing, Cheltenhan, 2016) vol 3 at 202–205.

286 Nicola Peart “Family Finances of Death of a Spouse or Partner” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark

Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

287 Nicola Peart “Family Finances of Death of a Spouse or Partner” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark

Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

  1. Nicola Peart “Family Finances of Death of a Spouse or Partner” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming). For England see Inheritance (Provision for Family and Dependants) Act 1975 (UK), s 1. For Australia see for example Succession Act

2006 (NSW).

interests of the children can influence whether provision is made

to protect their interest in the family home.

Chapter 4 – What are the big

questions of this review?

4.1 In this chapter we introduce what we think are the “big questions” about how the PRA is working in contemporary New Zealand. These are big questions because the responses could result in substantial change to the law. These questions, and possible options for reform, are then discussed in detail throughout the Issues Paper.

Is the framework of the PRA sound?

4.2 The PRA as passed in 1976 “was easy to understand and apply to most marriages.”289 Since then New Zealand has undergone a period of significant social change, including in patterns of partnering, family formation, relationship breakdown and re-

partnering. The PRA itself has also undergone significant change during this period, extending to de facto relationships, civil unions, same-sex relationships and relationships ending on death. Before we turn to how the PRA is working in practice, it

is important to first consider whether the framework of the PRA (explained in Chapter 3) still reflects what most New Zealanders want now and in the foreseeable future. If evidence suggests that this framework no longer reflects the values and expectations of most New Zealanders, this will affect our consideration of the PRA rules, as “the principles that we choose to guide us are the DNA of law reform.”290

The policy of a just division remains sound

4.3 While there may be different views on how the PRA framework ought to be implemented through rules, we consider that the policy of a just division of property at the end of a relationship remains appropriate for New Zealand both now and into the future.


289 Bill Atkin “Financial support – who supports whom?” in Mark Henaghan and Bill Atkin (eds) Family Law Policy in New

Zealand (4th ed, LexisNexis, Wellington, 2013) 209 at 224.

290 Bill Atkin “Classifying Relationship Property: A Radical Re-shaping” in Jessica Palmer, Nicola Peart, Margaret Briggs and

Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

4.4 We think that there is an ongoing need for specific legislation

that ensures a just division of property when relationships end. The general law of property does not respond well to the issues that arise on separation or the death of one partner. In many

cases where the partners have made different contributions to the relationship, general property law principles will not achieve a

just result.

4.5 Our preliminary view is that there should continue to be a comprehensive statutory regime setting out the rules to provide for a just division of property when partners separate.

4.6 We also take the preliminary view that the rules to provide for a just division of property when a partner dies should be set out in

a separate statute that also addresses the interests of third parties and relevant aspects of succession law. The death of a partner gives rise to different issues than separation and in some respects the rules that apply to relationships ending on death are at odds with the framework that applies on separation.. The remainder of this discussion focuses on the PRA as it applies to separation. We discuss the rules that apply on death at paragraphs 4.50 to 4.52 below.

The PRA strikes the right balance between the theories of entitlement, compensation and needs

4.7 We consider that the primary theory underpinning the rules of division in the PRA, based on a partner ’s entitlement to certain property as a result of the (presumed) equal contributions they made to the relationship, remains sound. We have considered fundamentally different approaches prioritising the different theories of compensation or need. However changing the approach would require a substantial redesign of the PRA rules, involve making difficult policy decisions291 and would introduce a much greater measure of discretion into the rules of division. As discussed in Chapter 3, greater discretion comes at a cost

to certainty and predictability, both of which are important in

  1. If we adopted rules of division based primarily on compensation, policy decisions would need to be made about what is being compensated for, whether and to what extent there would need to be proof of a causal connection between the loss or gain and the relationship, how multiple factor causation should be dealt with, and how the loss or gain

should be quantified. Rules based on need would also involve policy decisions including how we measure the claimant’s needs (subjectively or objectively), how we account for the other partner ’s needs (for example, if he or she has limited assets), whether there should be a causation requirement (for example, that the needs are generated as a result of

the relationship ending), and how long the payments should continue for. See discussion in Joanna Miles “Financial Provision and Property Division on Relationship Breakdown: A Theoretical Analysis of the New Zealand Legislation” (2004) 21 NZULR 268.

promoting resolution of disputes.292 We are also mindful of the

costs of significant structural change and the risk of unintended consequences.

4.8 The theory of compensation already has a role in the PRA. Section

15 is aimed at remedying situations where the roles each partner took during the relationship have led to a disparity in their income and living standards after separation. It compensates a partner for the economic disadvantages he or she suffers as a result of the division of functions during the relationship. This can, where necessary, provide “a more sophisticated concept of equality” than equal division alone can achieve.293

4.9 A theory based on needs is different in nature. The entitlement and compensation theories focus on past events and have the same broad objective of achieving economic equality at the end of a relationship.294 In contrast, a needs-based theory is forward- looking and imposes an ongoing financial responsibility as if the relationship were continuing.

4.10 Our preliminary view is that property should not primarily be divided according to need at the end of a relationship, for several reasons:

(a) First, the PRA, as social legislation, plays an important role in promoting gender equality. It does so largely

by recognising that non-monetary contributions to a relationship, that have traditionally been the remit of women, are equal in worth to monetary contributions and create enforceable property rights. In contrast, framing a claim in terms of future need has the effect

of “casting claimants in the passive role of supplicants”, encourages or at least prolongs dependency (as future

re-partnering may affect their eligibility to receive relief ), and fails to recognise the legitimacy of their claim to property of the relationship.295

(b) Second, a division of relationship property based primarily on needs does not strike the right balance


292 See paragraph 4.10 (d) above.

293 Joanna Miles “Financial Provision and Property Division on Relationship Breakdown: A Theoretical Analysis of the New

Zealand Legislation” (2004) 21 NZULR 268 at 288.

  1. For further discussion see Joanna Miles “Financial Provision and Property Division on Relationship Breakdown: A Theoretical Analysis of the New Zealand Legislation” (2004) 21 NZULR 268 at 288–289.

295 Joanna Miles “Financial Provision and Property Division on Relationship Breakdown: A Theoretical Analysis of the New

Zealand Legislation” (2004) 21 NZULR 268 at 287.

with the concepts of “no-fault” relationship dissolution

or a “clean break”. The concept of a “clean break” is that the property of the relationship is divided upon separation and the parties are free to go their separate ways without any competing continuing demands on their property.296 The clean break concept will often

be inappropriate where there are children of the relationship (discussed in Part I), or where the there is financial inequality between the partners resulting from the relationship (discussed in Part F).297 But we appreciate that the concept of a clean break is still valued by many people, particularly given that more

people are now entering into more than one qualifying relationship throughout their lifetime.

(c) Third, the PRA does not operate in a vacuum and cannot be expected to resolve all of the financial consequences of separation. Partners should ideally

be able to meet the future needs of their families from their own incomes, and where that is not possible by payments under other pillars of financial support that are needs-focused (discussed in Chapter 2), including maintenance under the Family Proceedings Act 1980, child support under the Child Support Act 1991 and State benefits under the Social Security Act 1964.

(d) Fourth, a distribution of property based on entitlement and/or compensation may be sufficient to meet a partner ’s needs in any event. In contrast, distribution based on need is effectively defined by and limited

to one partner ’s needs, which may in fact result in a smaller distribution (with the other partner retaining

more than an equal share of the property).298


  1. While the clean break concept is not given expression in the Property (Relationships) Act 1976, it is recognised by the courts. In Z v Z (No 2) [1997] 2 NZLR 258 (CA), the Court of Appeal noted that “the Act proceeds on the premise that on the breakdown of marriage the matrimonial property should be divided and adjustments made between the spouses and that they should then be free to go their separate ways without any competing continuing demands on the property of each other” at 269. See also Haldane v Haldane [1981] 1 NZLR 554 (CA) and M v B [2006] NZCA 535; [2006] 3 NZLR 660 (CA).
  2. The difficulty with a clean break when there are children of the relationship was discussed during Parliamentary debates of the De Facto Relationships (Property) Bill 1998 (108-1) and Matrimonial Property Amendment Bill 1998 (109-1) (which later became the Property (Relationships) Amendment Bill 2000). Patricia Schnauer from the ACT Party NZ said that “there is no doubt an adverse effect from applying the clean-break principle on the separation of couples. While there can be a clean break in terms of dividing up property, I suggest that it is totally impossible emotionally to have a clean break from one’s children”, at (5 May 1998) 567 NZPD 8233. Chris Fletcher from the National party noted that the idea of a clean break “is a good one” but that “[t]he reality, particularly for the partner who has been at home raising the children...she is much less likely to get back on her feet as quickly as her ex-husband”, at (6 May 1998) 567 NZPD 8280.

298 Joanna Miles “Financial Provision and Property Division on Relationship Breakdown: A Theoretical Analysis of the New

Zealand Legislation” (2004) 21 NZULR 268 at 284 and 287–288.

4.11 However, that is not to say that a needs-based theory should

play no role in the PRA. In practive section 15 compensation payments (discussed at paragraph 4.8 above) often meet a partner ’s post-separation needs. Our preliminary view, discussed in Part F, is that section 15 requires reform, and one option we consider is to unite the section 15 compensation payments

and maintenance payments by requiring one partner to make financial reconciliation payments to the other partner in certain circumstances. Such an approach would be based on both the compensation and needs theories. It would not, however, detract from the general rule of equal sharing under the PRA based on a theory of entitlement.

4.12 The needs of the partners and any children of the relationship are also relevant to the court’s implementation of the (generally equal) division of relationship property under the PRA and

its consideration of whether to make non-division orders. These orders grant a partner temporary rights to use or occupy property, but do not affect each partner ’s entitlement to a share of relationship property when division occurs. Non-division orders are usually made to reflect the needs of the other partner or their children.

Some principles may need change

4.13 Our preliminary view is that, broadly speaking, the principles of the PRA remain sound in 2017. Some principles may, however, need to change to better reflect people’s changing values and expecations about what is fair when relationships end.

4.14 In Part C we consider the principle that all property that has a connection to the relationship should be divided when a relationship ends. Repartnering and stepfamilies are more common today, and this might mean more people want to keep property separate. The PRA automatically treats some property as relationship property because of its use, such as use of a house for the family home. There is a question as to whether this principle remains appropriate in contemporary New Zealand.

4.15 In Part I we also consider whether the PRA should take a more child-centered approach, and propose options for promoting children’s best interests that might require a redefinition of existing the principle that a just division of property should have regard to children’s interests.

Recognising tikanga Māori in the PRA

4.16 We discussed in Chapter 3 the implicit principle that a just division of property under the PRA should recognise tikanga Māori and in particular whanaungatanga. At paragraphs 4.48–

4.49 below we identify some potential issues with the way that the rules allow tikanga to operate, and ask whether this means aspects of the PRA should be changed.

4.17 A further question we have considered is whether the current approach of accommodating and responding to tikanga Māori within the framework of the PRA, rather than having a separate regime for property division according to tikanga Māori, remains appropriate. Our preliminary view is that the PRA framework

can respond to matters of tikanga Māori, and that these matters should not be treated separately. We would like to hear from anyone who has a different view, with their suggestions for reform.

The principles should be explicit

4.18 As a matter of good drafting practice, particularly where a statute substitutes the general law and introduces rules based on distinct values, we commend the approach of a comprehensive principles section at the outset of the legislation. The Interpretation Act

1999 provides that that the meaning of an enactment must be ascertained from its text and in the light of its purpose.299 The principles will guide the reader with a clear understanding of the values that are promoted through the legislation and what

Parliament intended to be achieved.300










  1. Interpretation Act 1999, s 5(1). The Legislation Bill 2017 (275-1) currently before Parliament proposes to relocate the Interpretation Act within the new legislation. Legislation Bill 2017 (275-1), cls 10-12 (general principles of interpretation) and cl 150 (repeal of Interpretation Act 1999).
  2. See Law Commission A New Interpretation Act: To Avoid “Prolixity and Tautology” (NZLC R17, 1990) at [229]; Law Commission The Format of Legislation (NZLC R27, 1993) at 9; Law Commission Legislation Manual: Structure and Style (NZLC R35, 1996) at [30]. See also R I Carter Burrows and Carter Statute Law in New Zealand (5th ed, LexisNexis, Wellington, 2015) at 122–123. See also Law Commission Reforming The Law Of Contempt Of Court: A Modern Statute (NZLC R140, 2017). We note too that this approach has been recommended by the New Zealand Law Society in its submission on the Children, Young Persons, and Their Families (Oranga Tamariki) Legislation Bill (New Zealand Law Society “Children, Young Persons, and Their Families (Oranga Tamariki) Legislation Bill”at [34]).

Do you agree?

4.19 Our preliminary view is that the framework of the PRA is sound.

On the whole, we think that the current framework can achieve a just division of property when partners separate.

4.20 This preliminary view is significant, but it does not necessarily preclude major change. We discuss below what we think are big questions with the way the PRA is currently working, and

potential options for reform. Changes in these areas could have considerable consequences for outcomes under the PRA.



A1 Does the framework of the PRA described in Chapter 3 remain appropriate both in

2017 and in the foreseeable future?

a. Should this regime continue to be based primarily on a theory of entitlement, supplemented by theories of compensation and need?

b. Have we accurately articulated the explicit and implicit principles which should guide the content and interpretation of the rules in the PRA? Should any of the principles be amended or removed? Should any other principles be added?

  1. Does further consideration need to be given to how tikanga Māori is taken into account in the framework of the PRA? If so, what might this look like?


The big questions

4.21 We have identified eight “big questions” with how the PRA is working in contemporary New Zealand. These raise questions about whether the PRA always achieves a just division of property at the end of a relationship. In response to these big questions we are considering whether substantial change is needed to the PRA rules. This may require the PRA to embrace new ideas and new concepts.

4.22 These big questions are summarised below and are then explored in depth throughout this Issues Paper.

Big question 1: Does the PRA always apply to the

right relationships in the right way?

4.23 Since the PRA was first enacted over 40 years ago, there have been significant changes in relationship patterns, including

how relationships form and end.301 In essence, relationships are now much more diverse and this diversification is expected to continue. For example:

(a) Fewer people are marrying.302

(b) More people are living in de facto relationships.303

There is evidence to suggest that most married couples now spend a period of time living together before marriage.304

(c) Remarriages have increased, and in 2016 accounted for

29 per cent of all marriages, compared to 16 per cent in

1971.305 No information is collected about re-partnering in a de facto relationship, but it is expected that these rates will have also increased.

(d) Legal recognition and social acceptance of same-sex relationships has also coincided with more people recording that they are in a same-sex relationship.306

4.24 While there is little New Zealand-based research about the changing dynamics within relationships, we have heard anecdotally that there is an increasing variety in approaches

301 For further discussion about changes in relationships and families see see Law Commission Relationships and Families in

Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017).

  1. The marriage rate has declined from 35.5 (people per 1000 unmarried people age 16 and over) in 1976, to 10.9 in 2016: Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 1 citing Statistics New Zealand “General Marriage Rate, December years (total population) (Annual-Dec)” (June 2017) <www.stats.govt.nz>

303 In 2013, 409,380 people reported they were in a de facto relationship, which accounts for 22% of all couples, up from

8% in 1986: Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 1 citing Statistics New Zealand “Partnership status in current relationship and ethnic group (grouped total responses) by age group and sex, for the census usually resident population count aged 15 years and over, 2001, 2006 and 2013 Censuses” <nzdotstat.stats.govt.nz>; and Statistics New Zealand Population Structure and Internal Migration (1998) at 10.

  1. Dharmalingam and others found that 90% of the first marriages of women born after 1960 were preceded by one or more de facto relationships: Arunachalam Dharmalingam and others Patterns of Family Formation and Change in New Zealand (Ministry of Social Development, 2004) at 8. Superu observes that it is now the norm for a de facto relationship to be the first form of partnership for most New Zealanders, and for partners who marry to first spend time in a de facto relationship: Superu Families and Whānau Status Report 2014 (June 2014) at 164.
  2. Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 4 citing Statistics New Zealand “First Marriages, Remarriages, and Total Marriages (including Civil Unions) (Annual-Dec)” (May 2017) <www.stats.govt.nz>.

306 In 2013, 8,328 same-sex couples lived together, up from 5,067 in 2001: See Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 1 citing Statistics New Zealand 2013 Census QuickStats about families and households – tables (November 2014).

to managing finances. We understand that more partners are

choosing not to share their finances, or keep a joint account only for shared expenses such as rent or food. We have also heard about people who, having been through one relationship separation and property division, prefer to keep their finances separate in subsequent relationships. This is sometimes because one or both partners have children from previous relationships and prefer to organise their affairs so that each partner is financially responsible for his or her own children.

4.25 Similarly, we are aware of the increasing research attention being given to partners who live apart. Little is known about how common these types of relationships are in New Zealand, but research in the United Kingdom and Australia suggests that just under 10 per cent of adults are in a relationship but do not live with their partner.307 This research suggests that partners can live apart for very different reasons. Some partners may face constraints to living together, for example, they may work in

different locations, or have commitments to dependent children or elderly parents. For others, living apart may be a conscious choice.308

4.26 The increasing diversity of relationships requires us to consider whether the PRA still applies to the right relationships in the

right way. While we think the PRA’s application to marriages, civil unions and de facto relationships is broadly appropriate, we have identified the following possible issues:

(a) Does the definition of de facto relationship capture the right relationships?

(b) Is three years an appropriate period of time before the PRA’s general rule of equal sharing applies, or should it be longer?

(c) Are the different rules of division for relationships shorter than three years justified?






  1. Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 1 citing Rory Coulter and Yang Hu “Living Apart Together and Cohabitation Intentions in Great Britain” (2015) Journal of Family Issues 1 at 20; and Vicky Lyssens-Danneboom and Dimitri Mortelmans “Living Apart Together and Money: New Partnerships, Traditional Gender Roles” (2014) 76 Journal of Marriage at 950.

308 For further discussion about partners who “live apart together”, see Law Commission Relationships and Families in

Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 1.

(d) Are the different rules that apply to short-term de facto

relationships, compared to short marriages and civil unions, appropriate?

(e) Does the PRA apply appropriately where partners live or have lived outside New Zealand, or hold property in a number of jurisdictions?

4.27 We address question (a) in Part B, questions (b), (c) and (d) in Part

E, and question (e) in Part L of the Issues Paper.

Big question 2: Does the PRA divide property that should be kept separate?

4.28 The PRA classifies property as either relationship property or separate property as a means of identifying which property should be divided at the end of the relationship.

4.29 The PRA’s definition of relationship property, consistent with the principle that all property central to the relationship be shared, includes some items that may have been acquired by one partner before the relationship began. In particular, the couple’s family home and the family chattels are deemed relationship property “whenever acquired”.

4.30 We have encountered criticism that the PRA forces some people to divide property that was not acquired through joint effort. For example, when one partner brings a home into the relationship but the other does not, people have told us that it is unfair that the full value of the house be divided between the couple. There are also various anomalies that may arise depending on the use to which property has been put. For example, if a valuable item of property acquired before the relationship is placed within the family home and used for family purposes, it may be deemed

a family chattel and subject to equal sharing. If, however, the item was kept separate to family life (for example if a piece of art was displayed at the partner ’s workplace) the item may not be considered a family chattel.

4.31 These complaints suggest that the definition of relationship property could be reformed to exclude assets that were acquired before the relationship began. Instead, the concept of relationship property would only extend to property that was acquired during the relationship. This would have significant consequences for the

size of the property pool available for division in some cases, and

therefore requires careful consideration.

4.32 We discuss this question in Part C.

Big question 3: How should the PRA deal with trusts?

4.33 Property held on trust will generally not be subject to the PRA’s rules of division, even if one or both partners enjoy the use and benefits of that property.309 Many families in New Zealand use trusts as a means of holding property. Consequently, the PRA does not apply to a significant amount of property attributable to relationships, undermining the policy of a just division and the principle that all property central to a relationship ought to be divided equally.

4.34 The PRA has provisions designed to expose trust property and require the partner who disposed of property to a trust to pay compensation to the other partner. However these provisions are widely criticised for being of limited effect and easy to avoid.

4.35 While there are a number of possible remedies outside the PRA regime that a partner could pursue in relation to trust property, they generally depend on different principles, leaving the law complex and conflicting. Their existence also undermines

the principle that a single, accessible and comprehensive statute should regulate the division of property at the end of a relationship.

4.36 One significant option for reform is to amend the definition of relationship property in the PRA so that certain interests in a trust or even the trust property itself could, in defined circumstances,

be divided. Broadening the relationship property definition in this way would enable the partners to share property that had a connection to the relationship. It would in effect prevent the

policy of the PRA being undermined by the use of trusts to hold property that would otherwise be attributable to the relationship and subject to division.

4.37 We are also considering whether section 182 Family Proceedings Act 1980, which relates to setting aside nuptial settlements, should be either repealed or brought within the PRA and

309 Unless a partner has a vested or contingent beneficial interest under the trust.

amended, consistent with the principle that a single, accessible

and comprehensive statute should regulate the division of property at the end of a relationship. Another option for reform is to improve the existing provisions in the PRA that deal with dispositions of property to a trust.

4.38 We discuss this question in Part D.

Big question 4: What should happen if equal sharing does not lead to equality?

4.39 In some cases, separation may impose disproportionately greater economic disadvantages on one partner, as a result of the division of functions within the relationship. For example, in some relationships the career of one partner is prioritised (explicitly

or implicitly) over the career of the other. This may mean that the other partner (the supporting partner) instead prioritises the care of any children of the relationship and maintaining the family home. He or she may leave the workforce to do so, work part-time and/or deliberately choose a less demanding and ambitious job. The supporting partner may also relocate with their partner when their partner ’s job requires it. When the relationship ends, the supporting partner may find it more

difficult to recover economically from the separation. Because of the decisions the partners made about the division of functions during the relationship, the supporting partner may lack the skills and experience to find rewarding employment, whereas the other partner leaves the relationship with the benefits of an advanced career. In this scenario, the supporting partner loses the economic benefits that he or she expected to receive from the investment in the relationship.

4.40 One of the principles of the PRA is that a just division of property has regard to the economic advantages or disadvantages to the partners arising from their relationship or from its end. This principle is given effect by section 15. Having reviewed section 15 and the case law, we conclude that it has been largely ineffective in remedying the disproportionate economic disadvantages one partner may suffer.

4.41 We are considering a number of options to address this issue. The first option is to lower the hurdles that a partner must overcome to obtain an award under section 15. The second option is to

treat a partner ’s ability to earn income as an item of property

which could be divided to the extent it has been enhanced by

the relationship. The third option is unite the section 15 remedy with maintenance in a form of periodic financial reconciliation payments.

4.42 We discuss this question in Part F.

Big question 5: How should the PRA recognise children’s interests?

4.43 The interests of children are referred to in a limited number of provisions in the PRA. We have found that in practice children’s interests are seldom expressly taken into account in relationship property matters. This is probably due to the uncomfortable fit of needs-based provisions focused on children’s interests within an entitlement-based property division regime for adults. Children of relationships are, however, affected when parents or step-parents separate, and New Zealand family law has increasingly adopted a more child-centred approach within social legislation, consistent with New Zealand’s obligations under the United Nations Convention on the Rights of the Child.

4.44 A key question we consider is whether the PRA should be reformed to take greater account of children’s interests and, if so, what form those amendments should take. We explore this question further and consider a number of potential options in Part I.

Big question 6: Does the PRA facilitate the inexpensive, simple and speedy resolution of PRA matters consistent with justice?

4.45 We understand that the vast majority of partners who separate will not go to court to resolve the division of their property. Some will not even consult a lawyer. There is a critical need to ensure that the PRA’s rules, the court process and any dispute resolution mechanisms facilitate the inexpensive, simple and speedy resolution of PRA matters in a manner that is consistent with justice. Agreements reached outside court must be just, efficient and enduring.

4.46 We currently lack the information to fully analyse how couples

are resolving PRA matters. We welcome submissions on how the regime is operating in practice, and any areas of concern. Our research and preliminary consultation to date has identified two broad problems:

(a) Lack of information and support for resolution of PRA matters. International research suggests that access to information about property rights and the available processes for resolving disputes is vital in ensuring a just and prompt resolution of relationship property disputes.310 The clarity and certainty of the rules themselves is also important in facilitating

just agreements. We are concerned that the current information and support available to people at the end of their relationship may be lacking. We are considering a range of reform options, including the promotion of online resources about the PRA rules and the Family Court process, and online dispute resolution tools. We also identify the range of options for more formal out

of court dispute resolution, and ask whether the State should have a greater role in facilitating any of these options for PRA disputes.

(b) Undue delay in resolving property matters in the court system. This includes delays as a result of inefficiencies in the case management procedure for PRA cases

in the Family Court, as well as delays caused by one partner, for example, by failing to provide full disclosure or comply with other process requirements. We are considering reforms to improve the court process, including changes aimed at early issue identification

and minimising undue delay through stricter timeframes, clear rules of disclosure and tougher penalties for breaching process requirements. We are also considering reform options designed to clarify the jurisdiction of the Family Court and High Court to deal with PRA and related matters.

4.47 We consider issues relating to the resolution of PRA matters in

Part H.


  1. Emma Hitchings, Jo Miles and Hilary Woodward “Assembling the jigsaw puzzle: understanding financial settlement on divorce” [2014] Fam Law 309 at 316-317.

Big question 7: Does the PRA provide adequately

for tikanga Māori to operate?

4.48 The PRA recognises tikanga Māori in the exclusion of Māori land from the ambit of the PRA and the exclusion of taonga from the definition of family chattels.311 In this Issues Paper, we raise a range of other specific matters where tikanga Māori is especially relevant, and question whether the PRA is adequately providing for tikanga Māori to operate. These matters relate to:

(a) recognising customary marriage without subsuming it into de facto relationships (discussed in Part B);

(b) recognising whāngai children (discussed in Part I);

(c) addressing family homes built on Māori land (discussed in Part C);

(d) exempting taonga from division (discussed in Part C);

(e) whether contracting out agreements can be used to accommodate tikanga Māori (discussed in Part J); and

(f ) how should tikanga Māori interact in dispute resolution processes (discussed in Part H).

4.49 In some, or all of these areas, reform might be needed to ensure tikanga Māori can operate effectively.

Big question 8: How should the PRA’s rules apply to relationships ending on death?

4.50 The are tensions between the rules set out in Part 8 of the PRA that govern property division when one partner dies and succession law. There is considerable difficulty in the way

Part 8 tries to bring the two regimes together. First, when one partner dies different interests are at stake than if the partners separate during their lifetime. The law has to grapple with the obligations the deceased may have owed to third parties such

as other family members. These obligations may conflict with a surviving partner ’s interest in the deceased’s estate under the PRA. Second, the rules that apply on death are generally complex

and inaccessible. We understand that many will-makers, surviving

partners and even advisers struggle to come to terms with how

the law applies. Third, Part 8 is silent on key matters, such as how the rules are to apply when the deceased’s representative seeks a division of relationship property under the PRA.

4.51 We question whether the PRA framework remains appropriate for relationships ending on death, given the increase in re- partnering and the prevalence of step-families. Our preliminary view is that while surviving partners should not lose their right

to an equal share of relationship property when one partner dies, the provisions that relate to the division of property on death should be placed in a separate statute, which would also address the interests of third parties. Any such legislation would fall outside the scope of this review and would need to be progressed separately. Such legislation would also need to consider issues arising from the intersection of tikanga Māori and succession law.

4.52 We discuss these issues and options for reform further in Part M.



Other general issues

4.53 In addition to the big questions discussed above, there are some smaller points that we wish to raise here because they have an overarching application to the PRA and this review.

Should relationship neutral terms be used in the

PRA?

4.54 The PRA uses specific terms to describe different types of relationships, even though the same rules generally apply regardless of the relationship type.312 In particular the PRA uses

the terms “marriage”, “spouse”, “husband” and “wife”; “civil union” and “civil union partner”; and “de facto relationship” and “de facto partner”.313

4.55 The Select Committee considering the 2001 amendments decided to retain specific terms to describe the different relationship

types in response to concerns that failure to do so would


  1. There are some instances in which the Property Relationships Act 1976 distinguishes between relationship types, for example the rules applicable to relationships of short duration, ss 14, 14A and 14AA.

313 There is one partial exception: the phrase “spouse or partner” is sometimes used in the Property Relationships Act to

undermine the sanctity of marriage.314 New Zealand society has

undergone considerable change since 2000. There may be less social significance attached to different types of relationship, and objections to the use of relationship neutral terms may no longer be so strong. We think it is timely to reconsider whether these objections remain today, or if it is appropriate to use relationship neutral terms in the PRA where the same rules apply to all relationship types.

4.56 While sensitive to the concerns raised in 2001, our preliminary view is that relationship neutral terms should now be adopted, for two primary reasons:

(a) First, the use of specific terms is out of step with the principles of the PRA discussed in Chapter 3. The PRA seeks to achieve substantive equality and neutrality in terms of relationship type. Relationship neutral terms may better reflect the principle that the law should apply equally to all relationships that are substantively the same.

(b) Second, the use of specific terms can make the PRA complicated and long-winded. The introduction of civil unions in 2004 means there are now three different categories of relationship that must be specified in

the PRA. For example, section 13 of the PRA currently provides that if the exception to equal sharing applies:

...the share of each spouse or partner in that property or money is to be determined in accordance with the contribution of each spouse to the marriage or of each civil union partner to the civil union or of each de facto partner to the de facto relationship.

(c) This could be simplified, without loss of meaning; to read “...the share of each partner in that property or money is to be determined in accordance with the contribution of each partner to the relationship”. Simpler language would make the PRA more concise and accessible to the public.

  1. See Matrimonial Property Amendment Bill and Supplementary Order Paper No 25 2000 (109 – 3) (select committee report) at 6: “[some submitters] claim that it is degrading to refer to a spouse as a ‘partner ’, and to call marriage a

‘partnership relationship’, because they believe that marriage has a quality of sanctity that de facto relationships do not possess.” and Wendy Parker “Sameness and difference in the Property (Relationships) Act 1976” (2001) 3 BFLJ 276. The Rt. Hon. Jenny Shipley said at the time “We are now required to ...swallow the amoral and gender-neutral, politically correct line and call our husbands ‘partners’. Marriages are now just relationships. ...Well, Burton’s my husband. I’m his wife. And that’s the way we like it”. (Rt. Hon. Jenny Shipley, Address to the New Zealand National Party Conference 2000,

19 August 2000).

A2 Should specific terms be substituted with the neutral terms of “relationship” and

“partner” where there is no need to distinguish between relationship types?


Should there be more public education about the

PRA and how it works?

4.57 In our preliminary consultation, practitioners told us that most of their clients understand that after three years a de facto relationship will become subject to the general rule that relationship property is divided equally under the PRA.

However there are many things that people don’t know. People are often unaware that a de facto relationship does not require cohabitation. Nor do they realise that a surviving partner can choose to receive his or her entitlement under the PRA and not under the will. People often do not understand the implications of property being held in trust.

4.58 We would like to know whether greater public awareness of the PRA is needed and, if so, how this could be achieved. Some ideas we have are:

(a) Informing buyers of residential property of potential future obligations under the PRA.

(b) Providing couples who are getting married or entering a civil union with information about the PRA when they apply for a marriage or civil union licence.

(c) New immigrants being told, as part of the information package they receive on arriving in New Zealand, of the existence of the PRA, its general provisions and that the regime is likely to be very different to that regime in the person’s country of origin.

(d) Education on the PRA at secondary school.



A3 Do you agree that there needs to be greater public education about the PRA and the obligations and responsibilities that arise under it?

A4 Do you have any ideas about ways to promote public education relating to the PRA? Do you agree with any or all of the ideas we have suggested?

Part B – What

relationships should the PRA cover?

Chapter 5 – Who is covered by the

PRA?

Introduction

5.1 New Zealand has undergone significant change in the last 40 years.1 As a result of changing patterns in partnering, family formation, separation and re-partnering, what it means to be partnered has changed significantly since the 1970s. Public attitudes have also undergone major shifts towards matters such as couples living together before or as an alternative to marriage, separation and divorce, having and raising children outside marriage, and same-sex relationships.

5.2 In this chapter we explain the different relationships covered by the PRA, and the history leading up to the inclusion of de facto relationships in 2001. We look at why the PRA should continue

to apply to de facto relationships, and on the same “opt-out” basis as marriages and civil unions. The rest of Part B is arranged as follows:

(a) In Chapter 6 we consider the PRA’s definition of “de facto relationship”, and in particular what it means to “live together as a couple”. We consider potential

issues with the definition, and set out some options for reform.

(b) In Chapter 7 we look at some specific types of relationships, including Māori customary marriage, and consider how they are treated under the PRA.

Relationships covered by the PRA

5.3 The PRA covers three types of relationships: marriages, civil unions and de facto relationships.2

  1. These changes are summarised in Law Commission Relationships and Families in Contemporary New Zealand: He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017).
  2. We use the term “long-term relationship” (as well as “long-term marriage”, “long-term civil union” and “long-term de facto relationship”) to refer to qualifying relationships of three or more years’ duration that are not treated as

Marriages

5.4 Marriage is defined as the union of any two people, regardless of their sex, sexual orientation or gender identity.3

5.5 Despite population growth, the number of marriages each year is decreasing.4 The marriage rate is now around one quarter

of what it was when it peaked in 1971.5 Many factors will

have contributed to the fall in the marriage rate, including the increasing prevalence of de facto relationships (discussed below), the increasing numbers of New Zealanders remaining single,6 and a general trend towards delaying marriage.7 In 2016, the median age at first marriage was 30 for men and 29 for women, compared to 23 for men and 21 for women in 1971.8

5.6 Marriage today offers few legal advantages over a de facto relationship. So why do couples still get married? One reason is to make the shift from a private to a public commitment, another is to celebrate a “successful” and enduring relationship and ensure that it is properly acknowledged by family and friends.9 Some couples may wish to marry before they have children, or for pragmatic reasons or to conform to expectations and pressures

to marry.10 Some couples may marry for cultural or religious

reasons, and in New Zealand cultural and religious identity is




relationships of short duration under s 2E of the Property (Relationships) Act 1976. Relationships of short duration are considered in Part E.

  1. Marriage Act 1955, s 2 definition of “marriage”. In the Property (Relationships) Act 1976, “marriage” also includes a marriage that is void (for example a marriage of persons within prohibited degrees of relationship where no order is in force dispensing with the prohibition: see Marriage Act 1955, s 15 and sch 2, and Family Proceedings Act 1980, s 31) and a marriage that has ended by a legal process while both spouses are alive or by the death of one spouse: s 2A.

4 Law Commission Relationships and Families in Contemporary New Zealand: He hononga tangata, he hononga whānau i

Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 1.

5 Statistics New Zealand Information Release – Marriages, Civil Unions and Divorces: Year ended December 2016 (3 May 2017) at 3. Law Commission Relationships and Families in Contemporary New Zealand: He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 1.

  1. Analysis of census results identifies a decline in partnering rates amongst those aged 25–34, with the strongest decline being experienced between the 1986 and 1991 censuses. In 1986, 74% of women aged 25–34 were partnered, but by

2013 this had declined to 65%. For men, the partnership rate declined from 67% in 1986 to 61% in 2013. See: Paul Callister and Robert Didham The New Zealand ‘Meet Market’: 2013 census update (Callister & Associates, Research Note, September 2014) at 11.

7 Families Commission / SuPERU Families and Whānau Status Report 2014 (June 2014) at 164.

8 Statistics New Zealand Information Release – Marriages, Civil Unions and Divorces: Year ended December 2016 (3 May 2017)

at 5.

  1. Maureen Baker and Vivienne Elizabeth Marriage in an age of Cohabitation: How and When People Tie the Knot in the Twenty- First Century (Oxford University Press, Canada, 2014) at 45–46.
  2. Maureen Baker and Vivienne Elizabeth Marriage in an age of Cohabitation: How and When People Tie the Knot in the Twenty- First Century (Oxford University Press, Canada, 2014) at 50–54 and 54–62.

diversifying.11 Baker and Elizabeth say that marriage has “...

retained its cultural and symbolic value as the socially ordained vehicle for relationships of romantic love and commitment”.12

Civil unions

5.7 A civil union is a formal registered relationship that is similar

to a marriage.13 Civil unions were introduced in 2004 to provide for heterosexual couples who wanted formal recognition of

their relationship but who did not wish to marry, and to address the situation regarding same-sex couples who could not legally marry.14 Civil unions and marriages are both “opt-in” relationships that make a private commitment public. A civil union provides

the opportunity to formalise a relationship without the religious and social associations that can arise with marriage.15 Civil unions are generally treated the same as marriages under the PRA.

5.8 The number of people entering civil unions since 2005 has remained relatively small, accounting for 1.4 per cent of all marriages and civil unions between 2005 and 2013.16 The number of civil unions has dropped even further since same-sex marriage was legalised in 2013. In 2016, there were only 48 civil unions, accounting for 0.2 per cent of all marriages and civil unions.17

De facto relationships

5.9 The decline in the rate of people entering marriages and civil unions has coincided with an increase in the number of people



11 Law Commission Relationships and Families in Contemporary New Zealand: He hononga tangata, he hononga whānau i

Aotearoa o nāianei (NZLC SP22, 2017) at Introduction.

  1. Maureen Baker and Vivienne Elizabeth “A ‘brave thing to do’ or a normative practice? Marriage after long-term cohabitation” (2014) 50(4) Journal of Sociology 393 at 394.
  2. The Civil Union Act 2004 provides that two people, whether they are of different or the same sex, may enter into a civil union if they are both aged 16 or over; they are not within the prohibited degrees of civil union; and they are not currently married or in a civil union with someone else: Civil Union Act 2004, ss 10, 18 and 19. In the Property

(Relationships) Act 1976, a “civil union” includes a civil union that is void (for example a civil union where at the time of solemnisation either party was already married or in a civil union: see Civil Union Act 2004, s 23 and Family Proceedings Act 1980, s 31); and a civil union that has ended by a legal process while both civil union partners are alive or by the death of one civil union partner.

14 Hon David Benson-Pope, Associate Minister of Justice, (24 June 2004) 618 NZPD 13927.

15 Bill Atkin and Wendy Parker Relationship Property in New Zealand (2nd ed, LexisNexis, Wellington, 2009) at 1.11.1.

  1. Excluding marriages and civil unions of overseas residents. See: Statistics New Zealand “Marriages and civil unions by relationship type, NZ and overseas residents (Annual-Dec)” (May 2017) <www.stats.govt.nz>.
  2. Excluding marriages and civil unions of overseas residents. See: Statistics New Zealand “Marriages and civil unions by relationship type, NZ and overseas residents (Annual-Dec)” (May 2017) <www.stats.govt.nz>.

living in de facto relationships.18 In New Zealand, 409,380 people

reported they were in a de facto relationship in 2013.19 This accounted for 22 per cent of all people partnered, or 13 per cent of the total adult population.20 This has increased since 2001, when people in a de facto relationships accounted for 18 per cent of

all people partnered, or 11 per cent of the total adult population. The increasing prevalence of de facto relationships follows international trends, however the rate is higher in New Zealand than in other comparable countries. The increase in de facto relationships is also likely driving the increase in the number of children born outside marriage.21 In 2016, 46 per cent of all births in New Zealand were ex-nuptial, up from 17 per cent in 1976.22

5.10 Census data can tell us about some characteristics of people living in de facto relationships. A breakdown of census data by relationship type and age demonstrates that younger people are more likely to be in a de facto relationship, with people aged

15–24 being more likely to be in a de facto relationship than be married in 2013.23 Marriage then becomes more common in the older age brackets, which suggests that many people are living in a de facto relationship before marriage.24 De facto relationships are more prevalent among Māori compared to any other ethnic group. In the 2013 census, 17 per cent of Māori identified they were in

a de facto relationship, compared to the 13 per cent of the total

population.25


18 Law Commission Relationships and Families in Contemporary New Zealand: He hononga tangata, he hononga whānau i

Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 1. It is important to note that data collected on de facto relationships

in New Zealand (including census data) generally defines a de facto relationship as one where the partners live together as a couple in a relationship in the nature of marriage. As we discuss in Chapter 6, this is different to the definition of de facto relationship in the Property (Relationships) Act 1976, s 2D.

19 Statistics New Zealand “Partnership status in current relationship and ethnic group (grouped total responses) by age group and sex, for the census usually resident population count aged 15 years and over, 2001, 2006 and 2013 Census (RC, TA)” <nzdotstat.stats.govt.nz>.

  1. Statistics New Zealand “Partnership status in current relationship and ethnic group (grouped total responses) by age group and sex, for the census usually resident population count aged 15 years and over, 2001, 2006 and 2013 Census”

<nzdotstat.stats.govt.nz>.

21 Law Commission Relationships and Families in Contemporary New Zealand: He hononga tangata, he hononga whānau i

Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 1.

  1. Statistics New Zealand “Live births by nuptiality (Māori and total population) (annual-Dec)” (May 2017) <www.stats. govt.nz>.

23 Law Commission Relationships and Families in Contemporary New Zealand: He hononga tangata, he hononga whānau i

Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 1.

  1. Law Commission Relationships and Families in Contemporary New Zealand: He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 1. While we do not know how common it is for partners to be in a de facto relationship immediately preceding their civil union, we expect that the situation is similar to the prevalence of a de facto relationship preceding a marriage.

25 Law Commission Relationships and Families in Contemporary New Zealand: He hononga tangata, he hononga whānau i

Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 1.

The inclusion of de facto relationships in

the PRA

5.11 Prior to 2001, when a de facto relationship ended property rights were usually determined under general property law principles or the law of equity.26 This often resulted in significant unfairness, particularly for women.27 An analysis of de facto property cases between 1986 and 1990 had found that the average division of property for women in heterosexual de facto relationships of between three and ten years’ duration ranged from 10–40 per cent.28 Obtaining more than a 20–30 per cent division under this approach was described as “extremely difficult”,29 and predicting outcomes as “somewhat of a lottery”.30

5.12 There were attempts as early as 1975 to provide a statutory property regime for de facto relationships. The Matrimonial Property Bill 1975 originally provided for a court to consider applications by partners living in a “de facto marriage” of two or more years’ duration.31 In a White Paper accompanying the Bill, the Minister of Justice at the time said that on “practical and humanitarian grounds” there was a strong case for including

de facto relationships within the property division regime for marriages.32 Following a change of Government, de facto relationships were removed from the Bill at the Select Committee stage.33 The incoming Minister of Justice said that removing de facto relationships meant that “...we believe that individuals should demonstrate to those they live with a responsibility to

the other partner, and a responsibility at law to regularise that

union”.34 The opposition described the decision as “unfortunate”

  1. Equity is a body of law New Zealand inherited from England and Wales. In previous centuries the courts would apply equity when established legal rules would achieve unfair outcomes. Over time, the courts’ practice of applying equity evolved into distinct rules and principles. These rules and principles have become the law of equity which applies in New Zealand today. Note that the Domestic Actions Act 1975 provides a regime for the settlement of property disputes arising out of the termination of agreements to marry. This can apply to de facto relationships where the partners were engaged. The Domestic Actions Act is discussed further in Part H.

27 (14 November 2000) 588 NZPD 6517.

28 (14 November 2000) 588 NZPD 6517.

29 (14 November 2000) 588 NZPD 6517.

30 Bill Atkin and Wendy Parker Relationship Property in New Zealand (2nd ed, LexisNexis, Wellington, 2009) at 6.

31 Matrimonial Property Bill 1975 (125-1), cl 49.

  1. AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 13.

33 Matrimonial Property Bill 1976 (125-2) as reported from the Statutes Revision Committee.

34 Hon David Thomson MP, Minister of Justice (9 December 1976) 408 NZPD 4727.

and accused the Government of “closing its eyes” to the needs of

people in de facto relationships and the future welfare of their children.35

5.13 In 1988 a Working Group was established by the Ministry of Justice to revise and update the Matrimonial Property Act 1976. The Working Group was unanimous that the law as it applied to de facto relationships was unsatisfactory and should be reformed.36

In 1998 the De Facto Relationships (Property) Bill 1998 was introduced, proposing a separate statutory property regime for de facto relationships.37 The Bill defined de facto relationship as “a man and a woman... living together in a relationship in the nature of marriage, although not married to each other.”38 The proposed regime was different to the regime for married couples, and only applied to de facto relationships of three or more years’ duration.39

5.14 Supplementary Order Paper No 25 signalled a new policy direction.40 It was introduced in 2000 following a change of Government, and extended the Matrimonial Property Act 1976 to cover opposite-sex and same-sex de facto relationships.41

The same property division rules that applied to spouses would generally apply to de facto partners. The Associate Minister of Justice at the time said:42

As we enter a new century it is about time that New Zealand caught up with the rest of the world and provided legal

recognition and rights to the members of a considerable large and growing section of our community who freely chooses to organise

their relationships outside the formality of marriage.





35 Mary Batchelor MP (9 December 1976) 408 NZPD 4724.

36 Department of Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at

65–66. It gave as reasons: Many de facto partners fulfil the same family functions as legal spouses; it is inequitable to deny recognition to a relationship which is a marriage in substance; de facto partners and spouses encounter the same problems and therefore need comparable legal remedies; legal rights will reduce opportunities for exploitation and the need for litigation; the law should recognise the undeniable reality of de facto relationships and ameliorate unnecessary hardship and patent injustice; de facto partners can contract out of the legislative reforms; and a greater recognition of de facto relationships is consistent with the trend in similar overseas jurisdictions.

37 De Facto Relationships (Property) Bill 1998 (108-1) (explanatory note) at i.

38 De Facto Relationships (Property) Bill 1998 (108-1), cl 17.

39 De Facto Relationships (Property) Bill 1998, (108-1), cl 50(1). See Government Administration Committee Interim Report on the De Facto Relationships (Property) Bill (September 1999) at 13 for a table summarising the main differences between the Matrimonial Property Act and the De Facto Relationships (Property) Bill 1998.

40 Supplementary Order Paper 2000 (25) Matrimonial Property Amendment Bill (109-3).

41 (4 May 2000) 583 NZPD 1926.

42 Hon Margaret Wilson MP, Associate Minister of Justice (4 May 2000) 583 NZPD 1927.

5.15 Supplementary Order Paper No 25 was considered by the

Parliamentary Select Committee in mid-2000.43 Public interest was high, and the select committee received 1,631 submissions.44

While the vast majority of submissions (approximately 1,330)

did not support extending the Matrimonial Property Act to

de facto relationships,45 the majority of the Select Committee supported the key changes, making these observations and recommendations:

(a) The Matrimonial Property Act should be extended to cover both opposite-sex and same-sex de facto couples.46 Statutory protection was necessary to safeguard children and the property rights of people whose de facto relationships end, particularly those in vulnerable positions.47

(b) The definition of “de facto relationship” should centre on two people who “live together as a couple”, rather than “a relationship in the nature of marriage”.48

(c) An “opt-out” regime for de facto couples is preferable to an “opt-in” regime.49

5.16 The Property (Relationships) Amendment Bill was passed on 22

November 2000, with most amendments extending the regime to de facto relationships coming into force on 1 February 2002. The extension of the PRA to de facto relationships has been described as a “minor triumph for the traditional values of Kiwi pragmatism and tolerance”.50 It is said that we “lead the world” by largely applying the same rules of property division to all relationship types.51


43 (1 June 2000) 584 NZPD 2754–2770.

  1. Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 45.
  2. Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 5.
  3. Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 5.
  4. Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 5.
  5. Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 7–8 and cl 3A.
  6. Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 10–12.

50 Simon Jefferson “De facto or ‘friends with benefits’” (2007) 5 NZFLJ 304, at 1.

51 Wendy Parker “Sameness and difference in the Property (Relationships) Act 1976” (2001) 3 BFLJ 276.

Should the PRA continue to apply equally to long-

term relationships that are substantively the same?

5.17 In Part A we said that an implicit principle of the PRA is that the law should apply equally to all relationships that are substantively the same. This principle is inherent in the PRA’s core rules, which generally apply in the same way to marriages, civil unions and de facto relationships of three or more years’ duration (long-term relationships).52 The principle is driven by equality as expressed

in anti-discrimination laws and reflects a shift in family law policy towards greater recognition of a wide range of family relationships.53

5.18 There may be potential issues with how the PRA ensures that only those unmarried relationships that are substantively the same as marriages and civil unions are covered. If the PRA is not capturing substantively similar relationships, it may be failing to provide for a just division of property because it imposes the same general rule of equal sharing on relationships that are different. These issues relate to the PRA’s definition of de facto relationship, and are discussed in Chapter 6.

5.19 The broader question is whether the PRA should continue to apply in the same way to all long-term relationships that are substantively the same, regardless of relationship type. Our preliminary view is that it should. We think it would be inconsistent with human rights principles to have different

rules for relationships that are substantively the same and that face the same property issues when they end.54 Treating de facto relationships differently is also likely to be out of step with social trends such as the increasing prevalence of de facto relationships and changing attitudes on social issues such as living together before marriage (or not marrying at all), separation and having

and raising children outside marriage.55 Although legal remedies

  1. Exceptions include ss 24 and 89 of the Property (Relationships) Act 1976 (timeframes for commencing proceedings); and ss 63 (maintenance during marriage or civil union) and 182 (orders as to settled property) of the Family Proceedings Act

1980, which do not apply to couples in a de facto relationships. Short-term relationships (those that last for less than three years) are discussed in Part E.

  1. Mark Henaghan “Legally defining the family” in Mark Henaghan and Bill Atkin (eds) Family Law Policy in New Zealand (4th ed, LexisNexis, Wellington, 2013) 1 at 5. This reflects the right to freedom from discrimination on the grounds of marital status and family status enshrined in the New Zealand Bill of Rights Act 1990, s 19 and Human Rights Act 1993, s 21.

54 See New Zealand Bill of Rights Act 1990, ss 5 and 19; and Human Rights Act 1993, s 21(1)(b).

55 Law Commission Relationships and Families in Contemporary New Zealand: He hononga tangata, he hononga whānau i

Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 1.

may be available in property law or equity, they may be difficult

to access or less favourable than the PRA.56 Retaining de facto relationships within the PRA may also minimise some of the social and economic costs of relationship breakdown to the State.57

5.20 Atkin has also observed that:58

... recognising unmarried relationships in financial statutes is unlikely to undermine marriage because the legal issues that arise in each case are usually when the marriage or relationship is in strife or when one of the parties has died; ... and definitions of the relevant relationship and a duration requirement as a condition

of jurisdiction (in New Zealand three years) can weed out the fringe associations that should be outside a marriage-based regime.

5.21 We have also considered whether there should be a separate regime for de facto relationships, as originally proposed in 1998.59

However we think that it would be a backward step to reconsider that proposal at this stage of the PRA’s evolution. The current approach has its issues (discussed in Chapters 6 and 7 below), but is workable as a starting point for reform.

Should the PRA continue to apply to de facto relationships on an opt-out basis?

5.22 The PRA establishes a bilateral “opt-out” regime for all marriages, civil unions and de facto relationships.60 This means that long- term de facto relationships are subject to the PRA, unless

both partners agree to opt out by entering a “contracting out”

agreement.61 A contracting out agreement is a way that partners

56 For example, an alternative remedy may exist in the common law of contract, constructive trust, under the Law Reform

(Testamentary Promises) Act 1949 or the Family Protection Act 1955.

  1. See Bill Atkin and Wendy Parker “De Facto Property Developments in New Zealand: Pressures Impeded Progress” in John Dewar and Stephen Parker (eds) Family Law Processes, Practices and Pressures: Proceedings of the Tenth World Conference of the International Society of Family Law (Hart Publishing, Portland, 2003) 555 at 556.

58 Bill Atkin “The Legal World of Unmarried Couples: Reflections on ‘De Facto Relationships’ in Recent New Zealand

Legislation” (2008) 39 VUWLR 793 at 794.

59 See the De Facto Relationships (Property) Bill 1998 (108-1); and Supplementary Order Paper 2000 (25) Matrimonial

Property Amendment Bill 1998 (109-2).

  1. This reflects the implicit principle of the Property (Relationships) Act 1976 that partners should be free to make their own agreement regarding the status, ownership and division of their property, subject to safeguards. See Part A, Chapter

3.

61 Property (Relationships) Act 1976, ss 1C(2), 14A and 21. Short-term de facto relationships are discussed in Part E. A court may treat a relationship of three years or longer as a short-term relationship if it considers it just: s 2E(1); and short-term relationships must pass a further test before a property division order can be made: s 14A.

contracting out agreement must comply with Part 6 of the PRA,

and may be made during a relationship or in contemplation of entering a relationship.63 The ability to contract out is said to be an “integral feature” of the PRA.64

5.23 Alternatives to a bilateral opt-out regime include a:

(a) unilateral opt-out regime, where de facto relationships are covered by the PRA unless one partner opts out (the other partner ’s agreement is not required);

(b) unilateral opt-in regime, where de facto relationships are not covered by the PRA unless one partner opts in (the other partner ’s agreement is not required); and

(c) bilateral opt-in regime, where de facto relationships are not covered by the PRA unless both partners agree to opt-in.

5.24 The Parliamentary select committee considered a bilateral opt- in regime for de facto relationships in 2000,65 but preferred a bilateral opt-out regime because it would mean that vulnerable people unaware of their legal situation would be covered without having to try to contract in.66 In contrast, under an opt-in regime some people might not be able to secure their partner ’s agreement to contract into the PRA – this was of particular concern where

the relationship is a long one or where there are dependent children.67

5.25 Our preliminary view is that the existing bilateral opt-out regime remains appropriate for de facto relationships. We have found no new evidence that questions the conclusion in 2000 that, while an opt-out regime may create unfair outcomes for some, it will

  1. Contracting out of the Property (Relationships) Act 1976 is discussed further in Part J. A contracting out agreement may relate to the status, ownership and division of property in particular circumstances: s 21.
  2. Property (Relationships) Act 1976, s 21. Partners may also enter into a contracting out agreement to settle any differences that have arisen between them concerning their property: s 21A.

64 Wells v Wells [2006] NZFLR 870 (HC) at [38].

  1. Reasons in favour of an opt-in regime were noted by the Parliamentary select committee as: (1) people in de facto relationships may have chosen not to marry in order to avoid the statutory property regime; (2) an opt-in regime might, in terms of property sharing, be thought of as effectively “marrying” those couples without their consent; (3) couples in de facto relationships will bear the cost of contracting out of the PRA; (4) some de facto partners may be unable to secure the necessary support from their partner to contract out of the PRA: Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 11.
  2. Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (explanatory noteselect committee report) at 11.
  3. Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (explanatory noteselect committee report) at 11.

“...protect more people, especially those who are vulnerable,

and create less unfairness than an opt-in regime”.68 Rather, the arguments in favour of an opt-out regime may be even stronger in 2017. An increasing number of people are living in de facto relationships,69 and with the passage of time there is likely to be

greater public awareness that de facto relationships carry property consequences. Public education about the PRA and how it works, as discussed in Part A, would also help to raise awareness.

C ONSU LTATION QUESTIONS

B1 Do you agree with our preliminary view that the existing bilateral opt-out regime for de facto relationships is appropriate?

B2 Is the PRA’s bilateral opt-out approach causing issues for de facto relationships? If so, would those issues be best addressed by re-examining that approach, or in other ways, such as education; changes to the definition of de facto relationship; changing the minimum duration requirement (see Part E); changes to the PRA’s rules of classification and division (see Parts C and D); changes to the PRA’s contracting out provisions (see Part J) or something else?


































  1. Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (explanatory noteselect committee report) at 12.

69 Law Commission Relationships and Families in Contemporary New Zealand: He hononga tangata, he hononga whānau i

Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 1.

Chapter 6 – The definition of de

facto relationship

6.1 Under the PRA, a “de facto relationship” is a relationship between two people, both age 18 years or older; who “live together as a couple”; and who are not married to, or in a civil union with, each other.70 The definition is flexible because it relies on a high level

of judicial discretion and takes a functional approach that looks at how a couple’s relationship operates in practice rather than its form.71 The definition is set out in full below.72

2D Meaning of de facto relationship

(1) For the purposes of this Act, a de facto relationship is a relationship between 2 persons (whether a man and

a woman, or a man and a man, or a woman and a woman)—

(a) who are both aged 18 years or older; and

(b) who live together as a couple; and

(c) who are not married to, or in a civil union with, one another.

(2) In determining whether 2 persons live together as a couple, all the circumstances of the relationship are to be taken into account, including any of the following matters that are relevant in a particular case:

(a) the duration of the relationship:

(b) the nature and extent of common residence: (c) whether or not a sexual relationship exists: (d) the degree of financial dependence or

interdependence, and any arrangements for financial support, between the parties:

(e) the ownership, use, and acquisition of property:

(f ) the degree of mutual commitment to a shared life: (g) the care and support of children:

70 Property (Relationships) Act 1976, s 2D(1).

  1. See Margaret Briggs “What relationships should be included in a property division regime? A New Zealand perspective” (paper presented to A Colloquium on 40 Years of the PRA: Reflection and Reform, Auckland, December 2016).

72 Determining the duration of a de facto relationship, including start and end dates, is discussed in Part E.

(h) the performance of household duties:

(i) the reputation and public aspects of the relationship. (3) In determining whether 2 persons live together as a

couple,—

(a) no finding in respect of any of the matters stated in subsection (2), or in respect of any combination of them, is to be regarded as necessary; and

(b) a court is entitled to have regard to such matters, and to attach such weight to any matter, as may seem appropriate to the court in the circumstances of the case.

(4) For the purposes of this Act, a de facto relationship ends if—

(a) the de facto partners cease to live together as a couple; or

(b) one of the de facto partners dies.


Two people who “live together as a couple”


6.2 At the heart of the definition of de facto relationship is the concept of two people who “live together as a couple”.73 This was not always the case. Early drafts of the definition hinged on

the central concept of a man and a woman living together “in a relationship in the nature of marriage”.74 The more neutral concept of two people living together as a couple emerged in 2000 at

Select Committee stage.75



  1. The significance of the central concept of two people who “live together as a couple” is evident from the structure of the definition and several High Court decisions. The structure of the definition gives the concept of two people who “live together as a couple” in s 2D(1)(b) primacy over the factors listed in s 2D(2). In Benseman v Ball [2007] NZFLR 127 (HC) the High Court said at [20] that the “central inquiry must be whether the parties are living together as a couple and thus in a de facto relationship”. In L v P [2007] NZHC 1037; 26 FRNZ 946 (HC) the High Court said at [44] that “[t]he central plank of a de facto relationship is the parties living together”.
  2. For example, “de facto relationship” was defined in cl 17 of the De Facto Relationships (Property) Bill 1998 (108-1) as where “a man and a woman are living together in a relationship in the nature of marriage, although not married to each other”. The concept of “a relationship in the nature of marriage” persisted in the definition of “de facto relationship”

in cl 2A(2) of the Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3)

introduced by the newly elected Labour Government in 2000.

  1. Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 7. The Select Committee had received submissions that the proposed definition was unclear, and would

be difficult and costly to define in court. Some submitters were offended at de facto relationships being defined as relationships “in the nature of marriage”. The Select Committee saw the definition of de facto relationship in the New South Wales Property (Relationships) Act 1984 (NSW) and the criteria referred to in T v Department of Social Welfare (1993) 11 FRNZ 402 (HC) as a good starting point for what became the current definition of de facto relationship in s 2D of the Property (Relationships) Act 1976.

covered by the definition of de facto relationship. It said that: 76

In considering what criteria to include in the definition of de facto relationship, we discussed who should be covered by this legislation. There is a wide variety of de facto relationships. At one end of the scale there are long-term relationships where

a couple have children together, share property, operate as an economic partnership and are committed to sharing their lives. At the other end of the scale there are couples who live together, but are not committed to sharing their lives, remain financially independent and do not have children together. Such couples may be people who seek companionship and may be living in a de facto relationship expressly because they do not wish to share their property. We believe that a definition should aim to capture the first group, but avoid unduly covering the second.

The factors in section 2D(2)

6.4 In determining whether two people live together as a couple, all the circumstances of the relationship must be considered, including the nine factors in section 2D(2) where relevant. However no factors are prerequisites for a de facto relationship.77

A court may have regard to such matters, and attach such weight to any matter, as may seem appropriate in the case.78 This means that two people may “live together as a couple” even if they do not physically live together in the same house, or are financially independent. In S v S the High Court said that “...the approach must be broad, with various factors weighed up in an evaluative task”.79

6.5 Whether two people live together as a couple is case specific.80 If both parties say they were in a de facto relationship, then “that may well be decisive direct evidence, depending on the existence of other characteristics”.81 However it is not uncommon for one




  1. Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 8.

77 Property (Relationships) Act 1976, s 2D(3).

78 Property (Relationships) Act 1976, s 2D(3)(b).

79 S v S [2006] NZFLR 1076 (HC) at [64]. See also B v F [2009] NZHC 1165; [2010] NZFLR 67 (HC) at [51]; and Benseman v Ball [2007] NZFLR

127 (HC) at [20].

80 PT v C [2009] NZFLR 514 (HC) at [37]; and S v S [2006] NZFLR 1076 (HC) at [37].

81 S v S [2006] NZFLR 1076 (HC) at [64].

up to a court to decide whether the parties lived together as a

couple. As seen below, a range of committed relationships are de facto relationships. This highlights the flexibility of the definition. It also shows that relationships that are hard to categorise can end up in section 2D disputes.

The duration of the relationship

6.6 A long-term relationship is not necessarily a de facto relationship.

In C v S83 the parties had a 19 to 20 year relationship but did not share a common residence (even when they could have) and there was no financial commitment between them.84 The parties carried on “an affair” of about two decades that never moved to where they were living together as a couple.85 There the Family Court found that the parties were not in a de facto relationship.

6.7 A short-term relationship may still be a de facto relationship.86

In L v D, a relationship of two years and three months was a de facto relationship.87 Although the relationship was short, many of the section 2D(2) factors were present. The partners had a

common residence for the whole period, a sexual relationship, the applicant carried out substantial unpaid work on the respondent’s property, and the partners presented themselves publicly to their friends as a couple.

The nature and extent of common residence

6.8 Sharing a home is an important indicator that two people are in a de facto relationship, but is neither essential nor conclusive.88

In O’Shea v Rothstein the High Court said that the expression “two

people who live together as a couple” means more than physically

  1. In C v W FC Morrinsville FAM-2009-039-160, 26 April 2010 the Family Court found at [4] and [15] that a de facto relationship existed, despite one party’s “total denial” of the relationship and her “unyielding protestations” that the other party was never more than a boarder, albeit a boarder who did not always pay board.
  2. C v S FC Dunedin FAM-2005-012-157, 28 September 2006 at [71] and [74]. The issue in this case was whether the parties were in a de facto relationship as at 1 February 2002. The analysis was complicated by the fact that both parties were married to other people for periods of their relationship.

84 C v S FC Dunedin FAM-2005-012-157, 28 September 2006 at [158].

85 C v S FC Dunedin FAM-2005-012-157, 28 September 2006 at [159].

86 However different rules apply to short-term de facto relationships: see Part E.

87 L v D HC Blenheim CIV-2006-406-293, 2 November 2010.

88 Nicola Peart (ed) Brookers Family Law — Family Property (online looseleaf ed, Thomson Reuters) at PR2D.04(2). See also

W v L [2017] NZHC 388, [2017] NZFLR 299 where at [26] the High Court agreed with the Family Court that living at the same address cannot be determinative.

is not shared at all times does not break the period of a de facto

relationship provided that the true nature and characteristic of a de facto relationship remains.90 In S v S the extent of common residence was not great, with the longest period of continuous cohabitation being nine months during a five year relationship. The High Court observed that “the absence of sharing a common residence is not determinative”.91

6.9 Two people who share a home for a long period are not necessarily in a de facto relationship. In PT v C the parties shared a common residence for approximately 20 years.92 They also had a sexual relationship for around five years, shared the care and support

of their child, had a degree of financial interdependence and had a business relationship.93 Despite these factors the High Court found they were not in a de facto relationship.94 The

relationship lacked the degree of mutual commitment to a shared life indicative of a de facto relationship.95 One party had “divided loyalties” due to an intimate relationship with someone else, from which a child was born.96

6.10 In contrast, two people who live in separate homes can still be in a de facto relationship. In G v B the High Court found that the partners had been in a de facto relationship even though

they maintained separate residences for lengthy periods of time because the interests of one partner ’s children required it.97 The Court said that:98

There may be compelling reasons why a couple do not share a common residence for substantial periods of time whilst remaining totally committed to a long-term relationship. Ill- health and the need for medical treatment, the demands of employment or studies, the responsibility for childcare or other dependents, and financial need may separately or in combination

89 O’Shea v Rothstein HC Dunedin CIV-2002-412-8, 11 August 2003 at [20].

90 S v S [2006] NZFLR 1076 (HC) at [63].

91 S v S [2006] NZFLR 1076 (HC) at [42].

92 PT v C [2009] NZFLR 514 (HC) at [37].

93 PT v C [2009] NZFLR 514 (HC) at [37] and [45].

94 PT v C [2009] NZFLR 514 (HC) at [55] and [57].

95 PT v C [2009] NZFLR 514 (HC) at [55].

96 PT v C [2009] NZFLR 514 (HC) at [37]–[39] and [55].

97 G v B (2006) 26 FRNZ 28 (HC) at [35].

98 G v B (2006) 26 FRNZ 28 (HC) at [33].

periods of time.

6.11 It can sometimes be difficult to determine if the parties had shared a common residence as flatmates, landlord and tenant or as de facto partners. This can be the case where a relationship starts as a commercial arrangement and evolves into something more. In Z v C the applicant, a migrant student, claimed that within 18 months of moving in she had started a de facto relationship with her elderly landlord.99 The Family Court found

they had developed an affectionate, mutually supportive and close relationship that included sexual contact.100 Despite that, the Court was not satisfied that they were in a de facto relationship because “...[t]he range of their relationship simply did not

develop to the extent that it can fairly or properly be said that they were “a couple” with a mutual commitment to a shared life for the foreseeable future”.101

6.12 The reason the parties live in separate houses may be relevant.102

In S v S the High Court observed that there are many examples outside the PRA where people living in separate houses or with different families were nevertheless “cohabiting”, “so long as the parties retained the intention of cohabiting whenever possible so that their “consortium” was regarded as continuous”.103

Whether or not a sexual relationship exists

6.13 Two people can be in a de facto relationship even if there is insufficient evidence of a sexual relationship.104 A relationship where the partners’ religious beliefs prevent them from living together or having a sexual relationship can still be a de facto relationship.105



99 Z v C [2006] NZFLR 97 (FC). See also C v W FC Morrinsville FAM-2009-039-160, 26 April 2010; [LC] v T [2012] NZFC

1702; and G v R [2013] NZHC 89, [2014] NZFLR 563.

100 Z v C [2006] NZFLR 97 (FC) at [47].

101 Z v C [2006] NZFLR 97 (FC) at [47].

  1. See G v B (2006) 26 FRNZ 28 (HC) where the parties lived in separate houses for around half of their 12 year de facto relationship because the interests of one party’s children required it, not because their level of commitment to each other changed.

103 S v S [2006] NZFLR 1076 (HC) at [40].

104 In [LC] v T [2012] NZFC 1702 (FC) the evidence fell short of establishing a sexual relationship at [14], but regardless the

Family Court found that the parties were living together as couple, at [24].

105 In S v S [2006] NZFLR 1076 (HC) at [37] Gendall and France JJ had “no doubt” that the relationship in H v G (2001) 20

FRNZ 404 (CA) would have been a de facto relationship for the purposes of the Property (Relationships) Act 1976.

they do not have an exclusive sexual relationship.106 In S v S, the

partners were in a de facto relationship although they were not monogamous.107 The High Court said that:108

There may be instances where couples in a relationship operate on an understanding that each might have, from time to time, other sexual partners. There may be instances where intermittent sexual behaviour occurs but is kept secret from a partner for many years. Sexual fidelity may be a factor which, depending on the circumstances, may indicate a lack of commitment but it depends on all the circumstances.

The degree of financial dependence or interdependence, and any arrangements for financial support, between the parties

6.15 Financial dependence, interdependence or support is not a requirement for a de facto relationship but it can be an important factor. One text states that “[c]ouples who do not live together and maintain complete financial independence are unlikely to

be regarded as living in a de facto relationship.”109 In C v S the absence of any financial commitment between the parties was a material consideration leading to the conclusion that their 19 to

20 year relationship was not a de facto relationship (see paragraph

6.6).110 In that case, there was little pooling of resources or use of the other ’s independent funds and neither consulted the other regarding their future financial wellbeing.111 However in a more recent case the High Court observed that the parties’ separate finances were not a “...reliable indicator of the nature of the relationship between them, as separate financial arrangements can be quite a common feature of settled de facto or married couples”.112

6.16 Partners may still provide financial support to each other even if they have separate bank accounts and manage their money

  1. Property (Relationships) Act 1976, ss 2D(3), 52A and 52B (which provide special property division rules for some contemporaneous relationships).

107 S v S [2006] NZFLR 1076 (HC).

108 S v S [2006] NZFLR 1076 (HC) at [44].

109 Nicola Peart (ed) Brookers Family Law — Family Property (online looseleaf ed, Thomson Reuters) at PR2D.04(4).

110 C v S FC Dunedin FAM-2005-012-157, 28 September 2006 at [158].

111 C v S FC Dunedin FAM-2005-012-157, 28 September 2006 at [158].

  1. W v L [2017] NZHC 388, [2017] NZFLR 299 at [31]. In that case the parties did not operate a joint bank account and appeared to have kept their finances relatively separate. The High Court did not find a de facto relationship in that case, but for other reasons. See also Bowden v Bowden [2016] NZHC 1201, [2017] NZFLR 56.

independently. In S v S, while the partners kept their financial

affairs largely separate, Ms S depended financially on Mr S in the sense he provided her with a rent-free home and other benefits that enabled her to maintain a “generous lifestyle”.113

6.17 Two people can be in a de facto relationship even if one partner receives a State benefit as a sole parent or has made a declaration for benefit purposes that they are not in a relationship.114

6.18 Two people can also be in a de facto relationship even if one pays rent to the other. In C v W board payments were evidence of a degree of financial interdependence, and represented the parties “having thrown their lot in together”.115 In all the circumstances

of that case the Family Court found there was a de facto relationship.116

The ownership, use, and acquisition of property

6.19 It may be relevant whether property was acquired before or during the relationship; whether it is held in the name of one or both parties and to what degree; and whether it was used for family, investment or other purposes.

6.20 Two people can be in a de facto relationship even if they hold property in separate names. In G v B the High Court observed that how the parties had acquired and owned property showed a clear intention to maintain separate ownership, which “pointed away from a de facto relationship”.117 No property was acquired

in joint names and, with the sole exception of cars bought for one party by the other, each paid for their own property when it was purchased.118 But the parties were in a de facto relationship due to their level of commitment, the existence of a constant physical and emotional relationship and the provision of financial

support.119




113 S v S [2006] NZFLR 1076 (HC) at [45]–[47] and [65].

  1. See A v T [2012] NZFC 7836; L v P HC Auckland CIV-2010-404-6103, 17 August 2011; and [LC] v T [2012] NZFC 1702 for examples of how receipt of a benefit can affect the analysis of whether the parties were in a de facto relationship.

115 C v W FC Morrinsville FAM-2009-039-160, 26 April 2010 at [7], [15] and [20].

116 C v W FC Morrinsville FAM-2009-039-160, 26 April 2010 at [20].

117 G v B (2006) 26 FRNZ 28 (HC) at [16] and [38].

118 G v B (2006) 26 FRNZ 28 (HC) at [16].

119 G v B (2006) 26 FRNZ 28 (HC) at [35].

The degree of mutual commitment to a shared life

6.21 The attitude of each party to the relationship can be important evidence, and is often “...used to distinguish an affair or infatuation from a de facto relationship, because it signifies a deeper and more meaningful relationship”.120

6.22 A common argument is that the parties were merely “friends with benefits” and not de facto partners. In G v R the High Court found that despite Mr G’s arguments that he was a boarder and the parties were “friends with benefits”, the evidence supported a mutual commitment to a shared life to the extent that the conclusion that the parties were in a de facto relationship was “inevitable”.121

The care and support of children

6.23 Care and support of any children may include physical care, financial support and non-financial support. In this context “children” is not limited to children of the relationship. While having children together may indicate that two people are living together as a couple, it is not determinative. In PT v C, two parents shared a common residence and cooperated in the upbringing

of their daughter for over 20 years, but were not in a de facto relationship (see paragraph 6.9).122

The performance of household duties

6.24 Household duties may include home maintenance, gardening, cooking and cleaning. The way domestic work is shared in a relationship may need to be viewed in the light of other factors such as living arrangements and financial support. Household duties performed for payment may suggest a commercial relationship rather than two people who live together as a couple.

The reputation and public aspects of the relationship

6.25 Establishing the public face of the relationship may require evidence from family, friends and colleagues; and may be


120 Nicola Peart (ed) Brookers Family Law — Family Property (online looseleaf ed, Thomson Reuters) at PR2D.04(6).

121 G v R [2013] NZHC 89, [2014] NZFLR 563 at [4].

122 PT v C [2009] NZFLR 514 (HC).

illustrated through attendance at family and work functions as

a couple, photographs of the parties presenting as a couple, and public displays of affection.

6.26 A clandestine relationship however may still be a de facto relationship. In [LC] v T the parties described their relationship to others as landlord/tenant or flatmates.123 There was a considerable age gap between the parties, their relationship was a talking

point in their community and they were in fraudulent receipt of a benefit. Yet other factors satisfied the Family Court that although the public aspects of the relationship were “somewhat problematic but understandable”, the parties were living together as a couple.124

Issues with the definition of de facto relationship

6.27 Achieving a universal definition of de facto relationship is not an object of this review. The current legislative landscape contains three definitions of what is essentially the same concept: de

facto relationship as defined in the PRA;125 de facto relationship as defined in the Interpretation Act 1999;126 and the phrase “a relationship in the nature of marriage”.127 The PRA’s definition of de facto relationship is unique in that it hinges on the concept of two people who “live together as a couple” as opposed to a marriage/civil union analogy. Inconsistency across the statute

book raises wider issues, because two people may be in a “de facto relationship” for some purposes but not others.

6.28 Our preliminary view is that having a unique definition of de facto relationship in the PRA is not an issue. The PRA defines de facto relationship for a specific purpose, to establish which

relationships are subject to its rules about property division when the relationship ends. The central concept of the PRA definition

(two people who live together as a couple) has advantages over

123 [LC] v T [2012] NZFC 1702 (FC) at [14] and [22].

124 [LC] v T [2012] NZFC 1702 (FC) at [22]–[24].

125 Property (Relationships) Act 1976, s 2D.

126 Interpretation Act 1999, s 29A.

  1. The phrase “a relationship in the nature of marriage” is still used in the s 63(b) of the Social Security Act 1964, s 66(2) (a) of the Veterans’ Support Act 2014, s 8A of the Credit Contracts and Consumer Finance Act 2003, and s 384 of the Accident Compensation Act 2001.

“live together as a couple” is comparatively neutral and may

better accommodate couples who reject the religious and social connotations of marriage. The language of “coupledom” also allows room for a variety of two person relationships to be recognised

in the PRA, and for de facto relationships to be recognised as a genuine “third option”. Adopting a marriage/civil union analogy would not achieve a universal definition of de facto relationship because the inquiry will always be context specific.128 We do however recognise that historical objections to a marriage analogy may not be as strong in 2017 as they were when this approach

was rejected in 2000.129 Same-sex marriage is now possible, and the meaning of marriage may have changed for some people.130

Does the definition include relationships that are not substantively the same as marriages and civil unions?

6.29 In Chapter 5 we set out our preliminary view that the PRA should continue to apply in the same way to all long-term relationships that are substantively the same, regardless of relationship type (see paragraphs 5.17 to 5.20). However we signalled there may

be issues with whether the definition of de facto relationship captures relationships that are substantively the same as marriages and civil unions.

6.30 There is an argument that the definition of de facto relationship risks capturing relationships that are not substantively the same as marriages and civil unions. This may be because the definition does not prioritise factors that are more indicative of a qualifying relationship. It may also be because of perceived differences in how de facto relationships function that are not sufficiently taken into account by the definition. If so, the PRA may fail to provide


  1. Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 7–8. For this reason a list of factors equivalent to those in s 2D(2) of the Property (Relationships) Act 1976 were not included in the definition of “de facto relationship” in s 29A of the Interpretation Act 1999: Relationships (Statutory References) Bill (151-2) as reported from the Justice and Electoral Committee, March 2005, at 4.
  2. Matrimonial Property Amendment Bill 1998 nd Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 7–8.

130 The Marriage (Definition of Marriage) Amendment Act 2013 amended the definition of marriage in the Marriage Act

1955 to allow same-sex marriage. Maureen Baker and Vivienne Elizabeth Marriage in an Age of Cohabitation: How and When People Tie the Knot in the Twenty-First Century (Oxford University Press, Canada, 2014) at 188 said that “[c]learly, a diminishing number of people in the English-speaking countries see marriage as a sacrament, or even a union between a man and a woman”.

rule of equal sharing on relationships that are different.

6.31 There is also an argument that the current approach is appropriate. This may be because the flexibility inherent in the definition is thought to give courts the ability to exclude

relationships that are not substantively the same as marriages and civil unions. It may be because the definition rightly avoids imposing additional requirements on de facto partners that do not exist for couples that are married or in a civil union, because to do so would raise issues under human rights law. Prioritising factors may set a higher bar for de facto relationships and could expect them to exhibit characteristics of a traditional marriage that are

no longer hallmarks of a marriage or civil union today.

6.32 We consider below whether more weight should be given to some section 2D(2) factors in the definition of de facto relationship. This may be necessary to avoid unduly capturing relationships that are not substantively the same as marriages and civil unions. It may also be favoured to give more prominence to factors considered more indicative of a de facto relationship, in line with public expectations, or to address issues for particular groups.

C ONSU LTATION QUESTION

B3 Does the definition of de facto relationship unduly capture relationships that are not substantively the same as marriages and civil unions?

Should more weight be given to the nature and extent of common residence?

6.33 It might be more appropriate to give more weight to this factor because of what it suggests about the nature and quality of a relationship, and the extent to which the partners’ lives are intertwined. Some overseas jurisdictions have explored whether living together in a joint household should be a requirement.131

  1. The Law Commission of England and Wales recommended that people should be “cohabitants” to be eligible to apply for financial relief on separation where they are living together as a couple in a joint household and they are neither married to each other nor civil partners: Law Commission Cohabitation: The Financial Consequences of Relationship Breakdown

(LAW COM No 307, 2007) at [3.13]. Note that the Law Commission rejected the option of extending or modifying the Matrimonial Causes Act 1973 (UK) for couples that live together. In Sweden some rules apply at the end of a relationship between two people who live together permanently as a couple and with a joint household (so chores and expenses

are shared): Cohabitees Act (2003:376) (Sweden), s 1. See also Ministry of Justice, Sweden Cohabitees and their joint homes – a brief presentation of the Cohabitees Act (2012) at 1. Note that the Cohabitees Act only provides a minimum level of protection for the financially vulnerable party upon the dissolution of a cohabitee relationship, and the value of the protection depends on what property is to be shared: Margareta Brattström “The Protection of a Vulnerable Party when

a Cohabitee Relationship Ends – An Evaluation of the Swedish Cohabitees Act” in Bea Verschraegen (ed) Family Finances

may be more likely to exhibit other section 2D(2) factors (such as

financial interdependence, shared ownership and use of property and performing household duties) than a relationship between a couple that live in separate houses. Such relationships may have a stronger link to the property divided when the relationship ends, such as the family home and chattels. Giving more weight to this factor would recognise that, for some couples, moving in together is a significant step and evidences a strengthening commitment to the relationship.

6.35 As this factor is said to probe both the quality and quantity of shared living,132 it may also distinguish between an initial phase of living in the same house that could be seen as “co-residential dating” and couples for whom living together has taken on a deeper meaning.

6.36 The current approach to common residence may be surprising for some partners who live apart, in what are described as “Living Apart Together” (LAT) relationships. LATs are committed couples who live in separate houses for social, moral, religious or other reasons, including that it is more financially advantageous to

do so.133 There is little research about LATs in New Zealand. Most international studies agree that just under 10 per cent of adults are LAT, including studies in the United Kingdom and Australia.134 Research from the United Kingdom identified four distinct profiles of LATs, occurring at different stages in the life course.135 One profile was “seniors” (13 per cent of individuals in LAT relationships). Most seniors were aged 50 and over and most had been married.136 Seniors were most likely to be in long-term relationships and LATs out of choice, and least likely

to have intentions to live in the same house.137 This may be a


132 RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [2.12].

133 Superu (formerly Families Commission) The Kiwi Nest: 60 Years of Change in New Zealand Families (Research Report No

3/08, June 2008) at 6.

  1. Rory Coulter and Yang Hu “Living Apart Together and Cohabitation Intentions in Great Britain” (2015) Journal of Family Issues 1 at 20; and Vicky Lyssens-Danneboom and Dimitri Mortelmans “Living Apart Together and Money: New Partnerships, Traditional Gender Roles” (2014) 76 Journal of Marriage at 950.

135 Rory Coulter and Yang Hu “Living Apart Together and Cohabitation Intentions in Great Britain” (2015) 1 Journal of

Family Issues 1 at 13. This research investigated 3,112 individuals in LAT relationships.

136 Rory Coulter and Yang Hu “Living Apart Together and Cohabitation Intentions in Great Britain” (2015) 1 Journal of

Family Issues at 13.

137 Rory Coulter and Yang Hu “Living Apart Together and Cohabitation Intentions in Great Britain” (2015) 1 Journal of Family Issues at 14-15. Note that the study did not identify whether this group also included people who were LAT because their partner had gone into an aged care facility.

growing group in New Zealand given our demographics.138 The PRA’s current approach to common residence may be an issue for older New Zealanders in LAT relationships where there is no expectation of property sharing when the relationship ends, or

who do not appreciate that they may be in a de facto relationship even if they do not live in the same house. These LATs may wish to preserve their independence, and may seek to protect property acquired during a previous relationship for succession.

6.37 Giving more weight to common residence may, however, exclude relationships that should be subject to the PRA, for example

some LAT relationships where the partners live in separate houses because of their children’s needs or work commitments, or because they are forced to live apart for economic reasons, or because one partner is in prison or overseas.

C ONSU LTATION QUESTIONS

B4 Did you know that common residence is not a requirement for a de facto relationship?

B5 Should more weight be given to the nature and extent of common residence? If so, why?

Should more weight be given to financial dependence or interdependence and financial support?

6.38 Giving more weight to this factor might better align the criteria for a de facto relationship with the consequences of the PRA. It may avoid perceived unfairness, for example where the general rule of equal sharing is applied to relationships where finances were not shared. It may also better align with the partners’ expectations

and the way they conducted themselves during their relationship. Using more individualised systems of money management is viewed by some as evidence of lower levels of commitment to

the relationship.139 There is precedent for this approach in other contexts. For example, financial interdependence is a prerequisite for a relationship in the nature of marriage for some benefit

purposes.140


  1. The proportion of New Zealand’s population aged 65 and over is expected to increase from 14.3 per cent in 2013 to 26.7 per cent by 2063: Statistics New Zealand 2013 Census QuickStats about people aged 65 and over (June 2015) at 7.
  2. Katherine J Ashby and Carole B Burgoyne “Separate financial entities? Beyond categories of money management” (2008) 37 Journal of Socio-Economics 458 at 462, referring to KR Heimdal and SK Houseknecht “Cohabiting and married couples’ income organization: approaches in Sweden and the United States” (2003) 65 Journal of Marriage and Family 525, and RS Oropesa, NS Landale and T Kenkre “Income allocation in marital and cohabiting unions: the case of mainland Puerto Ricans” (2003) 65 Journal of Marriage and Family 910.

140 Social Security Act 1964, s 63; and R v Department of Social Welfare [1997] 1 NZLR 154 (CA).

Case Study: financial independence

Aroha (55) and Justin (59) were in a relationship for just over ten years. During the relationship, they lived together in Justin’s house on Linwood Street with Aroha’s daughter Hine (13) and Justin’s son, Hayden (32). Aroha and Justin both had good jobs. Both had been married before, and kept their money completely separate. They had no joint bank account. They valued their independence and liked the feeling of equality that came from splitting all the bills evenly down the middle, including the mortgage on the Linwood Street house. Aroha and Justin had an active social life together and shared a passion for motorsport. During their relationship they bought a rally car together which Hayden and Justin used in several events, with Aroha and Hine providing crew support. They also jointly

owned several other cars, a bach and a boat. While they were together they hosted a reunion for Aroha’s whānau and Christmas dinner each year for Justin’s wider family. The Linwood Street house was dilapidated when Aroha moved in, and she did significant work to the property during the relationship including building a

garden and deck, painting the bedrooms, sewing curtains and doing all the cleaning.

When the relationship ends, Aroha claims she was in a de facto relationship with Justin and is entitled to half of the house on Linwood Street. Justin consults his lawyer, Crystal. Crystal says that Justin and Aroha were probably in a de facto relationship because, among other things, their relationship lasted for just over ten years; they lived in the same house; they had a sexual relationship; owned and used property together; had a mutual commitment to a shared life and were considered by whānau and friends to be a couple. Crystal thinks Aroha probably has a good claim to half the relationship property. Justin is horrified that Aroha can claim half of the Linwood Street house even though they kept their money

separate during their relationship. If Aroha is successful, the house will need to be sold, because Justin can’t afford to buy out Aroha’s share. Aroha’s claim would also frustrate Justin’s plans to leave the Linwood Street house to Hayden in his will.

6.39 However, giving more weight to this factor would risk excluding relationships where equality and commitment are expressed in different ways. It may be unwise to assume that independent money management indicates a lack of commitment without considering what the partners are trying to achieve by organising their money in a particular way.141 It could also risk excluding vulnerable people in relationships that should otherwise be captured by the PRA, for example abusive relationships where no financial support is provided. The Parliamentary seelct committee ruled out making financial interdependence a prerequisite for a de facto relationship in 2001 for this reason.142




141 Katherine J Ashby and Carole B Burgoyne “Separate financial entities? Beyond categories of money management” (2008)

37 Journal of Socio-Economics 458 at 476.

  1. Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 7–8.

6.40 There is also an argument that the current appraoch is achieving its aim of not unduly capturing couples that remain financially independent.143 In C v S the Family Court observed that:144

The lack of financial dependence or interdependence or support is not, in my view, an insignificant matter particularly when one considers that the object of the [PRA] itself is to ensure an equitable division of assets and income taking into account financial and non-financial contributions couples make in any union and it is reasonable to expect as an indicator of mutual commitment and living together as a couple that there would

be some demonstration of financial regard for the other party in some fashion or mutual benefit even if segregation of income.

6.41 We also note there are other ways of dealing with any perceived unfairness created by the status quo. For example, the application of the general rule of equal sharing to a de facto relationship characterised by financial independence may also be addressed by reconsidering how the PRA classifies relationship property which we discuss in Chapter 9.

6.42 These competing arguments should be evaluated in the light of what we know about the way couples who live together manage money.

What do we know about the way couples who live together manage money?

6.43 Some international research suggests a tendency for married couples to operate more or less as single economic units; whereas unmarried couples145 are more likely to operate largely as two separate autonomous economic units.146 The differences in how couples manage money appear to be more pronounced among





  1. Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 8.

144 C v S FC Dunedin FAM-2005-012-157, 28 September 2006 at [105].

  1. “Unmarried couples” refer to couples who live together (or “cohabit”) in the same household but are not married to each other. Some will be in a de facto relationship under the Property (Relationships) Act 1976. Others will not, because their relationship does not satisfy the criteria in s 2D of the Property (Relationships Act) 1976 (note that living together in the same house is not a requirement for a de facto relationship: ss 2D(2) and 2D(3)).
  2. Carolyn Vogler “Cohabiting couples: rethinking money in the household at the beginning of the twenty first century” (2005) 53 Sociological Review 1 at 12–13, referring to KR Heimdal and Houseknecht “Cohabiting and married couples income organisation: approaches in Sweden and the United States” (2003) 65 Journal of Marriage and the Family 525, and J Treas and E Widmer “A multi-level analysis of financial management in marriage for 23 countries” in J Weesie and W Raub (eds) The Management of Durable Relations (Thela Thesis, Amsterdam, 2000).

to married couples.149 The main exception is unmarried couples

with children, who seem to organise their money in broadly similar ways to married couples.150 Other international research paints a more nuanced picture.151

6.44 The available literature on money management within relationships in Australia and New Zealand is sparse and based on older data:152

(a) An Australian study using data from a 1997 nationally representative survey found that most unmarried couples, like most married couples, combined some

or all of their income.153 The authors suggested this indicated that living together is somewhat institutionalised in Australia and viewed as similar to marriage.154 Children affected how couples organised their money, and couples with children aged under 13 were more likely to combine their incomes completely than couples with no children or older children.155

(b) A New Zealand study of unmarried couples, based on

20 in-depth interviews, during the early 1990s, found that some unmarried couples jointly managed their money.156 Joint money management was most common among unmarried couples with children; however the


147 “Nubile” unmarried couples who live together are young, childless and have never been married.

148 “Post-marital” unmarried couples are couples who live together after one or both have experienced a marital divorce.

  1. Carolyn Vogler “Cohabiting couples: rethinking money in the household at the beginning of the twenty first century” (2005) 53 Sociological Review 1 at 9 and 17.
  2. Carolyn Vogler “Cohabiting couples: rethinking money in the household at the beginning of the twenty first century” (2005) 53 Sociological Review 1 at 12–13, referring to S McRae Cohabiting Mothers (Policy Studies Institute, London,

1993), J Lewis The End of Marriage (Edward Elgar, Cheltenham, 2001), and A Winkler “Economic decision making by cohabitors: findings regarding income pooling” (1997) 29 Applied Economics 1079.

151 For example Lars Evertsson and Charlott Nyman “Perceptions and Practices in Independent Management: Blurring the

Boundaries Between ‘Mine,’ ‘ Yours’ and ‘Ours’” (2014) 35 J Fam Econ Iss 65.

  1. See also Supriya Singh and Jo Lindsay “Money in heterosexual relationships” (1996) 32(2) ANZJS 57, and Robin Fleming in association with Julia Taiapa, Anna Pasikale and Susan Kell Easting The Common Purse (AUP with Bridget Williams Books, Auckland, 1997).
  2. Edith Gray and Ann Evans “Do couples share income? Variation in the organisation of income in dual-earner households” (2008) 43(3) Australian Journal of Social Issues 441 at 450.
  3. Edith Gray and Ann Evans “Do couples share income? Variation in the organisation of income in dual-earner households” (2008) 43(3) Australian Journal of Social Issues 441 at 450, referring to A Evans and E Gray “What makes an Australian family?” in S Wilson and others (eds) Australian Social Attitudes: The first report (UNSW Press, Sydney, 2005).
  4. Edith Gray and Ann Evans “Do couples share income? Variation in the organisation of income in dual-earner households” (2008) 43(3) Australian Journal of Social Issues 441 at 446–447.
  5. Vivienne Elizabeth “Managing money, managing coupledom: a critical examination of cohabitant’s money management practices” (2001) 49 Sociological Review 389 at 395.

years previously when they moved in together and

prior to having children.157 This study also found that independent money management was adopted by some unmarried couples to avoid financial dependency and achieve equality and autonomy, by retaining control

over separate money and a sense of contributing equally to the relationship.158 It was suggested that independent money management is likely to become increasingly significant as the number of unmarried couples continues to grow in New Zealand.159

Should more weight be given to the degree of mutual commitment to a shared life?

6.45 Mutual commitment to a shared life is often regarded as central to the definition of de facto relationship.160 It is also the only factor

in section 2D(2) that touches on the “emotional commitment” described in R v Department of Social Welfare as one of the two prerequisites of a relationship in the nature of marriage.161

There may be a case for giving more weight to this factor because a de facto relationship is unlikely to exist without the “mental ingredient”, being commitment by the partners to their relationship.

Should more weight be given to the care and support of children?

6.46 Our preliminary view is that the existence of a child is not conclusive evidence that his or her parents were in a de facto relationship. Sometimes it may be appropriate to attach significant weight to this factor, for example where the parties have made a planned, joint decision to have a child. However,

  1. Vivienne Elizabeth “Managing money, managing coupledom: a critical examination of cohabitant’s money management practices” (2001) 49 Sociological Review 389 at 395.
  2. Vivienne Elizabeth “Managing money, managing coupledom: a critical examination of cohabitant’s money management practices” (2001) 49 Sociological Review 389.
  3. Vivienne Elizabeth “Managing money, managing coupledom: a critical examination of cohabitant’s money management practices” (2001) 49 Sociological Review 389 at 389.

160 M v P [De facto relationship] [2012] NZHC 503; [2012] NZFLR 385 (HC) at [27], referring to S v S [2006] NZFLR 1076 (HC) at [32], and Nicola

Peart “The Property (Relationships) Amendment Act 2001: A Conceptual Change” (2009) 39 VUWLR 813 at 823.

  1. Emotional commitment and financial interdependence and support are the two prerequisites for a relationship in the nature of marriage for some benefit purposes. See Social Security Act 1964, s 63 and R v Department of Social Welfare [1997] 1 NZLR 154 (CA).

a child may not always be a reliable indicator of a relationship between two people, for example where the child is the unplanned result of a fleeting association.

Should less weight be given to some section 2D(2) factors?

6.47 Giving more weight to some section 2D(2) factors requires a decision that other factors are less important in determining whether two people live together as a couple. We are interested in whether some section 2D(2) factors should be given less weight than others. In particular:

(a) Whether or not a sexual relationship exists. The existence of a sexual relationship may be less important in 2017. Sexual mores are said to have become more liberal over time, and today a sexual relationship is

not necessarily indicative of a mutual commitment

to a shared life.162 There may be greater recognition of romantic and loving non-sexual relationships based on companionship or where one or both partners identify as asexual. Undue focus on the existence, nature or extent of a sexual relationship may also be seen as inconsistent with the PRA’s focus on how property is divided up when a relationship ends.163 It may also

raise evidential issues that may be less relevant when assessing property entitlements.164

(b) The performance of household duties. This may be a less important factor because of the way work is shared or outsourced in some relationships, or because it is considered to have less or no bearing on whether two people live together as a couple. Giving less weight to this factor may, however, be thought to undervalue work in the home and may not be a good conceptual fit with the way the PRA treats all forms of contribution to the relationship as equal.165

C ONSU LTATION QUESTION


162 Craig v Keith [2017] NZHC 1720 at [44].

163 Property (Relationships) Act 1976, s 1C(1); and Matrimonial Property Amendment Bill 1998 and Supplementary Order

Paper No 25 2000 (109-3) (select committee report) at 5.

164 See for example D v B FC Napier FAM-2005-041-591, 17 May 2007.

165 Property (Relationships) Act 1976, s 1N(b). See King v Church [2002] NZCA 67; [2002] NZFLR 555 (CA) at [33].

B6 Do the range of factors in section 2D(2) still reflect what should be considerations when deciding whether two people are in a de facto relationship? Are any of the factors more, or less important?

Does the definition achieve the right balance between flexibility and certainty?

6.48 McCarthy says that the “biggest criticism” levelled at the PRA’s treatment of de facto relationships surrounds the definition of de facto relationship and how it has been interpreted and applied by the courts.166 In particular:

(a) The definition is criticised for being too broad to provide effective guidance. Grainer notes that key terms and phrases like “relationship” and “live together as a

couple” are not defined in the PRA:167

The operative phrase “living together as a couple” is hardly less vague than the term “de facto relationship.” Nor is the matter significantly clarified by the enumerated factors. Taken together, they convey virtually every aspect of human interaction.

(b) It is difficult to look to previous cases to find guidance on when two people are “living together as a couple”, or even to distil any “universal principles”.168 This is because none of the factors in section 2D(2) are prerequisites

and each case turns on its own facts.169 For example, in

PT v C the parties shared a common residence for over

20 years but were not in a de facto relationship,170 and

in G v B the partners maintained separate residences for lengthy periods but were in a de facto relationship.171

Although there were other factors at play in those cases, they illustrate the point that section 2D cases have

limited precedent value.



  1. Frankie McCarthy “Playing the Percentages: New Zealand, Scotland and a Global Solution to the Consequences of Non- Marital Relationships?” (2011) 24 NZULR 499 at 505–506.
  2. Virginia Grainer “What’s Yours is Mine: Reform of the Property Division Regime for Unmarried Couples in New Zealand” (2002) 11(2) Pacific Rim Law & Policy Journal 285 at 303.

168 See also Simon Jefferson “De facto or ‘friends with benefits’” (2007) 5 NZFLJ 304, at 8.

169 Property (Relationships) Act 1976, s 2D(3).

170 PT v C [2009] NZFLR 514 (HC).

171 G v B (2006) 26 FRNZ 28 (HC).

(c) The discretion in the definition is an awkward fit with the PRA’s rules-based regime. Briggs says that:172

...[t]he broad discretion in s 2D is an awkward inclusion in legislation that has stripped so many other discretions away from the judiciary. By comparison, the court has little or no discretion on the issue of the division of the

relationship property. While there are some provisions that allow a departure from equal sharing, these provisions

are designed to apply in exceptional cases only. None relates to a discretion so central as that found in s 2D, where the court must rule on the status of the relationship, which in turn, either qualifies or disqualifies entry to the [PRA’s] inflexible equal sharing rules. Such an uncertain access route into a rigid code can turn the process into an expensive gamble for potential applicants.

6.49 There are however advantages in having a flexible definition of

de facto relationship. The lack of prerequisites for “living together as a couple” allows the definition to accommodate the diversity

of relationships that should be subject to the PRA’s rules, and flexibility allows the definition to evolve through judge-made law as relationship formation and separation patterns change.

6.50 Some research suggests that the definition of de facto relationship is fulfilling the original aims of the parliamentary select

committee (see paragraph 6.3).173 A study from 2002 to 2009, found that an issue about whether a relationship was wholly or in part a de facto relationship arose in 43 per cent of de facto cases.174 However only 12 per cent involved questions about whether the entire relationship had crossed the threshold to

become a de facto relationship.175 Cleary said that there is no


172 Margaret Briggs “The Formalization of Property Sharing Rights For De Facto Couples in New Zealand” in Bea Verschraegen

(ed) Family Finances (Jan Sramek Verlag, Austria, 2009) 329 at 337.

  1. Thomas Cleary “Relationship Property Under the Property (Relationships) Act 1976: An analysis of cases since the introduction of the Property (Relationships) Act 1976” (Summer Research Paper, University of Otago, 2012) at 9–10; Mark Henaghan and others Property (Relationships) Amendment Act 2001 and Retirement: Are Separated Women More Disadvantaged Than Men? (University of Otago, 2012) at 3.27; and Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 8.
  2. Thomas Cleary “Relationship Property Under the Property (Relationships) Act 1976: An analysis of cases since the introduction of the Property (Relationships) Act 1976” (Summer Research Paper, University of Otago, 2012). Cleary identified and analysed 316 electronically available cases on the Brookers and LexisNexis legal databases involving relationship property disputes. At 9: “From the reported judgments 144 relationship property cases involved de facto partnerships or de facto relationships that had evolved into marriage. In 83 of these cases the existence of a de factor relationship was not an issue but in 61 cases s 2D was an issue. This represents 42.7% of de facto cases involving issues around whether they existed in their entirety or at certain points.” See also Mark Henaghan and others Property (Relationships) Amendment Act 2001 and Retirement: Are Separated Women More Disadvantaged Than Men? (University of Otago, 2012) at [3.26].

real need to change the definition unless it catches unintended

people.176 He concluded that the cases seem to suggest that the definition is working as the Select Committee intended (see paragraph 2.3).177 This research is, however, based on data drawn from reported cases and only gives us information about the small proportion of de facto relationships that end in a dispute resolved by the court. These are more likely to be contentious cases because they involve unusual facts. We do not know what happens in those cases that are resolved out of court, which makes public consultation on this issue important.

6.51 Whether the definition of de facto relationship achieves an appropriate balance between flexibility and certainty is an important question:

(a) The PRA has significant implications for de facto relationships. If a de facto relationship lasts for three years, the general rule of equal sharing usually applies. People should know if they are subject to the PRA so they can organise their personal affairs accordingly.

If the definition is sufficiently certain, couples can make a conscious decision whether to enter a de facto relationship. They can also make better informed

decisions about resolving any disputes.



























  1. Thomas Cleary “Relationship Property Under the Property (Relationships) Act 1976: An analysis of cases since the introduction of the Property (Relationships) Act 1976” (Summer Research Paper, University of Otago, 2012) at 9.

(b) If the definition is too uncertain, it can:

• undermine the right to contract out of the PRA,178 if partners do not appreciate that they are drifting towards a de facto relationship or that they

are already in one, they will not have the same opportunity to exercise this right; and


C ONSU LTATION QUESTION

B7 Does the definition of de facto relationship achieve the right balance between flexibility and certainty?

Options for reform

6.52 If the issues identified above require reform, there are three possible options that could achieve a better balance between certainty and flexibility, or would better capture the essence of what it means to be in a de facto relationship for the purposes of the PRA.

Option 1: Make section 2D(2) an exhaustive list of factors

6.53 One option is to limit the matters that are relevant when determining whether two people live together as a couple to the factors specified in section 2D(2). A court would no longer have the discretion to consider all the circumstances of the relationship.179 This would make section 2D(2) an exhaustive (rather than inclusive) list of factors.180

6.54 This option would increase certainty by restricting a court’s inquiry to a known list of factors that capture what might be

  1. The Property (Relationships) Act 1976 is an “opt-out” regime because it applies to a de facto relationship unless the partners have agreed on a different way to divide property: see pt 6.

179 Property (Relationships) Act 1976, s 2D(2).

180 The current definition of de facto relationship requires a court to consider all the circumstances of the relationship,

considered to be key matters relevant to determining whether

two people live together as a couple. It is, however, unlikely to increase certainty in a significant way unless the list of factors is prioritised or reduced. This is because the list is so wide-

ranging that it is said to convey “virtually every aspect of human interaction”.181

Option 2: Give more weight to one or more section

2D(2) factors

6.55 This option could be achieved by requiring a court to have particular regard to one or more of the section 2D(2) factors in deciding whether two people live together as a couple.182

The remaining section 2D(2) factors would remain relevant as

“indicators” to be considered, where relevant.

6.56 This option could increase certainty and give more weight to factors considered more important characteristics of a relationship to which the PRA should apply. It could address issues for particular groups. For example, giving more weight to common residence would make it harder for some couples in LAT relationships to qualify as de facto partners. It would

retain elements of section 2D and some associated case law may therefore remain relevant. Giving more weight to some factors as opposed to making them requirements would retain a relatively high level of judicial discretion and flexibility.183

Option 3: Introduce rebuttable presumption(s) that two people are in a de facto relationship

6.57 The final option we are considering is adopting one or more rebuttable presumptions that two people are in a de facto relationship if certain factors are present.



  1. Property (Relationships) Act 1976, s 2D; L v P [2007] NZHC 1037; 26 FRNZ 946 (HC) at [44]; and Virginia Grainer “What’s Yours is Mine: Reform of the Property Division Regime for Unmarried Couples in New Zealand” (2002) 11(2) Pacific Rim Law & Policy Journal 285 at 303.
  2. The factors we considered at [6.29]–[6.39] were common residence; financial interdependence and support; mutual commitment to a shared life; and the care and support of children.
  3. We have not put forward, as a separate option, making some or all of the factors listed in s 2D(2) mandatory requirements. While this would significantly increase certainty, it would also be considerably less flexible than the current approach. We think that it risks excluding relationships to which the Property (Relationships) Act 1976 should apply. It would also impose requirements on de facto relationships that do not exist for marriages or civil unions (see [6.31]) and may raise issues under human rights law.

partners” is an example of this approach. That definition contains

three elements:185

(a) first, a basic definition of “domestic partners” as two unmarried people who, for a significant period, share a primary residence and a life together as a couple;186

(b) second, an absolute rule that two people are domestic partners where they have maintained a common household with their children for a set period, such as two years;187 and

(c) third, a presumption that two people without children are domestic partners when they have maintained a common household for a set period, such as three years, which is rebuttable by evidence that the parties did not share a life together as a couple.

6.59 The American Law Institute expected that this approach would minimise the need for detailed inquiry into couples’ lives, as most cases would be decided under the absolute rule or the rebuttable presumption.188

6.60 A similar approach could be adopted in the PRA. For example, the basic definition of de facto relationship in section 2D could be retained, and new rebuttable presumption(s) could be introduced, for example:

(a) partners are presumed to be in a de facto relationship when they have shared a primary residence and



184 The American Law Institute (ALI) is an independent organisation in the United States that produces scholarly work

to clarify, modernize and improve the law: see <www.ali.org>. In Principles of the Law of Family Dissolution: Analysis and Recommendations (LexisNexis, Newark, 2002) the ALI reviewed and analysed divorce and related family-law issues throughout the United States, and described approaches to areas such as child custody, child and spousal support, division of property, marital agreements and unmarried domestic partners. It proposed a wide range of regulations for the legal termination of domestic unions.

185 The American Law Institute Principles of the Law of Family Dissolution: Analysis and Recommendations (LexisNexis, Newark,

2002) at [6.03].

  1. Whether persons share a life together as a couple is to be determined by reference to all the circumstances, including listed matters such as the extent to which the parties intermingled their finances and the emotional or physical intimacy of the parties’ relationship: The American Law Institute Principles of the Law of Family Dissolution: Analysis and Recommendations (LexisNexis, Newark, 2002) at [6.03(7)].

187 The American Law Institute Principles of the Law of Family Dissolution: Analysis and Recommendations (LexisNexis, Newark,

2002) at [6.03(4)]: “[p]ersons maintain a common household when they share a primary residence only with each other and family members; or when, if they share a household with other unrelated persons, they act jointly, rather than as individuals, with respect to management of the household”.

188 The American Law Institute Principles of the Law of Family Dissolution: Analysis and Recommendations (LexisNexis, Newark,

2002) at 920.

maintained a common household with a child of the

relationship for a set period, such as two years;189 and

(b) partners are presumed to be in a de facto relationship when they have shared a primary residence and maintained a joint household for a set period, such as three years.

6.61 A presumption could be rebutted by evidence that the parties did not live together as a couple, to be determined by considering all the circumstances, including the factors in section 2D(2). This would retain some of the existing building blocks of section 2D while accommodating a need to give more weight to other section

2D(2) factors such as common residence.

6.62 This option could increase certainty and reduce the need for detailed inquiry where a presumption applies, while retaining an element of flexibility and judicial discretion. It would also

change which party has the burden of proof. At present the party asserting that a de facto relationship existed must generally prove that in court.190 This option would shift that burden to the party wishing to avoid the PRA’s rules where a presumption applies. This may protect a vulnerable applicant, but also has the potential to harm a vulnerable defendant, for example an older person that drifts into circumstances that satisfy a presumption unawares.

The burden of proof in PRA proceedings is discussed further in

Part H.

C ONSU LTATION QUESTION

B8 Would any of these options achieve a better balance between flexibility and certainty, or better capture the essence of what it means to be in a de facto relationship?











189 We do not adopt the approach of the American Law Institute in making this an absolute rule, as this raises issues under human rights law: see New Zealand Bill of Rights Act 1990, s 19, and Human Rights Act 1993, s 21(l). We also think that it would be too great a generalisation to assume that all couples with children are in a de facto relationship.

190 See H v G FC Lower Hutt FAM-2005-032-527, 6 December 2006 at [3]; and M v B [economic disparity] (2006) 25 FRNZ

171 (CA) at [39]: “...although there is not a fully inquisitorial system, a Court needs only to be satisfied about a state of events which has existed, or which exists. Notions of onus of proof fit uncomfortably within this legislative regime”. See also RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [19.23]: “The role of the Courts under the [PRA] is to some degree an inquisitorial one to do justice between the parties rather than to consider a claim in a strictly adversarial context.”

Should any changes have retrospective or

prospective effect?

6.63 A final issue for consideration is when any changes to the definition of de facto relationship should take effect. The

general rule is that new legislation should be forward looking, or prospective, and not apply to peoples’ past actions.191 The 2001 amendments were unusual because they extended the PRA to include de facto relationships on a retrospective basis.192 This meant that the PRA applied to de facto relationships that began before the amendments came into force on 1 February 2002, and were still in existence as at that date.193 As a result, the actions

of unmarried couples before 1 February 2002 were given legal consequences they may not have anticipated.194 There was a delay between the date the amendments were made and the date they came into force to enable people to learn about the new regime and organise their affairs.195

6.64 Changing the definition of de facto relationship on a retrospective basis would follow the approach taken in 2001.196 It would

avoid the confusion and complexity associated with having

a different definition for relationships that began before any amendments came into force. It would, however, be inconsistent with the general rule that legislation should have prospective, not retrospective effect.197 Legislation should not interfere with accrued rights and duties.198 While retrospective legislation

might be appropriate where it is intended, for example, to be

entirely to the benefit of those affected,199 a new definition of

191 Legislation Advisory Committee Guidelines on Process and Content of Legislation (2014) at 43.

192 Property (Relationships) Act 1976, s 4C.

193 Property (Relationships) Act 1976 (PRA), s 4C; and Property (Relationships) Amendment Act 2001, s 2. Note that an order cannot generally be made under the PRA for the division of relationship property in respect of a de facto relationship of short duration unless the test in s 14A is passed.

194 See Nicola Peart (ed) Brookers Family Law — Family Property (online looseleaf ed, Thomson Reuters) at PR4C.01.

195 The Property (Relationships) Amendment Bill had its third reading on 29 March 2001: (29 March 2001) 591 NZPD 8640; and received Royal Assent on 3 April 2001. The relevant provisions of the Property (Relationships) Amendment Act 2001 came into force on 1 February 2002: Property (Relationships) Amendment Act 2001, s 2. Note that some contracting out provisions came into force earlier on 1 August 2001: Property (Relationships) Amendment Act 2001, ss 2 and 21(2).

  1. Any change to the definition of de facto relationship in the Property (Relationships) Act 1976 (PRA) will also require careful consideration to avoid unintended consequences. This is because the PRA definition in s 2D is also used in other Acts, for example in s 60(1) of the Family Proceedings Act 1990; s 2(1) of the Administration Act 1969; s 2(1) of the Family Protection Act 1955; and s 75A of the Estate and Gift Duties Act 1968.

197 Legislation Advisory Committee Guidelines on Process and Content of Legislation (2014) at 43.

198 Legislation Advisory Committee Guidelines on Process and Content of Legislation (2014) at 43.

199 Legislation Advisory Committee Guidelines on Process and Content of Legislation (2014) at 43.

de facto relationship may not satisfy that goal. A new definition

could disadvantage people by eroding their property rights or overturning property arrangements made before the PRA was extended to apply to them.200

C ONSU LTATION QUESTION

B9 Should any new definition of de facto relationship have retrospective or prospective effect?
















































  1. A potential middle ground is a partially retrospective option that applies the Property (Relationships) Act 1976 regime to existing relationships if they continue for a certain period, such as 3 years, from the commencement of the legislation. This option was identified by the Ministry of Justice in advice to the parliamentary select committee on the Supplementary Order Paper to the Matrimonial Property Amendment Bill. The Ministry noted that this was likely to be seen as unfairly favouring one class of relationships over another. Another partially retrospective option identified by the Ministry of Justice was to include existing relationships where there were children, which they also noted could be seen as unfairly favouring one class of relationships over another. See Ministry of Justice “Advice to the Justice and Electoral Committee on the SOP to Matrimonial Property Amendment Bill, 5 September 2000” at [1].

Chapter 7 – Specific relationship

types and family arrangements

7.1 This chapter considers issues with the definition of de facto relationship that may arise for specific relationship types and family arrangements. We look at Māori customary marriage, relationships involving young people, contemporaneous relationships and relationships with and between members of the LGBTQI+ community.201 We also consider whether the PRA should be extended to include other relationship types such as

multi-partner relationships and domestic relationships (platonic, interdependent relationships between two people who provide care and support for each other).

Māori customary marriages

7.2 Māori customary marriages have as their basis tikanga Māori and whānau approval. Traditionally it was the public expression of whānau approval, as opposed to a formal ceremony or cohabitation, which established a couple as married.202 The

breakdown of the relationship would bring the union to an end.203

Metge has said that Māori were “...well ahead of the rest of New Zealand society in accepting de facto unions and non-blame divorce”.204

7.3 As discussed in Part A, most Māori married according to their own custom until the early twentieth century.205 Successive marriage laws required Māori to conform more closely to the legal requirements for establishing marriage until, in the 1950s,

legal recognition of customary marriage was removed.206 However

201 LGBTQI+ means Lesbian, Gay, Bisexual, Transgender, Queer or Questioning, Intersex+.

202 Jacinta Ruru “Kua tutū te puehu, kia mau: Māori aspirations and family law policy” in Mark Henaghan and Bill Atkin

(eds) Family Law Policy in New Zealand (4th ed, LexisNexis, Wellington, 2013) 57 at 62.

203 Joan Metge “Succession Law: Background Issues Relating to Tikanga Maori” (paper prepared in connection with Law

Commission seminar on succession, 1994) at 4.

204 Joan Metge “Succession Law: Background Issues Relating to Tikanga Maori” (paper prepared in connection with Law

Commission seminar on succession, 1994) at 4.

205 Megan Cook “Marriage and partnering - Marriage in traditional Māori society” (4 May 2017) Te Ara — the Encyclopedia of New Zealand <https://teara.govt.nz>.

206 Law Commission Justice: The Experiences of Māori Women; Te Tikanga o te Ture: Te Mātauranga o ngā Wāhine Māori e pa ana ki tēnei (NZLC R53, 1999) at 22. Section 8(1) of the Māori Purposes Act 1951 and s 78 of the Māori Affairs Act 1953 both provided that:

subsequent law changes that eliminated the discrimination of

children based on their parents’ marital status, and the growing prevalence of de facto relationships among non-Māori, reduced pressure for Māori couples to officially register a marriage.207 It is not known how many Māori marry according to custom in

contemporary New Zealand, but two relatively recent court cases illustrate that the practice continues.208

7.4 It likely that a Māori customary marriage would fall within the definition of a de facto relationship.209 This means that in a formal legal sense Māori who have married according to custom are governed by the PRA, not by principles of whanaungatanga.

7.5 In contrast to the law applying to de facto relationships, customary marriage does not carry with it any rights to property held by the other spouse.210 For example, it was common practice for the wife’s parents to gift land to the married couple.211 If

the land was gifted to the husband, the right to occupy could terminate on the wife’s death and the land would revert to her family as gifting only conveyed a temporary right.212

Whanaungatanga may be more important to property rights than marriage:213

... because of the emphasis they place on descent, Maori do not in general give marriage the priority over all other relations that it has in law. They accept that there are times and circumstances

Every marriage to which a Māori is a party shall be celebrated in the same manner, and its validity shall be determined by the same law, as if each of the parties was a European; and all provisions of the Marriage Act 1908 shall apply accordingly.

The Māori Affairs Act also invalidated all future Māori customary marriages and any marriages entered into in the past, except as expressly provided by that Act (s 79).

207 Kay Goodger “Maintaining Sole Parent Families in New Zealand: An Historical Review” (1998) 10 Social Policy Journal of

New Zealand at 6.

  1. Re Adoption of T (1992) 10 FRNZ 23 (DC); and Re R (Adoption) (1998) 17 FRNZ 498 (FC). Both were cases concerning the Adoption Act 1955 and whether the couples in question could adopt without being legally married: Jacinta Ruru “Implications for Māori: Contemporary Legislation” in Nicola Peart, Margaret Briggs and Mark Henaghan Relationship Property on Death (Brookers, Wellington, 2004) 467 at 487.

209 Jacinta Ruru “Indigenous Peoples and Family Law: Issues in Aotearoa/New Zealand” (2005) 19 International Journal of

Law, Policy and the Family 327 at 335.

  1. Jacinta Ruru “Implications for Māori: Historical Overview” in Nicola Peart, Margaret Briggs and Mark Henaghan Relationship Property on Death (Brookers, Wellington, 2004) 445 at 450–451. See also the discussion on marriage and property practices in traditional Māori society in Part A.

211 Jacinta Ruru “Implications for Māori: Historical Overview” in Nicola Peart, Margaret Briggs and Mark Henaghan

Relationship Property on Death (Brookers, Wellington, 2004) 445 at 450–451.

  1. Jacinta Ruru “Implications for Māori: Historical Overview” in Nicola Peart, Margaret Briggs and Mark Henaghan Relationship Property on Death (Brookers, Wellington, 2004) 445 at 451, referring to N Smith Māori Land Law (AH and AW Reed, Wellington, 1960) at 37. Ruru refers to situations where the husband has a blood link to the land and where there are children of the marriage as possible exceptions.

213 Joan Metge “Succession Law: Background Issues Relating to Tikanga Maori” (paper prepared in connection with Law

Commission seminar on succession, 1994) at 4.

descent line before his or her spouse: e.g. with regard to the

transmission of ancestral land and taonga, contribution to whanau activities (especially in connection with tangihanga) and support of kin.

7.6 Ruru states that the extension of the PRA to de facto relationships allows someone in a Māori customary marriage to turn his or

her back on the nature of the relationship and, upon death or separation, claim a half-share in relationship property as an entitlement under the PRA.214 Conflict could conceivably arise between the whānau and the person claiming a half-share in property that may, under tikanga, more properly be property

of the whānau.215 However the extent to which this is an issue may be affected by the exclusion of Māori land from the PRA’s ambit and the exclusion of taonga from the definition of family chattels.216

C ONSU LTATION QUESTIONS

B10 To what extent should Māori customary marriage be subject to the PRA?

B11 Should different rules apply to Māori customary marriage? If so, what would those rules provide? Would they still apply if the parties to the Māori customary marriage also entered a marriage or civil union? Would they be affected by the PRA’s approach to classification of property (discussed in Part C) (including or excluding Māori land from the PRA and taonga from the definition of family chattels)?

Relationships involving young people

7.7 The PRA requires that both partners in a de facto relationship be aged 18 or over.217 This has two important consequences for young people:

(a) first, a de facto relationship will not be covered by the PRA if it ends before the youngest partner turns 18;218 and

  1. Jacinta Ruru “Implications for Māori: Historical Overview” in Nicola Peart, Margaret Briggs and Mark Henaghan Relationship Property on Death (Brookers, Wellington, 2004) 445 at 488. See also Jacinta Ruru “Indigenous Peoples and Family Law: Issues in Aotearoa/New Zealand” (2005) 19 International Journal of Law, Policy and the Family 327 at 335.

215 Jacinta Ruru “Implications for Māori: Contemporary Legislation” in Nicola Peart, Margaret Briggs and Mark Henaghan

Relationship Property on Death (Brookers, Wellington, 2004) 467at 488.

216 Property (Relationships) Act 1976, ss 2 and 6.

217 Property (Relationships) Act 1976, s 2D(1)(a).

218 Property (Relationships) Act 1976, s 2D(1)(a).

youngest partner turns 21 will be a short-term de facto

relationship, even if the relationship was longer than three years.219

7.8 This means that the earliest point at which a division order could be made, applying the PRA’s general rule of equal sharing, is when the youngest partner turns 21. This may disadvantage

young people in relationships that, but for the age limit, would be covered or treated differently by the PRA. This is illustrated in the case study below.

Case study: Young people in a relationship

Samara (16) begins a relationship with Marcus (25) that, but for the age limit in the PRA, would immediately qualify as a de facto relationship. They have a child, Asha, who is born when Samara is 18. The relationship lasts for four years, ending when Samara is 20. But for the age limit, this would be long enough for the PRA’s general rule of equal sharing to automatically apply. However, due to the age limit, a qualifying de facto relationship only started when Samara turned 18. When

the relationship ended Samara was 20, making the relationship a short-term de facto relationship. Samara must therefore satisfy the court that failure to make an order under the PRA for the division of relationship property would cause serious injustice.220 If she can establish serious injustice, the relationship property will

be divided in accordance with each partner ’s contribution to the relationship.221

7.9 The PRA’s age limit for de facto relationships is inconsistent with the age limit in the general definition of de facto relationship

in the Interpretation Act 1999 (18 years, or 16 or 17 years with the consent of both guardians or, if that cannot be obtained, a Family Court Judge).222 It is also different to the age for entering a marriage or civil union (18 years, or 16 or 17 years with consent of specified individuals such as guardians).223 Different treatment

based on age raises issues under human rights law.224 It may also

  1. This is because the “clock starts ticking” when the youngest partner turns 18, not when the de facto relationship commenced (if earlier): Property (Relationships) Act 1976, ss 2D(1)(a) and 2E(1)(b). Note that a court can also treat a long-term relationship as a short-term relationship if it considers it just: s 2E(1)(b)(ii). Special rules apply to short-term relationships: s 14A. Short-term relationships are discussed in Part E.

220 Property (Relationships) Act 1976, s 14A(2)(b).

221 Property (Relationships) Act 1976, s 14A.

  1. Interpretation Act 1999, s 29A. Note that cl 14 of the Legislation Bill 2017 (275-1) would replace the definition of de facto relationship in s 29A of the Interpretation Act, but retain the age limit and the central concept of two people who “live together as a couple in a relationship in the nature of marriage or civil union”.
  2. Marriage Act 1955, ss 17 and 18; and Civil Union Act 2004, ss 7 and 19. Note that the Marriage (Court Consent to Marriage of Minors) Amendment Bill 2017 (256-1) proposes that 16 and 17 year olds who wish to marry must obtain consent to the marriage from a Family Court Judge (cl 5). This Bill has arisen out of the concern that some 16 and 17 year olds may be undergoing forced marriage.

224 See Human Rights Act 1993, s 21(1)(i), and New Zealand Bill of Rights Act 1990, s 19(1).

enable partners to escape obligations they would have had, had they been in a marriage or civil union.

7.10 However there is another view that the higher age limit for de facto relationships in the PRA may protect young people who drift into a de facto relationship, as it gives them more time to recognise that their legal status is changing and contract out of the PRA should they wish to.225

7.11 Younger people are more likely to be in a de facto relationship.226

This may in part reflect the legal restriction on people marrying before age 18.227 We do not know how many young people are adversely affected by the PRA’s age limit for de facto relationships. Situations involving young people with substantial assets are likely to be rare, although that will not always be the case, for example where a young person has received an inheritance.228

There are also restrictions built into the definition of de facto relationship itself, which limit the number of young people in a de facto relationship under the PRA.229

7.12 Young people may also look to the general law of contract or equity for a remedy when their relationship ends, for example a claim that a constructive trust existed over certain assets.

However those remedies may be difficult and costly to access and may lead to a less favourable result for the claimant than would have been the case if the PRA applied.

7.13 An option would be to amend section 2D(1)(a) to lower the age limit for entering into a de facto relationship. This could be done by amending section 2D(1)(a) to reflect the age limit for entering into a de facto relationship under the Interpretation Act 1999 (see paragraph 7.9).

C ONSU LTATION QUESTIONS


  1. Note that there is an exception to the general age of contractual capacity (18 years) that allows a minor who is not and has not been in a marriage or civil union to contract out of the Property (Relationships) Act 1976 with court approval. See Minors Contracts Act 1969, ss 2(1) and 6(1), and Property (Relationships) Act 1976, s 21I.

226 See Law Commission Relationships and Families in Contemporary New Zealand: He hononga tangata, he hononga whānau i

Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 1.

  1. Marriage Act 1955, ss 17 and 18. Consent to marriages between 16 and 17 year olds occurs on average about 80 times each year: Marriage (Court Consent to Marriage of Minors) Amendment Bill 2017 (256-1) (explanatory note) at 1. Consent for a marriage involving a party aged 16 or 17 must be obtained from specified individuals such as the minor ’s guardians: see ss 17 and 18 of the Marriage Act 1955.
  2. Bill Atkin and Wendy Parker Relationship Property in New Zealand (2nd ed, LexisNexis, Wellington, 2009) at 2.4.3; and Margaret Briggs “The Formalization of Property Sharing Rights For De Facto Couples in New Zealand” in Bea Verschraegen (ed) Family Finances (Jan Sramek Verlag, Austria, 2009) 329 at 334.

229 Property (Relationships) Act 1976, s 2D.

B12 Can the age limit of 18 years for a de facto relationship be justified, and if so, on what

grounds?

B13 Should the age limit for entering into a de facto relationship be 18 years, or 16 or 17

years with consent of both guardians or, if that cannot be obtained, a Family Court Judge?



Relationships with and between members of the LGBTQI+ community

7.14 The LGBTQI+ (Lesbian, Gay, Bisexual, Transgender, Queer or

Questioning, Intersex+) community includes:230

... people who identify as takataapui, lesbian, gay, bisexual, queer, heterosexual, intersex, female, male, transsexual, transgender, whakawāhine, tangata ira tane, mahu (Tahiti and Hawaii), vakasalewalewa (Fiji), palopa (Papua New Guinea), fa’afafine (Samoa, America Samoa and Tokelau), akava’ine (Cook Islands), fakaleiti or leiti (the Kingdom of Tonga), or fakafifine (Niue).

7.15 The PRA’s definition of de facto relationship clearly includes same- sex relationships that satisfy the criteria in section 2D. Under the PRA, a de facto relationship includes “... a relationship between

2 persons (whether a man and a woman, or a man and a man,

or a woman and a woman) ...”.231 The definition does not use the inclusive language now in other statutes such as the Marriage Act 1955, which defines a marriage as the union of two people “regardless of their sex, sexual orientation or gender identity”.232

The same inclusive language is proposed in the Legislation Bill

2017, which would amend the general definition of de facto relationship in the Interpretation Act 1999.233

7.16 The flexibility inherent in the PRA’s definition of de facto relationship may work well for some members of the LGBTQI+


  1. Human Rights Commission “Sexual Orientation, Gender Identity, and Sex Characteristics” <www.hrc.co.nz>. The Human Rights Commission defines intersex as a term “...used for a variety of conditions in which a person is born with reproductive or sexual anatomy that does not seem to fit the typical biological definitions of female or male”; a transsexual is defined as “[a] person who has changed, or is in the process of changing, their physical sex to conform

to their gender identity”; and a person who is transgender is defined as someone “... whose gender identity is different from their physical sex at birth”: see Human Rights Commission “Trans People: Facts and Information Resource – Terminology” <www.hrc.co.nz>. See also Elizabeth Kerekere “Part of the Whānau: The Emergence of Takatāpui Identity He Whāriki Takatāpui” (PhD Thesis, Victoria University of Wellington, 2017) for recent research on takatāpui.

231 Property (Relationships) Act 1976, s 2D(1).

  1. Marriage Act 1955, s 2(1). The same language is proposed in the Legislation Bill 2017 (275-1) for the general definition of de facto relationship in the Interpretation Act 1999.

233 Legislation Bill 2017 (275-1), cl 14; and Interpretation Act 1999, s 29A.

community.234 For example, some people may have trouble evidencing factors in section 2D(2) such as the reputation

and public aspects of their relationship because they have not disclosed their sexuality to friends and family.235 The Lavender Islands study found that only 35 per cent of respondents had disclosed their sexual identity to everyone in their lives, and one per cent said they had not disclosed to anyone and did not plan to do so.236 The PRA’s definition of de facto relationship may, however, be able to accommodate this. In S v M the High Court acknowledged there may be situations where a same-sex

relationship is kept private, “...[b]ut in a case such as this, where the parties mixed in the gay community, the public appearance

or reputation of their relationship may be an important factor”.237

There are also instances where a court has used the flexibility inherent in the definition to consider the clandestine nature of some relationships.238 But few cases focus on whether relationships involving members of the LGBTQI+ community are de facto relationships. We do not have information about

relationships involved in property matters resolved out of court.

7.17 We are interested in whether the definition of de facto relationship, and the way it is applied makes “heteronormative” assumptions. Male and female respondents in the Lavender Islands study experienced same-sex relationships and identity in different ways.239 We are also cognisant of the “...complex realities of family lives that differ from traditional forms and norms of those headed by heterosexuals”.240

7.18 We have no evidence that the PRA’s three year minimum duration requirement for long-term de facto relationships is causing issues that are specific to the LGBTQI+ community.241 The PRA applies

  1. The definition of de facto relationship is flexible because none of the factors in s 2D(2), such as the reputation and public aspects of the relationship, are requirements. No finding in respect of any of them is necessary, and the court is entitled to attach such weight to any matter as may seem appropriate in the circumstances: Property (Relationships) Act 1976, s

2D(3).

235 Property (Relationships) Act 1976, s 2D(2)(i).

236 Mark Henrickson and others Lavender Islands: The New Zealand Study (2007) 53(4) Journal of Homosexuality 223 at 237.

Lavender Islands: Portrait of the Whole Family (Lavender Islands) was a national study of 2,269 lesbian, gay and bisexual individuals conducted in 1994 by the School of Social and Cultural Studies, Massey University at Albany.

237 S v M HC Wellington CIV-2006-485-1940, 17 April 2007 at [27].

  1. For example in [LC] v T [2012] NZFC 1702 the opposite-sex parties generally described their relationship as that of landlord and tenant.

239 Mark Henrickson and others Lavender Islands: The New Zealand Study (2007) 53(4) Journal of Homosexuality 223.

240 See Families Commission / SuPERU We’re a Family: how lesbians and gay men are creating and maintain family in New

Zealand (Blues Skies Report No 29/09, August 2009) at 7.

241 Property (Relationships) Act 1976, ss 2E and 14–14A.

three years, and usually only applies to de facto relationships

that last for three years or more.242 The Lavender Islands study identified that the average longest same-sex relationship that respondents had (or have) was around six years.243 There was no significant difference between men and women, and many

respondents noted that their longest same-sex relationships were still going on.244 This study suggests that same-sex relationships at least may not be overly troubled by the three year rule.

C ONSU LTATION QUESTIONS

B14 Is the PRA working well for members of the LGBTQI+ community?

B15 Is more inclusive language required in the PRA’s definition of de facto relationship?

B16 Does the definition of de facto relationship make “heteronormative” assumptions?


Contemporaneous relationships

7.19 The PRA addresses some situations where a person is in two relationships at the same time, in the form of:245

(a) a marriage or civil union and a de facto relationship; or

(b) two de facto relationships.

7.20 The PRA calls these “contemporaneous relationships”.246 The

special property division rules that can apply to contemporaneous relationships are discussed in Part D.247

7.21 Contemporaneous relationships in the form of two marriages, or two civil unions, are not covered by the PRA. This may be because bigamy is an offence under the Crimes Act 1961.248 We

242 See Property (Relationships) Act 1976 ss 1C and 14–14A. Relationships of short duration are discussed in Part E.

243 Mark Henrickson and others Lavender Islands: The New Zealand Study (2007) 53(4) Journal of Homosexuality 223 at 238.

244 Mark Henrickson and others Lavender Islands: The New Zealand Study (2007) 53(4) Journal of Homosexuality 223 at 238.

  1. Property (Relationships) Act 1976, ss 52A and 52B. The PRA also addresses some situations where a partner has successive relationships, one after the other, with no period of overlap. See Part D.

246 For example, partner A is married to partner B and at the same time is in a de facto relationship with partner C.

The contemporaneous relationships are partner A’s marriage to partner B, and partner A’s de facto relationship with partner C. Some polyamorous relationships, where a partner has intimate relationships with more than one partner, may be contemporaneous relationships for the purposes of the Property (Relationships) Act 1976 depending on the circumstances. For a recent account of polyamorous relationships in New Zealand see Eleanor Black “Polyamory and the complicated lives of those with multiple lovers” (17 September 2017) stuff <www.stuff.co.nz>.

247 Property (Relationships) Act 1976, ss 52A and 52B.

  1. See Crimes Act 1961, ss 205–207. In essence, bigamy is the act of going through a form of marriage or civil union; either on the part of a person already married or in a civil union, or on the part of a person who knows the other party to the

the PRA include void marriages and void civil unions.249 A void

marriage or civil union might therefore be treated as a de facto relationship for the purposes of section 52A. But in any event this scenario is likely to be unusual.

7.22 Although the PRA recognises the possibility of some contemporaneous relationships, establishing a contemporaneous relationship under the PRA appears to be difficult in

practice.250 One possible reason for this is that the features of a contemporaneous de facto relationship may differ from an “orthodox” de facto relationship.251 For example, a

contemporaneous relationship may be more clandestine, making it difficult to prove the reputation and public aspects of the relationship.252 The partners may not share a common residence or be financially interdependent, particularly if the relationship

is clandestine. A contemporaneous relationship is also by its nature unlikely to be monogamous. In M v P the High Court observed that “[t]he statutory indicia of a shared life are broadly consistent with a substantial degree of exclusivity in qualifying relationships.”253 The Court said that:254

... contemporaneous de facto relationships are not likely merely because the legislation admits their existence. A contemporaneous de facto relationship with a different partner shows that the relationship before the court lacks the character of a life lived

as a couple. The legislation governs division of the property of a relationship between two people and there must be natural limits to one’s capacity to spend the only life that one has in contemporaneous bilateral relationships with more than one

person.

ceremony is married or in a civil union.

249 Property (Relationships) Act 1976, ss 2A(1)(a) and 2AB(1)(a).

250 Property (Relationships) Act 1976, ss 52A and 52B. See for example Greig v Hutchison [2016] NZCA 479, [2016] NZFLR

905; M v P [De facto relationship] [2012] NZHC 503, [2012] NZFLR 385; and C v S FC Dunedin FAM-2005-012-157, 28

September 2006.

251 Unsuccessfully argued on appeal in Greig v Hutchison [2016] NZCA 479, [2016] NZFLR 905 at [11]. Application for leave to appeal was declined as there was no question of general or public importance such as to outweigh the cost and delay of a second appeal.

  1. Property (Relationships) Act 1976, s 2D(2)(i). Unsuccessfully argued on appeal in Greig v Hutchison [2016] NZCA 479, [2016] NZFLR 905 at [11].
  2. M v P [De facto relationship] [2012] NZHC 503, [2012] NZFLR 385 at [26]. These comments are described as observations, or obiter dicta. This is because the issue on appeal in that case was the end date of the relationship, not whether there were contemporaneous de facto relationships. These comments were, however, said to correctly reflect the law in Greig v Hutchison [2015] NZHC 1309, [2015] NZFLR 587 at [63]. See also S v S [2006] NZFLR 1076 (HC) at [44].
  3. M v P [De facto relationship] [2012] NZHC 503, [2012] NZFLR 385 at [29]. These comments are described as observations, or obiter dicta. This is because the issue on appeal in that case was the end date of the relationship, not whether there were contemporaneous de facto relationships. These comments were, however, said to correctly reflect the law in Greig v Hutchison [2015] NZHC 1309, [2015] NZFLR 587 at [63].

court may consider when determining whether a relationship is

a de facto relationship. They are not requirements.255 A court can take a flexible approach, and the Family Court in Greig v Hutchison noted that in contemporaneous relationships a common residence is unrealistic.256 This can be contrasted with a comment made

by the High Court in M v P, to the effect that contemporaneous relationships may be most likely when the relationships follow an “orthodox” format, i.e. when “A cohabits intermittently with each of B and C, maintaining two households on an indefinite basis”.257

7.24 Contemporaneous relationships may also be viewed as “primary” and “secondary” relationships, particularly where one relationship is a marriage and is covered by the PRA. This approach may

make it difficult for a “secondary” relationship to qualify as a de facto relationship. In Greig v Hutchison, the High Court said that to assess the nature of contemporaneous relationships,

it is unnecessary to view each in isolation and distinct from the other.258 Rather, it is appropriate to compare the two relationships.259

7.25 The practical difficulties in establishing a contemporaneous relationship risks relationships falling outside the PRA because they do not follow an orthodox format. In an extreme case partner A may escape legal obligations to partners B and C by pleading

that neither relationship is sufficiently public, robust or exclusive to qualify as a de facto relationship.260

7.26 There may be a case for changing the provisions for contemporaneous relationships to address these practical difficulties. We have considered three possible options for reform:

(a) Option 1: Amend the definition of de facto relationship or enact a new definition of contemporaneous de facto relationship: We are not attracted to this option. It is difficult to see how the existing definition of de facto relationship could be any broader or more flexible than

it already is to better accommodate contemporaneous

255 Property (Relationships) Act 1976, ss 2D(2) and (3). See also S v S [2006] NZFLR 1076 (HC) at [44].

256 Greig v Hutchison [2014] NZFC 2895 at [262].

257 M v P [De facto relationship] [2012] NZHC 503, [2012] NZFLR 385 at [29].

258 Greig v Hutchison [2015] NZHC 1309, [2015] NZFLR 587 at [57].

259 Greig v Hutchison [2015] NZHC 1309. [2015] NZFLR 587 at [57].

260 See M v P [De facto relationship] [2012] NZHC 503, [2012] NZFLR 385 at [29].

de facto relationship would bring an additional layer of

complexity to the PRA to accommodate a situation that may be relatively rare.

(b) Option 2: Provide guidance in sections 52A and 52B

on how to apply the definition of de facto relationship to a contemporaneous relationship: Guidance may direct a court to take a different approach to the factors in section 2D(2) where there is the possibility of a contemporaneous de facto relationship, for example having particular regard to some factor(s) or giving some factor(s) less weight. Alternatively, guidance

may direct a court to take a specific approach, such as considering each relationship in isolation, avoiding a comparative approach.

(c) Option 3: Exclude contemporaneous relationships: This would simplify the PRA. It could, however, allow a person in two relationships to avoid his or her obligations to one or both partners. It may also

simply shift the point in dispute to which relationship was the qualifying relationship, which would likely result in a bias towards marriages and civil unions and undermining the principle that the law should apply equally to all relationships that are substantively the same. It could also exclude vulnerable people from the PRA’s protection.

C ONSU LTATION QUESTION

B17 How should contemporaneous relationships be recognised by the PRA?


Multi-partner relationships

7.27 The definition of de facto relationship excludes relationships of more than two people (multi-partner relationships).261 The PRA may however cater for some contemporaneous relationships



  1. Property (Relationships) Act 1976, s 2D. We use the general term “multi-partner relationship” to refer to a consensual relationship among an emotionally and/or sexually intimate group larger than two: see Elisabeth Sheff and Megan M Tesene “Consensual Non-Monogamies in Industrialized Nations” in J DeLamater and R F Plante (eds) Handbook of the Sociology of Sexualities (Springer International Publishing, Switzerland, 2015) 223 for a discussion of non-monogamous relationship forms.

a relationship which comprised three people may be recognised

under the PRA as a series of contemporaneous relationships. We have no evidence as to the number of multi-partner relationships in New Zealand, although the number is likely to be small.

C ONSU LTATION QUESTION

B18 Should the PRA specifically recognise multi-partner relationships? If so, how should they be defined and what property division rules should apply?

Domestic relationships

7.28 The PRA does not apply to domestic relationships. These are platonic, interdependent relationships between two people who provide care and support for each other. Domestic relationships can include relationships between family members such as siblings, parents and adult children; relationships between unrelated parties such as companions; and relationships between unpaid263 informal carers264 and those they care for. Domestic relationships are included in property regimes in several Australian states.265

7.29 We know little about the prevalence of domestic relationships in New Zealand. Domestic relationships within families may be more common due to the increasing number of people sharing their household with members of their extended family.266 Domestic relationships between carers and those they care for may become more common due to the predicted increase in the demand




262 Property (Relationships) Act 1976, ss 52A and 52B.

  1. Relationships where companionship, care and support are provided for payment or on behalf of another person or organisation (including a government agency, body corporate or a charitable organisation) are not considered to be domestic relationships for the purposes of this Issues Paper.
  2. The National Advisory Committee on Health and Disability explains that: Informal caring differs from the usual tasks and responsibilities that form part of a relationship between, for example, partners in older age or a child and parent, because it requires a commitment beyond usual levels of reciprocity. The role is different from formal care supports and services because it is unpaid and is not based on any formal agreement or service specifications, although it can be the carer ’s main occupation.” – National Advisory Committee on Health and Disability How Should we Care for the Carers, Now and into the Future? (Ministry of Health, 2010) at 3.
  3. See for example Relationships Act 2003 (Tas); Property (Relationships) Act 1984 (NSW); Relationships Act 2008 (Vic); and Domestic Relationships Act 1994 (ACT). Note however that these states take different approaches to the definition and entitlements arising out of domestic relationships.

266 See Law Commission Relationships and Families in Contemporary New Zealand: He hononga tangata, he hononga whānau i

Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 5.

population.267

Should the PRA cover domestic relationships?

7.30 There is a view that the PRA should apply to some domestic relationships. This is because some domestic relationships may be functionally similar to a marriage, civil union or de facto relationship.268 People in a domestic relationship may live in the same house and provide support and care to each other over a long period. One person may make personal sacrifices for the other to provide services as an informal carer. For example, the relationship between two adult siblings in Re C (dec’d) exhibited all of the section 2D(2) factors of a de facto relationship except

a sexual relationship and the care and support of children.269

Excluding domestic relationships functionally similar to qualifying relationships raises questions of discrimination, equality and fairness.270 It has also been described as a little anomalous because of the PRA’s focus on property law rather than the nature of the relationship.271

7.31 However, domestic relationships are different to qualifying relationships covered by the PRA. While a sexual relationship is not a prerequisite for a qualifying relationship, it is a common feature that often distinguishes it from a domestic relationship.

In addition, a domestic relationship may not give rise to the same expectation of property sharing as a qualifying relationship. For example, siblings may live together for a long period in a domestic relationship while each maintaining the hope of meeting a

partner and getting married.



267 National Advisory Committee on Health and Disability How Should we Care for the Carers, Now and into the Future?

(Ministry of Health, 2010) at 7, 8 and 45.

268 Margaret Briggs “Rethinking Relationships” (2015) 46 VUWLR 649 at 665, referring to Re C (dec’d) HC Dunedin CP18/00,

5 April 2001.

269 Re C (dec’d) HC Dunedin CP18/00, 5 April 2001; and Property (Relationships) Act 1976, s 2D.

270 Legal rights for non-sexual relationships received some political attention on this basis in 2004, where Members of

Parliament said that civil unions discriminate against non-sexual relationships: Richard Worth MP (9 December 2004)

622 NZPD 17638 (online version); and registering a relationship did not have to be a “bedroom issue”: Judy Turner MP (7

December 2004) 622 NZPD 17497 (online version). See also Supplementary Order Paper 2004 (314) Civil Union Bill 2004 (149-2) which proposed removing the provisions of the Civil Union Bill 2004 (149-2) relating to prohibited degrees of relationship. Its purpose was to “wide[n] the number of couples who will be able to register their relationship and enjoy the protection and benefits that the Relationships (Statutory References) Bill may provide.”

271 Bill Atkin and Wendy Parker “De Facto Property Developments in New Zealand: Pressures Impeded Progress” in John

Dewar and Stephen Parker (eds) Family Law Processes, Practices and Pressures: Proceedings of the Tenth World Conference of

in property law or equity, and may have difficulty finding a viable

basis for making a property claim when the relationship ends.272

If a domestic relationship ends on the death of one party, the survivor may have a claim under the Law Reform (Testamentary Promises) Act 1949 and/or the Family Protection Act 1955. Those statutes have their limitations. A successful claim under the

Law Reform (Testamentary Promises) Act requires a promise by the deceased to reward the claimant for services by making testamentary provision.273 A testamentary promise may be absent or difficult to prove in some domestic relationships. A claim for provision from the deceased’s estate can only be made under the Family Protection Act 1955 by a partner, children, grandchildren and, in certain circumstances, stepchildren and parents of the deceased.274 Siblings cannot claim.

7.33 People living in domestic relationships do however have options to secure property rights during the relationship. The parties

may change the way property is owned, for example by holding property as joint tenants,275 creating a trust, agreeing by contract on how their property is to be shared, and/or providing for

each other in their wills. However, while these options exist in theory, we do not know how common it is for people in domestic relationships to formalise property sharing rights in this way.

7.34 If domestic relationships should be included in the PRA, there are several parameters that need to be explored. In particular:

(a) The definition of domestic relationship: Definitions of caring relationships used in some Australian states may provide a helpful starting point. These generally require care and support.276 Some also require common


  1. See Margaret Briggs “Rethinking Relationships” (2015) 46 VUWLR 649 at 670. In this regard people in domestic relationships are in a similar position to de facto partners prior to the 2001 amendments to the Property (Relationships) Act 1976 (PRA). They have a relationship that is functionally similar to a qualifying relationship but are not entitled to the benefit of the property sharing rules applicable to qualifying relationships in the PRA.
  2. The key elements of claim under s 3 of the Law Reform (Testamentary Promises) Act 1949 are: (1) the claimant must have rendered services to, or performed work for, the deceased in his or her lifetime; (2) there must be an express or implied promise by the deceased to reward the claimant; (3) there must be a nexus between the services or work and the promise; and (4) the deceased must have failed to make the promised testamentary provision or otherwise remunerate the claimant.

274 Family Protection Act 1955, s 3.

  1. If property is held by two domestic partners as joint tenants, when one of them dies his or her interest in the property accrues by operation of law to the survivor, who then becomes the sole owner. See The Laws of New Zealand Land Law at [46].

276 For example, Tasmania has a broad definition of “caring relationship” that hinges on the provision of “domestic support

where care is provided for fee or reward or on behalf

of another person or organisation are excluded.278

Other qualifying criteria, such as a minimum duration requirement, may also be appropriate.

(b) Whether a domestic relationships regime should be opt-in or opt-out: Including domestic relationships

in the PRA on an “opt-in” basis through a registration scheme would ensure personal autonomy and take account of the assumptions some people in domestic relationships may have about property rights. Requiring independent legal advice as a prerequisite to registration could help ensure the parties make an

informed decision and protect vulnerable people from exploitation. A registration scheme may not, however, best protect the vulnerable because registration rates are likely to be low and domestic partners may not see the need to register.279

(c) Multiple relationships: People in domestic relationships may also have spouses, civil union or de facto partners.

It may be unnecessarily restrictive to prevent people in qualifying relationships from having a secondary domestic relationship if the PRA were extended to domestic relationships on a registration basis. The property classification and division rules may, however, be complex and would require careful consideration.

(d) Property entitlements arising at the end of a

domestic relationship: One option is to treat domestic relationships like marriages, civil unions or de facto relationships. This would be relatively straightforward and would avoid a separate set of rules for domestic relationships. Another option is a discretionary model that allows a court to adjust the parties’ property interests in a way that is just and equitable in the

  1. For example, Victoria has a definition of “registrable caring relationship” that require the provision of “personal or financial commitment and support of a domestic nature for the material benefit of the other”, but does not require the parties to live under the same roof. See Relationships Act 2008 (Vic), s 5.

278 For example the definition of “caring relationship” in the Tasmanian legislation expressly excludes relationships where domestic support and personal care are provided for fee or payment, under an employment relationship or on behalf of another person or organisation: Relationships Act 2003 (Tas), s 5(2).

  1. Rundle notes in her 2011 paper that at the time there were only four registered caring relationships in Australia, all of which were in Tasmania: Olivia Rundle “An examination of relationship registration schemes in Australia” (2011) 25

AJFL 121 at 146.

philosophical objection to [a discretionary model]

in the New Zealand context would be that singling- out domestic partnerships for different treatment undermines the functional equivalence argument”.280

C ONSU LTATION QUESTION

B19 Should the PRA apply to domestic relationships? If so, on what basis?























































280 Margaret Briggs “Rethinking Relationships” (2015) 46 VUWLR 649 at 669.



















































RELATIONSHIPS

Part C – What

property should be covered by the PRA?

Chapter 8 – What property is

covered?

Introduction

8.1 The PRA provides the rules for how partners divide their property when a relationship ends. A key part of this process is to first identify what property should be divided. In this Part we focus

on the rules that determine what property should be shared and what property should be kept separate.

8.2 In this chapter we examine the PRA’s definitions of “property”

and “owner” and consider whether they capture the right types of property. The rest of Part C is arranged as follows:

(a) In Chapter 9 we look at how the PRA classifies property as either relationship property (which is divided equally between the partners) or separate property (which is not). We also look at the classification of debts. We then examine the basis for classification and ask whether this remains appropriate for contemporary New Zealand.

(b) In Chapter 10 we look at situations when a partner ’s separate property may become relationship property.

(c) In Chapter 11 we concentrate on particular items of property and how the PRA classifies them. This includes ACC and insurance payments, super profits and income- earning capacity, heirlooms and taonga. We also look at student loan debts and inter-family gifting and lending.

The PRA’s definitions of “property” and

“owner”

8.3 The PRA is concerned with the division of property that is owned by one or both of the partners. Its application is therefore limited by how the PRA defines “property” and “owner”.

8.4 The PRA does not define property in an exclusive manner. Instead

it lists the types of things that the PRA will include as property. The definition has remained essentially unchanged since 19761 and it includes:2

(a) real property;

(b) personal property;

(c) any estate or interest in any real property or personal property;

(d) any debt or any thing in action; and

(e) any other right or interest.

8.5 An owner in respect of any property means any person who is the beneficial owner of the property under any enactment or rule of common law or equity.3 A person will normally be a beneficial owner if he or she can enjoy the fruits of that property personally and can dispose of the property for his or her own benefit, either

in the present or contingent on some future event.4 A person may be the beneficial owner of property even if the property is not

held in his or her name.5

8.6 Property that is owned by a partner in his or her capacity as trustee is not captured by the PRA because that partner is not the beneficial owner of the trust property.6 In S v S, one partner was an artist who intended to give some of his paintings to his two children.7 The paintings hung in the artist’s house until the children were ready to take possession. The Family Court was satisfied that the artist held those paintings on trust for the

benefit of his children. As a result, the artist was not the “owner”




  1. The definition of “property” included in the Matrimonial Property Act 1976 also followed the definition in its predecessor legislation, the Matrimonial Property Act 1963.

2 Property (Relationships) Act 1976, s 2.

3 Property (Relationships) Act 1976, s 2.

4 See discussion in RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [10.6].

5 Fuller v Fuller (1978) 1 MPC 85 (SC) per Davison CJ, discussed in RL Fisher (ed) Fisher on Matrimonial and Relationship

Property (online looseleaf ed, LexisNexis) at [10.6].

6 Property (Relationships) Act 1976, s 4B. A person cannot, however, be a trustee and the sole beneficiary under a trust:

Re Cook, Beck v Grant [1948] Ch 212 (Ch); Re Herberley (deceased) [1971] NZLR 325 (CA); Law Commission The Duties, Office and Powers of a Trustee (NZLC IP26, 2011) at [4.3]; and Richard Gray “Creation of Trusts” in Don Breaden (ed) Law of Trusts (online looseleaf ed, LexisNexis) at [2.22], all as cited in Clayton v Clayton [2015] NZCA 30, [2015] NZLR 293 at [47].

7 S v S [2012] NZFC 2685.

of the paintings and those paintings were not captured by the

PRA.8

8.7 The PRA only applies to property belonging to the partners. It does not apply to property owned by third parties. For example, if the partners live together in a home owned by one of the partner ’s parents, that property could not be divided at the end of the relationship because it is not “owned” by either partner. However difficulties arise where property that is legally owned by one or more third parties is held on trust (either explicitly or implicitly) for the benefit of one or both partners. In some cases a partner ’s beneficial interest in trust property may be captured by the PRA. Trust property is discussed in detail in Part G.

Is the PRA limited to conventional types of property?

8.8 Although the PRA’s definition of property is broad and inclusive, in the past it has been interpreted by the courts as being a conventional definition which is essentially limited to real and personal property, and rights or interests in such property.9

The Court of Appeal in Z v Z (No 2) emphasised that the PRA uses the same property definition as a great number of other general property law statutes including the Property Law Act

1952,10 and considered that the consistent, cumulative use of that definition strongly indicated that the conventional understanding of property applied in the context of the PRA.11

In that case the Court considered whether a partner ’s income earning capacity was covered by the PRA, but concluded that the conventional understanding of property was limited to rights in things, rather than rights in respect of the person, and it did not include “essentially personal characteristics which are part of an individual’s overall makeup”.12

8.9 In the more recent case of Clayton v Clayton [Vaughan Road

Property Trust] the Supreme Court emphasised the need to

8 S v S [2012] NZFC 2685 at [46].

9 Z v Z (No 2) [1997] 2 NZLR 258 (CA) at 268.

10 The Property Law Act 1952 has since been repealed and replaced with the Property Law Act 2007.

  1. Z v Z (No 2) [1997] 2 NZLR 258 (CA) at 279. See also Nicola Peart, Mark Henaghan and Greg Kelly “Trusts and relationship property in New Zealand” (2011) 17 Trusts & Trustees 866 at 878; and Nicola Peart “Protecting children’s interests in relationship property proceedings” (2013) 13 Otago L Rev 27 at 30.

12 Z v Z (No 2) [1997] 2 NZLR 258 (CA) at 279.

interpret the meaning of property in a manner that reflects the

PRA’s statutory context.13 The Court said that, because the PRA is social legislation, its definition of property is broader than traditional concepts of property, and included rights and interests even if they are not rights or interests in property.14

8.10 It remains to be seen whether the Supreme Court’s decision

in Clayton will have wider implications for what is considered property under the PRA. In that case, the trust deed gave Mr Clayton powers to appoint and remove beneficiaries, distribute any of the trust property to any one beneficiary including himself, and bring the trust to an end. The Supreme Court said that these powers were a right that was captured within the PRA’s definition

of property. However, as we discuss in Part G, that decision turned on the unusual and specific terms of that trust deed. Therefore the application of that decision may be limited.

Should the PRA apply to wider economic resources?

8.11 The PRA’s focus (at least prior to Clayton) on conventional types of property means that wider “economic resources”, from which the partners may derive financial advantages, are excluded from the PRA. Partners may have at their disposal resources which can confer on them real financial benefits even though that resource is not traditionally considered property. Probably the most significant example of an economic resource not captured by the PRA’s definition of property is a person’s capacity to earn an income (earning capacity). The current approach, following Z

v Z (No 2), is that the personal skills of an individual do not come within the PRA’s concept of property.15 We discuss how the courts have approached earning capacity in greater detail in Chapter 11. Another example of an economic resource not captured by the PRA’s definition of property is property held on trust. Trusts are

discussed in detail in Part G.



13 Clayton v Clayton [Vaughan Road Property Trust] [2016] NZSC 29, [2016] 1 NZLR 551 at [38].

14 Clayton v Clayton [Vaughan Road Property Trust] [2016] NZSC 29, [2016] 1 NZLR 551 at [38].

  1. Z v Z (No 2) [1997] 2 NZLR 258 (CA), relied on in Newman v Newman [1999] NZFLR 839 (HC), in which the personal goodwill attaching to a surgeon’s practice accounted for roughly 60 per cent of the practice’s value. The High Court said that the personal goodwill was not property which could be divided between the partners.

8.12 Several overseas jurisdictions require courts to take into account

the “financial resources” of the partners when making orders

to divide their property.16 In these jurisdictions, a court’s power to make property division orders only applies to conventional property.17 Nevertheless, the availability of wider resources from which a partner can access financial benefits is highly relevant

to the way in which the court can choose to divide the partners’ property.18 For example, in the Australian case Hall v Hall the wife’s father made provision under his will that a group of companies associated with the family should provide financial support to the wife.19 The executors of the father ’s estate, who controlled the group of companies, gave evidence that there was no legal obligation on the companies to make such provision. Nevertheless, the High Court of Australia upheld a finding that if

the wife had requested financial support, the executors were likely to have made a voluntary payment in accordance with her father ’s testamentary wishes. The Court said that the wife’s interest was a financial resource.20

8.13 Similarly, in the English case Charman v Charman (No 4), the husband established a trust under which he was a discretionary beneficiary.21 There was a close connection between the husband and the trust, as indicated by the husband having previously told the trustee that he was to be considered the primary beneficiary. The Court of Appeal upheld the High Court’s finding that if the

16 See for example Matrimonial Causes Act 1973 (UK), ss 24 and 25(2)(a); Family Law Act 1975 (Cth), ss 75 and 79; and

Family Law (Scotland) Act 1985, s 8(2)(b).

  1. In England and Wales, s 24 of the Matrimonial Causes Act 1973 (UK) refers to “property to which the first-mentioned party is entitled, either in possession or reversion”. The Supreme Court of the United Kingdom has explained that its jurisdiction to make property adjustment orders under s 24 only applies to proprietary rights “with an established legal meaning and recognised legal incidents under the general law”: Prest v Petrodel Resources Ltd [2013] UKSC 34, [2013] 2 AC

415 at [37]. Likewise, in Australia the court is given powers under s 79 of the Family Law Act 1975 (Cth) to make orders “altering the interests of the parties to the marriage in the property”. In s 4 of the Family Law Act 1975 (Cth), property is defined in conventional terms as property to which the spouses are entitled in “possession or reversion”. The High Court of Australia has, however, said that the term property had to be interpreted to conform with the purposes of the Family Law Act rather than how the term is interpreted in a general property law context: Kennon v Spry [2008] HCA 56, (2008)

[2008] HCA 56; 238 CLR 366 at [64] per French CJ and at [89] per Hayne and Gummow JJ.

  1. It should be noted that in these jurisdictions, particularly England, Wales and Australia, the legislation gives the court far more discretion when making property division orders. The New Zealand approach under the Property (Relationships) Act 1976 does not give the courts such leeway. Consequently, caution should be taken when assessing the relevance of the courts’ power to account for a partner ’s financial resources under overseas property division schemes.
  2. Hall v Hall [2016] HCA 23, (2016) 90 ALJR 695. The case concerned the wife’s claim for interim maintenance from her former husband, which required the court of first instance to assess the “financial resources” of the wife under s 75(2)(b) of the Family Law Act 1975 (Cth). When the court makes orders altering property interests, it also relies on the matters listed in s 75(2), therefore the decision in Hall is equally relevant to cases of property division.
  3. Hall v Hall [2016] HCA 23, (2016) 90 ALJR 695 at [45]–[48] and [56]. It should be noted that if Hall was decided by the New Zealand courts under the Property (Relationships) Act 1976, any property the wife obtained under her father ’s will would probably not be classified as relationship property because inheritances from third parties are generally classified as separate property under s 10.
  4. Charman v Charman (No 4) [2007] EWCA Civ 503, [2007] 1 FLR 1246. As we discuss in Part G, a discretionary interest in a trust has not traditionally been considered property.

husband made a request, the trustee would advance all the trust’s

assets to him.22 On that basis the Court attributed all the assets

of the trust to the husband as his financial resources, and upheld an order that required the husband to pay a lump sum to the wife based in part on the assessment of his financial resources.23

8.14 The primary argument for including wider economic resources in the PRA’s definition of property is that it would best achieve the policy of a just division of property in cases where those wider economic resources constitute a significant proportion of the partners’ combined wealth. Failing to account for those economic resources at the end of a relationship may fail to achieve equal division of the true value attributable to the relationship.

8.15 There are, however, several arguments against broadening the definition of property to include wider economic resources:

(a) First, a novel definition of property under the PRA could create confusion, and there would be a period of uncertainty as lawyers and the courts grapple with the new and unfamiliar definition. For this reason, it might be preferable to maintain a consistent approach to the definition of property across different statutory contexts where possible.24 The Supreme Court in Clayton may, however, have already signalled a departure from the conventional categories of property in the PRA context, as discussed at paragraph 8.9.

(b) Second, the inclusion of earning capacity and trust property under the PRA will raise complex questions in each case. In particular, it might be difficult to identify the component of those resources that should be considered “relationship property” and shared between

  1. Charman v Charman (No 4) [2007] EWCA Civ 503, [2007] 1 FLR 1246 at [57]. See also Thomas v Thomas [1995] 2 FLR 668 at 670; and A v A [2007] EWHC 99, [2007] 2 FLR 467.
  2. Charman v Charman (No 4) [2007] EWCA Civ 503, [2007] 1 FLR 1246 at [57]. It should be noted that the Court of Appeal did not order that the assets of the trust should be transferred, nor that the trust be varied. Instead, the Court’s orders were in respect of the husband’s property, taking into account the additional financial resources he had available by way of the trust.

24 The Supreme Court of the United Kingdom has made similar observations in Prest v Petrodel Resources Ltd [2013] UKSC

34[2013] UKSC 34; , [2013] 2 AC 415. At [37] per Lord Sumption the Court rejected the argument that a different definition of property should apply under relationship property law, concluding instead that core property law principles should remain constant across different legal contexts:

Courts exercising family jurisdiction do not occupy a desert island in which general legal concepts are suspended or mean something different. If a right of property exists, it exists in every division of the High Court and in every jurisdiction of the county courts. If it does not exist, it does not exist anywhere.

Lady Hale, who agreed with the leading judgment of Lord Sumption, said at [87]–[88] that s 24(1)(a) of the Matrimonial Causes Act 1973 (UK) referred only to rights recognised by the law of property and nothing in the wording of the statute nor its history suggested a wider interpretation.

the partners.25 For example, if a partner ’s earning

capacity is divisible to the extent it has been enhanced by the relationship, how is such enhancement to be ascertained? The valuation of those resources is also likely to be a difficult exercise. The inclusion of such resources may therefore increase the contestability

of relationship property matters, undermining the principle that all questions under the PRA should be resolved as inexpensively, simply and speedily as is consistent with justice.26 We look at these questions

in greater detail in Chapter 11 when considering super profits and earning capacity.

(c) Third, there are other ways to recognise and account for the benefits bestowed on one partner by wider economic resources. We discuss some options in

respect of trust property in Part G. We also note that the approaches taken in Australia and England and Wales described above do not go as far as dividing a partner ’s economic resources. Rather, they are taken into account as one among many factors that influence how the courts divide the partners’ conventional property.27

It would be a radical step for the PRA to deem wider economic resources as property which is divisible between the partners.

(d) Fourth, the main criticism regarding the narrowness of PRA generally focuses on two specific economic resources that are currently not considered “property”: earning capacity and property held on trust. We discuss the issues caused by the exclusion of these resources from the PRA in subsequent parts of the Issues Paper.28

It may be unnecessary to amend the PRA’s definition of property to include economic resources generally.

Rather, it may be preferable to assess whether the


  1. In Mark Henaghan “Sharing Family Finances at the end of a Relationship” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming), Henaghan proposes an approach that would include earning capacity as relationship property in its own right, which would then be divided equally alongside the parties’ other relationship property. Henaghan proposes a formula to ascertain the amount of earning capacity to be counted as relationship property. This formula is discussed at n 278

below.

26 Property (Relationships) Act 1976, s 1N(d). See Chapter 3 for a discussion of the principles of the PRA.

  1. As noted above at n 18, the courts in England, Wales and Australia have more discretion when making property division orders than the New Zealand courts have under the Property (Relationships) Act 1976.

28 See discussion in Chapter 11 dealing with earning capacity and Part G dealing with trusts.

definition of property should be expanded to include

specific resources on a case by case basis as we do in respect of earning capacity and trust property.

C ONSU LTATION QUESTION

C1 Should the PRA’s definition of property include wider economic resources?


Is the definition of property future-proof ?

8.16 We have considered whether the PRA can accommodate new and emerging types of property such as:29

(a) Cryptocurrencies (virtual currencies): Cryptocurrencies are digital representations of value that can be transferred, stored and traded electronically.30 A

person wishing to hold or trade cryptocurrency must use specific software to allow the currency to be transferred through a peer to peer online network.31

In the case of the cryptocurrency Bitcoin for example, a “virtual wallet” must be used. Cryptocurrencies are becoming increasingly common and so it is likely that partners in the future will hold some of their wealth in cryptocurrencies. Several hundred virtual currencies are in existence.32 Each has an exchange rate to

conventional currencies. These exchange rates are prone to quite considerable fluctuation.33

(b) Digital libraries: In previous years, when partners separated they might divide their CD and DVD collections. A modern equivalent might be that partners divide their digital libraries.34 A digital library might





29 Jade Lattimore, Bryce Menzies and Joe Box “ You Sexy Thing: New Property in the 21st Century” (seminar at the National

Family Law Conference, Melbourne, 19 October 2016).

30 Judith Lee and others “Bitcoin Basics: A Primer on Virtual Currencies” (2015) 16 BLI 21 at 22.

31 Andrea Borroni “Bitcoins: Regulatory Patterns” (2016) 32 BFLR 47 at 50–51.

32 Judith Lee and others “Bitcoin Basics: A Primer on Virtual Currencies” (2015) 16 BLI 21 at 22–23.

  1. Judith Lee and others “Bitcoin Basics: A Primer on Virtual Currencies” (2015) 16 BLI 21 at 23. The authors give the example of Bitcoin which in November 2014 reached an exchange rate of US$1,200 per Bitcoin, whereas at the time of the article’s publication it had fallen to US$400 per Bitcoin.
  2. There may be some uncertainty when considering digital libraries if the property in question is the digital files and apps themselves, or the licence granted to use the files or apps.

include media collections like movies or music. It might

also include a collection of apps.35

(c) Intellectual property rights: As more people are involved with developing software, apps and other forms of

digital design, it is likely that the intellectual property rights to these forms of work will become an issue which is more contested when partners separate.

(d) Other forms of intangible or digital property: It is likely that new forms of intangible and digital property will continue to emerge. Customer loyalty scheme credits like frequent flyer points can have considerable value. Even credits earned within computer games, like a Pokémon collection in the game Pokémon Go, can sometimes be traded for large amounts of money.36

8.17 We think that the PRA’s definition of property, and in particular the catch all “any other right or interest” is wide enough to capture all sorts of intangible things.37 For example, the Supreme Court has recently found that digital files, such as videos, constituted property under the Crimes Act 1961, which uses a very similar definition of property to the PRA.38

8.18 The key question is whether the PRA’s definition of property provides partners, lawyers and judges with sufficient guidance on whether new forms of property are indeed property for the

  1. Apps refer to computer applications which are used for a range of different activities, such as games, news, weather and social networks: BBC “What is an app?” (2 June 2014) BBC Webwise <www.bbc.co.uk>. Apps are used on devices like a tablet or smartphone.

36 Pokémon Go is a game played through mobile devices. The aim is for players to capture Pokémon. The value of extensive

Pokémon collections that some players had captured through the game rose with the widespread popularity of the game. Presenters at the Australian National Family Law Conference raised the example of Pokémon Go collections: Jade Lattimore, Bryce Menzies and Joe Box “ You Sexy Thing: New Property in the 21st Century” (seminar at the National Family Law Conference, Melbourne, 19 October 2016).

  1. RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [10.3] lists the types of property that the courts have said to be property as “any thing in action, and any other right or interest”. The courts have said property includes: assignable goodwill, a transmissible right of action for damages, debts, company shares, an option to purchase, a right to receive an Armed Services Terminal Benefit on future retirement, the right to superannuation benefits contingent upon future events, a life interest, rights pursuant to proprietary estoppel or constructive trust,

rights pursuant to a building society secret ballot, fishing rights under the Fishing Act 1983, an interest in an asset in common with a third party, rights under the Accident Compensation Act, and goodwill in a professional practice.

  1. In Dixon v R [2015] NZSC 147, [2016] 1 NZLR 678 Mr Dixon posted CCTV footage on a video-sharing website. He was then charged under s 249(1)(a) of the Crimes Act 1961 with accessing a computer system and dishonestly obtaining “property”. The issue before the Supreme Court was whether the video files Mr Dixon had obtained were property. The Crimes Act defines property in a similar way to the Property (Relationships) Act 1976. The Court concluded that the video files were property within the meaning of s 249 of the Crimes Act and upheld Mr Dixon’s conviction. At [25] the Court explained that the files could be identified, they had a value and they were capable of being transferred to others. The Court also considered that the word “property” must be interpreted in the context of the legislation in which it is

used. In this case, the Court said it was clear that s 249 was intended to apply to circumstances like Mr Dixon’s use of the video files. The Court relied on the High Court of Australia decision in Kennon v Spry [2008] HCA 56, (2008) 238 CLR 366 at [89] for this proposition. The Supreme Court’s decision in Dixon v R suggests that the PRA’s definition is broad enough to apply to new forms of property, particularly digital files.

purposes of the PRA. As discussed above, the PRA’s definition of

property simply lists what is included as property, which is very broad.

8.19 While court decisions (in New Zealand and overseas), academic literature and continuing legal professional development courses will all provide insights into what emerging forms of property come under the PRA, this may not avoid the need to go to court in order to establish whether a new form of property comes within the PRA.

8.20 The main problem with the PRA’s definition of property is that it does not explain how or why something should be treated as property.39 Lawyers may struggle to advise clients on whether emerging forms of property will be treated as property under the PRA. Consequently, valuable items may be omitted from the relationship property pool because they were overlooked.

Alternatively, partners may suffer prolonged and costly disputes over whether an item should be treated as property.

8.21 There are also difficulties in valuing emerging forms of property.

The future trend of emerging property can be unclear. New technology may become very popular, or it can quickly fade away. These matters are difficult to predict. The value of some

emerging property is likely to fluctuate considerably. The value of cryptocurrencies, for example, can be very volatile. Best practices for valuing emerging forms of property may not have developed. How, for example, should the value of a Pokémon Go collection be determined?

Should the PRA include a more prescriptive definition of property?

8.22 While we think that the current definition of property is broad enough to capture emerging forms of property, there may still be merit in changing the definition to provide a way to determine whether an item constitutes property. Some statutes define property with greater prescription than the PRA, although

these statutes operate in different policy areas. For example the


  1. In Clayton v Clayton [Vaughan Road Property Trust] [2016] NZSC 29, [2016] 1 NZLR 551 at [27] the Supreme Court noted the different definition of property under the Property Law Act 2007: “everything capable of being owned, whether

it is real or personal property, and whether it is tangible or intangible property”. The Supreme Court said “[t]his is an attempt to define what the concept of ‘property’ means, unlike the definition in the PRA which is essentially an inclusive definition...”.

Criminal Proceeds (Recovery) Act 2009 defines property in a

conventional manner: property means real and personal property of any kind and any other right or interest.40 The Act goes further, however, and defines “interest” as:41

(a) a legal or equitable estate or interest in the property; or

(b) a right, power, or privilege in connection with the property.

8.23 These definitions are supported by section 58 of the Act which provides that where people exercise “effective control” over property, they are to be treated as though they had an interest in the property. The “effective control” definition has been applied where a person controls a corporate structure42 and trusts.43 The Act’s extended definition of interest exists to fulfil the purposes of that legislation. Principally, the definition is targeted at ensuring all “tainted property” or property to which a forfeiture order may apply comes under the Act. The extended definition also allows for the identification of appropriate parties who may wish to apply

for relief from forfeiture.44

8.24 The Property Law Act 2007, which deals with certain aspects

of the law relating to real and personal property, has adopted a different definition of property to its predecessor legislation.45 It now provides that property means “everything capable of being owned, whether it is real or personal property, and whether it is tangible or intangible property”.46

8.25 If the PRA’s definition of property was to be amended to provide greater guidance on what property the PRA is concerned with, the definition would need to be drafted to best achieve the PRA’s policy objective. Careful consideration would be needed. We are

40 Criminal Proceeds (Recovery) Act 2009, s 5(1), definition of “property”.

41 Criminal Proceeds (Recovery) Act 2009, s 5(1), definition of “interest”.

42 Commissioner of Police v Li [2014] NZHC 479.

43 Commissioner of Police v Ranga [2013] NZHC 745; Commissioner of Police v Clifford [2014] NZHC 181; and Commissioner of

Police v Read [2015] NZHC 2055.

44 Simon France (ed) Adams on Criminal Law – Sentencing (online looseleaf ed, Thomson Reuters) at [CP5.22.01].

  1. Property Law Act 2007, s 3. The aim of reformulating the definition of property reflected the Law Commission’s recommendation that the elements of the former inclusive definition of property under the Property Law Act 1952 be broken up and placed elsewhere in the Act: Law Commission A New Property Law Act (NZLC R29, 1994) at 258. The Property Law Act 2007 now has a very general definition of property under s 4, but the definition of what intangible property may include is found under subpart 5 of pt 2, s 48.
  2. Property Law Act 2007, s 4, definition of “property”. The Property Law Act 2007 does not, however, define what is meant by ownership, and its definition of “owner” is only in respect of certain conventional interests in land: Property Law Act

2007, s 4, definition of “owner”.

currently unaware of any other legislation that would provide a

workable precedent for the PRA’s statutory purpose.

8.26 A solution may be to retain the current definition but specify particular items that ought to be included. We consider in Chapter

11 whether a partner ’s earning capacity ought to be included and we consider in Part G whether trust property ought to be included.

C ONSU LTATION QUESTIONS

C2 Should the PRA’s definition of property be retained so that questions of whether the PRA applies to emerging forms of property is left to the courts to decide on a case by case basis?

C3 Should the PRA’s definition of property be amended so that it defines property in greater detail? If so, is it preferable to amend the definition to expand the items that are included as property? Which items ought to be included?

Exclusion of Māori land from the PRA

8.27 Land is a taonga tuku iho of special significance to Māori people.47

For that reason Te Ture Whenua Māori Act 1993 (TTWMA) promotes the retention of Māori land in the hands of its Māori owners, their whānau, their hapu, and their descendants.48

TTWMA operates as a code, and Māori land can only be sold, gifted or otherwise disposed of in accordance with its rules.49

Proposed alienations of Māori land must generally be approved by the Māori Land Court.50

8.28 Only five per cent of New Zealand’s land is Māori freehold land and very little Māori customary land remains.51 Māori land is typically owned in common with many other owners.52 It is


47 Te Ture Whenua Māori Act 1993, preamble and s 2.

48 Te Ture Whenua Māori Act 1993, preamble, s 2 and pt 6. Section 2 defines Māori land as Māori customary land (held in accordance with tikanga Māori) and Māori freehold land (Māori customary land to which the beneficial ownership has been determined according to tikanga Māori by order of the Māori Land Court).

49 Te Ture Whenua Māori Act 1993, s 146. Information on Māori land is available on the Māori Land Court website <www. maorilandcourt.govt.nz>.

50 Te Ture Whenua Māori Act 1993, pts 7 and 8.

51 Statistics New Zealand He Arotahi Tatauranga: Supplementary Information (August 2014) at 10.

52 Ministry of Agriculture and Forestry Māori Agribusiness in New Zealand: a study of the Māori Freehold Land Resource

(March 2012) at 5. Te Ture Whenua Māori Act 1993 (TTWMA), part 12 provides for five types of Māori landowner

trusts that may relate to Māori land, other land classified under the TTWMA and shares in a Māori incorporation that is incorporated under part 13 of TTWMA.

largely non-arable and some is landlocked.53 The importance of

Māori land however generally lies not in its monetary value, but in its ancestral, spiritual, cultural and historical value.54

8.29 Section 6 of the PRA provides that “[n]othing in this Act shall apply in respect of any Māori land within the meaning of [TTWMA].” As noted by the Family Court in Rawhiti v Marama, Parliament’s intention seems to have been to exclude Māori land completely from the ambit of the PRA.55 In doing so, section

6 protects the special status of Māori land and recognises the interests of other people in that land.56

What happens when partners separate?

8.30 The exclusion of Māori land from the PRA means that if one

or both of the partners owns Māori land, that land will not fall within the pool of relationship property available for sharing upon death or separation. This remains the case even if Māori land

was used as the family home, and/or if the non-owning partner made or paid for improvements to the land, thereby increasing its value.57 Similarly, a court cannot order one partner to transfer

Māori land to the other partner for compensation purposes, such





53 The Ministry of Agriculture and Forestry (now Ministry for Primary Industries) estimated that 80 per cent of land held in

Māori title is of non-arable class and 30 per cent is landlocked: Ministry of Agriculture and Forestry Māori Agribusiness in New Zealand: a study of the Māori Freehold Land Resource (March 2012) at 2.

  1. Jacinta Ruru “Implications for Māori: Contemporary Legislation” in Nicola Peart, Margaret Briggs, and Mark Henaghan Relationship Property on Death (Brookers, Wellington, 2004) 467 at 469. In Yates v Nathan the Deputy Chief Judge noted that “general land...lacks the same characteristics associated with land to which Māori people are associated in

accordance with tikanga”. In that case the Deputy Chief Judge exercised jurisdiction under s 44 of Te Ture Whenua Māori Act 1993 (TTWMA) to amend orders of the Court constituting a whānau trust under s 214. The respondent had failed to disclose to the Court the applicant’s potential claim under the Property (Relationships) Act 1976 (PRA) in relation to the land which was classified as general land owned by Māori under s 129 of TTWMA. The orders constituting the trust were made conditional on there being no successful PRA claim by the applicant before the Family Court: Yates v Nathan (2016) Chief Judge’s MB 223 (2016 CJ 223).

  1. Rawhiti v Marama (1983) 2 NZFLR 127 (FC) at 127. Jacinta Ruru and Leo Watson describe this as “good law”, recognising “the importance of the blood connection that ties land and taonga to a collective rather than an individual responsibility”: Jacinta Ruru and Leo Watson “Should Indigenous Property be Relationship Property?” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

56 As discussed in Part A, Māori land was not excluded from the predecessor regime (the Matrimonial Property Act

1963). It was only upon passing of the 1976 Act that Māori land was no longer covered. There was no discussion of the change in Parliament at the time of the 1976 Bill and it seems simply to reflect the evolving paradigm of the 1970s that special rules for Māori land were thought necessary, reflecting the importance of property passing in accordance with the principle of descent in te ao Māori. See Jacinta Ruru “Implications for Māori: Historical Overview” in Nicola Peart, Margaret Briggs, and Mark Henaghan Relationship Property on Death (Brookers, Wellington, 2004) 445 at 464; and Justice Joseph Williams “The Henry Harkness Lecture: Lex Aotearoa: An Heroic Attempt to Map the Māori Dimension in Modern New Zealand Law” [2013] WkoLawRw 2; (2013) 21 Waikato L Rev 1 at 11.

  1. The provisions of the Property (Relationships) Act 1976 in ss 9A and 10(2) which enable separate property to become relationship property do not apply as Māori land is not separate property.

as where one partner used relationship property to pay off a

personal debt.58

8.31 The rights, if any, of a non-owning partner in respect of Māori land on separation are not covered in TTWMA, although it does provide for a right of occupation when one partner dies.59 Nor does the Te Ture Whenua Māori Bill 2016, as currently drafted, appear to address the position on separation.60 In 2008 Ruru referred to this as a legislative gap between TTWMA and the PRA that is unacknowledged by the judiciary and Parliament.61

8.32 Historically, owners of Māori land rarely built and resided on their land.62 However more recently owners are increasingly being encouraged and enabled to live and build on their land,63 which means questions as to the rights of non-owning partners, particularly in respect of family homes built on Māori land, may arise more frequently in future.

The PRA applies if the family home is a chattel

8.33 As was observed in Rawhiti v Marama,64 because Māori land

is exempt from the PRA, a family home that is fixed to Māori land would also be exempt.65 However buildings and other improvements that are not fixed to the land are regarded in law as chattels, and are therefore not excluded under section 6 of the PRA. This means that improvements that are not fixed to Māori land, such as movable houses, can be classified as relationship property and divided under the PRA.


58 Property (Relationships) Act 1976, s 20E(1)(b).

  1. Te Ture Whenua Māori Act 1993, s 328. The right applies where a person has a beneficial interest in that land, such as a life interest devised by will: see s 108(4).

60 Te Ture Whenua Māori Bill 2016 (126-2). At the time of writing, the Bill is currently in the Committee of the Whole

House in Parliament.

61 Jacinta Ruru “Finding Solutions for the Legislative Gaps in Determining Rights to the Family Home on Colonially Defined

Indigenous Lands” (2008) 41 UBC L Rev 315 at 327.

  1. Ruru notes that land that stayed in Māori ownership following conversion and alienation through the Native Land Court was often remote and non-arable, and that Māori freehold land titles often have multiple owners and it is nearly impossible for one owner to obtain consent from all the others to build a family home on the land: Jacinta Ruru “Finding Solutions for the Legislative Gaps in Determining Rights to the Family Home on Colonially Defined Indigenous Lands” (2008) 41 UBC L Rev 315 at 334 and 337.

63 See, for example, the proposals emerging from the most recent review of TTWMA: Te Ture Whenua Māori Act 1993

Review Panel Report of the panel appointed to review Te Ture Whenua Māori Act 1993 (March 2014).

64 Rawhiti v Marama (1983) 2 NZFLR 127 (FC) at 127.

  1. This reflects the general property law principle that what is fixed to the soil belongs with the soil: Elitestone Ltd v Morris [1997] UKHL 15; [1997] 2 All ER 513. See further Stock v Morris – Wainui 2D2B (2012) 41 Taitokerau MB 121 (41 TTK 121) and Jacinta Ruru “Finding Solutions for the Legislative Gaps in Determining Rights to the Family Home on Colonially Defined Indigenous Lands” 41 (2008) UBC L Rev 315 at 339.

8.34 The main indicators of whether a building is a fixture rather

than a chattel are the degree of annexation and the purpose

of annexation.66 The Māori Land Court used this distinction to provide relief to a non-owner of Māori land in Epiha William Hills

– Kaiapoi MR873 Blk XI Sec 71B.67 In that case the sole owner of Māori land wished to build a house for his family, but could only do so if his wife contributed $200,000 towards its construction. The wife would only do so if she could become joint owner of

the land. The Māori Land Court said that it had no jurisdiction to transfer half ownership to her, and declined to exercise its jurisdiction to change the status of the land to general land. But

if the house were built so that it could be easily transported away from the land, the Court could make an order declaring the house to be a chattel owned solely by the wife.68

A claim in constructive trust

8.35 TTWMA does not prevent constructive trust claims being brought in respect of Māori land. The Māori Land Court has said that, although general principles of property law provide

that the owners of the land also own any fixtures, section 18(1) (a) of TTWMA enables the Court to recognise that someone

may separately own, by way of a beneficial interest under a constructive trust, an improvement on the land.69 The Court

has used these principles to recognise a non-owner ’s beneficial interest in buildings fixed to Māori land.70

8.36 The leading case is Stock v Morris – Wainui 2D2B, decided by the

Māori Land Court in 2012.71 In that case the parties lived together

66 Nga Uri a Maata Ngapo Charitable Trust v McLeod — Harataunga West 2B2A1 (2012) 49 Waikato Maniapoto MB 223 (49

WMN 223) at [41] referring to Auckland City Council v Ports of Auckland [2000] NZCA 190; [2000] 3 NZLR 614 (CA) which adopted the approach of the House of Lords in Elitestone Ltd v Morris and Anor [1997] UKHL 15; [1997] 1 WLR 687, [1997] 2 All ER 513.

67 Epiha William Hills – Kaiapoi MR 873 Blk XI Sec 71B (2005) 110 SI 85.

  1. Epiha William Hills – Kaiapoi MR 873 Blk XI Sec 71B (2005) 110 SI 85 at 89. Kāinga Whenua loans are available to build, purchase or relocate a house on multiple-owned Māori land subject to a tripartite deed between the borrower, owners and Housing New Zealand: see Kāinga Whenua information on the Housing New Zealand website <www.hnzc. co.nz>. The terms of the tripartite deed may stipulate design requirements, such as that the house be built on piles. In Housing Corporation of New Zealand – Waimanoni 1B3B2A (1996) 19 Kaitaia MB 227 (19 KT 227) the Court found that the parties to the deed had treated the house as a chattel. In Anderson – Te Raupo (2015) 99 Taitokerau MB 206 (99

TTK 206) and Bennett – Estate of Ronald Clifford Bennett (2017) 156 Waiariki MB 250 (156 WAR 250) the Court found the house to be a fixture that would only become a chattel if the lender ’s right to remove the house was triggered by a default by the borrower.

69 See Nga Uri a Maata Ngapo Charitable Trust v McLeod – Harataunga West 2B2A1 (2012) 49 Waikato Maniapoto MB 223 (49

WMN 223) at [35]; Stock v Morris – Wainui 2D2B (2012) 41 Taitokerau MB 121 (41 TTK 121) at [26].

70 Stock v Morris – Wainui 2D2B (2012) 41 Taitokerau MB 121 (41 TTK 121) at [30] referring to Matenga v Bryan – Parish of

Tahawai Lot 18C-F and 181 (2003) 73 Tauranga MB 150 (73 T 150) and Brokenshaw – Te Kaha B6X2 (2003) 81 Opotiki MB

18 (81 OPO 18).

71 Stock v Morris – Wainui 2D2B (2012) 41 Taitokerau MB 121 (41 TTK 121).

for eight years on Māori land. The applicant was an owner in the

land, and the respondent a non-owner. During their relationship the respondent paid approximately $60,000 for the construction of a cottage on the land. On separation, the applicant claimed ownership of the cottage, supported by her fellow owners. The respondent sought half the value of the cottage. The Court found that the cottage (which had been built on a concrete slab) was part and parcel of the land and could not be treated as a chattel.72

It could not be uplifted, and the applicant could not afford to purchase the respondent’s claimed half-share in the cottage. The central issue for the Court was how it should do justice between the parties, within the parameters of the TTWMA.73

8.37 The Court examined the scope of its powers under section 18(1) (a) of TTWMA to hear and determine a claim in equity. It said that the Court could make orders under that section in favour

of a non-owner, and had done so in the past.74 The Court went on to say that where a non-owner is entitled to equitable relief in relation to a fixture on Māori land, the Court should in the first place look to award monetary compensation. If monetary compensation is inappropriate, the Court may award ownership of the fixture if it can be removed from the land. The Court will also take into account the non-owner ’s free occupation of the land.75 However an order vesting interests in the land, or a right of possession in favour of a non-owner would likely offend the kaupapa and provisions of TTWMA,76 although it noted that the Court of Appeal had not completely ruled out this possibility.77

8.38 The Court in Stock v Morris concluded that the applicant was the owner of the cottage but that the non-owner was entitled to compensation. The order declaring the applicant the owner was made conditional upon the respondent paying the non-owner compensation within two years. The Court also issued a charging



72 Stock v Morris – Wainui 2D2B (2012) 41 Taitokerau MB 121 (41 TTK 121) at [22].

73 Stock v Morris – Wainui 2D2B (2012) 41 Taitokerau MB 121 (41 TTK 121) at [1].

  1. Stock v Morris – Wainui 2D2B (2012) 41 Taitokerau MB 121 (41 TTK 121) at [64], referring to Matenga v Bryan – Parish of Tahawai Lot 18C-F and 181 (2003) 73 Waikato Maniapoto 150 (73 T 150). See also Nga Uri a Maata Ngapo Charitable Trust v McLeod – Harataunga West 2B2A1 (2012) 49 Waikato Maniapoto MB 223 (49 WMN 223).

75 Stock v Morris – Wainui 2D2B (2012) 41 Taitokerau MB 121 (41 TTK 121) at [70].

76 Stock v Morris – Wainui 2D2B (2012) 41 Taitokerau MB 121 (41 TTK 121) at [70]. See also Tipene v Tipene – Motatau 2

Section 49A4F (2014) 85 Taitokerau MB 2 (85 TTK 2) at [63] and Owen v Hauiti – Kiwinui A (2016) 57 Tairawhiti MB 70 (57 TRW 70) at [69].

77 Grace v Grace [1995] 1 NZLR 1 (CA) at 5.

debt under section 82 of TTWMA, charging the owner ’s interest in

the home with the sum owing.78

Issues with the remedies for family homes on

Māori land

8.39 While the Māori Land Court can make an order declaring a house to be a chattel, it can only do so if the house was built so that it could be easily relocatable. If the house is a fixture,

the Court cannot say it is a chattel as it only has jurisdiction to declare existing ownership rights and cannot transfer or create new ownership rights.79 The extent to which the Court can grant equitable relief in respect of houses and other buildings that are fixtures on Māori land remains unclear.80

8.40 Ruru notes the reality of removable homes as a solution to the legislative gap is feasible and the concept of removable

or relocatable homes is becoming more common.81 However, removable homes can be both logistically problematic and expensive, and the solution adds another constraint on the effective utilisation of Māori land.82 It may also be the case that some homes are regarded as a taonga, imbued with a sense of tapu. In this situation, removal or relocation would be contrary to

tikanga Māori and therefore unacceptable.83



  1. Stock v Morris – Wainui 2D2B (2012) 41 Taitokerau MB 121 (41 TTK 121) at [77]. The Court noted at [74] there was some prospect that the respondent may not receive compensation and that the Court had limited powers to enforce payment.
  2. Stock v Morris – Wainui 2D2B (2012) 41 Taitokerau MB 121 (41 TTK 121) at [25]. The Court discussed but did not prefer the line of authority which conceptualised the house as a chattel following the making of an order under s 18(1)(a) (the “fixture to chattel” theory): at [43] to [47].
  3. Despite the Māori Land Court’s willingness to apply constructive trust principles over the family home, there is an argument that a constructive trust over Māori land is inconsistent with Te Ture Whenua Māori Act’s prohibition on any form of disposition of any equitable interest in Māori land other than in accordance with that Act: see Josie Te Rata, “Papakāinga: Tools for Determining Rights to the Family Home in a Māori Land Context” (paper prepared for Laws 455

Māori Land Law, University of Otago) at 10; Te Ture Whenua Māori Act 1993 (TTWMA), s 4, definition of “alienation”, para (a)(i), and s 146. The Court in Stock v Morris rationalised its ability to “do equity” in relation to Māori freehold land on the basis that the preamble and ss 2 and 17 set the kaupapa of TTWMA and promoted the interests of the owners, but the Court could not allow the actions of owners to cause injustice to non-owners: Stock v Morris – Wainui 2D2B (2012)

41 Taitokerau MB 121 (41 TTK 121) at [65]. However, it remains unclear what rights a constructive trust over Māori freehold land could confer that would not be contrary to TTWMA.

81 Jacinta Ruru and Leo Watson “Should Indigenous Property be Relationship Property?” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

82 Jacinta Ruru and Leo Watson “Should Indigenous Property be Relationship Property?” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

83 Jacinta Ruru and Leo Watson “Should Indigenous Property be Relationship Property?” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

8.41 For these reasons, there may be merit in clarifying the legal

position of non-owning partners when the family home is on

Māori land.

Options to provide for family homes on Māori land

8.42 The current legislative position reflects a policy decision that

the retention of Māori land in the bloodline is preferred over an ability of the non-owning partner to claim an interest in the land. We are not considering removing the exclusion of Māori land from the PRA. This would have significant implications for TTWMA and Māori custom law. Further we are not aware of any issues with

the exclusion of Māori land other than the issue of addressing improvements made by the non-owning partner, particularly in respect of family homes.

8.43 Enabling a non-owning partner to claim an interest in the family home but not the land on which it sits would represent an alternative policy balance that could be supported on the basis that it enables a just division of property that has a connection to the relationship, either because it is used as the family home or because it is attributable to the relationship.84 Alternatively, the non-owning partner ’s actions or contributions to improving the land could be recognised by way of compensation. These options are discussed below.

8.44 In Part H we discuss which court, or courts, should hear claims that raise issues of importance to Māori, including family homes on Māori land.

Option 1: Treating the family home on Māori land as a family home under the PRA

8.45 One option is to enable a non-owning partner to claim an interest in Māori land by treating the family home (but not the land on which it sits) as a family home under the PRA.

8.46 The family home could be classified as relationship property either on the basis that it was for family use or that it was attributable

to the relationship through the efforts of the partners. The family

home could form part of the relationship property pool and a

  1. See Chapter 9 for a discussion of the “family use” and “fruits of the relationship” approaches to the classification of relationship property.

court could make orders with respect to the family home in

accordance with the provisions of the PRA.

8.47 In practical terms this would mean that the value of the interest in the family home is brought into the relationship property pool and accounted for from other relationship property, but the land itself is not.

8.48 This would provide a more equal balance between the policies underpinning the TTWMA and PRA. However, a significant practical limitation is that there may be no other assets from which to satisfy the other partner ’s entitlement to a share in the relationship property.

Option 2: Providing compensation under the PRA

8.49 Another option is to amend the PRA to provide a mechanism to compensate a non-owning partner for his or her actions in increasing the value of Māori land. This would be consistent with the policy and provisions of the TTWMA and would overcome the difficulties identified with the current approach.

It would, however, be inconsistent with the focus in the PRA on contributions to the relationship, rather than to specific items of property.85

8.50 A new mechanism specifically for family homes on Māori

land would recognise the unique policy considerations at play. Amending the PRA’s existing compensation provisions will not achieve this and is unlikely to be the best conceptual and practical fit in light of the underlying ownership of the land.86

8.51 Amending the PRA’s provisions to provide compensation may acknowledge a non-owner ’s rights but, again, such opportunities can be limited in practice if the owning partner has insufficient

  1. See Chapter 2 for a discussion on why the Property (Relationships) Act 1976 replaced the earlier approach in the Matrimonial Property Act 1963 which focused on the contributions of the non-owning partner to specific items of property. The exception is s 9A(2)(b), which applies when an increase in the value of separate property is attributable to the actions of the non-owning partner. That section requires the court to determine the partners’ respective shares in accordance with “the contribution of each spouse of partner to the increase in value”. We discuss the problems with this approach in Chapter 10.
  2. For example, s 17 of the Property (Relationships) Act 1976 could be applied to order compensation to be paid where a partner ’s separate property has been sustained by the application of relationship property or the actions of the other partner. Alternatively, Ruru and Watson discuss an amendment to enable the Family Court to take Māori land interests into account when considering a compensatory order under s 11B of the PRA for the absence of an interest in the family home: Jacinta Ruru and Leo Watson “Should Indigenous Property be Relationship Property?” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming). Josie Te Rata suggests a provision similar to s 9A that would compensate a non-owning

partner by adjusting the division of other relationship property to reflect the increase in value of the land attributable to the non-landowning partner ’s actions: Josie Te Rata, “Papakāinga: Tools for Determining Rights to the Family Home in a Māori Land Context” (paper prepared for Laws 455 Māori Land Law, University of Otago) at 9.

assets from which any compensation can be drawn. Nor would

such amendments overcome the difficulties arising from land in multiple ownership as compensation can only be drawn from an owning partner ’s share in the land.

8.52 Te Rata notes, however, that in trying to strike a policy balance between retaining Māori land in the hands of its owners while compensating non-owning partners for their contributions, direction could be provided to the court on how to determine and give effect to a non-owning partner ’s rights.87

Option 3: Remedies under Te Ture Whenua Māori Act 1993


8.53 TTWMA operates as a code for interests in Māori land. Although a non-owner ’s interest in a family home may be a product of a relationship, it is arguable that any attempt to fill the legislative gap in relation to contributions to Māori land should more appropriately sit in TTWMA.

8.54 There may be situations where it would be appropriate in the circumstances and in accordance with tikanga for the Māori Land Court to award an interest in land or otherwise provide compensation to a non-owner following a separation. TTWMA currently provides for rights for non-owners, including the provision of a life interest88 or a financial interest89 following the death of a partner, and the right of an owner of a beneficial interest to occupy land.90 These provisions could be adapted, or

new compensation provisions added, to recognise a non-owner ’s contribution to the family home.

8.55 While amendments to TTWMA are outside our terms of reference, we are interested in hearing whether this is an appropriate

avenue for reform.

C ONSU LTATION QUESTIONS

C4 Do you think that the law should provide rights or recognise interests in respect of a

  1. Josie Te Rata, “Papakāinga: Tools for Determining Rights to the Family Home in a Māori Land Context” (paper prepared for Laws 455 Māori Land Law, University of Otago) at 9 in relation to a suggested amendment similar to s 9A.

88 Te Ture Whenua Māori Act 1993, ss 108(4) and 109(2).

  1. Te Ture Whenua Māori Act 1993, s 116. Parliament is alive to the issue of injustice: s 116(3) states “In enacting this provision, Parliament has in mind particularly the possibility of injustice arising in individual cases from the prohibitions enacted by this Act against the alienation of beneficial interests in Māori freehold land to persons outside defined classes, and is therefore desirous of conferring on the court some flexible, if limited, powers to ameliorate any such injustice.

90 Te Ture Whenua Māori Act 1993, s 328.

family home on Māori land, when one partner is not an owner of that land?

C5 If so, what option do you prefer, and why?

Chapter 9 – Classifying

relationship property and separate property

9.1 The PRA recognises that certain types of property should be

shared between the partners at the end of the relationship, whereas other types of property should not. The PRA calls the types of property that should be divided relationship property. Property that is not shared remains each partner ’s separate property. The process of determining whether an item of property is relationship property or separate property is referred to as “classification”.

Relationship property, separate property and debts

Relationship Property

9.2 Section 8(1) of the PRA provides that relationship property consists of:91

(a) the family home whenever acquired; and

(b) the family chattels whenever acquired; and

(c) all property owned jointly or in common in equal shares by the married couple or by the partners; and

(d) all property owned by either spouse or partner immediately before their marriage, civil union, or de facto relationship began, if—

(i) the property was acquired in contemplation of the marriage, civil union, or de facto relationship; and

(ii) the property was intended for the common use or common benefit of both spouses or partners; and


91 Many of the types of property listed in s 8 of the Property (Relationships) Act 1976 are defined further elsewhere in the

Act, for example the family home, the family chattels, a life insurance policy, and a superannuation scheme.

(e) subject to sections 9(2) to (6), 9A, and 10, all property

acquired by either spouse or partner after their marriage, civil union, or de facto relationship began; and

(ee) subject to sections 9(3) to (6), 9A, and 10, all property acquired, after the marriage, civil union, or de facto relationship began, for the common use or common benefit of both spouses or partners, if—

(i) the property was acquired out of property owned by either spouse or partner or by both of them before the marriage, civil union, or de facto relationship began; or

(ii) the property was acquired out of the proceeds of any disposition of any property owned by either spouse or partner or by both of them before the marriage, civil union, or de facto relationship began; and

(f ) [Repealed]

(g) the proportion of the value of any life insurance policy (as defined in section 2), or of the proceeds of such a policy, that is attributable to the marriage, civil union, or de facto relationship; and

(h) any policy of insurance in respect of any property described in paragraphs (a) to (ee); and

(i) the proportion of the value of any superannuation scheme entitlements (as defined in section 2) that is attributable to the marriage, civil union, or de facto relationship; and

(j) all other property that is relationship property under an agreement made under Part 6; and

(k) any other property that is relationship property by virtue of any other provision of this Act or by virtue of any other Act; and

(l) any income and gains derived from, the proceeds of

any disposition of, and any increase in the value of, any property described in paragraphs (a) to (k).

Separate Property

9.3 Separate property generally falls under one of three categories: (a) Property of either partner that is not relationship

property. Section 9(1) defines separate property broadly as all property that does not fall within any of

the categories of relationship property under section

8. Section 9 goes on to provide that separate property includes:

(i) all property acquired out of separate property and the proceeds of any disposition of separate property;92

(ii) any increase in the value of separate property, and any income or gains derived from separate property;93

(iii) all property acquired by either partner while they are not living together, or by the surviving partner after the death of one of the partners, unless the court considers it just in the circumstances to treat the property as relationship property;94 and

(iv) all property acquired by either partner after a court has made an order defining the partners’ respective interests in the relationship property, or dividing that property.95

(b) Property acquired by one partner from a third party.

Section 10 provides that separate property includes property a partner acquires from a third person:96

(i) by succession; (ii) by survivorship; (iii) by gift; or

(iv) because the partner is the beneficiary under a trust settled by a third person.

(c) These items of property will be classified as separate property even if they fit the description of relationship property under section 8. The family home and



92 Property (Relationships) Act 1976, s 9(2), which is subject to ss 8(1)(ee), 9A(3) and 10.

93 Property (Relationships) Act 1976, s 9(3), which is subject to s 9A.

94 Property (Relationships) Act 1976, s 9(4).

95 Property (Relationships) Act 1976, s 9(5). This section does not apply in respect of orders made under s 25(3).

96 Property (Relationships) Act 1976, ss 10(1) and 10(2). This includes the proceeds of a disposition of property, to which s

10(1)(a) applies, and property acquired out of property to which s 10(1)(a) applies: ss 10(1)(b) and 10(1)(c). If, however, the property listed in s 10(1) has been so intermingled with other relationship property that it is unreasonable or impracticable to regard that property or those proceeds as separate property, it may be classified as relationship property.

family chattels, however, will always be classified as

relationship property.97

(d) Special types of property recognised by the PRA: These are other items of property that ordinarily would be relationship property, but for which the PRA makes specific provision. This includes property that one partner receives by gift from the other partner.98 It also includes certain types of chattels that would otherwise be classified as relationship property, specifically:99

(i) chattels used wholly or principally for business purposes;

(ii) money or securities for money;

(iii) heirlooms; and



Debts

(iv) taonga.

9.4 Partners’ debts are classified under the PRA in a similar way to relationship and separate property. A relationship debt is a debt that has been incurred:100

(a) by the partners jointly;

(b) in the course of a common enterprise carried on by the partners;

(c) for the purpose of acquiring, improving, or maintaining relationship property;

(d) for the benefit of both partners in the course of managing the affairs of the household; or

(e) for the purpose of bringing up any child of the relationship.

9.5 A personal debt is any debt that is not a relationship debt.101

97 Property (Relationships) Act 1976, s 9(4).

  1. Property (Relationships) Act 1976, s 10(3), unless the gift is used for the benefit of both partners. Note that this does not apply to the family home and family chattels, which remain relationship property: s 10(4).
  2. Property (Relationships) Act 1976, ss 2, definition of “family chattels” and 8. See Chapter 11 for a discussion of heirlooms and taonga.

100 Property (Relationships) Act 1976, s 20(1), definition of “relationship debt”.

101 Property (Relationships) Act 1976, s 20(1), definition of “personal debt”.

9.6 The classification of debts can be equally as important as the

classification of property. This is because the value of the pool of relationship property to be divided between the partners is calculated by first ascertaining the total value of the relationship property, and then deducting from that total any relationship debts owed by either or both partners.102 In this way, relationship debts are shared between the partners.103

9.7 If one partner has paid a personal debt from relationship property, the court may order that the other partner ’s share of relationship property be increased or that the partner who paid the debt pay compensation to the other partner.104 There is no equivalent provision for relationship debts that are paid from separate property.



To show how the PRA’s rules of classification work in practice, we use the hypothet- ical example of Rebecca and Wiremu.1 Wiremu is a successful photographer. When Wiremu and Rebecca were married, Wiremu had already acquired a significant amount of property. He had amassed a significant collection of photographs, both works he created and works by other artists. He also owned a house, although he was still paying off the mortgage on it.
When the partners separate, Rebecca consults her lawyer. Her lawyer says that it is probable that the Family Court would classify the partners’ property in the following way:
Item
Classification
Relevant section of the PRA
House registered in
Wiremu’s name
Relationship property
Section 8(1)(a) – the family home whenever acquired is relationship
property
Rebecca’s KiwiSaver Super- annuation Policy acquired during the relationship
Relationship property
Section 8(1)(i) – the proportion of any superannuation attributable
to the relationship is relationship
property
Car registered in Wiremu’s name but mostly driven by
Rebecca
Relationship property
Section 8(1)(b) – the family chattels, which includes motor vehicles, are
relationship property


102 Property (Relationships) Act 1976, s 20D.

  1. It is however only the value of the debt that is shared; the legal obligations each partner has to the creditors will remain unaltered: Property (Relationships) Act 1976, s 20A.

104 Property (Relationships) Act 1976, s 20E.

Money in the partners’
bank accounts saved during the relationship
Relationship property
Section 8(1)(e) - all property ac- quired after the relationship began is
relationship property
Small boat used by the partners on holidays
Relationship property
Section 8(1)(b) – the family chattels, which includes boats, are relation-
ship property
Colour printer used by Wiremu for his work as a photographer and bought prior to the relationship
Wiremu’s sepa- rate property
Section 9(1) – all property which is not relationship property is sepa- rate property (or the printer may be considered a chattel used principally for business purposes and so is not a
family chattel)
Framed photographs bought by Wiremu prior to the relationship and displayed in the partners’
home
Relationship property
Section 8(1)(b) – the family chattels, which include household ornaments
Framed photographs bought by Wiremu prior to the relationship and dis- played in his studio (which is separate to the family
home)
Wiremu’s sepa- rate property
Section 9(1) – all property which is not relationship property is separate property
The partners’ pet dog, Monty, bought after the
relationship began
Relationship property
Section 8(1)(b) – the family chattels, which includes pets, are relationship
property
Gifts of jewellery from
Wiremu to Rebecca
Rebecca’s sepa- rate property
Section 10(3) – property gifted by one spouse to the other is separate
property
Mortgage over Wiremu’s house
Relationship debt
Section 20 – a debt incurred for the purpose of acquiring relationship
property is a relationship debt.
Personal debt incurred by Wiremu to buy the colour printer
Personal debt
Section 20 – the debt was not in- curred for a purpose that would classify it as a relationship debt, so it
is a personal debt.

The basis for classification

9.8 The classification of property is fundamental to the overall scheme of the PRA because it determines which property is to be divided between the partners.

9.9 In Part A we explained why we have the PRA, and the theories and principles on which its rules are based. To recap briefly, the PRA treats a qualifying relationship as a partnership or joint venture to which each partner contributes equally, although perhaps in different ways.105 Each partner ’s contributions to the relationship result in an entitlement to an equal share in the property of the relationship.

9.10 The concept of relationship property is intended to capture property that has a connection to the relationship, and which

the partners can justifiably consider “theirs”, irrespective of strict legal title.106

9.11 The PRA classifies two types of property as relationship property:107

(a) Property which is central to family life. This includes commonly owned and used property such as the family home and family chattels, whenever acquired. We call this the “family use” approach to classification.

(b) Property attributable to the relationship. This includes property that is directly or indirectly produced by the joint or several efforts of the partners, such as property acquired during the relationship, the proportion of

any life insurance policy or superannuation scheme attributable to the relationship and increases in the

value of separate property due to the actions of the



  1. This is reflected in the explicit and implicit principles of the PRA, discussed in Chapter 3. See AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 1 and 10. See also AH Angelo and WR Atkin “A Conceptual and Structural Overview of the Matrimonial Property Act 1976” (1977)

7 NZULR 237 at 245 and 247; Bill Atkin “Classifying Relationship Property: A Radical Re-shaping” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

  1. AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 5–6. The original Matrimonial Property Act 1976 only gave a husband and wife an equal share in the matrimonial home and family chattels. Other items of matrimonial property were divided pursuant to the spouses’ respective contributions. The law was amended in 2001 so the Property (Relationships) Act 1976 divided all relationship property equally.

107 See discussion in RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at

[11.5]–[11.6].

non-owner partner. We call this the “fruits of the

relationship” approach to classification.108

9.12 Separate property, on the other hand, is property that is unconnected to the relationship. It is excluded from division on the basis that a partner ’s contributions to the relationship cannot be said to have had any bearing on the other partner ’s separate property.

9.13 As discussed in Part A, there is no explicit principle in the PRA to explain this basis for classification. In Chapter 4 we recommended that, as a matter of good drafting practice, the implicit principles

of the PRA should be expressly stated in a comprehensive principles section, including the principle that only property that has a connection to the relationship should be divided when the relationship ends.

Is the basis for classification appropriate for contemporary New Zealand?

9.14 An important issue in this review is whether the basis for the way the PRA classifies property remains appropriate in contemporary New Zealand.

9.15 As discussed above, there are two approaches reflected in the classification of relationship property. The fruits of the relationship approach, we think, remains appropriate because it reflects the values and norms of relationships in contemporary New Zealand. As explained above and in Part A, each partner is entitled to an equal share of the relationship property as a result of the equal contributions each makes to the relationship. The fruits of the relationship approach focuses on the product of the partners’ joint and several contributions. Conversely, it excludes property which has not been produced or improved by the relationship.





108 The term “fruits of the relationship” is commonly used in the literature. See for example Haldane v Haldane [1981] 1

NZLR 554 (CA) at 569; and Geddes v Geddes [1987] 1 NZLR 303 (CA) at 307 per Somers J, “...such a construction reflects the general policy of the Matrimonial Property Act, that, save for express exceptions, matrimonial property is the fruit of the partnership.” See also Robert Fisher “Should a Property Sharing Regime be Mandatory or Optional?” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming). It is also referred to as a “gains” or “acquests” approach.

9.16 The ongoing relevance of the family use approach needs to be

considered in light of New Zealand’s changing social context and overseas trends, as we discuss below.

Does the family use approach still reflect most people’s sense of fairness?

9.17 Under the family use approach, property that one partner brings into the relationship or receives from a third party can sometimes be classified and divided as relationship property. The most common example is where the property contributed by one partner is used as the family home or as a family chattel.109 In

such cases, the non-owning partner is entitled to an equal share in that property if the partners separate.

9.18 This might not fit with most people’s expectations of fairness in some situations, particularly where one partner brings significantly more property to the relationship than the other.110

The family use approach might also lead to arbitrary results in some cases, as we discuss below.

The family use approach may lead to arbitrary results

9.19 If one partner brings a piece of furniture or appliance into the family home to be used for family purposes, it is likely to be considered a family chattel and eligible for division as relationship property. If the partner had taken the same item and placed it

in his or her office away from the home, or even if it was kept

in the home but it was not available for family use, it may retain its character as separate property. In S v S, Mr S had acquired an extensive art collection prior to his relationship with Mrs S.111

As the artworks were displayed on the walls throughout their

home, the Family Court held that Mr S had used the works as


  1. The family home and family chattels are relationship property because of their family use, regardless of when or how the property was acquired: Property (Relationships) Act 1976, s 8(1)(a) and 8(1)(b).
  2. See Robert Fisher “Should a Property Sharing Regime be Mandatory or Optional?” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming). Fisher argues that the rules of classification and division of relationship property in the Property (Relationships) Act 1976 (PRA) should be based on causation. He says only property that is the “fruit of the relationship” should be divided equally. Fisher claims this approach is the generally accepted view in New Zealand. He criticises the classification of property that was acquired either before the relationship began or from some external source, such as from an inheritance, as relationship property. In particular he criticises the current classification of the family home regardless of how it was acquired as the greatest anomaly within the PRA. This is because of the possibility that a home would be divided even though it was acquired before the relationship began or from some external source.

111 S v S [2012] NZFC 2685.

a household ornament and so they had become family chattels

and therefore relationship property.112 Mr S’s lawyer pointed out that if Mr S had collected stamps and kept the collection in a hall cupboard, the collection would have remained separate property.113

9.20 In Farrimond v Farrimond, the partners had lived in a home bought by Mr Farrimond two years before the relationship began.114 The partners’ relationship lasted for approximately 10 years. The home’s value when the relationship began was $280,000 but that had increased to $830,500 by the date of hearing. Nine months prior to the partners’ separation they moved into a property

they rented by the beach. Mr Farrimond argued that their former home had ceased to be the family home for the purposes of the PRA, and as a result was his separate property. The Family Court accepted this argument.115 On appeal, the High Court overturned the decision and said that, notwithstanding the family’s

relocation, the former home remained the family home within the meaning of the PRA.116 The High Court reasoned that the family had not been living away from the home for a considerable period of time,117 nor had they clearly intended to move away from the home on a permanent basis.118 Had the partners spent longer

away from the home, or had they clearly indicated an intention to permanently move away from the property, the house may have ceased to be the family home. As a result the pool of relationship property would have decreased by $830,500.119 It seems odd that such a significant difference can depend on such minor factors.

9.21 It could be said that partners who willingly share their property for family use, rather than keep it separate, are disadvantaged

  1. S v S [2012] NZFC 2685 at [89], although the Family Court ordered that there were extraordinary circumstances in this case under section 13 which justified a departure from equal sharing in Mr S’s favour.
  2. S v S [2012] NZFC 2685 at [80]. Mr S’s lawyer relied on the case S v S (1978) MPC 178 (SC) in which the court said that as the husband had kept several trunks gifted to him by his parents in storage, the trunks remained separate property.

114 Farrimond v Farrimond [2017] NZHC 1450.

115 Farrimond v Farrimond [2016] NZFC 9599.

116 Farrimond v Farrimond [2017] NZHC 1450 at [35].

  1. The High Court relied on s 2H of the Property (Relationships) Act 1976 which provides that the use to which property is put is to be determined by the use to which it was being put before the relationship ended. The Court also drew on the decision of Evers v Evers [1985] 2 NZLR 209 (CA) in which Richardson J for the Court of Appeal said at 211 that the Court must survey the pattern of use of the particular item up to the time the parties ceased to live together, and this may involve going back some distance in time in order to obtain a fair picture of the use of the property in the period before separation.

118 Farrimond v Farrimond [2017] NZHC 1450 at [35].

  1. It should be noted that if the house had not been considered relationship property, the wife would probably have been entitled to compensation under s 17 of the Property (Relationships) Act 1976 as had previously been ordered by the Family Court: Farrimond v Farrimond [2016] NZFC 9599.

by the family use approach to classification. For example, if one

partner owns or inherits a house, and lives in that house with his or her partner, the house will likely become relationship property. But if that house was rented out, and the couple lived elsewhere, that house would remain separate property.

The family use approach and the changing social context

9.22 Changing patterns in partnering, family formation, separation and re-partnering mean that relationships in New Zealand have undergone significant change since the PRA’s rules of classification were first drafted.120

9.23 In the 1970s the paradigm relationship was one in which children were raised and wealth was accumulated over time. Today people are generally marrying later in life,121 and are more likely to separate and re-partner.122 In 1971, just 16 per cent of marriages were remarriages.123 Since 1982 however, approximately one third of all marriages in New Zealand have been remarriages.124 These statistics do not capture people who enter a de facto relationship after separation. This is likely to be a significant group. One New Zealand study identified that 80 per cent of women who had re- partnered within five years of separation had entered into a de facto relationship rather than remarrying.125 That study also found that within two years of separation from a first marriage, 30 per cent of women had re-partnered, and that women who separated later in the study period (1950–1995) were increasingly more

120 We discuss these changes in detail in our Study Paper, Law Commission Relationships and Families in Contemporary New

Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017).

  1. In 2016, the median age at first marriage was 30 for men and 29 for women, compared to 23 for men and 21 for women in 1971, when the marriage rate peaked: Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017), citing Statistics New Zealand Information Release – Marriages, Civil Unions and Divorces: Year ended December 2016 (3 May 2017) <www.stats.govt.nz> at 5.
  2. The divorce rate has increased from 7.4 per 1,000 existing marriages in 1976, to 8.7 in 2016: Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017), citing Statistics New Zealand “Divorce rate (total population) (Annual-Dec)” (June 2017) <www.stats. govt.nz>.
  3. Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017), citing Statistics New Zealand “First Marriages, Remarriages, and Total Marriages (including Civil Unions) (Annual-Dec)” (May 2017) <www.stats.govt.nz>.
  4. Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017), citing Statistics New Zealand “First Marriages, Remarriages, and Total Marriages (including Civil Unions) (Annual-Dec)” (May 2017) <www.stats.govt.nz>.
  5. Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017), citing Ian Pool, Arunachalam Dharmalingam and Janet Sceats The New Zealand Family from 1840: A Demographic History (Auckland University Press, Auckland, 2007) at 238–239.

likely to re-partner.126 While this study is now over 20 years old, it

indicates that re-partnering has become increasingly common in

New Zealand.

9.24 These social changes mean that more people are entering new relationships later in life, and are therefore more likely to have already accumulated some property. Situations where one partner brings significantly more property into a relationship (such as

a house) might be more common. There may also be a question about the extent to which the fruits of a former relationship should be available for division at the end of a subsequent relationship. If the family use approach is considered unfair in these situations, then the issue is more significant than it was in the 1970s, and is likely to grow in the future (although we note that the rate of home ownership is decreasing127).

9.25 The family use approach might also raise issues for specific groups of people, in particular stepfamilies and older people.

The impact of the family use approach on stepfamilies

9.26 As the rate of re-partnering increases, stepfamilies have become more common. One New Zealand study identified that, in 2011, approximately 9 per cent of children were living in a stepfamily.128

Several longitudinal studies suggest that up to 18–20 per cent of all children spend some time in a stepfamily before age 16–17 years.129

9.27 If one partner brings property into the relationship for the use of the stepfamily, it will normally be divided between the partners on separation. As we discuss in Part I, children’s interests do not

generally affect the division of property. However some people we

have spoken to in our preliminary consultation think it would be

  1. Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017), citing Ian Pool, Arunachalam Dharmalingam and Janet Sceats The New Zealand Family from 1840: A Demographic History (Auckland University Press, Auckland, 2007) at 238–239.

127 In New Zealand the rate of home ownership has decreased from a record high 74 per cent in 1991 to 65 per cent in

2013: Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017), citing Families Commission The kiwi nest: 60 years of change in New Zealand families (Research Report No 3/08, 2008) at 86 and 96. If this trend continues, fewer couples will have a family home to divide when they separate.

128 Megan Gath Identifying stepfamilies in longitudinal data (Statistics New Zealand, Working Paper No 16-01, 2016) at 5.

129 Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i

Aotearoa o nāianei (NZLC SP22, 2017), citing Arunachalam Dharmalingam and others Patterns of Family Formation

and Change in New Zealand (Ministry of Social Development, 2004) at 72–73; and JM Nicholson, DM Fergusson and LJ Horwood “Effects on later adjustment of living in a stepfamily during childhood and adolescence” (1999) 40 Journal of Child Psychology and Psychiatry 405 discussed in Megan Gath Identifying stepfamilies in longitudinal data (Statistics New Zealand, Working Paper No 16-01, 2016) at 7.

fairer if the partner who contributed the property is able to retain

it and use it exclusively for his or her own children. It is unfair, they said, that a partner should be deprived of his or her property in order to support the other partner and that partner ’s children.

Relationships involving older people

9.28 The family use approach might also raise particular issues for older people who re-partner later in life. Older people will generally enter relationships with a greater property base than younger partners, as it will have been built over a longer period of time before the relationship. When an older person re-partners after

the death of a former partner, the property he or she holds may represent the fruits of the previous relationship. We have heard anecdotally that some older people unwittingly enter qualifying de facto relationships and later find they are obliged to divide half the equity in their home and other key items of property.

This may create particular financial hardship for older people who are close to retirement or are no longer in paid employment and therefore have no sufficient income stream to acquire further property.

Trends in overseas jurisdictions

9.29 The current trend in overseas jurisdictions appears to be a move away from the family use approach and towards the fruits of the relationship approach.130 For example, British Columbia’s Family Law Act 2011 departed entirely from the previous family use approach.131 The law now excludes from division all property acquired by a spouse before the relationship began, as well as inheritances and gifts acquired from third parties. Instead, all property acquired after the relationship began is eligible for division.132 The Law Reform Commission of British Columbia

had previously recommended the change, observing that there was “widespread agreement” that spouses who bring assets into a marriage should have a greater claim to them than the law

provided.133 The Government White Paper accompanying the

130 See Chapter 3 for a wider discussion of international approaches to property division.

131 The previous legislation defined a “family asset” (the property eligible for division) as property used by a spouse for a

“family purpose”: Family Relations Act 1996 (BC) (repealed), s 58(2).

132 Family Law Act 2011 (BC), ss 84–85.

133 Law Reform Commission of British Columbia Report on Property Rights on Marriage Breakdown (LRC111, March 1990)

at 17. The Commission based this assertion on the submissions it had received on its Working Paper, the laws of other

reforms echoed that sentiment.134 The White Paper stated that

the “most compelling reasons” for the fruits of the relationship approach over the family use approach were:135

to make the law simpler, clear, easier to apply, and easier to understand for the people who are subject to it. The model seems to better fit with people’s expectations about what is fair. They “keep what is theirs,” (such as pre-relationship property and gifts and inheritances given to them as individuals) but share the property and debt that accrued during their relationship.

9.30 Similarly, the Netherlands is in the process of reforming its property division laws. Previously the Netherlands was heralded

as one of the few examples of a jurisdiction that maintained a “full community of property”,136 meaning that on marriage all property of either partner was subject to division. Draft legislation has recently been approved by both houses of the Dutch legislature that will introduce a limited community of property, under which assets owned before the marriage, or inheritances and gifts, will remain separate property.137

The case for retaining the current approach

9.31 There are however several arguments for retaining the family use approach in connection with the family home and family chattels:

(a) First, while the family use approach may be perceived as unfair in some situations, it might still reflect most people’s values and expectations in most cases. As discussed at paragraph 9.9, the PRA treats a relationship as an equal partnership or joint venture to which

each partner contributes equally. Core assets that form an integral part of family life, like the family home, should arguably be seen as the property of the partnership. The contribution of pre-acquired property

to the relationship partnership could be seen as

Canadian provinces, and what appeared to be the “mainstream approach of the judges in the exercise of discretion with respect to the division of assets brought into marriage.”

134 Ministry of Attorney General, Justice Services Branch, Civil Policy and Legislative Office White Paper on Family Relations

Act Reform; Proposals for a new Family Law Act (July 2010).

135 Ministry of Attorney General, Justice Services Branch, Civil Policy and Legislative Office White Paper on Family Relations

Act Reform; Proposals for a new Family Law Act (July 2010) at 81.

136 Jens M Scherpe “Marital Agreements and Private Autonomy in Comparative Perspective” in Jens M Scherpe (ed) Marital

Agreements and Private Autonomy in Comparative Perspective 443 (Hart, London, 2012) at 448.

  1. “Dutch married couples may no longer share ‘All my worldly goods’” (17 February 2017) DutchNews.nl <www.dutchnews. nl>; and “Community of property” (2017) De Boorder Schoots <www.deboorderschoots.nl/en>.

simply one among many different but ultimately equal

contributions the partners make to the relationship. It may be that in most cases the partners treat core family assets that are used for family purposes as their joint property in any event, in accordance with their commitment to a joint life together.138 The family use approach may therefore be better at implementing the policy and principles of the PRA than a strict fruits of the relationship approach.

(b) Second, division of the family home and family chattels has long been a hallmark of New Zealand’s property division law.139 The equal division of core family assets, regardless of how or when they were acquired, may therefore be established in the public mind. There is

also a developed body of case law and understanding regarding the current rules of classification.

(c) Third, the family use approach may be better at serving children’s interests. There are several provisions under the PRA which allow the court to make orders which grant relationship property, or the use of relationship property, to meet the interests of children of the relationship. Section 26, for example, provides that

the court can set aside relationship property for the benefit of the children. Section 27 allows the court to grant occupation of the family home, or other premises that are relationship property, to a partner for a certain

period. The family use approach focuses on key assets

  1. Bill Atkin goes further, arguing that more is needed for the Property (Relationships) Act 1976 (PRA) to reflect the nature of relationships as a partnership: Bill Atkin “Classifying Relationship Property: A Radical Re-shaping” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming). Atkin argues that if the principles underpinning the PRA are to be taken seriously, it should be reformed so that all the partners’ property would be relationship property and each partner would be entitled to an equal share of the combined pool. Certain assets could be excluded if the relevant partner persuaded the court that the item had nothing to do with the life of the relationship or family. An advantage to this approach is that it may simplify the PRA’s complex rules of classification and division. The disadvantage with this option is that it is a radical departure from the current rules. An “all assets” approach may not reflect the values and expectations of most New Zealanders.
  2. Fisher suggests that the special status attributable to the family home is historical, that is, it was the battleground on which women’s property rights were first developed: see Robert Fisher “Should a Property Sharing Regime be Mandatory or Optional?” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming). Fisher explains that the early reforms that gave women proprietary interests in their husband’s property centred on the family home. The Matrimonial Proceedings Act 1963,

for example, gave the court powers to make orders granting rights to a spouse to occupy the family home following divorce, regardless of which spouse held title to the property (s 57). That Act also gave the court power to make orders directing the sale of the home and dividing the proceeds between the spouses if each spouse had made a “substantial contribution” to the home, whether “in the form of money payments, or services, or prudent management, or otherwise” (s 58). Similarly, the Joint Family Homes Act 1964 initially allowed a spouse to settle a home in the joint names of

both parties to the marriage. The drafters of the Matrimonial Property Bill 1975 described the family home as being

“in a category of its own”: AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial

Property Bill 1975” [1975] II AJHR E6 at 9.

that are important to the children, such as the family

home, pets, furniture and other household items.

In some cases, this might mean a larger relationship property pool available for division, which can also indirectly benefit children. The family use approach therefore ensures that the orders the court can make for children’s interests are targeted at the appropriate

property. While sections 26 and 27 could, under a fruits of the relationship approach, be extended to separate property in order to address these concerns, the courts may be less willing to make orders that have the effect of restricting one partner ’s enjoyment of his or her separate property for any considerable length of time.

(d) Fourth, classification based solely on the fruits of the relationship approach presents a number of practical problems. It is more complex to assess what property the partners entered the relationship with. In the case of a lengthy relationship, it may be impractical to do

so. It is unrealistic to expect partners to have kept clear records about the origins of their property. The assets may also have become so intermingled with other property it is impossible to discern what property is

pre-relationship property and what property is the fruit of the relationship. In contrast, the default inclusion

of the family home and family chattels is a bright- line rule.140 Because the rules are clear, it is easier for vulnerable partners to prove their relationship property entitlements.

(e) Fifth, any reform to the PRA’s rules of classification would inevitably introduce some uncertainty, at least for a short period. Other significant amendments would probably be needed to other parts of the PRA, including sections that deal with the classification of

increases in the value of separate property (section 9A), the provisions concerning situations where no family home exists (sections 11A and 11B), the homestead provisions (sections 12 and 12A), and adjustments in the case of two family homes (section 16). The fruits of

the relationship approach raises complex issues about

  1. Although the question of whether a chattel is a “household” chattel may be open to interpretation in some circumstances.

the treatment of debts such as mortgages. For example

it might not be appropriate to treat a pre-existing mortgage as a personal debt when that property is used as the family home. Careful thought would also be needed as to how a partner ’s protected interest in the family home under section 20B would apply.141

9.32 In light of these arguments, we think that a credible case can be made for retaining the PRA’s current definition of relationship property, which is based on both a family use approach and a fruits of the relationship approach. While our initial research has identified criticism of the family use approach, we do not know how widespread that criticism is.

Options for Reform

9.33 In light of the criticisms of the family use approach to the classification of relationship property, we consider two options for reform.

Option 1: Move to a pure fruits of the relationship approach

9.34 The PRA could be reformed so that relationship property is defined solely by the fruits of the relationship approach. That would

mean, in general terms, the value of property a partner brings into the relationship, and the value of any property a party inherits

or receives as a gift from a third party, will remain as separate property. This could apply even if the property is subsequently used as the family home and family chattels, or if the property has been placed in the joint ownership of the partners. Consequently, when the partners separate, they would divide whatever property had been acquired during the relationship.

9.35 Plainly, this approach would be a significant departure from the PRA’s current provisions. A number of other amendments to the PRA would be required, some of which we mentioned at

paragraph 9.31 above. For example, when an asset that has been

  1. The main purpose of the protected interest is to safeguard a partner ’s relationship property against the unsecured creditors of the other partner in respect to his or her personal debts: Property (Relationships) Act 1976, s 20B(2). The approach currently is to give a partner priority interest in the family home. We examine the protected interest provisions in Part K and discuss whether they ought to remain. Assuming they do remain, and if the family home ceases to be classified in all cases as relationship property, the protected interest will need to attach to other property.

purchased from both separate property funds and relationship

property funds, how is any increase in the value of that asset to be treated? We consider this question further below in our analysis

of section 9A.

9.36 Another question is whether the PRA should impose an onus of proof on a partner who contends for a certain classification. For example, if a partner argues that an asset, or part of the value of an asset, is separate property, he or she must bear the responsibility for demonstrating that the property was acquired before the relationship or from an external source.142

Option 2: Adopt different approaches depending on the length of the relationship

9.37 Another possible option for reform is to apply different definitions of relationship property to relationships of different lengths.

The PRA could be reformed so that the relationship property of relationships that endured for a certain length of time could be determined on both a family use and fruits of the relationship approach. If the relationship has not endured for the requisite period, the partners’ property could be classified solely on a fruits of the relationship approach. The special rules in the PRA that apply to relationships of short duration could also be reformed by incorporating them into this framework. We examine how this approach might apply to relationships of short duration in Part E.

9.38 The advantage of the family use approach is the certainty it provides through its bright-line rules. However the shorter the relationship, the simpler it will be to trace the separate property

a partner brings to the relationship. It is also more likely that the fruits of the relationship approach is considered fairer in shorter relationships. Basing the applicable definition of relationship property on the length of the relationship could lead to a just division of property which is better tailored to the circumstances of the case.143

9.39 There may however be disadvantages:



142 A similar approach is taken in British Columbia, Family Law Act 2011 (BC), s 85(2).

  1. The Property (Relationships) Act 1976 already provides that in cases of relationships of short duration, it is more appropriate for partners to recover separate property contributions when those contributions have been unequal: see ss

14–14A.

(a) First, it may be challenging to identify when the

length of a relationship has crossed the relevant point in time, especially for de facto relationships or marriages and civil unions that were preceded by de facto relationships. This uncertainty may lead to more disputes. Nevertheless, this task is not impossible; the length of de facto relationships is routinely assessed in PRA matters.144

(b) Second, this option requires prescribing a relationship length, according to which different relationships would be subject to different rules. There will be a degree of arbitrariness to this. There is little research

in New Zealand into relationships, particularly de facto relationships, which makes this task difficult. Careful thought would need to be given to what time frames would be most appropriate for the majority of couples.

(c) Third, having multiple definitions of relationship property may create uncertainty and potentially confusion.



































144 The difficulties in establishing when a de facto relationship commences are discussed in Part E.

C ONSU LTATION QUESTIONS

C6 Do you think the current classification of relationship property on the basis of family use is still appropriate?

C7 Do you prefer any of the options for reform? If you prefer option 2, what length of relationship should justify different rules?

Chapter 10 – When separate

property becomes relationship property

10.1 A partner ’s separate property may not always be kept truly

separate from the relationship. The partners might use separate property for family purposes, like the family home. It might be combined with relationship property. For example, the partners may use savings acquired before the relationship to buy property together. One partner may make contributions, either directly or indirectly, to the other ’s separate property. The separate property may increase in value, or it may produce income which is then used for family purposes. These scenarios reflect just some of the many different ways partners can organise their property for their joint life together.

10.2 In this chapter we address the important issue of when a partner ’s separate property should no longer be considered separate.

The PRA currently provides that separate property may become relationship property in a number of scenarios. In this section we focus on two particular provisions, section 9A and section 10(2), which apply in the following scenarios:145

(a) where relationship property has been applied to separate property, increasing the value of the separate property, or producing income or gains from the property (section 9A(1));

(b) where the actions of the non-owning partner have directly or indirectly resulted in an increase in the value of separate property, or income or gains from the property (section 9A(2));

(c) where the income or gains from separate property are used to improve or acquire relationship property (section 9A(3)); and



  1. Other sections of the Property (Relationships) Act 1976 provide that separate property becomes relationship property where the court considers it just to treat property acquired after a relationship ends as relationship property: s 9(4); and where the property a partner acquires as a gift or inheritance from a third party is used as the family home or as a family chattel: s 10(4).

(d) where property received from a third party by way of

succession, survivorship, as a beneficiary under a trust or by gift has been so intermingled with relationship property that it is unreasonable or impracticable to regard that property as separate property (section

10(2)).


Increasing the value of separate property


10.3 Sections 9A(1) and 9A(2) apply when one partner contributes to the other partner ’s separate property, and this results in an increase in the value of the separate property.146 That increase

in value is relationship property. It is treated as an independent item of property which is notionally severed from the underlying separate property.147

10.4 Section 9A(1) applies where there has been an intermingling

of relationship property and separate property. For example, in Mead v Graham-Mead the partners built a new milking shed on a farm which was Mr Mead’s separate property.148 The shed had

been funded by money from the relationship bank account, and therefore section 9A(1) applied.149 Under section 9A(1), if the increase in the separate property’s value is due, wholly or in

part, to the application of the relationship property, then the full increase in value is relationship property.

10.5 Section 9A(2) applies when the actions of the non-owning partner have directly or indirectly increased the value of the separate property. In the leading case of Rose v Rose, Mrs Rose had cared

for the children and earned a significant portion of the household



  1. Section 9A of the Property (Relationships) Act 1976 also applies to any income or gains from separate property, and our discussion of section 9A in this chapter applies equally to income and gains.
  2. Rose v Rose [2009] NZSC 46, [2009] 3 NZLR 1 at [25]. Section 9A was inserted into the PRA in 2001 and replaced what was s 9(3). The former s 9(3) had a similar purpose but did not allow for indirect contributions of the non-owning partner. The 2001 changes appear to have been aimed at that omission. However, s 9A includes changes beyond this, including the creation of separate tests for income or gains attributable to the actions of the other spouse, and income or gains attributable to the application of relationship property. The changes also removed a section which allowed

for unequal division of non-domestic relationship property assets where one partner ’s contribution had been clearly greater than the other, which has influenced how the section has been applied subsequently: Margaret Briggs and Nicola Peart “Sharing the Increase in Value of Separate Property Under the Property (Relationships) Act 1976: A Conceptual Conundrum” (2010) 24 NZULR 1.

148 Mead v Graham-Mead [2015] NZHC 825.

149 Mead v Graham-Mead [2015] NZHC 825 at [50]. The issue between the parties was the date from which the increase in value to the farm should be taken. The High Court preferred the earlier date on the basis that at that time the partners had borrowed funds which were then invested in the farming busines: at [54].

income.150 She argued that these contributions freed up Mr Rose

to work in his farming business, including developing a section of land that was his separate property. Mrs Rose’s contributions also provided Mr Rose with income that, had it not been available, would probably have caused Mr Rose to sell his land to reduce

his indebtedness. Mr Rose also funded the development of his separate property by increasing the relationship debt. On the basis of these indirect contributions, the Supreme Court granted Mrs Rose’s claim under section 9A(2).151

10.6 Like section 9A(1), when a partner ’s actions have increased the value of the other partner ’s separate property, section 9(A)(2) provides that the entire increase in value is treated as relationship property.152 There is however a major difference in how the two provisions divide the increase in value. Under section 9A(1), the increase in value will be shared equally between the partners. Under section 9A(2), each partner ’s share will be determined in accordance with the contribution of each partner to the increase

in value. This rule has typically led to uneven divisions that favour the owning spouse. In Rose v Rose the Supreme Court observed that, where a portion of the increase in value was caused by inflation or a general rise in the value of a certain kind of property, “the ownership of the separate property from which

these increases in value sprang should be treated under s 9A(2)(b) as a contribution made by the owner spouse.”153 That contribution should then be evaluated, together with other contributions to

the increase in value made by the owner spouse, and weighed

against the contributions of the non-owner spouse.154 In that case

150 Rose v Rose [2009] NZSC 46, [2009] 3 NZLR 1.

  1. Rose v Rose [2009] NZSC 46, [2009] 3 NZLR 1 at [47]–[51]. We note however that Mrs Rose’s indirect contributions to the increase in value of the separate property, both her financial and non-financial contributions to the relationship, might not of themselves have resulted in a significant share of the increased value. At [50] the Court noted that on these factors alone “the balance [of contributions] would appear to be substantially in favour of the husband.” There was however an “unusual and very important feature”, being that Mr Rose had funded the development of his separate

property by increasing the partnership’s indebtedness and, in doing so, increasing the relationship debt. The other “very significant finding” related to the fact that, had it not been for Mrs Rose’s financial contribution, it is likely that the separate property would not have been retained, At [51] the Court said that “[w]hen these features are brought into account the wife’s case for a share of the increase is greatly strengthened.”

152 Property (Relationships) Act 1976, s 9A(2)(a).

  1. Rose v Rose [2009] NZSC 46, [2009] 3 NZLR 1 at [47]. The Supreme Court noted another approach would be to set aside external factors that resulted in an increase in the value of separate property, determine the relativity of the other contributions of each spouse and then divide the total increase in value on that ratio. However in respect of that approach the Court said:

In many, perhaps most, instances that would not, however, give adequate recognition to the fact that the property was,

and remains, separate property (only the increase being relationship property) and that, if it had not been brought into the marriage or acquired during the marriage as separate property, there would have been no asset to produce the inflationary or general gain.

  1. Rose v Rose [2009] NZSC 46, [2009] 3 NZLR 1 at [47]. The courts have not tended to separate out the portion of an increase in value that was due to market inflation, instead factoring it into the overall decision as to how to divide the

Mrs Rose’s indirect contributions were considered less than Mr

Rose’s direct contributions.155 Consequently, the increase in value was divided 60:40 between Mr Rose (who owned the separate property) and Mrs Rose.156 In other cases there have been splits of

75:25157 and 80:20158 between the owner and non-owner partner.

10.7 Both sections 9A(1) and 9A(2) require a partner to show that his or her actions or the application of relationship property caused the separate property to increase in value. Frequently, claims under section 9A fail on the basis that any increase in the value of the property was caused by something else, such as inflation or market growth. In those cases, the non-owning partner would not share in the increase in value of the separate property, even

if he or she worked extensively on the property or contributed relationship property towards it.

10.8 The differences in the section 9A(1) and 9A(2) tests are summarised in the table below:


Section 9A(1)
Section 9A(2)
Applies to increases in the value of separate property attributable to the application of
relationship property.
Applies to increases in the value of separate property attributable to the actions of the
non-owner partner.
Requires direct causation between the application of relationship property and the increase in the separate property’s value.
Requires either a direct or indirect causation between the non-owning part-
ner ’s actions and the increase in the separate
property’s value.
Classifies the entire increase in value as relationship property and divides it equally between the partners.
Classifies the entire increase in value as rela- tionship property but divides it accordance with each partner’s contribution to the
increase in value.


Overlap with section 17 and section 15A

10.9 There is some common ground between section 9A, section 17 and section 15A of the PRA. Section 17 compensates a partner where his or her actions or the application of relationship property has sustained the separate property of the other partner.

increase. See also Clark v Clark [2012] NZHC 3159, [2013] NZFLR 534 at [112]–[114].

155 Rose v Rose [2009] NZSC 46, [2009] 3 NZLR 1 at [47]–[51].

156 Rose v Rose [2009] NZSC 46, [2009] 3 NZLR 1 at [51].

157 Clark v Clark [2012] NZHC 3159, [2013] NZFLR 534.

158 T v W FC Papakura FAM-2009-055-432, 22 September 2011.

Applications under section 9A and section 17 will therefore often

be made together. There are, however, two important differences between the sections. First, under section 17 a partner needs

to show that the separate property was sustained, not that it increased in value.159 This means that in many cases where a section 9A claim fails, a section 17 claim may succeed. Second, section 9A treats the increase in value as a type of relationship property in its own right. In contrast, section 17 allows the court to either increase the non-owner partner ’s share of relationship property, or order the owner partner to pay money to the other partner as compensation. No new property arises.

10.10 Section 15A compensates a partner for the increase in value of the other partner ’s separate property, when:

(a) after the relationship the owner partner ’s income and living standards are likely to be significantly higher than the other partner ’s, as a result of the division of functions within the relationship; and

(b) the owner partner acted to increase the value of his or her separate property during the relationship.

10.11 When section 15A applies the court can order the owner partner to pay money or transfer property to the other party.160 This section deals with the situation where one partner was “freed up” to work during the relationship, and largely spent that time improving the value of his or her separate property, therefore creating an inequality at the end of the relationship.

Does section 15A have a meaningful role?

10.12 Cases involving section 15A are rare. We have not identified any cases where an application under section 15A was successful.161

The courts have always rejected the claim, usually because the applicant has failed to show that the disparity in income and living standards between the partners was linked to the division

of functions in the relationship,162 or because the applicant failed

  1. In A v R [2006] NZHC 1631; [2007] 2 NZLR 399 (HC) the High Court, citing French v French [1987] NZCA 141; [1988] 1 NZLR 62 (CA) per Cooke P at 65, said at [119]: “Whereas s 9A(1) requires an increase in the value of the separate property to be established, s 17 only requires it to be established that the application of the relationship property has preserved the value of the separate property and allowed inflation to work” (emphasis in original).

160 This can come from relationship property or separate property: Property (Relationships) Act 1976, s 15A(3).

161 Nicola Peart (ed) Brookers Family Law — Family Property (online looseleaf ed, Thomson Reuters) at [PR15A.04].

  1. De Malmanche v De Malmanche [2002] 2 NZLR 838 (HC); N v L FC Gore FAM-2004-017-21, 18 August 2006; and J v D FC North Shore FAM-2008-044-833, 13 May 2011.

to show any increase in the value of the other partner ’s separate

property.163

10.13 It seems to us that in most cases where section 15A would apply, section 9A(2) would also apply, as the partners’ division of functions will have enabled one partner to devote himself or

herself to labour or expenditure which increases the value of his or her separate property. This is precisely the scenario in Rose v Rose, discussed at paragraphs 10.5–10.6 above.164

10.14 An application under section 9A is also likely to be simpler than an application under section 15A, as the applicant does not need to show a future disparity in income and living standards as required by section 15A(1)(a).

10.15 For these reasons, our preliminary view is that section 15A should be repealed.

C ONSU LTATION QUESTION

C8 Does section 15A perform a meaningful role? Should it be repealed?

Issues with sections 9A(1) and 9A(2)

10.16 The different tests in sections 9A(1) and 9A(2) raise several issues. These issues arise because of the inconsistent approach within section 9A, and between section 9A and the wider PRA framework.

Are the different tests in sections 9A(1) and 9A(2) justified?


10.17 As noted above, there are significant differences between sections

9A(1) and 9A(2). Briggs and Peart argue that the distinction between monetary (section 9A(1)) and non-monetary (section

9A(2)) contributions contravenes the principle that all forms of contribution to the relationship are treated as equal.165 They observe that section 18(2) gives explicit effect to that principle by stating that there is no presumption that a contribution of a

monetary nature is of greater value than a contribution of a non-

163 Beran v Beran [2004] NZFLR 127 (FC); A v F FC Manukau FAM-2006-092-2394, 23 December 2009; and J v D FC North

Shore FAM-2008-044-833, 13 May 2011.

164 Rose v Rose [2009] NZSC 46, [2009] 3 NZLR 1.

  1. Margaret Briggs and Nicola Peart “Sharing the Increase in Value of Separate Property Under the Property (Relationships) Act 1976: A Conceptual Conundrum” (2010) 24 NZULR 1 at 18. For a discussion of the principles of the PRA see Chapter

3 of this Issues Paper.

monetary nature. Yet section 9A makes exactly that distinction.166

They say the distinction is without rationale and could produce bizarre results.167 The High Court has also observed that including indirect contributions under section 9A(2) but not section 9A(1) is a “perplexing” distinction.168

10.18 However Chief Justice Elias has suggested that the concern

may be overstated. This is because sections 9A(1) and 9A(2) are aimed at different circumstances.169 She explains that section

9A(1) treats the application of relationship property to separate property as a form of intermingling, similar to that provided for in section 10.170 Section 9A(2) on the other hand is a legislative tool designed to recognise indirect contributions to separate property; something the PRA failed to recognise before section 9A(2) was introduced.171

10.19 If the different tests in sections 9A(1) and 9A(2) are not justified, the natural next step is to ask which test should be preferred, if either should. Both tests present their own issues, as we discuss below.

Is section 9A(1) inconsistent with the concept of separate property?

10.20 Under section 9A(1), where there has been an increase in value due to the application of relationship property, the whole of the increase in value is shared equally between the partners. It does not matter whether or not the application of relationship property was the sole cause of the increase in value. Briggs and Peart say this approach undermines the concept of separate property,



  1. Margaret Briggs and Nicola Peart “Sharing the Increase in Value of Separate Property Under the Property (Relationships) Act 1976: A Conceptual Conundrum” (2010) 24 NZULR 1 at 18.
  2. For example, a small amount of relationship property applied to separate property would entitle the non-owning partner to share equally in the consequential increase in value, whereas substantial actions by the non-owning partner are unlikely to result in equal sharing of the increase in value: Margaret Briggs and Nicola Peart “Sharing the Increase in Value of Separate Property Under the Property (Relationships) Act 1976: A Conceptual Conundrum” (2010) 24 NZULR 1 at 18.

168 Hyde v Hyde [2010] NZHC 1356; [2011] NZFLR 35 (HC) at [33].

169 Sian Elias “Separate Property – Rose v Rose” (paper presented to the Family Court Conference, Wellington, 5 August 2011)

at 7–8.

170 Sian Elias “Separate Property – Rose v Rose” (paper presented to the Family Court Conference, Wellington, 5 August 2011)

at 7–8.

171 Sian Elias “Separate Property – Rose v Rose” (paper presented to the Family Court Conference, Wellington, 5 August 2011) at 8. Elias does, however, recognise that the division of the increases pursuant to s 9A(2)(b) is a different concept to that applied to the Property (Relationships) Act 1976 as a whole: at 8.

because it allows the non-owning partner to share in any increase

in value that is caused by inflation and the owner ’s own actions.172

10.21 There have been cases where the application of relationship property made only a small contribution to the increase in value of separate property, but because of section 9A(1) the non- owning partner could access an equal share in the much larger, overall increase in value. A typical example is where relationship property is used for improvements to land, such as landscaping or the introduction of an irrigation system, but the dominant reason for the increase in the land’s value is market growth.173

The courts have in some cases avoided unjust results by excluding contributions that have had minimal impact on the increase

in value.174 The result is that the courts take an “all or nothing”

approach.

Is section 9A(2) inconsistent with the wider framework of the

PRA?

10.22 When separate property has increased in value due to the actions of the non-owning partner, the increase in value is shared in accordance with the contribution of each partner to that increase. This method of dividing property is not found anywhere else in the PRA. Rather, the PRA’s general rule is that

each partner is entitled to an equal share of relationship property. The entitlement is based on the principle of the PRA that all

forms of contribution to the relationship are treated as equal.

The few exceptions to this general rule require the court to divide relationship property in accordance with the contribution of each partner to the relationship rather than to the property.175

10.23 When Parliament introduced the PRA’s general rule of equal sharing, it made a deliberate decision to move away from a contributions-based approach. The previous test under the Matrimonial Property Act 1963 required the court to divide

  1. Margaret Briggs and Nicola Peart “Sharing the Increase in Value of Separate Property Under the Property (Relationships) Act 1976: A Conceptual Conundrum” (2010) 24 NZULR 1 at 15–16.

173 These were the facts in J v K [2013] NZFC 823.

  1. This was the reason given for not making an award in V v V [2007] NZFLR 350 (FC), where an increase in value attributable to the input of work and relationship property was estimated to be worth $10,000 of a $1.3 million increase.
  2. The Property (Relationships) Act 1976, s 13 (exceptional circumstances), discussed in Part D; ss 14–14A (relationships of short duration), discussed in Part E; and s 85 (short term relationships ending on death), discussed in Part M. The only other occasion where a contributions-based method applies is where there are multiple claims regarding two different qualifying relationships under ss 52A–52B. That test is unique as it requires the court to allocate property amongst the two relationships in accordance with the contribution of each relationship (rather than each partner) to the acquisition of the property.

partners’ property pursuant to the specific contributions each

had made to the property. As we discussed in Chapter 2, this approach was later regarded as fundamentally flawed. It required the applicant to prove specific contributions and have them quantified by the court, which was often impossible in practice and involved a considerable measure of uncertainty in every case.176 Invariably, disproportionate weight was given to monetary contributions, usually made by the husband.177 In criticising the courts’ approach under the former legislation, Woodhouse J in

Reid v Reid, called this the “hypnotic influence of money”.178

10.24 Arguably, the approach taken under the current section 9A(2)(b) resembles a similar downplaying of indirect and non-monetary contributions that the PRA was designed to avoid. As discussed at paragraph 10.6, the courts have tended to place a higher value on the direct work done by an owning partner than the indirect work done by the non-owning partner.179

10.25 There are also practical issues in applying the test in section 9A(2) (b). The provision gives no guidance as to how contributions are to be weighted, and the courts have said that determining how the property is to be divided in accordance with contributions “may

be little better than a matter of general impression”.180

Do the causal requirements in section 9A lead to unfair outcomes?

10.26 The final issue with sections 9A(1) and 9A(2) is that both require a causal link between the work done or investment made and

the increase in value of the separate property. This may lead to unfair outcomes. A classic example is the case of a farm. One partner may have inherited the farm or purchased it before the relationship began, therefore making it separate property. The other partner could do significant farming work over many years during the relationship, performing materially similar work as the owning partner. This might result in no material changes to

the farm, but nevertheless the farm may significantly increase

  1. AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 5.

177 Reid v Reid [1979] NZCA 30; [1979] 1 NZLR 572 (CA) at 581 per Woodhouse J.

178 Reid v Reid [1979] NZCA 30; [1979] 1 NZLR 572 (CA) at 581 per Woodhouse J.

179 Rose v Rose [2009] NZSC 46, [2009] 3 NZLR 1 at [51].

180 Clark v Clark [2012] NZHC 3159, [2013] NZFLR 534 at [114].

in value due to other factors. At the end of the relationship, due

to a lack of any causal connection, the non-owning partner may receive nothing under section 9A(2) for the work he or she has done while the owning partner receives the full benefit of the increased value.181

10.27 The causal requirement might also lead to unfair outcomes when relationship property is used to pay off debt in separate property, such as a mortgage. Section 9A(1) will not normally apply to

the payment of debts, because it has not caused the property to increase in value – it only reduces or discharges the indebtedness secured over the property.182 This means very different results under section 9A(1), depending on how the relationship property is used. For example, if one partner separately owned a rental property, and relationship property (such as either of the partners’ incomes)183 was used to make improvements to the rental property, the increased value would be shared under section

9A(1). If however relationship property was instead used to meet the mortgage repayments on the rental, section 9A would not apply.

10.28 Section 17, discussed at paragraph 10.9 above, might provide a partial answer to these issues. Where the partner ’s actions cannot be attributed to the increase in the property’s value, the courts have sometimes found that the partner has “sustained” the property and therefore can receive compensation.184 Section

20E might also apply when relationship property has been used

to pay debt in separate property.185 However compensation under section 17 or section 20E may not result in an award of the same size as if the increase in value was classified as relationship

181 This scenario is in essence what occurred in V v V [2007] NZFLR 350 (FC); O v O FC Hamilton FAM-2001-019-1355, 4 May

2006; Hodgkinson v Hodgkinson [2003] NZFLR 780 (FC); B v Adams (2005) 25 FRNZ 778 (FC); and W v W FC Wellington

FAM-2008-032-461, 6 July 2009.

  1. M v G [2012] NZHC 1798 at [64]. However s 9A(1) may apply if the debt was incurred in order to improve the separate property (rather than to purchase the property), and that debt was paid off with relationship property: L v L [2012] NZFC

2545. In that case one partner borrowed money to pay for developments to a farm that was his separate property. Those developments increased the farm’s value. The partners used relationship property to meet the loan repayments, and that was an application of relationship property that brought about the increase in value of separate property [69]. Therefore the court said that the increased value of the separate property was relationship property under s 9A(1) of the Property (Relationships) Act 1976.

183 Income earned by either partner is generally classified as relationship property under s 8(1)(e).

184 Section 17 awards were made in these circumstances in V v V [2007] NZFLR 350 (FC); O v O FC Hamilton FAM-2001-019-

1355, 4 May 2006; Hodgkinson v Hodgkinson [2003] NZFLR 780 (FC); B v Adams (2005) 25 FRNZ 778 (FC); and W v W FC Wellington FAM-2008-032-461, 6 July 2009.

  1. Under s 20E the court may make an order increasing proportionately the share to which the non-owning partner would otherwise be entitled in the relationship property, an order that some of the owning partner ’s separate property is relationship property for the purposes of division, or an order that the owning partner pays money as compensation to the non-owning partner: Property (Relationships) Act 1976, s 20E(1).

property under section 9A(2). This is because these sections focus

on compensating the non-owning partner only for the amount of relationship property spent on the separate property or personal debts. However in some cases, awards of up to 25 per cent of the increase in value of the separate property have been made under section 17 as compensation.186

Options for reform

10.29 We have considered three possible options for reforming sections

9A(1) and 9A(2). These options address the issues discussed above by removing some of the inconsistencies between the different components of section 9A and between section 9A and the wider PRA.

Option 1: Adopt a single contributions-based test

10.30 Option 1 is to replace sections 9A(1) and 9A(2) with a single test, under which increases in the value of separate property are shared between the partners on the basis of the contributions each partner made to the relationship. Briggs and Peart propose the following wording for consideration:187

(1) If any increase in the value of separate property, or any income or gains derived from separate property, were attributable wholly or in part, directly or indirectly, to the application of relationship property or the contributions of the non-owning spouse or partner, then the increase

in value or (as the case requires) the income or gains are relationship property.

(2) In every case to which subsection (1) applies, sections

11(1), 11A, 11B and 12 do not apply and the share of each spouse or partner in the increase in value that has become relationship property is to be determined in accordance with the contribution of each spouse or partner to the relationship.

10.31 Under this test, the application of relationship property and a non-owning partner ’s actions are treated alike, reflecting the principle of the PRA that all forms of contributions should be

  1. Hodgkinson v Hodgkinson [2003] NZFLR 780 (FC); O v O FC Hamilton FAM-2001-019-1355, 4 May 2006; and W v W FC Wellington FAM-2008-032-461, 6 July 2009.

treated as equal.188 Increases in value caused by external factors

such as inflation may be captured, but the second part of the test ensures that the property is divided in accordance with the partners’ contributions.189 The test is also more consistent with the wider PRA framework as it focuses on contributions to the relationship and not contributions to the property.190

10.32 However, this test does not resolve the inconsistency with the principle that all contributions to the relationship are to be treated as equal. This inconsistency is inherent in a contributions-based assessment, and is put in even starker

relief if the court has to assess contributions to the relationship rather than to the specific item of separate property.191 While

a similar approach is used elsewhere in the PRA, this is only where there are exceptional circumstances which make equal sharing repugnant to justice (section 13), or where the partners were in a relationship that does not qualify for the PRA’s general rule of equal sharing because it was shorter than three years (sections 14–14A). We have doubts as to whether increases in value of separate property that are the result of the application of relationship property or the contributions of the non-owning partner should be treated in the same way.

10.33 Neither does this test address the practical issues that arise

when the court is required to divide property in accordance with contributions, discussed at paragraph 10.25 above.

Option 2: Adopt a single causation-based test

10.34 The other option Briggs and Peart present is to adopt a narrow causative approach:192

(1) If any increase in the value of separate property, or any income or gains derived from separate property, were attributable directly or indirectly to the application of relationship property or the contributions of the non-

  1. Margaret Briggs and Nicola Peart “Sharing the Increase in Value of Separate Property Under the Property (Relationships) Act 1976: A Conceptual Conundrum” (2010) 24 NZULR 1 at 19.
  2. Margaret Briggs and Nicola Peart “Sharing the Increase in Value of Separate Property Under the Property (Relationships) Act 1976: A Conceptual Conundrum” (2010) 24 NZULR 1 at 19.
  3. Margaret Briggs and Nicola Peart “Sharing the Increase in Value of Separate Property Under the Property (Relationships) Act 1976: A Conceptual Conundrum” (2010) 24 NZULR 1 at 20.

191 The contributions-based approach is already used in s 13 (exceptional circumstances), discussed in Part D, and ss 14,

14AA and 14A (relationships of short duration), discussed in Part E.

owning spouse or partner, then that part of the increase

in value or (as the case requires) the income or gains are relationship property.

10.35 Alternatively, this test could be broadened so that it also captures the contributions of the owning partner to the increase in value, effectively treating all increases other than those caused by external factors such as inflation as relationship property. This alternative is favoured by Fisher, who suggests that gains on separate property during the course of the relationship that are attributable to the joint and several efforts of the partners should be considered relationship property.193

10.36 Like option 1, this test removes distinctions between the current sections 9A(1) and 9A(2). Because it provides for equal sharing,

it is arguably more consistent with the PRA’s principle that all forms of contribution to the relationship are treated as equal. By only allowing increases in value to be shared equally if the

increase is attributable to the application of relationship property or the contributions of the one or both of the partners, it excludes external causative factors like inflation.194 The main disadvantage is that the task of apportioning the correct value to the respective separate property and relationship property components of

the increase in value will be complex and is also likely to be imprecise. To achieve accuracy, the partners will probably require considerable expert assistance, which will increase the costs and length of resolving relationship property matters.

Option 3: Treat all increases in value of separate property as relationship property

10.37 This option proposes more significant reform, by expanding the extent to which a non-owning partner can access the increase in value or income or gains from separate property.

10.38 Under this option the PRA would classify all increases in the value of separate property, or income or gains derived from separate property during the relationship as relationship property. No causative element would be needed. This option would probably


  1. Robert Fisher “Should a Property Sharing Regime be Mandatory or Optional?” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

mean repealing sections 9A(1) and 9A(2) and introducing a new

category of relationship property under section 8.

10.39 The basis for doing so is that it is simply an extension of the rule under section 8(1)(e) that all property acquired after the relationship began is relationship property. There would be

no distinction as to whether the property acquired during the relationship was derived from separate property or any other source. The Supreme Court accepted in Rose v Rose that, except in the case of a purely passive investment, it is likely that conduct

of the non-owning partner will have had some direct or indirect influence on the value of separate property.195 The Court explained that invariably, one partner ’s actions will have allowed the

owning-partner to devote labour or expenditure to the separate property. Alternatively, the non-owning partner may have provided financial support by paying for household expenditure and thereby enabling the owner of the separate property to pay for work which increases the value of the separate property.196

If that is the case, it may be sensible to reverse the position of section 9A and deem that all increases in, or gains from, separate property are relationship property. An exception could be retained for cases where the increases in the value of separate property truly have no connection with the relationship.

10.40 This option would also be simpler than options 1 or 2. There would be no need to undertake the complex process of apportioning the increased value of the property to the different contributions of the partners or the application of relationship property.

10.41 The main criticism of this option is likely to be that it undermines the concept of separate property as it would give no credit to a partner who contributed the separate property in the first place.

It might also increase valuation costs and the risk of valuation disputes, as the partners would need to determine the extent to which any separate property increased in value during the relationship.

C ONSU LTATION QUESTIONS

C9 Is section 9A in need of reform? If so, what is the preferable option for reform? Are there any other potential options we have not considered?

195 Rose v Rose [2009] NZSC 46, [2009] 3 NZLR 1 at [44].

196 Rose v Rose [2009] NZSC 46, [2009] 3 NZLR 1 at [44].

Applying separate property to relationship

property

10.42 Section 9A(3) applies where the partners have used separate property for the acquisition or improvement of relationship property. It provides that any separate property197 is relationship property if it is used:

(a) with the express or implied consent of the owning partner; and

(b) for the acquisition or improvement of relationship property, or to increase the value of relationship property or the amount of any partner ’s interest in any relationship property.

Does section 9A(3) have a meaningful role?

10.43 Section 9A(3) is of narrow application and is not widely used.

This is because other provisions of the PRA will usually classify the property as relationship property without relying on section

9A(3). When separate property is used to acquire or improve relationship property it will generally be converted into that relationship property.198 For example, if an item of separate property is sold and the money is used to make improvements on the family home, that money will simply become part of the

family home, which is relationship property. Also, section 9A(3) is subject to section 10, which means the specific rules applying to property acquired by gift, succession or under a trust will apply to that type of property.

10.44 Since section 9A(3) was amended in 2001, there have been several cases where the courts have said that section 9A(3) applied. However those courts also found the property to be relationship property for other reasons.199


  1. Including any proceeds of the disposition of any separate property, or any increase in the value of, or any income or gains derived from, separate property: Property (Relationships) Act 1976, s 9A(3).
  2. In Hyde v Hyde [2010] NZHC 1356; [2011] NZFLR 35 (HC) at [39] Ellis J observed that “where separate property is applied to enhance relationship property, the operation of some other provision of the Act will usually transmogrify the separate, into relationship, property in any event.”
  3. The cases are Hyde v Hyde [2010] NZHC 1356; [2011] NZFLR 35 (HC) and Thackwray v Thackwray [2014] NZFC 8702. In one other case the court did not attempt to apply s 9A(3) at all due to findings in favour of the partner seeking division of the property on other grounds: see Herbst v Herbst [2013] NZFC 4862.

10.45 Some commentators suggest that section 9A(3) resolves conflicts

between some of the definitions of relationship property and some of the definitions of separate property.200 For example, section 9A(3) ensures that when the family home is purchased from the proceeds of separate property, the family home is still treated as relationship property despite section 9A(2) stating that all property acquired out of separate property is separate property. There may be a simpler way to approach this, for example by amending sections 8 and 9 to clarify where the provisions

defining relationship property take precedence over provisions defining separate property, and vice versa.

C ONSU LTATION QUESTION

C10 Do you think that section 9A(3) has a meaningful? Should it be repealed?

Does the policy of section 9A(3) lead to unfair outcomes?

10.46 Section 9A(3) is based on the presumption that when one partner uses their separate property to acquire or improve relationship property, it is fair to treat the separate property as relationship property from that point on. That might not seem fair in some scenarios, because it gives no credit to the partner providing the separate property. For example, if one partner used his or her substantial savings to pay the deposit on the family home that deposit simply becomes part of the relationship property pool.

10.47 If the policy of section 9A(3) no longer reflects what most people think is fair, then this may support the option of amending the definition of relationship property to reflect a pure “fruits of the relationship” approach, which we discussed in Chapter 9. Under this approach the value of any contributions of separate property to the relationship could be preserved. We discuss how this would work below.











200 RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [11.55].

Intermingling of gifts and inheritances

with relationship property

10.48 Section 10 recognises the special nature of property received from a third party by way of succession, survivorship, as a beneficiary under a trust or by gift. This property will normally be separate property, as will any proceeds from the sale of that property, and property acquired out that property.201 In this section we refer to these types of property as “gifts and inheritances”.

10.49 Section 10(2) provides an exception. The gifted or inherited property will be considered relationship property if it has, with the express or implied consent of the partner who received it, “been so intermingled with other relationship property that it is unreasonable or impracticable to regard that property or those proceeds as separate property”.202

10.50 In N v N, for example, the husband received a gift of 247 cattle

20 years before the relationship ended.203 The cattle had been farmed with other stock that was relationship property. The Court of Appeal upheld the High Court’s finding that, because over the

20 year period the original stock had either died, been sold or replaced, they could not be traced. The Court of Appeal therefore said that the cattle were so intermingled with relationship property that it was impractical and unreasonable to treat them as separate property.204

10.51 The courts have noted that there is a distinction between the terms “impractical” and “unreasonable”.205 In S v W one partner had purchased a herd of animals from his separate property funds to start a farming business.206 The business was operated through a partnership between the partners which was also used to operate an art business. The farming business and art business were fully integrated. Revenues and expenses were dealt with through

the same account. The High Court observed that the surviving


201 Property (Relationships) Act 1976, ss 10(1)(b) and 10(1)(c).

  1. Property (Relationships) Act 1976, s 10(2). Section 10(3) also provides that a gift from the other partner will be regarded as relationship property if has been “used for the benefit of both spouses or partners”.

203 N v N [2004] NZCA 288; [2005] 3 NZLR 46 (CA).

204 N v N [2004] NZCA 288; [2005] 3 NZLR 46 (CA) at [115].

205 S v W [2006] NZHC 1672; [2006] 2 NZLR 669 (HC) at [58].

206 S v W [2006] NZHC 1672; [2006] 2 NZLR 669 (HC).

animals were physically identifiable at the time of separation

and it was arguably practical to regard the surviving animals in the original herd as the partner ’s separate property. However,

the partners ran the farming business through a jointly operated partnership which intermingled the separate property with relationship property. The partners saw advantages in structuring the operation in this way. The High Court therefore said that it was unreasonable to regard the animals as separate property.207

The relationship between sections 8, 9, 9A and 10 is unclear

10.52 The PRA appears to treat gifts and inheritances received from a third party as a special form of separate property. Rather than include gifts and inheritances among the general types of separate property under section 9, section 10 deals with it in isolation. Section 10 also provides specific exceptions in subsections 10(2) and 10(3). It is not clear from the PRA how section 10 relates

to the general definitions of relationship property and separate property. This is evident in a number of instances.

Gifts and inheritances acquired in the partners’ joint names

10.53 There is some uncertainty about how to classify property that

has been acquired in the partners’ joint names but was funded by property acquired by gift or inheritance. Section 8(1)(c) provides that property owned jointly or in common in equal shares by

the partners is relationship property. However, section 10(1)(c) provides that all property acquired from a gift or inheritance is not relationship property. To confuse matters further, some items of relationship property under section 8(1) are expressly stated to be subject to section 10, but section 8(1)(c) is not so qualified. Yet, section 10(4) provides that regardless of sections 10(2) and 10(3), the family home and family chattels (under sections 8(1)(a) and

8(1)(b)) will always be classified as relationship property. It makes

no mention of section 8(1)(c).


  1. S v W [2006] NZHC 1672; [2006] 2 NZLR 669 (HC) at [73]. A similar decision was reached in Greenslade v Greenslade (1978) 2 MPC 69 (SC). In that case Mr and Mrs Greenslade carried on business together through a partnership. Mr Greenslade paid an inheritance he had received into the partners’ joint account. The partners pooled all their joint cash resources into the account, regardless of whether the income and expenditure from the account was used for private, domestic or business purposes. The court said at 70 that pooling of the partners’ resources in this way reflected their “joint domestic interest” and also the significant help rendered by Mrs Greenslade to the business. Accordingly, the court said that property purchased

from the account should be classified as matrimonial property.

10.54 The courts have considered the relationship between section

8(1)(c) and section 10(2) on a number of occasions, but have reached different conclusions.208 The courts are now tending to follow the High Court’s decision in S v W.209 In that case, the High Court observed that the wording of the PRA was not capable

of conclusively resolving the issue one way or the other.210

Nevertheless, the Court said that the underlying intention

behind the PRA seemed to be that section 10 alone should govern property acquired by succession, survivorship, as a beneficiary under a trust or by gift. That was because the property had not been produced by the efforts of the partners.211 On that basis, the High Court saw section 10 as “an exclusive code”.212 While joint ownership of property might reflect an intention to share the property equally, the Court said that this could be displaced where section 10 applied.213

Is section 10 subject to section 9A?

10.55 There is also some uncertainty about whether any increases in the value of property obtained by gift or inheritance from a third party can be classified as relationship property. In other words, is section 10 subject to section 9A? The wordings of the provisions give no indication of their respective priorities. The ordering of

the sections suggests that section 9A is intended as a qualification to section 9. If section 9A was meant to qualify section 10 as

well, it may have been logical for section 9A to follow section 10. Section 10(2) also provides its own grounds for when the property listed in section 10(1) may become relationship property. Section

9A is not mentioned. If section 10 is intended to be an exclusive code, as the High Court concluded in S v W, section 9A should not

apply.


  1. The conflicting authorities were helpfully considered by the High Court in S v W [2006] NZHC 1672; [2006] 2 NZLR 669 (HC). Cases that decided s 8(1)(c) prevailed over s 10: Skerten v Skerten (1978) 1 MPC 193 (SC); Lewis v Lewis [1993] 1 NZLR 569 (HC); and Waller v Hider [1997] NZFLR 936 (HC) (leave to Court of Appeal refused: Waller v Hider [1997] NZCA 221; [1998] 1 NZLR 412 (CA)). Cases that decided s 10 prevails over s 8(1)(c): Z v Z (1988) 5 NZFLR 111 (HC); Millington v Millington [1999] NZFLR 829 (HC); Coley v Coley FC Manukau FP055/253/02, 24 December 2003; Macleod v Macleod FC North Shore FAM-2003-044-1824, 29

June 2004; P v P (2002) 22 FRNZ 380 (FC); S v W [2006] NZHC 1672; [2006] 2 NZLR 669 (HC); McDowell v McDowell (2009) 28 FRNZ 379 (FC);

B v B FC Christchurch FAM-2005-009-3163, 29 June 2009; Phair v Galland FC Oamaru FAM-2008-045-113, 8 February

2010.

209 S v W [2006] NZHC 1672; [2006] 2 NZLR 669 (HC).

210 S v W [2006] NZHC 1672; [2006] 2 NZLR 669 (HC) at [51].

211 S v W [2006] NZHC 1672; [2006] 2 NZLR 669 (HC) at [52].

212 S v W [2006] NZHC 1672; [2006] 2 NZLR 669 (HC) at [52].

213 S v W [2006] NZHC 1672; [2006] 2 NZLR 669 (HC) at [52].

10.56 Nevertheless, the Supreme Court has inferred that section 10 is

subject to section 9A. In Rose v Rose, one partner inherited land from his father and so it would have been separate property under section 10.214 The partner developed the land into a vineyard

using relationship property. The land increased in value. The Supreme Court said that the increased value could be considered relationship property under section 9A. The Court, however, did not discuss the relationship between section 9A and section 10. It appears simply to have been assumed that section 9A would apply to separate property under section 10.

10.57 Accordingly, while the courts have decided how section 10 should be interpreted in relation to section 8(1) and section 9A, these interpretations are not supported by the clear wording of the PRA. In addition, the extent to which section 10 is a self-contained

code is unclear in light of the Supreme Court’s decision in Rose v

Rose.

Is reform required?

10.58 In considering whether reform is required, the primary question is what priority should be given to property that a partner acquires as a gift or inheritance from a third party. Does that

property deserve special treatment, or can it be treated as separate property generally and therefore subject to sections 8 and 9A? More specifically, should gifts or inheritances become relationship property when the partners have placed that property into their joint ownership? And should increases in the value of a gift or inheritance that are attributable to the relationship be treated as relationship property?

10.59 There is little discussion in the legislative material about why the property described in section 10(1) should be treated differently from separate property generally under section 9. The rationale alluded to in the case law is that property acquired from a third party has not been produced by the efforts of the partners and so should not be considered relationship property.215 But the same can equally be said of other types of separate property that would fall under the definition in section 9, such as property acquired before a relationship.


214 Rose v Rose [2009] NZSC 46, [2009] 3 NZLR 1 at [28].

215 S v W [2006] NZHC 1672; [2006] 2 NZLR 669 (HC) at [52].

10.60 One possible explanation is that property acquired by gift or

inheritance is unique because of the intentions of the third party who gave the property. It could be argued that the PRA should

not defeat or restrict a third party’s ability to gift property to a recipient of his or her choosing. For example, parents may wish that their children inherit certain family assets by way of succession. As we explain in Part G it has been common in New Zealand for families to establish trusts in order to pass family

farms to the next generation. It might be suggested that the PRA should not disrupt such estate planning. Rather, the PRA should distinguish between gifted and inherited property and separate property generally in order that gifted and inherited property is given extra protections against division.

10.61 The question of whether gifted or inherited property should be treated differently by the PRA is fundamentally a value judgment.

C ONSU LTATION QUESTIONS

C11 Should the PRA give special treatment to property acquired by one partner from a third party by succession, survivorship, gift or because the partner is beneficiary under a trust?

C12 If so, should such property lose its separate property status if it has been used to acquire property in the partners’ joint names?

C13 Likewise, should such property be subject to section 9A?

Should the courts take a more robust approach to intermingling?

10.62 Some commentators criticise the intermingling exception under section 10(2). Fisher argues that separate property such as third party gifts do not lose their character just because they have been intermingled.216 Nor does intermingling prevent an estimation of the respective proportions of relationship property and separate property, even if broad and robust estimates are required.217 Fisher argues that it is far better to undertake rough apportionments in the case of intermingling because it is more consistent with the



  1. Robert Fisher “Should a Property Sharing Regime be Mandatory or Optional?” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).
  2. Robert Fisher “Should a Property Sharing Regime be Mandatory or Optional?” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

concept underlying the PRA, that relationship property is divided

but separate property remains separate.218

10.63 Fisher makes a valid point. It might not seem fair that the recipient of the gifted or inherited property receives no credit

for its initial contribution, just because it has been intermingled with relationship property. It is however important to recognise that the courts will only refuse to account for the initial separate property input when the intermingling has made it impractical or unreasonable to regard the property as separate property. This is a high threshold. The case law shows that intermingling on its own will not deprive a partner of the separate property.

10.64 In Brenssell v Brenssell for example, the partners carried on a farming business together as a partnership.219 The partners initially contributed funds to begin the partnership. The wife injected a sum of money she had inherited as a bequest. The partnership soon began to generate revenue. All funds were credited to and debited from the same account. The wife used a sum of money from the partnership account to purchase shares in a company. She claimed that the money she had withdrawn was the money she had inherited. The question before the

High Court was the classification of the shares. This in turn required the Court to consider whether the purchase of the shares could be traced to the funds the wife had inherited as a bequest, or whether the funds in the partnership account were so intermingled it was impractical and unreasonable to consider

the purchase funds as the wife’s separate property. The High Court observed that at the time of the share purchase, the partnership had acquired insufficient revenue from which to fund the share purchase. Accordingly, the purchase funds must have been the from the wife’s bequest, at least in substantial part. In those circumstances, the Court said, it was logical to regard the purchase money as the withdrawal of the wife’s separate property.220 While there had been an intermingling of the bequest by depositing it in the partnership account, it was not unreasonable or impracticable

to regard the money as the wife’s separate property.221

  1. Robert Fisher “Should a Property Sharing Regime be Mandatory or Optional?” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming). See also RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [11.63].

219 Brenssell v Brenssell [1995] 3 NZLR 320 (HC).

220 Brenssell v Brenssell [1995] 3 NZLR 320 (HC) at 330.

221 Brenssell v Brenssell [1995] 3 NZLR 320 (HC) at 330.

10.65 Even if it is practical to apportion the value of intermingled

property between the separate property and relationship property inputs, there may be good reasons for treating intermingled property as relationship property where it is unreasonable to do otherwise. In the case S v W discussed above, one partner had acquired animals from his separate property funds. The High Court recognised, however, that the partner derived advantages through structuring the farming business as a partnership with the other partner and by intermingling property. In that case, the High Court said it would be unreasonable to treat the animals as separate property, even though it was practical to treat them as such.222

10.66 In our preliminary view, the intermingling exception under section 10(2) ought to be retained in its current form. Although it could be argued that the courts should take a robust approach and be more willing to apportion the value of intermingled property, section 10(2) is intended to operate in the truly exceptional case. We also see advantages in allowing the court to treat intermingled property as relationship property where it is reasonable.

C ONSU LTATION QUESTIONS

C14 Should the intermingling exception under section 10(2) of the PRA be retained in its

current form?

C15 If not, what is a better approach for when gifts and inheritances have been intermingled with relationship property?

Implications of moving to a “fruits of the relationship” approach

10.67 In Chapter 9 we considered the option of moving to a pure fruits

of the relationship approach. Under that approach, the PRA would define relationship property as property which is attributable (directly or indirectly) to the relationship. Relationship property would no longer be defined based on the use to which property is put.

10.68 If the PRA is reformed by adopting a fruits of the relationship approach, there are implications for section 9A and section 10.

222 S v W [2006] NZHC 1672; [2006] 2 NZLR 669 (HC) at [73].

How would separate property be treated under a

fruits of the relationship approach?

10.69 The fruits of the relationship approach will require the partners to identify all property they brought into the relationship or acquired during the relationship from a gift or inheritance. This will generally remain separate property even if it is used as the family home (subject to intermingling under section 10(2)). The questions that then arise are:

(a) First, how should increases in value, or any incomes or gains on separate property, be treated?

(b) Second, where new property has been purchased using relationship property funds and separate property funds, how should the new property, and any increases in its value, be shared?

Option 1: Share increases in value and new property purchases between the separate property and relationship property sources

10.70 One option is to share any increases in the value of separate property, or new property purchased using separate property funds, according to the extent they were attributable to the relationship. Fisher, who favours this approach, suggests that increases in value of separate property during the course of the relationship that are attributable to the joint and several efforts of the partners should be considered relationship

property.223 However, “spontaneous increases in value”, such as those attributable to inflation or rises in the value of property, should remain separate.224 This is similar to the second option for reforming sections 9A(1) and 9A(2), discussed at paragraphs

10.34–10.36 above.

10.71 For new property that is purchased from both relationship property funds and separate property funds, it would be necessary to share the value of the new property according to

  1. Robert Fisher “Should a Property Sharing Regime be Mandatory or Optional?” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

the relationship property and separate property contributions,

including a proportionate share of any increase in value of the new property.225

10.72 The advantage of this approach is that each partner is credited for the property they contribute to the relationship, including any additional value gained on that separate property. Likewise, the approach apportions the gains in value that are attributable to the relationship. The main disadvantage is that the task of

apportioning the correct value to the respective separate property and relationship property components of an asset will be complex. The task of apportioning value between the various factors, such

as the relationship, the input of separate property and inflationary gains, is also likely to be imprecise. To achieve accuracy, the partners will probably require considerable expert assistance, which will increase the costs and length of resolving relationship property matters.

Option 2: Classify increases in the value of any property as relationship property

10.73 A second and alternative approach is to consider any increase in value on any property, whether relationship property or separate property, as relationship property. This is essentially the third option for reforming sections 9A(1) and 9A(2), discussed at paragraphs 10.37–10.41 above.

10.74 When new property is purchased using a combination of separate property funds and relationship property funds, the partners would keep an entitlement to their separate property contributions, but any subsequent increase in the new property’s value would be treated as relationship property.

10.75 The advantage of this approach is that it would be simpler.

There would be no need to undertake the complex process of apportioning the increased value of the property to the respective separate property and relationship property inputs. Instead, all gains would be relationship property. The main disadvantage

is that it would give no credit to a partner who contributes a significant amount of separate property to the purchase of an asset.

10.76 These options are illustrated in the case study below.

CASE STUDY: How should increases in value be shared?

To explore how a fruits of the relationship approach might work, we use the hypothetical example of Brenda and Martin

Brenda and Martin decide to move in together. They purchase a house. Brenda uses her savings of $50,000 (which is her separate property) to fund the deposit. The purchase price of the house is $300,000. Brenda and Martin fund the balance of the purchase price by a mortgage of $250,000.

Brenda and Martin meet the mortgage repayments and other expenditure of the house from their incomes.

Three years later Martin receives a $50,000 inheritance from his grandmother ’s estate (which is his separate property). Martin uses this money to build a double garage and an extra bedroom on the house.

Brenda and Martin separate a year later. Brenda and Martin have repaid
$50,000 off the mortgage. An amount of $200,000 remains outstanding.

A valuer tells Brenda and Martin that the market value of the house is $450,000. However, if the house did not have the double garage and the extra bedroom, it would only be worth $375,000.

How should Brenda and Martin divide the value of the house?2

DIVISION UNDER THE CURRENT RULES

The contributions of separate property by both Brenda and Martin are treated as having been converted into the house, which is relationship property. The market value of the house, less the mortgage, is shared equally:

Status quo
Separate property and gains
Relationship property and gains (half share)
Total

Brenda
-
$125,000
$125,000
Martin
-
$125,000
$125,000
DIVISION UNDER OPTION 1

Under option 1, Brenda and Martin would need to share the value of the house between their respective separate property and relationship property contributions.

First, Martin’s use of separate property to build the garage and bedroom has increased the house’s value by $75,000. That would mean Martin is entitled to his initial separate property contribution ($50,000) and gain ($25,000), totalling $75,000.

Second, the market value of the house after discounting Martin’s separate property contribution appears to be $375,000. The house has therefore increased in value by $75,000. Brenda’s separate property contribution of
$50,000 accounts for one sixth of the initial purchase price. She may therefore be entitled to recover one sixth of the property’s increased value ($12,500)
as a gain on her separate property contribution. That would mean Brenda is entitled to $62,500 representing her separate property contribution and gain.

Third, the remainder of the house’s market value ($312,500) would be relationship property. From this amount, the outstanding $200,000 mortgage debt must be deducted because it is a relationship debt. The relationship property eligible for equal division between Brenda and Martin is $112,500.

Option 1
Separate property and gains
Relationship property and gains (half share)
Total

Brenda
$62,500
$56,250
$118,750
Martin
$75,000
$56,250
$131,250




DIVISION UNDER OPTION 2

Under option 2, increases in value of all property during the relationship would be relationship property. Accordingly, Brenda and Martin would each be entitled to their $50,000 separate property contributions. All increases in the house’s value would be relationship property, against which the outstanding mortgage debt would be deducted. Brenda
and Martin’s respective shares would be as follows:

Option 2
Separate property and gains
Relationship property and gains (half share)
Total

Brenda
$50,000
$75,000
$125,000
Martin
$50,000
$75,000
$125,000

C ONSU LTATION QUESTION

C16 If the PRA’s definition of relationship property was based solely on a fruits of the relationship approach, how should increases in value be treated? Do you prefer option 1 or option 2? Why?

How would gifts and inheritances be treated under a fruits of the relationship approach?

10.77 Section 10(4) provides that if gifted or inherited property is used as the family home or a family chattel, that property will be classified as relationship property. The PRA therefore gives primacy to the family use approach to classification over the special treatment given to gifted or inherited property.

10.78 Under a fruits of the relationship approach, the family home and family chattels would not automatically be designated as relationship property. Section 10(4) would need to be removed. Consequently, the special status of gifted and inherited property would be enhanced because there would be fewer exceptions under section 10 for when such property could be treated as relationship property. If, however, gifted and inherited property was treated like other types of property and was subject to the same rules and exceptions under sections 8 and 9A, a move to a fruits of the relationship approach would not enhance the special status of inherited and gifted property to the same extent.

10.79 The responses we receive to the question of whether gifted and inherited property should receive special treatment will also be relevant if a fruits of the relationship approach to classification is considered.

Chapter 11 – Issues with

particular types of property &

debts

11.1 This chapter considers issues with the classification of the following types of property and debts:

(a) ACC and insurance payments;

(b) super profits and earning capacity; (c) taonga;

(d) heirlooms;

(e) student loan debts; and

(f ) inter-family gifting and lending.


ACC and insurance payments

11.2 A partner may have a right to payments in respect of injury or illness under the Accident Compensation Act 2001 or under a private insurance policy. The courts have said that the right to payment constitutes a property right which, if accrued during the relationship, will be classified as relationship property. For ease of reference, we will refer to payments under the Accident Compensation Act 2001 and its predecessors as “ACC payments”.

We will refer to payments under an insurance policy for personal injury or illness as “insurance payments”.

11.3 ACC payments can take several forms.226 The main ones are:

(a) rehabilitation payments, which are intended as money and support to facilitate the injured person’s rehabilitation;227

  1. For an overview, see Simon Connell and Nicola Peart “Accident Compensation Entitlements Under the Property (Relationships) Act 1976” (2017) 14(3) Otago Law Review (forthcoming). Not listed here are the entitlements available when a partner dies: see Accident Compensation Act 2001, sch 1, pt 4.
  2. Accident Compensation Act 2001, sch 1, pt 1. Simon Connell and Nicola Peart “Accident Compensation Entitlements Under the Property (Relationships) Act 1976” (2017) 14(3) Otago Law Review (forthcoming) suggest that rehabilitation payments reflect the statutory purpose in s 3(c) of that Act that “where injuries occur, the Corporation’s primary focus should be on rehabilitation with the goal of achieving quality of life through the provision of entitlements that restores to the maximum practicable extent a claimant’s health, independence, and participation”.

(b) lump sum compensation payments for permanent

impairment;228 and

(c) weekly compensation payments, which are to compensate people incapacitated through injury for their lost earnings.229

11.4 In S v S230 and B v B231 a partner had received lump sum ACC payments. In both cases, the courts determined that the payments represented the recipient partner ’s right to compensation under accident compensation legislation. As the rights had accrued during the relationship, they were relationship property pursuant to section 8(1)(e) of the PRA.

11.5 In C v C the husband suffered an illness during the course of the relationship which left him disabled.232 His policy of insurance provided that in the event he suffered a disability that prevented him from working he would be paid a monthly income, both during his notional working life and in his retirement. The High Court said the husband’s right to payments was a contractual right under the insurance policy that had crystallised during the relationship.233 All future payments the husband would receive were attributable to this underlying property right and were likewise relationship property.234

11.6 In contrast, if the partner ’s right to ACC or insurance payments, either as a lump sum or as periodical payments, accrues before the relationship, it will be regarded as the partner ’s separate property.235







  1. These payments are designed to compensate the injured person for impairment to their person regardless of whether that causes economic loss: Injury Prevention and Rehabilitation Bill 2000 (90-1) (explanatory note) at 3; and Royal Commission of Inquiry into Compensation for Personal Injury in New Zealand Compensation for personal injury in New Zealand: Report of the Royal Commission of Inquiry (Wellington, 1967) at [291] cited in Simon Connell and Nicola Peart “Accident Compensation Entitlements Under the Property (Relationships) Act 1976 (2017) 14(3) Otago Law Review (forthcoming).

229 Accident Compensation Act 2001, s 100(1) and sch 1, pt 2.

230 S v S (1984) 3 NZFLR 88 (DC).

231 B v B [2016] NZHC 1201, [2017] NZFLR 56. In this case there was an issue as to when the right to payments accrued.

The High Court said that, based on s 38 of the Accident Compensation Act 2001, the statutory right to payment accrues when the claimant first receives treatment for the injury, even if the injury itself was suffered and manifested some time earlier.

232 C v C HC Auckland CIV-2003-404-6892, 10 September 2004.

233 C v C HC Auckland CIV-2003-404-6892, 10 September 2004 at [32].

234 C v C HC Auckland CIV-2003-404-6892, 10 September 2004 at [39].

235 G v G [1995] NZFLR 550 (HC); and T v A FC Auckland FP 88/00, 20 November 2003.

Should a partner ’s right to ACC or insurance

payments accrued during the relationship be divided as relationship property?

11.7 The classification of a partner ’s right to ACC or insurance payments as relationship property may be perceived as unfair for several reasons.

11.8 First, ACC payments are usually made either to facilitate a person’s rehabilitation from injury or as compensation for impairment or lost earnings. Likewise, insurance payments are received in respect of insured loss to a person’s health, often as a means of ensuring income protection. The partner who receives the payments may continue to suffer the injury and loss after

the partners’ relationship has ended. Nevertheless, the courts have said that the full value of a lump sum payment, or all future periodic payments, is relationship property if the right to the payments accrued during the relationship. It could be argued that, if the payments are to compensate for the loss suffered after the relationship ends, this means the recipient partner is obliged to account for property received in respect of post-separation losses which are unconnected with the relationship.236

11.9 Although technically all payments stem from the underlying property right,237 it could be said that this analysis is not in

keeping with classification under the PRA. The general approach is to classify property connected to the relationship as relationship property and all property unconnected with the relationship as

separate property.238 In any event, many people may not agree

236 In some cases, the courts have recognised the difficulties in requiring a partner to share the value of ACC payments

that are intended as compensation for loss suffered after the relationship: P v P HC Nelson M8-83, 20 July 1983 at 9 per Hardie Boys J: the lump sum compensation was “entirely personal” and intended to compensate the injured husband for losses he would suffer “for the remainder of his days”; and S v S (1984) 3 NZFLR 88 (DC) at 92–93. In these cases, the courts applied the exception that extraordinary circumstances rendered equal sharing of the payments repugnant to justice. These cases were, however, decided prior to the 2001 amendments, and there was greater scope under the

legislation to depart from equal sharing in respect of property other than the family home and family chattels: see Simon

Connell and Nicola Peart “Accident Compensation Entitlements under the Property (Relationships) Act 1976” (2017)

14(3) Otago Law Review (forthcoming).

237 C v C HC Auckland CIV-2003-404-6892, 10 September 2004 at [33]–[34].

  1. In its 1988 report, the Ministerial Working Group observed that ACC payments are distinct from other types of property a partner may receive during the relationship. Unlike property such as lottery winnings and redundancy payments,

the injury for which the partner receives compensation may be permanent: Department of Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at 24. Ultimately, the Working Group did not make any firm recommendations in respect of ACC payments but expressed the view that earnings-related compensation for the period during marriage should be matrimonial property and earnings-related compensation for a period outside marriage should remain separate (at 25). We also note that s 8(1)(g) of the Property (Relationships) Act

1976 provides that the value of any life insurance policy, or of the proceeds of such a policy, is relationship property to the extent the value is attributable to the relationship. There are, however, key differences between life insurance policies, and ACC payments and other insurance policies (such as income protection policies). Life insurance policies

with the distinction made between post-separation income,

which is not relationship property, and post-separation ACC

payments or insurance payments, which are.

11.10 The law has long recognised that compensation received in respect of bodily injury deserves special treatment.239 Throughout the history of the accident compensation legislation, a person’s entitlements under the legislation have always been inalienable and have never vested in the Official Assignee if the recipient became bankrupt.240

11.11 Second, if a partner has received or is continuing to receive ACC

or insurance payments, it may mean that his or her ability to work is affected. In some cases the payments may be income on which the partner depends if he or she cannot work. In other cases,

the payments will be necessary for the partner ’s rehabilitation. There will be tensions and practical difficulties if the partner is required to account for half the payments to a former partner after separation.

11.12 The extent to which the current approach to ACC and insurance payments may operate unfairly is best illustrated by the scenario where, at the end of a relationship, one partner is working full time and the other is unable to work due to an injury sustained during the relationship. In this scenario, the partner working full time is not required to share his or her future earnings, while the partner receiving ACC or insurance payments must share any future payments equally with his or her former partner.

Options for reform

11.13 The PRA could be amended in order to respond to these potential issues. Section 8 could classify ACC payments as relationship property only to the extent that they relate to loss a partner has suffered during the relationship. If the payments relate to the loss a partner suffered either before or after the relationship, those payments could be classified as separate property. The task of apportioning payments may be straightforward if the payments

often can be surrendered in return for a certain payment. Life insurance policies also insure the life of a partner rather than compensate for ongoing loss a person may suffer during the course of his or her life.

  1. In B v N [2007] NZFLR 1146 (FC) at [23] the Family Court observed that s 123 of the Accident Compensation Act 2001 provided that entitlements under that Act are “not assignable or alienable”. The Court said that this provision “very much carries through the philosophy that derives from common law in which actions for damage to the person are sacrosanct.”

240 Accident Compensation Act 2001, s 123; Accident Insurance Act 1998, s 124; Accident Rehabilitation and Compensation Insurance Act 1992, s 86; Accident Compensation Act 1982, s 89; and Accident Compensation Act 1972, s 135. See also B v N [2007] NZFLR 1146 (FC) at [23] for discussion on the effect of s 123 of the Accident Compensation Act 2001.

are made to the partner periodically. If, on the other hand, the

payments are made as a lump sum payment, the partners would have to apportion the lump sum across the respective periods. This could be difficult, particularly when there is no indication of how the lump sum compensatory payment has been calculated.

11.14 The advantages of this approach are that the classification better reflects the nature of relationship property and separate property. We also believe that most New Zealanders would consider this approach to classification to be fairer. The main disadvantage is that it will require partners to undertake the potentially difficult task of apportioning lump sum ACC payments to the pre- relationship period, relationship period and post-relationship period.

11.15 A similar reform could be made for insurance payments made in respect of personal injury or illness. However there may be less basis for doing so, as insurance payments are likely received as a result of the deliberate choice by a couple to purchase an insurance policy and meet the premiums using relationship property. They may be distinguishable therefore from the compulsory social insurance accident compensation scheme, although partners will still have usually contributed to the scheme through levies on their incomes, which will usually be relationship property.241

C ONSU LTATION QUESTIONS

C1 If a right to ACC or insurance payments arises during the relationship (because of a personal injury or illness sustained during the relationship), should all those payments (including future payments) be classified as relationship property?

C2 Should the PRA be reformed? If so, do you agree with our suggested amendment?

Should it apply to ACC and insurance payments?


Super profits and earning capacity

11.16 As discussed in Chapter 8, the courts have said that a partner ’s capacity to earn an income (earning capacity) does not come under the PRA’s definition of property. The leading case is the decision of the full Court of Appeal in Z v Z (No 2).242 In that case

  1. Simon Connell and Nicola Peart “Accident Compensation Entitlements Under the Property (Relationships) Act 1976” (2017) 14(3) Otago Law Review (forthcoming).

242 Z v Z (No 2) [1997] 2 NZLR 258 (CA).

Mrs Z had left the labour force when she married Mr Z in order

to care for their children and look after the home. Mr Z had developed a successful career in accountancy. At the time the partners separated, Mr Z had become a partner in a successful accountancy firm. Mrs Z suffered from an illness and was unlikely to return to work. Mrs Z argued that her contributions to the marriage had enhanced Mr Z’s earning capacity, and that his enhanced earning capacity should be relationship property. Through her care for the children and the home she had

supported Mr Z through his study and the development of his career. Mrs Z said that she should be entitled to half the value of Mr Z’s earning capacity.

11.17 The Court of Appeal recognised the force of Mrs Z’s arguments.243

However, the Court said that Mr Z’s earning capacity could not be considered property under the PRA. The Court noted that

the PRA’s definition of property was adopted from conventional property law statutes and this strongly indicated the PRA only applied to conventional notions of property.244 The Court also said that personal characteristics, which are part of an individual’s overall make up, cannot constitute property under the PRA.245

11.18 Although the Court of Appeal did not accept Mrs Z’s argument, that was not the end of the matter. The Court said that Mr Z had a “bundle of rights” that made up his interest as a partner in the accountancy firm. This interest, the Court said, did constitute

property under the PRA which should be divided between Mr and Mrs Z.246 The Court suggested that the best approach to valuing Mr Z’s partnership interest was first to ascertain whether the profits he received from the partnership included an element derived from his membership of the firm as distinct from his own earning capacity.247 The Court referred to these excess earnings as “super profits”.

11.19 This approach to valuing a partner ’s interest in a firm has been followed in subsequent cases. The Court of Appeal case M v B is a leading example.248 The husband was a partner in a large law firm. The Court said that his interest in the partnership was relationship property, but only to the extent that the profits he

243 Z v Z (No 2) [1997] 2 NZLR 258 (CA) at 281.

244 Z v Z (No 2) [1997] 2 NZLR 258 (CA) at 279.

245 Z v Z (No 2) [1997] 2 NZLR 258 (CA) at 279.

246 Z v Z (No 2) [1997] 2 NZLR 258 (CA) at 286.

247 Z v Z (No 2) [1997] 2 NZLR 258 (CA) at 292.

248 M v B [2006] NZCA 535; [2006] 3 NZLR 660 (CA).

derived from partnership were in excess of what his own direct

industry would command. His future maintainable earnings in the partnership were estimated at $500,000 per annum.249 In contrast, the evidence suggested he could earn at least $250,000 as a self-employed barrister.250 The Court of Appeal said that the annual differential between the husband’s actual earnings and the potential earnings from his own industry was $250,000.251

In terms of Z v Z (No 2), this was the level of “super profit” which was available to the husband on an ongoing basis.252 The Court of Appeal described the super profits as an income stream from an item of relationship property (the husband’s partnership interest) which the husband could continue to access.253

11.20 In order to arrive at an accurate valuation of the husband’s relationship property interest in the partnership, the Court adopted a multiplier against which to multiply the annual amount of super profits. The multiplier took into account the following factors, which affected the ongoing value of the income stream:254

(a) the husband was about 50 years old;

(b) when he ceased to be a partner in the firm, there was no residual value in the partnership to be paid out to him

by the remaining partners;

(c) the firm relied heavily on one client, which generated fees at a lower level of remuneration than existed in many firms; and

(d) there was a degree of capture by the firm of its partners because of the relatively restricted nature of the work undertaken.

11.21 The Court decided that a multiplier of three was appropriate. In other words, the value of the husband’s relationship property interest in the partnership (the “super profit”) was three times

his future maintainable earnings, less what was attributable to his personal industry and commitment.255 Having calculated the value

of the husband’s interest in the partnership (the “super profit”)


249 M v B [2006] NZCA 535; [2006] 3 NZLR 660 (CA) at [88].

250 M v B [2006] NZCA 535; [2006] 3 NZLR 660 (CA) at [77].

251 M v B [2006] NZCA 535; [2006] 3 NZLR 660 (CA) at [89].

252 M v B [2006] NZCA 535; [2006] 3 NZLR 660 (CA) at [89].

253 M v B [2006] NZCA 535; [2006] 3 NZLR 660 (CA) at [89].

254 M v B [2006] NZCA 535; [2006] 3 NZLR 660 (CA) at [93].

255 M v B [2006] NZCA 535; [2006] 3 NZLR 660 (CA) at [94].

at $750,000, the Court of Appeal made a discount for the tax

payable on that income.256 The net value was $450,000 and that was the sum at which the Court valued the relationship property interest in the partnership.257 The wife was accordingly entitled

to $225,000, being an equal share of that item of relationship property.

11.22 The courts’ approach to analysing the relationship property component of a partnership interest in a firm has become a significant topic of debate. This is largely because the issue has been dealt with in a number of appellate cases, such as Z v Z (No 2) and M v B. A number of issues are raised in the discussions around these cases which are worth highlighting.

Issue 1: The distinction between earning capacity and super profits may be difficult to understand

11.23 The exclusion of earning capacity and the focus instead on super profits from the partnership interest may be difficult to understand. The courts’ approach can be understood by

following the Court of Appeal’s reasoning in Z v Z (No 2). However most people will not be aware of the Court’s decision. Instead, most people are unlikely to distinguish between the income attributable to a partner ’s personal efforts and skills as against

the excess income from a partnership interest. Also, as the Court of Appeal accepted in Z v Z (No 2),258 there is logic in the view that a partner ’s earning capacity is “human capital” into which both parties in a relationship have invested. Arguably it is sensible that all income derived from that human capital be

shared. Consequently, the exclusion of income attributable to the partner ’s individual skills and industry may appear arbitrary.

11.24 The analysis may also lead to differing and seemingly anomalous results between similar cases. For example, there could be instances where two individuals have the same interest in a partnership under the firm’s partnership deed. If assessed under the PRA, their respective interests might be valued at different levels depending on the level of income a court says should

be attributed to the partners’ personal industry and skill.259 To

256 M v B [2006] NZCA 535; [2006] 3 NZLR 660 (CA) at [94].

257 M v B [2006] NZCA 535; [2006] 3 NZLR 660 (CA) at [94].

258 Z v Z (No 2) [1997] 2 NZLR 258 (CA) at 280-281.

259 This observation was made by William Young P in M v B [2006] NZCA 535; [2006] 3 NZLR 660 (CA) at [167].

take another example, a court may find that if an individual

was self-employed he or she could command an income at a similar or greater level to that which he or she in fact receives from the interest in the partnership. In that scenario, the court will probably say that there are no super profits arising from the partnership interest, even if the partner does receive income derived from his or her partnership interest.260

Issue 2: Valuation of super profits is complex

11.25 The valuation of a partnership interest based on the super profits approach can be complex. The assessment requires a sophisticated analysis of what income should be attributed to a partner ’s personal skills and industry. The court must then decide on an appropriate multiplier which reflects the peculiarities of, among other things, the nature of the firm’s business, the specific terms of the partnership deed, and contingencies relating to the individual partner in question, such as proximity to retirement

or other factors affecting work output. In cases where the partnership interest is relatively modest, there are concerns as to whether the costs and depth of analysis can be justified. The case T v T provides an interesting example.261 That case involved what the court described as a “modest trucking business”.262 The central issue was how the trucking business partnership should

be valued and divided. The Family Court expressed dissatisfaction that the resolution of this issue had turned into “an astonishingly convoluted legal process”.263 The wife, in attempting to claim a relationship property interest in the partnership, had relied on evidence of the husband’s earnings from the business following separation. She presented accounting evidence that, after a fair remuneration from these earnings was deducted, there was a super profit for each financial year.264 The Court considered that this argument lacked the proper analysis. Rather, the Court focused on the operations of the trucking business. The success

of the business was due to the husband’s personal relationship with the business’s major contractor and the husband’s proven reliability. The Court therefore said that the profits generated by

the business were almost certainly due to the husband’s “singular

260 This observation was made by William Young P in M v B [2006] NZCA 535; [2006] 3 NZLR 660 (CA) at [167].

261 T v T [2007] NZFLR 754 (FC).

262 T v T [2007] NZFLR 754 (FC) at [1].

263 T v T [2007] NZFLR 754 (FC) at [6].

264 T v T [2007] NZFLR 754 (FC) at [51].

commitment and energy”.265 This case suggests that sophisticated

legal and valuation analysis is needed to effectively present a

claim for a relationship property interest in a partnership interest, even if the interest in question is relatively modest.

Issue 3: The super profits analysis may blur the line between income and capital

11.26 Atkin says that the super profits analysis unhelpfully blurs the distinction between income and capital.266 As a general rule, the income a partner earns following separation will not be relationship property.267 The super profits analysis, however, focuses on the future income a partner will receive

after separation. As explained above, the analysis is based on

a partnership interest being relationship property. The income generated from it is likewise relationship property. It is analogous to dividends received on company shares when the shares themselves are classified as relationship property.268

11.27 It not always easy to determine when post-relationship income is generated from an item of relationship property. An example is C v C, discussed at paragraph 11.5 above. In that case the husband suffered an illness during the course of the marriage which left him disabled.269 His insurance policy provided that in the event

of disability that prevented him from working he would be paid a monthly income, both during his notional working life and in his retirement. The wife claimed that the insurance payments the husband received after separation should be classified as relationship property. In response the husband argued, among other things, that the insurance payments related to his earning capacity and, in accordance with Z v Z (No 2), were not property. The High Court said that the property interest at issue was the husband’s contractual right to payments under the insurance policy.270 As the right had crystallised during the course of the relationship when the husband became disabled, that right was

relationship property. All future payments the husband would



265 T v T [2007] NZFLR 754 (FC) at [60].

266 Bill Atkin “What Kind of Property is ‘Relationship Property’?” (2016) 47 VUWLR 345 at 355.

267 Property (Relationships) Act 1976, s 9(4).

268 Scott v Williams [2016] NZCA 356, [2016] NZFLR 499 at [50].

269 C v C HC Auckland CIV-2003-404-6892, 10 September 2004.

270 C v C HC Auckland CIV-2003-404-6892, 10 September 2004 at [32].

receive were attributable to this underlying property right and

were likewise relationship property.271

11.28 The decision in C v C demonstrates the sophisticated legal analysis needed when analysing property rights and income. Many people may struggle to understand the distinction between income received from someone’s personal efforts or employment and income received pursuant to some other contractual entitlement, such as a partnership interest or a right under an insurance policy. Atkin’s observation about the blurred distinction holds some weight.

Issue 4: The super profits approach singles out people in partnerships and their partners

11.29 A further issue is that the super profits approach will only apply in the small number of cases where a partner has a partnership interest, for example in an accounting or law firm.272 Not dividing a partner ’s earning capacity, but dividing super profits, creates a different set of rules that unfairly favours people whose partners have had the opportunity to obtain a partnership interest and disadvantages the partners who have a partnership interest.

11.30 Take an example of two different relationships: Couple A and Couple B. In both relationships one partner stops working to take on the role of supporting the career of the other partner, through such things as child care and housework. In Couple A the working partner develops a successful career in management, and at the time of separation is the chief executive of a large company. In Couple B the working partner trains as a lawyer, and at the time of separation is a partner in a large law firm. The supporting partner in Couple A would have no relationship property interest in the human capital of the working partner. In contrast, the supporting partner in Couple B would have a relationship property interest

in the partnership interest, at least to the extent of the super profits. In both relationships the supporting partners made the same level of contributions and support to the relationships, and

the working partners may even be earning the same income. Yet



271 C v C HC Auckland CIV-2003-404-6892, 10 September 2004 at [39].

  1. Bill Atkin “What Kind of Property is “Relationship Property”?” (2017) 47 VUWLR 345 at 355. Atkin notes that “although the Court of Appeal [in Z v Z (No 2)] toyed with [the] idea of its reasoning being applied to employment contracts, it is hard to see how super profits or something similar can apply to the regular wage and salary earner”.

the supporting partners’ entitlements under the PRA are very

different as are the effects on the working partners.

Should a partner ’s enhanced earning capacity be considered relationship property?

11.31 The question of how earning capacity and super profits should be dealt with is a complex one. There are no simple solutions. A possible, though perhaps equally problematic, solution is to move away from super profits and instead deem a partner ’s earning capacity as an item of property. The extent to which that earning capacity has been enhanced by the relationship could then be classified as relationship property.

11.32 We have already considered in Chapter 8 whether earning capacity should be captured within the definition of property for the purposes of the PRA as a wider “economic resource”. We now consider the advantages and disadvantages of including a

partner ’s enhanced earning capacity within the PRA’s concept of relationship property.

Advantages of including enhanced earning capacity within the PRA’s definition of relationship property

11.33 First, treating a partner ’s earning capacity as relationship property to the extent it has been enhanced by the relationship is consistent with the principles of the PRA. It would recognise

that one partner may make a significant contribution to the other partner ’s earning capacity and this constitutes a contribution

to the relationship. This contribution may result in one partner sacrificing his or her own career, expecting that the investment

in the other partner ’s career will provide financial returns. As the

Court of Appeal noted in Z v Z (No 2):273

it is difficult to refute the contention that excluding a wife whose contribution to the matrimonial partnership has been the management of the home and the care of the children from

sharing in the husband’s increased earning power, which they had jointly worked for, perpetuates the injustice the Act was aimed at

remedying.




273 Z v Z (No 2) [1997] 2 NZLR 258 (CA) at 280.

11.34 Second, treating enhanced earning capacity as relationship

property removes the distinction the current law makes between people who have partnership interests and those who do not. Every partner ’s income-earning potential would be assessed, whether it was attributable to the partner ’s personal skills and experience or a super-profit derived from a partnership.

Disadvantages of including enhanced earning capacity within the

PRA’s definition of relationship property

11.35 First, if a partner ’s earning capacity is treated as property under the PRA, and that capacity is to be relationship property to the extent it has been enhanced by the relationship, it will encourage partners to focus their disputes on their personal characteristics. Separation is generally a time of emotional upheaval, and

recently separated partners are often on bad terms. There are therefore good reasons why relationship property issues should be depersonalised as much as possible

11.36 Second, treating earning capacity as property likely presents more problems than it solves. Concern is often expressed at the difficulty of valuing earning capacity. It is generally acknowledged that the value of an earning capacity is the net present value

of the partner ’s future income stream.274 A valuation therefore requires estimations of the partner ’s projected future earnings. These estimations can be imprecise as they rely on speculations about things like the partner ’s projected career path, the duration of the partner ’s working life, inflation rates, taxation and other

contingencies.275 Valuation evidence could become more critical

  1. The approach of valuing earning capacity as the net present value of the partner ’s future income stream was taken in the leading case (prior to the law change) of O’Brien v O’Brien, 489 N.E.2d 712, 713-714, 716 (N.Y. 1985). The American Law Institute criticised the approach as it observes that “earning capacity” has no meaning or existence independent

of the method used to measure it. It concludes that a rule characterising earning capacity as marital property is really a rule that treats future earnings as marital property. American Law Institute Principles of the Law of Family Dissolution: Analysis and Recommendations (LexisNexis, Washington, 2000) at 694. Calculating this value can be challenging as it requires speculation on the likely income the partner will obtain and possible contingencies.

275 The uncertainty and arbitrariness of valuing earning capacity was one of the principal reasons the Working Group in

1988 recommended against including earning capacity as a potentially divisible item of property under the Matrimonial Property Act 1976: Department of Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at 9.

In New York, until recently the courts treated a partner ’s professional qualifications as property. Reviewing the law, the New York City Bar Association expressed concerns on valuing enhanced earning capacity: New York City Bar Association “Report to the New York State Law Revision Commission by the Domestic Violence Committee, Family Court and Family Law Committee, Matrimonial Law Committee and Sex and Law Committee” (November, 2011) at 6–7:

As history has shown, this is...a difficult, imprecise and costly endeavor. It requires assumptions on assumptions: first,

project the earnings (especially hard with newly acquired skills, degrees or licenses when hypothetical figures must be used); second, project work-life expectancies, real earnings growth, inflation rates, and taxes; and, third, determine the appropriate interest rates to be used to reduce the figure to present value. As we have seen in recent years of economic upheaval, these assumptions often do not pan out. The result of this analysis is that the payor is held to the resulting number (often paid

at the time of the divorce judgment) even if the actual income is not reached or the employment life is reduced (this is

and, probably as a result, more contestable. This is likely to

increase the costs and delay in resolving relationship property matters.276

11.37 Third, it may be a complex task to identify the relationship property component of a partner ’s earning capacity. As explained in Chapter 9, relationship property is property that is either used for family purposes, like the family home and family chattels,

or property that has been acquired through the partners’ joint and several efforts during the relationship (the “fruit” of the relationship). For example, the partners’ income acquired during the relationship is usually relationship property,277 and the proportion or value of a partner ’s superannuation scheme entitlements “attributable to the relationship” is relationship property.278 It follows that a partner ’s income earning capacity

would likewise fall under this “fruit of the relationship” category. A partner ’s income earning capacity should therefore only be relationship property to the extent the earning capacity has been enhanced by the relationship. Therefore:

(a) the partner ’s income earning capacity must be identified at the point when the relationship began;

(b) it may then be necessary to identify and discount the value of future income likely to be derived from





true even if the results were not due to the actions of the titled spouse). Thus, the payor may be forced to stay in work or employment positions even if it is not a good decision (or sometimes even if it is an unhealthy decision) just in order to pay off the award or the results of the award which cannot be modified.

  1. Overseas jurisdictions have developed sophisticated tools, such as tables or online calculators, to help with valuations of a person’s future projected earnings. For instance, in the United Kingdom litigants will refer to the Ogden tables to calculate lump sum damages for future losses in personal injury and fatal accident cases: see Government Actuary’s Department, Actuarial Tables with explanatory notes for use in Personal Injury and Fatal Accident Cases (7th ed, The Stationary Office, London, 2017) at 8. In M v B [2006] NZCA 535; [2006] 3 NZLR 660 (CA) at [169] to [171] the Court of Appeal commented on the desirability of providing a methodology such as the Ogden Tables that could be applied by “reasonably numerate lawyers and judges” when calculating super profits.

Henaghan suggests several “simple and cost-effective” calculations that could be used to ascertain the “amount of

earning capacity to be counted as relationship property”. His principal suggestion is for an “income equalisation payment”. The partners’ respective future incomes for the 12 month period after their relationship ends are calculated and then added together to arrive at the total combined annual income. This is then divided equally, similar to the division of relationship property. In practical terms, it would mean the partner with the larger income earning capacity would

need to pay the other partner in order to equalise their incomes. The amount the partner would need to pay the other based on an annual figure would then be multiplied by half the number of years the partners had been together, up to a maximum of 10 years: see Mark Henaghan “Sharing Family Finances at the end of a Relationship” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

However, neither of these approaches isolate the relationship property component of a partner ’s earning capacity, namely the extent to which it has been enhanced by the relationship. Henaghan for example proposes instead to treat both partners’ entire income earning capacity as relationship property.

277 Property (Relationships) Act 1976, s 8(1)(e).

278 Property (Relationships) Act 1976, s 8(1)(i).

enhancements that occurred after the relationship

ended, such as any subsequent training or experience;279

(c) there may be suggestions that income attributable to the partner ’s innate talent should be excluded; and

(d) it may also be appropriate to recognise that the partner must undertake the work; earning capacity alone is not enough.

11.38 The task of identifying the relationship property component of a partner ’s earning capacity can therefore be challenging. It could be so cumbersome and uncertain that the advantages of designating income earning capacity as property are lost.

11.39 Fourth, designating enhanced earning capacity as relationship property may unfairly affect the autonomy of a partner by forcing him or her to continue to work to produce that income stream. One response to this is that property must be valued on the basis that the property will be put to its highest and best use. Otherwise one partner could devalue the partners’ relationship property by his or her personal preferences. If that view was followed then partners who do not wish to put their enhanced earning powers

to best use should have to pay for that choice.

11.40 Finally, it is rare that overseas jurisdictions treat enhanced

earning capacity as property. In earlier years, courts in the State of New York pioneered the treatment of professional qualifications and educational degrees as divisible items of property.280 However, in 2015 the New York State Assembly amended the law to bar

the courts from considering as marital property “the value of a spouse’s enhanced earning capacity arising from a license, degree, celebrity goodwill, or career enhancement”.281 In making its recommendations for reform, the New York State Law Revision Commission recommended “based on widespread consensus” that “one party’s “increased earning capacity” no longer be considered as a marital asset in equitable distribution.” The Commission

noted that:282

  1. New York State in the United States formerly divided the value of a spouse’s qualifications by determining the present value of the spouse’s entire future earning stream: see O’Brien v O’Brien 489 N.E.2d 712, 713-714, 716 (N.Y. 1985). Frantz and Dagan criticise this approach as going too far because the court in O’Brien included value that was “partly attributable to future professional experience, skill development, and seniority”: Carolyn Frantz and Hanoch Dagan “Properties of Marriage” (2004) 104 Colum L Rev 75 at 107.

280 O’Brien v O’Brien 489 N.E.2d 712, 713-714, 716 (N.Y. 1985).

281 Domestic Relations Law (New York), § 236, as amended by Bill A7645, effective from 23 January 2016.

282 New York State Law Revision Commission “Final Report on Maintenance Awards in Divorce Proceedings” (May, 2013).

The New York State Law Revision Commission was created by Chapter 597 of the Laws of 1934 which enacted Article

4-A of the Legislative Law. It consists of the chairpersons of the Committees on the Judiciary and Codes of the Senate

The concept of an “increased earning capacity” has much

dissatisfaction and litigation because of the asset’s intangible nature, the speculative nature of its “value” as well as the costs associated with valuations, and problems of double counting increased earnings in awards of post-divorce income and child support.

11.41 On balance, our preliminary view is that deeming a partner ’s enhanced earning capacity as relationship property is not

a feasible option. We look at the point again in Part F when considering options to address situations where the economic advantages and disadvantages flowing from the roles each partner took in the relationship are not fairly shared after the relationship ends.

C ONSU LTATION QUESTION

C3 Is the law regarding earning capacity and super profits problematic?

C4 Do you agree with our preliminary view that it is not feasible to deem a partner’s income earning capacity as enhanced by the relationship as relationship property?

Taonga

11.42 In 2001 taonga were excluded from the PRA’s definition of family chattels. While there was no discussion of Parliament’s intention in making this special rule for taonga, it followed the recommendation in 1988 of a Working Group established to review the Matrimonial Property Act 1976.283 The Working Group recommended the exclusion of taonga and heirlooms (discussed below) for the following reasons:284

(1) Heirlooms and taonga are of a special nature as much of their value lies in their individuality; as a family treasure they cannot be replaced by another, although in other ways identical, object. Where an object’s value lies partly in the fact that it has been passed down from earlier



and Assembly and five members appointed by the Governor. Its role is to examine the common law and statutes of New York State and current judicial decisions for the purpose of recommending law reform: see website at <lawrevision.state. ny.us>.

  1. The Working Group was convened by Geoffrey Palmer, then Minister of Justice: Department of Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988). The Matrimonial Property Amendment Bill 1998 (109-1) (explanatory note) at i states that the amendments in the Bill (including the exclusion of taonga) were largely drawn from the recommendations of the Working Group.

284 Department of Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at

18.

generations its special character is lost if it passes to

someone outside the family or tribal group.

(2) Other property acquired by succession or survivorship, or under a trust, which does not fall within the category of family chattels, is separate property by virtue of s10. The group is of the opinion that the special nature of heirlooms and taonga outweighs the special nature of family chattels in relation to other types of property.

(3) Taonga have a special cultural and ancestral significance for Maori tribes as well as for individual Maori to whom the property may pass. Maori argue that individuals are not seen as owning such property and therefore able to dispose of it as they wish. Instead, a person in possession of taonga is more of a guardian of taonga for the rest of

the tribe and for future generations. Maori thus argue that the matrimonial property regime should not apply to such property in order that the property may pass according to custom.

11.43 The special significance of taonga was also recognised in a 1996 working paper prepared by Hohepa and Williams for the Law Commission’s review of the law of succession.285 In that paper Williams discussed whether tikanga Māori should govern the succession of items defined by general law as personal property, “on the basis that the items are not the personal property of

the deceased but are taonga of the [hapū] for which the new kaitiaki may well be a person outside the immediate family of the deceased”.286

Taonga are subject to the PRA

11.44 Unlike Māori land, discussed in Chapter 8, taonga are still subject to the PRA, even if they are excluded from the definition of family chattels. This means that taonga that are chattels will generally

be treated as one partner ’s separate property.287 As separate property, taonga are subject to the PRA’s ordinary rules about

when separate property becomes relationship property, including




285 Pat Hohepa and David Williams The Taking into Account of Te Ao Māori in Relation to Reform of the Law of Succession

(NZLC MP6, 1996) at 46.

286 Pat Hohepa and David Williams The Taking into Account of Te Ao Māori in Relation to Reform of the Law of Succession

(NZLC MP6, 1996) at 46 (emphasis in original).

  1. This is because s 9(1) of the Property (Relationships) Act 1976 provides that all property of either partner that is not relationship property is separate property.

through intermingling,288 or where the value of the taonga has

increased or income or gains have been made from as a result of the application of relationship property.289

11.45 Taonga that are not chattels are not excluded from the defintion of relationship property. Rather, they are treated like any other item of property that needs to be classified as either relationship property or separate property according to the PRA’s rules of classification. For example, land with general title status that nonetheless has ancestral significance is not excluded from

the pool of relationship property on the basis that it is taonga, although it may still be separate property under section 9 or section 10. On this point, Ruru suggests that: 290

If whanaungatanga is operative, it should be for the whānau (not necessarily the nuclear family) to appoint the successive kaitiaki (guardian) of the property, here, ancestral land. However, the placement of taonga in the family chattels definition does not permit such a practice to be given effect.

11.46 Taonga that are in the posession of one partner might, in some circumstances, be regarded by the court as being held on trust, in which case the taonga would be excluded from the PRA entirely.291

C ONSU LTATION QUESTIONS

C5 Should the PRA exclude taonga which fall outside of the definition of family chattels

(e.g. land of ancestral significance which is not Māori land)?

C6 Should the PRA provide that taonga which is initially separate property cannot become relationship property in any circumstances?









  1. Where property acquired by succession, survivorship, or gift becomes so intermingled with relationship property that it is unreasonable or impracticable to regard it as separate property: Property (Relationships) Act 1976, s 10(2).

289 Property (Relationshps) Act 1976, s 9A.

290 Jacinta Ruru “Implications for Māori: Contemporary Legislation” in Nicola Peart, Margaret Briggs, and Mark Henaghan

Relationship Property on Death (Brookers, Wellington, 2004) 467 at 482 (footnotes omitted).

  1. This is pursuant to s 4B of the Property (Relationships) Act 1976, which provides that nothing in the Act applies where either partner is acting as a trustee. In B v P [2017] NZHC 338 the High Court was required to determine whether the ownership of three items of taonga (two taiaha and a tewhatewha) had passed to the applicant as administrator of the deceased’s estate. The applicant argued the taonga were the deceased’s personal property, while the respondents (the deceased’s parents) argued that it was for them, as guardians of the taonga, to decide what should happen to the taonga. The Court held that, in the particular circumstances of the case, the taonga did not fall into the deceased’s estate after

his death. That was because the deceased had, six years prior to his death, entrusted the taonga to his parents to care for, and in doing so entrusted his parents to make a decision as to how they should be ultimately dealt with after his death: at [151] and [161].

The courts’ interpretation of taonga


11.47 Taonga is not defined in the PRA, but its interpretation in the context of the PRA has been explored in a series of cases.292

11.48 Initially the courts took a broad approach to the concept of taonga. In Page v Page the High Court considered taonga in the context of the PRA for the first time.293 That case concerned the status of a piece of artwork painted by one partner ’s mother. Neither partner was Māori. The case was decided in 2001, shortly before taonga was excluded from the definition of family chattels. With that legislative change on the horizon the High Court observed that the “ordinary and everyday use [of the term taonga] would encompass without difficulty the artworks of the mother in this case.”294

11.49 In Perry v West the District Court and High Court had to determine whether a Colin McCahon painting was taonga.295 Both Courts agreed that the concept of taonga could be applied to describe

the relationship between an item of property and a person of any ethnic or cultural background.296 The High Court set out two ways in which an item could attain the status of taonga:297

The first is where the object is acquired by an individual because it has a special significance to that individual. The second is where the object assumes the special status of taonga because others

also ascribe to it or bestow upon it a special significance.

11.50 Both Courts found that the husband had failed to establish that the painting was a taonga but for different reasons. The District Court said it could not be a taonga to the husband if he was willing to sell it to realise cash for other routine purposes,298

while the High Court said it could not be a taonga to the husband because he had failed to consistently maintain his personal attachment to it, having only made a claim to the painting nearly

a decade after the divorce.299

  1. The courts’ interpretation of the concept of taonga in the context of the Property (Relationships) Act 1976 has been the subject of commentary by Ruru: see Jacinta Ruru “Taonga and family chattels” [2004] NZLJ 297 and Jacinta Ruru and

Leo Watson “Should Indigenous Property be Relationship Property?” in Jessica Palmer, Nicola Peart, Margaret Briggs and

Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

293 Page v Page [2001] NZHC 592; (2001) 21 FRNZ 275 (HC).

294 Page v Page [2001] NZHC 592; (2001) 21 FRNZ 275 (HC) at [46].

295 Perry v West DC Waitakere FP 239/01, 25 March 2003; Perry v West [2004] NZFLR 515 (HC).

296 Perry v West DC Waitakere FP 239/01, 25 March 2003 at [89]; Perry v West [2004] NZFLR 515 (HC) at [37].

297 Perry v West [2004] NZFLR 515 (HC) at [37].

298 Perry v West DC Waitakere FP 239/01, 25 March 2003 at [95].

299 Perry v West [2004] NZFLR 515 (HC) at [37(b)].

11.51 In a 2004 article Ruru expressed concern at an emerging

precedent by which an item could be classified as taonga although it is not owned or held by a Māori person, was not made by a Māori person and has no Māori association or content.300 In reference to the judicial approaches in Perry v West Ruru noted that:301

(a) Neither Court had attempted a particularly comprehensive definition of taonga.

(b) Each Court relied on broad concepts of taonga as employed by the Waitangi Tribunal, but failed to acknowledge that the Tribunal’s approach to taonga, while broad, is necessarily still Māori-specific.

(c) Jurisprudence on taonga in other contexts recognises it as a Māori-specific term (as does jurisprudence on Māori concepts in other statutes, for instance, “kaitiaki” under the Resource Management Act 1990).

(d) Each Court noted the importance of the existence of a relationship with the object in question, but placed importance on a personal attachment. Under tikanga, personal attachment to the taonga is largely irrelevant; more important is the kaitiakitanga exercised over the taonga for the purposes of wider family expectations.

(e) The Courts did not discuss Parliament’s likely intention in making the special rule for taonga, and did not refer to the 1988 Working Group’s reasons for recommending the exclusion of taonga, which referred specifically to the Māori cultural significance of taonga.

(f ) The Courts did not consider the effect of the broad interpretation of taonga on the meaning of “heirloom”.

If taonga is so broadly interpreted, arguably the separate category for heirlooms becomes superfluous.

11.52 In subsequent cases the courts have restricted the interpretation of taonga.302 In Kininmonth v Kininmonth the husband argued

that his interest in a family bach was taonga and was therefore


300 Jacinta Ruru “Taonga and family chattels” [2004] NZLJ 297.

301 Jacinta Ruru “Taonga and family chattels” [2004] NZLJ 297 at 298–299.

302 Jacinta Ruru and Leo Watson “Should Indigenous Property be Relationship Property?” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

excluded from the pool of relationship property.303 The Family

Court, referring to Ruru’s article, did not accept that the concept of taonga could be relied upon in respect of a non-Māori asset such as an interest in a bach.304

11.53 In S v S, the husband, an artist, claimed that his art collection was a taonga, and thus was excluded from the definition of family chattels in the PRA.305 The Family Court observed that case law to date provided no definitive definition of taonga.306 It

concluded that the term should be defined within a tikanga Māori construct, noting the reference of the 1988 Working Group to taonga as a Māori concept and the need to avoid interpreting the term through a Pākeha lens. However, it found that the concept

of taonga, as defined within a tikanga Māori construct, could be applied “pan-culturally”:307

[P]rovided the central elements of Tikanga Māori can be shown to exist on the evidence before the Court, there can be no sound basis as to why a particular item of property could not be classified as taonga, notwithstanding that the parties to the proceedings are non-Māori.

11.54 To help identify what made a chattel a “taonga”, the Court relied on writings of Professor Paul Tapsell (who also gave evidence in the proceedings) and concluded that:308

... for an item to become taonga it must be accompanied, through a marae or marae like setting, with elements of whakapapa, mana, tapu and korero. For an item to become taonga it must therefore be presented, either by a group or an individual (but

only on behalf of a kin group/tribal group) to another, in a marae like setting. It must additionally have accompanying it a history or whakapapa, some particular significance or mana, and be presented in the context of an oration or korero. Professor Tapsell accepted that application of taonga using this definition could involve non-Māori.

11.55 Applying that definition, the husband’s art collection were

not taonga as there was no evidence that he had acquired the paintings in a marae like setting, no evidence of any particular speech or history associated with the paintings and no evidence

303 Kininmonth v Kininmonth FC Auckland FAM-2004-004-509, 27 August 2008.

304 Kininmonth v Kininmonth FC Auckland FAM-2004-004-509, 27 August 2008 at [26].

305 S v S [2012] NZFC 2685.

306 S v S [2012] NZFC 2685 at [48].

307 S v S [2012] NZFC 2685 at [54(b)].

308 S v S [2012] NZFC 2685 at [57].

that the paintings were received on behalf of others who were

representatives of a wider group.309

11.56 Ruru has observed that the Court’s decision in S v S has provided

“a more Māori aligned precedent for understanding taonga”.310

Should taonga be defined in the PRA?

11.57 Ruru has previously suggested that it would be prudent for Parliament to engage with Māori about a possible definition of taonga for the PRA.311 This was echoed by the Family Court in S v S.312 The decision in that case however may have “reduced any

urgency for the legislature to clarify its intent to confine taonga to

Māori generational treasures.”313

11.58 If Parliament opts not to define taonga, Ruru stresses that there must be ways for evidence from experts on tikanga to be obtained and applied by a court that has a working knowledge of tikanga.314

11.59 The use of expert evidence on tikanga was evident in S v S, discussed above, and was also demonstrated in the recent High Court case of B v P.315 While this case did not involve a claim under the PRA, the High Court had to decide whether taonga belonging to the deceased should go to his surviving partner or to his parents (with both the surviving partner and the parents intending to ultimately pass them on to the deceased’s three sons). The Court heard evidence from two kuia. The evidence confirmed that, according to tikanga, taonga had a guardian

instead of an owner. If the taonga were entrusted into the care of someone, those people were responsible for protecting and caring for them and for making decisions about what would happen to them. The Court concluded that in the circumstances, the taonga

were held on trust by the deceased’s parents. At least in this





309 S v S [2012] NZFC 2685 at [59].

310 Jacinta Ruru and Leo Watson “Should Indigenous Property be Relationship Property?” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

311 Jacinta Ruru “Taonga and family chattels” [2004] NZLJ 297 at 299.

312 S v S [2012] NZFC 2685 at [48].

313 Jacinta Ruru and Leo Watson “Should Indigenous Property be Relationship Property?” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

314 Jacinta Ruru “Taonga and family chattels” [2004] NZLJ 297 at 300.

315 B v P [2017] NZHC 338. The facts of this case are summarised above at n 293.

instance, the Court had little trouble resolving the issue with the

assistance of the expert evidence from the kuia.316

C ONSU LTATION QUESTIONS

C7 Should the concept of taonga be defined in the PRA? Or should it be left to be considered on a case by case basis with evidence called as necessary in each case?

Heirlooms

11.60 The definition of “family chattels” under section 2 of the PRA excludes heirlooms. That means an heirloom that is a family chattel will not be considered relationship property and it will be excluded from division under the PRA. An heirloom that is not a family chattel is likely to be classified as separate property under section 10.

11.61 The PRA does not define what an heirloom is. The Family Court has said that in order to be an heirloom, an item of property must:317

(a) be passed down from one generation to another in accordance with some special family custom;

(b) have unique characteristics or be of particular importance; and

(c) have been in the partner ’s family for generations.

11.62 The PRA was amended to exclude heirlooms in 2001. This was

in response to an earlier recommendation of the Working Group established to review the Matrimonial Property Act 1976. In 1988 the Working Group recommended that heirlooms (and taonga, discussed above) be excluded from the definition of family chattels in recognition of the special nature of heirlooms, which outweighed the special nature of family chattels.318 The Working Group’s reasons for recommending the exclusion of heirlooms are set out in full at paragraph 11.42 above.



316 Note also the discussion in John Chadwick “Whanautanga and the Family Court” (2002) 4 Butterworths Family Law Journal 91 at 94 where the author noted that whanautanga prevails over the law in relation to matrimonial property because Māori, as a rule, do not have the same emotional attachment to property like family chattels.

317 Humphrey v Humphrey FC Christchurch FAM-2003-009-3044, 25 May 2005 at [112]. See also H v F FC Auckland FAM

2005-004-1312, 27 January 2006 at [48] and Stuart v Stuart FC Christchurch FAM 2003-00-5175, 16 March 2005 at [19].

318 Department of Justice Report of the Working Group on Matrimonial Property and Family Protection (October 1988) at

18.

11.63 In our view, these reasons remain valid and justify the exclusion

of heirlooms from the definition of family chattels. In our research and preliminary consultation we have not come across any significant concerns about excluding heirlooms from the PRA’s equal sharing regime.

Should the PRA exclude other property with special significance?

11.64 There may be items of property that do not fall within the definition of heirloom but should be exempt from the PRA regime because of the special significance the property holds.

11.65 Ruru suggests that the interpretation of heirloom as being something which is handed down the generations may explain attempts to categorise non-Māori items of property, such as an art collection, as taonga.319 It is significant that all the cases arising

to date where one partner has sought to rely on the exclusion for taonga have not involved separating Māori couples or traditionally treasured Māori items.320 This may suggest a legislative gap for items of special significance other than heirlooms or taonga.321

11.66 It may, however, be challenging to describe with precision

what types of property ought to escape division under the PRA. Partners will no doubt attribute value and significance to a diverse range of property. The unique characteristics and importance that makes an item of property significant are likely to be intangible and subjective.

11.67 We suggest two categories of property that, like heirlooms, might deserve to be expressly excluded from the definition of family chattels:322

(a) First, property that has special meaning for a partner and is irreplaceable. Such property might include:




319 Jacinta Ruru “Taonga and family chattels” [2004] NZLJ 297 at 299.

320 Jacinta Ruru and Leo Watson “Should Indigenous Property be Relationship Property?” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

321 Jacinta Ruru “Taonga and family chattels” [2004] NZLJ 297 at 299.

  1. If the Property (Relationships) Act 1976 is amended to abolish the family use approach to the classification of relationship property, discussed in Chapter 9, property would not become relationship property solely because they were used as family chattels. We note therefore that although the Act could exclude other forms of property from the

definition of family chattels in addition to heirlooms and taonga, moving away from a family use approach could achieve a similar outcome.

(i) a gift from a close friend or family member who has

died; or

(ii) a trophy or ornament awarded for a particular achievement, like winning a sporting event or a long-service award from a workplace.

(b) Second, property which is in the nominal ownership of one of the partners but, owing to its wider cultural significance, should not form part of the partners’ relationship property pool. The traditional construct of property rights, which undoubtedly the PRA’s definition of property embodies, may appear alien to

or be unsuited for different cultural groups within New Zealand. It may be appropriate for the PRA to make exceptions for other property of cultural significance.

C ONSU LTATION QUESTIONS

C8 Should the PRA expressly exclude property with special significance from the definition of family chattels in addition to heirlooms? If so, what types of property ought to be exempt?

Student loans

11.68 The PRA treats student loans like any other debt. That means the classification of a student loan as either a personal debt or a relationship debt under section 20 will depend on the purpose for which the debt has been incurred.323 The cases show that a

student loan incurred before the relationship began will generally be classified as a personal debt.324 That is because the debt cannot have been incurred for relationship purposes, such as a common enterprise between the partners, or for the purposes of acquiring,

improving or maintaining relationship property.325

  1. Property (Relationships) Act 1976, s 20. The treatment of student loan debts was raised by several submitters during the Parliamentary select committee’s consideration of the Matrimonial Property Amendment Bill and Supplementary Order Paper No 25: see Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report). In particular, several submitters argued that it was unfair if both partners had a student loan, but one partner pays off his or her loan while working while the other stays at home (for example to look after children) and does not: see Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 16. The National Council of Women submitted that a student loan should be a relationship debt unless this would be repugnant to justice: see Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 16. The select committee concluded, however, that a student loan debt was no different from any other type of debt and should be classified in accordance with the normal rules.

324 O’Connor v O’Connor FC Christchurch FP 1720/94, 16 December 1996; and Kauwhata v Kauwhata [2000] NZFLR 755 (HC).

See also Nicola Peart (ed) Brookers Family Law — Family Property (online looseleaf ed, Thomson Reuters) at [PR20.01].

325 Shaws v Reed [2016] NZFC 7925, [2017] NZFLR 243 at [51].

11.69 If, however, a partner incurred a student loan during the course

of the relationship, the position may be different. A student loan may comprise a debt that was partly used to pay the partner ’s course fees and partly used to pay for the family’s living costs. In some cases, the courts have classified the component of the debt that relates to course fees as the partner ’s personal debt. But the courts have classified the component of the debt that relates to the family’s living costs as a relationship debt.326 Similarly, if a partner has undertaken the study as part of a common enterprise

of the partners, or for the benefit of both partners, the courts have classified the entire student loan as a relationship debt.327 For example, in Jayachandran v Daswani the partners were married

in India but came to New Zealand to live, study and work.328 The husband incurred a student loan to enable him to study in New Zealand. The Family Court accepted that the entire debt should be classified as a relationship debt.329 It said that the husband’s study and accompanying loan had been incurred as part of the partners’ common enterprise to relocate to New Zealand. It had

also provided both partners with benefits as, among other things, the husband’s study allowed the wife to obtain a work visa.

11.70 If a student loan is classified as a relationship debt, the net

value of the partners’ relationship property will be calculated by deducting the student loan debt.330 That will mean both partners share the debt equally. On the other hand, if a partner ’s student loan is classified as a personal debt the amount of that debt will not be shared equally between both partners. If the partner has paid back some of the loan with relationship property, such

as with his or her salary, section 20E will apply. Section 20E provides that a partner who has paid his or her personal debt from relationship property is obliged to compensate the other partner. The recent case Shaws v Reed provides a good example.331

Ms Reed had completed her degree shortly before her relationship with Mr Shaws began. She had incurred a student loan of

$49,643.04. Her qualification allowed her to secure specialist

employment during the course of the relationship from which


  1. See for example C v B FC Hamilton FAM-2005-019-991, 7 June 2006. The Family Court said that the part of the loan that was used for managing the affairs of the household and bringing up a child of the marriage came within the meaning of a “relationship debt” under s 20(1)(d).

327 S v S [2012] NZFC 4050.

328 Jayachandran v Daswani [2015] NZFC 5238.

329 Jayachandran v Daswani [2015] NZFC 5238 at [44]–[45].

330 Property (Relationships) Act 1976, s 20D.

331 Shaws v Reed [2016] NZFC 7925, [2017] NZFLR 243.

she received considerable remuneration. Her income was pooled

with Mr Shaws’ income. From that income, Ms Reed repaid her student loan. Mr Shaws sought compensation under section

20E on the grounds Ms Reed had paid her personal debt with relationship property. The Family Court agreed and awarded Mr Shaws compensation.332 The Court recognised, however, that Mr Shaws had received the benefit of Ms Reed’s income during the relationship and that should be recognised in the compensation to which he was entitled.333 The Court therefore awarded Mr Shaws a “broad brush” sum of $10,000.

11.71 Student loans are likely to be an increasingly common debt, particularly for younger partners. As at 30 June 2016, there were

731,754 borrowers in the Student Loan Scheme.334 The average student loan amount for all borrowers in 2016 was $20,983, which has increased from $19,731 in 2011.335 Of the total borrowers,

30 per cent are inactive, mostly because their income is below the repayment threshold which means they do not have any repayment obligations.336 The median repayment time for all borrowers who left study in 2014 is projected to be 8.4 years.337

This is longer than the median repayment time of 7 years for borrowers who left study in 2011.338 Females make up a greater proportion of borrowers than males and are projected to take slightly longer to fully repay their loans.339

11.72 Given the prevalence of student loans, we are interested in views on whether the PRA should provide any special rules for dealing with them.340 In particular, we are interested in whether there could be better provision for two likely scenarios.


332 Shaws v Reed [2016] NZFC 7925, [2017] NZFLR 243 at [52].

333 Shaws v Reed [2016] NZFC 7925, [2017] NZFLR 243 at [56].

  1. The Ministry of Education “Student Loan Scheme Annual Report 2015/2016” (December 2016) at 32. Of the 731,754 borrowers, 621,015 were New Zealand-based borrowers. The number of borrowers in 2014 and 2015 were 721,437 and

728,354 respectively.

335 The Ministry of Education “Student Loan Scheme Annual Report 2015/16” (December 2016) at 34.

  1. Twenty two per cent of borrowers are New Zealand-based borrowers who are inactive, and eight per cent are overseas- based borrowers who are inactive: The Ministry of Education “Student Loan Scheme Annual Report 2015/16” (December

2016) at 35.

337 The Ministry of Education “Student Loan Scheme Annual Report 2015/16” (December 2016) at 37.

338 The Ministry of Education “Student Loan Scheme Annual Report 2015/16” (December 2016) at 37. The Ministry notes at 36 that many factors may affect times for repayment, such as the government policy towards student loans and the strength of the labour market.

  1. The Ministry of Education “Student Loan Scheme Annual Report 2015/16” (December 2016) at 37. For borrowers who completed study in 2014, the projected median time for a male to repay his loan is 7.9 years whereas a female’s projected repayment time is 8.8 years.
  2. We again note that the issue was considered by the Parliamentary select committee during the 2001 amendments: Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 16.

11.73 The first is where a partner has repaid a student loan that is

classified as a personal debt from relationship property. This is likely to be the most common scenario, as a student loan borrower must make repayments when the borrower ’s income reaches a certain level,341 and a borrower ’s repayments will be automatically deducted from employment income.342 Consequently, in most cases a partner will pay back a student loan, at least in part, through his or her earnings, which will generally be classified as relationship property under section 8(e). Section 20E will apply, and the partner will need to pay compensation to account for the relationship property he or she has applied to a personal debt. The matter may become more complicated if the court is required to calculate a discount to reflect the benefit the other partner has received from the partner ’s qualification and enhanced earning capacity. We are also conscious that the rules relating to the classification and allocation of debts may be overly complex.

11.74 The second scenario relates to the division of functions in a relationship. One partner may have maintained steady employment and made significant repayments to his or her student loan. The other partner may have performed other contributions to the relationship that limited his or her capacity for paid employment. For example, the other partner may have cared for children at home. In contrast to the employed partner, it may be unlikely that this partner can make meaningful repayments to his or her student loan. The result may be that,

if the relationship ends, one partner has discharged his or her student loan whereas the other partner ’s student loan remains unpaid. Even if the employed partner is obliged to pay compensation for applying relationship property to his or her student loan, it can be argued that the non-employed partner is still at a disadvantage.

Option for reform

11.75 A possible reform option could be to classify a student loan

that either partner brings into the relationship as a relationship debt. The classification could be subject to limited exceptions, such as if the classification of the student loan as a relationship

  1. The income threshold is currently set at $19,084 a year: The New Zealand Government “Paying back your student loan” (8 May 2017) <www.govt.nz>.
  2. Inland Revenue “Employer Responsibilities – Deducting Student Loan Repayments” (23 October 2013) <www.ird.govt. nz>.

debt is repugnant to justice.343 The advantage of this approach

is that it avoids difficult assessments of whether a student loan is a personal debt or a relationship debt. It also avoids complex accounting exercises to determine the level of compensation that should be payable under section 20E. In addition, it obliges both partners to share the burden of their respective student loans if one partner has been unable to repay his or her loan owing to the division of functions within the relationship.

11.76 On the other hand, the current rules arguably provide for a more nuanced approach. Student loans will be incurred in different circumstances and for different reasons. It may be unfair to classify all student loans as relationship debts, particularly if

one partner ’s loan is sizeable and provides little benefit for the partners. Moreover, if the PRA treats student loans differently from other debts, student loans may be seen as an anomaly. It

is unclear whether the potential issues we have identified above justify special treatment.

C ONSU LTATION QUESTION

C9 Are the current rules regarding the treatment of student loans adequate? Could

the rules be improved? For example, should all student loans whenever acquired be treated as a relationship debt?

Family gifting and lending

11.77 We have learned through our research and preliminary consultation that transfers of property between family members may be increasingly common. This is partly attributable to the fact that New Zealand may be becoming more culturally diverse and intergenerational wealth transfers may be more prominent among different cultures.344 It may also reflect the increasing financial assistance partners require in order to buy their first home.345

11.78 While intergenerational transfers of wealth themselves do not appear to create significant legal problems, disputes can arise when it is unclear whether the transfer was intended as a gift or

  1. This was the approach suggested by the National Council of Women to the Parliamentary select committee when the Property (Relationships) Act 1976 was amended in 2001: see Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 16.

344 See Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i

Aotearoa o nāianei (NZLC SP22, 2017).

345 See Law Commission Relationships and Families in Contemporary New Zealand – He hononga tangata, he hononga whānau i

Aotearoa o nāianei (NZLC SP22, 2017).

a loan. The distinction is important when determining property

interests at the end of a relationship. If, for example, the parents of one partner gift property to that partner to help him or her purchase a first home, the gift would constitute relationship property if that home is used as the family home.346 If, on the other hand, the transfer is a loan to help purchase a home, the loan is likely to be a relationship debt which is then deducted from the partners’ relationship property.

11.79 Some legal rules attempt to simplify the process of determining whether a transfer is a gift or loan. The law presumes that when parents transfer property to their children they intend to do so as a gift.347 This rule is sometimes called the “presumption of

advancement”. Consequently, if a partner argues that the advance was a loan, he or she must prove that the advance was indeed intended as a loan.

11.80 In Speller v Chong the husband, who was from Hong Kong, and the wife, who was a New Zealander of European descent, separated.348

The husband’s family members had advanced the partners money which was used to buy a house. The issue before the Family Court was whether the advance was a gift or a loan. The husband argued that in Chinese culture there was a very clear expectation that these types of advances were loans. The Family Court accepted that the transactions should not be evaluated in terms of the expectations of a New Zealand lawyer.349 Rather, the formalities

of the transactions reflected the cultural context in which they occurred.350 The Court said that on the evidence there was no doubt that there was an obligation and the husband was expected to repay the advances made.

11.81 Similarly, in Zhou v Yu the husband argued that the fact that the advance took place in a Chinese family was enough for the court to be satisfied the advance was not intended to be a gift.351 In

346 Assuming that no contracting out agreement under pt 6 of the Property (Relationships) Act 1976 classifies the advance.

  1. In Narayan v Narayan [2009] NZHC 1973; [2010] NZFLR 161 (HC) at [46] the High Court applied the presumption in a case where a husband contended that an advance from his parents was a loan whereas the wife argued it was a gift. The husband’s parents had executed a document described as an “irrevocable document” in which they recorded that they had loaned the partners the money. The High Court said at [48] that the document was direct evidence that the advance was intended as a loan. Although the presumption that the advancement was a gift applied, the Court said that in these circumstances the document rebutted that presumption. The presumption of advancement does not, however, apply to gifts between a partner and a son in law or daughter in law: Knight v Biss [1954] NZLR 55 (SC); and Terry Schwass Company Ltd v Marsh [2017] NZHC 1382 at [20].
  2. Speller v Chong [2003] NZFLR 385 (FC). The Family Court’s judgment regarding the advances and their classification as relationship debts was accepted on appeal to the High Court: Chong v Speller [2005] NZFLR 400 (HC) at [53].

349 Speller v Chong [2003] NZFLR 385 (FC) at [8].

350 Speller v Chong [2003] NZFLR 385 (FC) at [8].

351 Zhou v Yu [2015] NZFC 7668, [2016] NZFLR 338 at [400].

that case the husband’s parents had made an advance to him. The

husband produced evidence that in Chinese culture there was

an expectation that an advance is treated as a loan.352 The Family

Court did not directly decide whether or not the presumption

of advancement should be rebutted when the advance occurred within a Chinese family. The Court said however that in this particular case there was a lack of surrounding evidence supporting the husband’s assertion that the advance was a loan.353

11.82 As we think it probable that family gifting and lending will increase in New Zealand, it is appropriate to consider whether any reform to the PRA is needed to respond to these types of transactions. In particular, we are interested in views on whether the PRA should provide that the presumption of advancement does not apply.354 Removing the presumption could better

reflect current (and potentially future) practices in New Zealand, particularly among some sections of society. On the other hand, it could make situations where the nature of an advance is unclear more contestable. That would potentially stimulate disputes between partners and wider family members. It could also be contrary to the principle that questions arising under the PRA should be resolved as inexpensively, simply, and speedily as is consistent with justice.

C ONSU LTATION QUESTION

C10 Is reform to the PRA needed to respond to the rise in family gifting and lending?

Should the presumption of advancement be expressly excluded by the PRA?




















352 Zhou v Yu [2015] NZFC 7668, [2016] NZFLR 338 at [407].

353 Zhou v Yu [2015] NZFC 7668, [2016] NZFLR 338 at [428].

  1. Section 4(3) of the Property (Relationships) Act 1976 already provides that many presumptions that existed under the former law no longer apply. For example s 4(3)(a) provides that the presumption of advancement does not apply between a husband and wife.

Part D –

How should property be divided?

Chapter 12 – The general rule of

equal sharing and exceptions

Introduction

12.1 The division of property is the PRA’s main purpose. It is characterised by the general rule that each partner is entitled to an equal share of the couple’s relationship property. The focus

of this chapter is whether the general rule of equal sharing, and the exceptions to it, remain appropriate in contemporary New Zealand. The rest of Part D is arranged as follows:

(a) In Chapter 13 we look at how property is valued under the PRA. We examine the various approaches to valuation and the issues that might arise in PRA proceedings.

(b) In Chapter 14 we focus on how the courts implement a division of property. We look at the range of orders a court can make and whether there are any restrictions which limit a court’s ability to implement a just division of property.

Equal sharing

12.2 Section 11 provides that on the division of relationship property under the PRA, each partner is entitled to share equally in:

(a) the family home;

(b) the family chattels; and

(c) any other relationship property.1

12.3 Section 11 is the centrepiece of the PRA’s framework. It characterises the PRA as an “equal sharing regime”. It is important

  1. Prior to the amendments to the Property (Relationships) Act 1976 in 2001, the Matrimonial Property Act 1976 had slightly different rules for the division of property. It provided that the family home and family chattels would be shared equally, but that the balance of relationship property (then referred to as matrimonial property) was subject only to

a presumption of equal sharing. That property could be divided according to the contributions each spouse had made to the relationship, if one spouse’s contributions had clearly been greater than that of the other spouse: Matrimonial Property Act 1976, s 15.

to note, however, that the general rule of equal sharing is not

absolute. Section 11 is subject to other provisions that govern the division of property which we discuss further in paragraph 12.7.

12.4 A partner ’s entitlement to share equally in relationship property will not necessarily result in the equal division of every specific item of relationship property. Rather, a court has a wide discretion to decide how the division of the partners’ shares in relationship property should be implemented.2 We examine the types of orders a court can make, and what issues may arise, in Chapter 14.

12.5 A court will usually determine the partners’ shares in the relationship property as at the date their relationship ended.3

If the partners’ relationship has not ended, the date will be the date of the application to the court.4 The property will usually be valued as at the date of the application to the court.5

Does the rule of equal sharing remain appropriate in contemporary New Zealand?

12.6 Our preliminary view is that the general rule of equal sharing remains appropriate in contemporary New Zealand, for three reasons:

(a) First, we think equal sharing reflects the values we should attribute to relationships. As we explain in Part A, the PRA sees a qualifying relationship as a partnership or a joint venture.6 Key principles of the PRA include that men and women have equal status, and that all forms of contribution to the relationship are treated as equal.7 The PRA therefore treats non- monetary contributions as having equal worth to monetary contributions. When the relationship ends, the PRA grants each partner an entitlement to an equal share of relationship property based on the equal contributions each partner has made to the

2 Principally, ss 25 and 33 Property (Relationships) Act 1976.

3 Property (Relationships) Act 1976, s 2F(1)(b).

4 Property (Relationships) Act 1976, s 2F(1)(a).

  1. Property (Relationships) Act 1976, s 2G(1). The court of first instance or an appellate court does have the discretion to determine that a different date should apply: s 2F(2).

6 See Part A, paragraph [3.6] and [4.7]–[4.11].

7 The principles of the Property (Relationships) Act 1976 are discussed in Chapter 3.

relationship. Historically, women tended to make non-

monetary contributions to relationships which, prior to the PRA, made it difficult to claim interests in property when relationships ended. The PRA overcomes this difficulty by recognising the true value each partner contributes to the relationship partnership. In doing so the PRA promotes gender equality. We think this view of relationships, and the values and norms it reflects, is now firmly established and accepted in New Zealand.

(b) Second, through our research and preliminary consultation we have been struck by the extent to which the equal sharing rule is familiar to the public. We believe that many if not most people are generally aware that when a relationship ends the partners are required to divide their relationship property equally.

Because the PRA is social legislation and affects so many people, there is a great deal of value in public awareness of the law.

(c) Third, the equal sharing rule is easy to understand and simple to apply which in turn makes the law more predictable. It provides a “bright-line” test for determining each partner ’s share of the relationship

property. This helps partners to understand their rights and empowers them to resolve property matters out

of court, which is central to the principle that disputes should be resolved inexpensively, simply and speedily as is consistent with justice.8

Exceptions to equal sharing

12.7 The general rule of equal sharing is not absolute. The PRA gives a court powers to depart from equal sharing in several different situations, including where:9

(a) there are extraordinary circumstances that make the equal sharing of property repugnant to justice (section

13);

8 Property (Relationships) Act 1976, s 1N.

  1. There are other provisions in the Property (Relationships) Act 1976 (PRA) which allow the court to make an adjustment to the general rule of equal sharing, including s 16 (two houses when the relationship began), ss 17–17A (where a partner has sustained or diminished the other ’s separate property), s 20E (where a partner has paid a personal debt from relationship property) which we discuss further below, and ss 44 and 44C (where a partner has disposed of property to defeat the other partner ’s claim or rights under the PRA).

(b) the partners’ relationship was shorter than three years

(sections 14–14A);

(c) the income and living standards of one partner are likely to be significantly higher than the other partner because of the effects of the division of functions in the relationship (section 15);

(d) one partner made contributions to the relationship or dissipations of relationship property after the relationship ended (section 18B and section 18C); and

(e) there are successive and contemporaneous relationships

(sections 52A and 52B).

12.8 Short-term relationships are considered in Part E, and section 15 adjustments for economic disparity are considered in Part F. In the rest of this chapter we explore issues identified with some of

the other exceptions to equal sharing. We also discuss the limited effect of misconduct on the division of relationship property.

Extraordinary circumstances

12.9 If a court considers there are “extraordinary circumstances” that would make equal sharing “repugnant to justice”, section 13 provides that a court may order that each partner ’s share of the relationship property be determined in accordance with their contributions to the relationship.10

12.10 Section 13 sets a high threshold for departing from equal sharing. The courts have repeatedly remarked on the strength and stringency of the words “extraordinary circumstances” and

“repugnant to justice”.11 This is premised on the view that in most cases relationship property should be shared equally.12 It may be easier to establish an exception to equal sharing if the relationship has only marginally satisfied the technical criteria for equal sharing.13 For example, section 13 might apply if a relationship

is only just longer than three years, or if property has only been

10 Section 18 of the Property (Relationships) Act 1976 lists the types of contributions the court will take into account.

  1. See for example Martin v Martin [1979] 1 NZLR 97 (CA) at 111 per Richardson J; and Wilson v Wilson [1991] 1 NZLR 687 (CA) at 125: “It is difficult to envisage any stronger use of language than is reflected in ‘extraordinary circumstances’ and

‘repugnant to justice’ to emphasise the stringency of the test which has to be satisfied in order to justify departure from the equal sharing regime.”

12 RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [12.28].

13 RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [12.29]–[12.30].

used as a family home or family chattel for a very short period of

time.

12.11 Section 13 is largely unchanged from when it was first introduced in 1976.14 It might have been thought that the courts would be more willing to apply section 13 following the 2001 amendments, which brought more property within the general rule of equal sharing.15 The courts have, however, confirmed the test remains as rigorous as it did before 2001.16

12.12 The courts have found that there were extraordinary circumstances that would have made equal sharing repugnant to justice in situations where:

(a) one partner contributed $129,000 to the relationship that he had received as a beneficiary under a trust six months before the partners separated;17

(b) one partner contributed all the deposit for the family home, paid the mortgage from her salary and supported the other partner through his mental illness, which limited his contribution to the relationship;18

(c) the partners were married for just over three years, and the husband had contributed almost all of the property to the relationship (even the wife’s income was derived from selling art work produced by the husband);19

(d) one partner concealed his own property and contributed very little property to the relationship;20 and

(e) the relationship lasted for three years and two days, one partner contributed all capital assets to the relationship and the partners acquired no relationship property during the relationship.21

14 Section 13 of the Property (Relationships) Act 1976 was originally enacted as s 14 of the Matrimonial Property Act 1976.

  1. See above n 1. The Property (Relationships) Amendment Act 2001 extended the general rule of equal sharing to all relationship property, when previously it applied only to the family home and family chattels.

16 De Malmanche v De Malmanche [2002] 2 NZLR 838 (HC) at [138].

  1. A v C (1997) 16 FRNZ 29 (HC). See also the similar cases B v B (1986) 2 FRNZ 430 (HC); and W v W (1990) 6 FRNZ 683 (DC).

18 P v P [1980] 2 NZLR 278 (CA).

19 S v S [2012] NZFC 2685 (FC).

  1. H v M (2001) 21 FRNZ 369 (FC). In addition, the husband had promised to enter a contracting out agreement but then evaded signing. He also refused to leave the family home when the relationship broke down so he could avoid the rules relating to relationship of short duration in the Property (Relationships) Act 1976.

21 B v B [2016] NZHC 1201, [2017] NZFLR 56.

12.13 A court might also consider that there are extraordinary

circumstances that make equal sharing repugnant to justice when children’s interests are involved, however we have not identified any successful cases of this kind.22

12.14 If a court is satisfied that section 13 applies, it will then look

at the contributions each partner made to the relationship and divide the relationship property based on those contributions. Section 18(1) provides that contributions to the relationship are all or any of the following:

(a) the care of—

(i) any child of the marriage, civil union, or de facto relationship:

(ii) any aged or infirm relative or dependant of either spouse or partner:

(b) the management of the household and the performance of household duties:

(c) the provision of money, including the earning of income, for the purposes of the marriage, civil union, or de facto relationship:

(d) the acquisition or creation of relationship property, including the payment of money for those purposes:

(e) the payment of money to maintain or increase the value of—

(i) the relationship property or any part of that property; or

(ii) the separate property of the other spouse or partner or any part of that property:

(f ) the performance of work or services in respect of—

(i) the relationship property or any part of that property; or

(ii) the separate property of the other spouse or partner or any part of that property:

(g) the forgoing of a higher standard of living than would otherwise have been available:




  1. An unsuccessful application was made in M v M [2012] NZFC 5019 (FC) however the Family Court did not exclude the possibility that children’s interests could constitute exceptional circumstances warranting an unequal division.

(h) the giving of assistance or support to the other spouse or

partner (whether or not of a material kind), including the giving of assistance or support that—

(i) enables the other spouse or partner to acquire qualifications; or

(ii) aids the other spouse or partner in the carrying on of his or her occupation or business.

12.15 There is no presumption that financial contributions are of greater value than non-financial contributions.23

The continued role of section 13 in the PRA

framework

12.16 In our view, there remains a need for a provision that permits a court to depart from equal sharing in appropriate cases. The circumstances of each relationship differ so greatly that it

is impossible to draft general rules of property division that will achieve a just division of property in every case. This is particularly so given that relationships in New Zealand are becoming more diverse.24 We therefore consider if section 13, or

an equivalent provision, should have a continuing role in the PRA.

12.17 We also think that there should be a high threshold for departing from the general rule of equal sharing, in order to preserve the principles of the PRA, discussed at paragraph (a) above and in more detail in Chapter 3.

12.18 It is difficult, however, to say precisely what the test ought to be for departing from the equal sharing rule. This is because section

13 operates as an exception that applies when the general rules in the PRA will not achieve a just division of property. In this Issues Paper we are considering reform of some of the PRA’s general rules, such as the rules for the classification of property. Therefore it will not be clear what the precise role of section 13, or an equivalent provision, should be until there is greater clarity about

how the PRA’s general rules ought to operate.





23 Property (Relationships) Act 1976, s 18(2).

24 See Law Commission Relationships and Families in Contemporary New Zealand: He hononga tangata, he hononga whānau i

Aotearoa o nāianei (NZLC SP22, 2017) at Introduction.

Is the section 13 test uncertain?

12.19 Nonetheless, we have concerns about the test used in section

13. The phrase “extraordinary circumstances” requires a court to test the case at hand against a whole range of relationships

to determine whether it can be characterised as extraordinary.25

But as relationships continue to diversify, it is increasingly difficult to identify what are “ordinary” circumstances. We are therefore concerned that deciding what constitutes “extraordinary circumstances that make equal sharing repugnant to justice” will become more difficult in the years to come.

12.20 Options for reform might include prescribing in greater detail the matters a court should take into account when deciding whether section 13 should apply, setting out examples in the PRA of how the exception is intended to operate,26 or replacing the test in section 13 with a new formula. As noted above, any options for reform will need to be considered in light of any reforms to the PRA’s general rules.

C ONSU LTATION QUESTIONS

D1 Should the PRA continue to have an exception provision like section 13?

D2 Is the current wording of section 13 satisfactory? If not, how might the test for departing from equal sharing be formulated?

Misconduct

12.21 The misconduct of one partner has very little influence on the division of property under the PRA. We noted in Chapter 3 that an implicit principle of the PRA is that misconduct during a relationship is generally irrelevant to the division of property. Section 18A makes this position clear.

12.22 Section 18A(1) provides that “a court may not take any misconduct of a spouse or partner into account in proceedings under this Act”, except as permitted in sections 18A(1) and

18A(2).This general rule influences how the PRA’s rules of division

are to be interpreted. For example, the courts have said that

25 J v J (1993) 10 FRNZ 302 (CA) at 307.

26 See for example Copyright Act 1994, s 122A; Personal Property Securities Act 1999, s 41; and Accident Compensation Act

2001, s 114 as amended by the Interest on Money Claims Act 2016, s 29 which will come into effect on 1 January 2018. The Property (Relationships) Act 1976 itself contains some examples in ss 2B and 2BAA.

because of section 18A(1), misconduct is not an “extraordinary

circumstance” that will allow a departure from the general rule of equal sharing under section 13.27

12.23 Section 18A(2) provides that a court can only take into account a partner ’s misconduct when deciding:

(a) a partner ’s contributions to the relationship under section 18;28

(b) whether to make an order under section 26 to settle relationship property for the benefit of children;

(c) whether to make an order postponing division,29 granting one partner the right to occupy the family home or a home rented by the family,30 or granting one partner the temporary use of furniture or household items;31 or

(d) whether to make an ancillary order under section 33.32

12.24 Importantly, section 18A(3) provides that a court may only take misconduct into account that is “gross and palpable” and has “significantly affected the extent or value of relationship property”. Misconduct that has no effect on the relationship property will

be irrelevant, regardless of how severe the misconduct may have been. For example, in W v G there was evidence that one partner had committed “gross and repeated” violence to his partner over a long period of time, including both physical and sexual abuse.33

However because the District Court found no causative link between that conduct and the value of the relationship property, the partner ’s misconduct had no impact on the division of

property.34


  1. J v J (2005) 25 FRNZ 1 (CA) at [11] per William Young J. See the discussion at Nicola Peart (ed) Brookers Family Law — Family Property (online looseleaf ed, Thomson Reuters) at [PR13.06]. The author exemplifies the extent of the exclusion by the case E v W [2006] NZFLR 1140 (FC) where one partner was convicted of sexually abusing the other partner ’s children. The Family Court said this misconduct was not relevant to s 13 of the Property (Relationships) Act 1976.
  2. One partner ’s support and tolerance of the other partner ’s misconduct might also be seen as a positive contribution to the relationship under s 18 of the Property (Relationships) Act 1976: J v J (1993) 10 FRNZ 302 (CA) (wife coping with her husband’s alcoholism); and W v W (No 2) (1999) 19 FRNZ 24 (DC) (wife supporting husband through mental illness).

29 Property (Relationships) Act 1976, s 26A.

30 Property (Relationships) Act 1976, ss 27–28.

31 Property (Relationships) Act 1976, ss 28B–28C.

  1. The court’s ancillary powers under s 33 of the Property (Relationships) Act 1976 are for the court to give effect to any substantive orders it makes dividing the partners’ relationship property under s 25.

33 W v G DC Wellington FP 558/92, 16 August 1995.

34 W v G DC Wellington FP 558/92, 16 August 1995 at 12–13.

12.25 The effect of section 18A is that misconduct will generally not

affect a partner ’s share of relationship property, even if that misconduct was gross and palpable and significantly affected the value of the relationship property. Misconduct will only have a bearing on a partner ’s share of relationship property when there are other exceptional circumstances that make equal division repugnant to justice under section 13, or when the relationship is a short-term relationship.35

12.26 There have, however, been cases when a court has taken misconduct into account as a question of fact when considering other provisions of the PRA. For example in N v N the Family Court accepted that if one partner ’s violent conduct causes the other partner to take on more of the childcare responsibilities, or prevents them from taking on employment, then that violence may result in a division of functions for the purposes of section

15.36

12.27 A court can also make orders where one partner has taken “deliberate action or inaction” that has “materially diminished” the other partner ’s separate property (section 17A) or the relationship property after separation (section 18C).

Should misconduct have more weight in the division of relationship property?

12.28 There have been calls for a partner ’s misconduct to have a greater bearing on the division of relationship property, particularly in cases of family violence.37








  1. Section 18A(2)(a) of the Property (Relationships) Act 1976 permits misconduct to be taken into account when determining the contribution of a partner to the relationship under s 18. Section 18 is only relevant when s 13 (extraordinary circumstances) or ss 14–14A (short-term relationships) apply. These sections provide for the division of property in accordance with the contribution of each partner to the relationship.

36 N v N [2004] NZFLR 942 (FC) at [98]. Section 15 of the Property (Relationships) Act 1976 is discussed in Part F.

  1. See for example Wendy Parker “Family Violence and Matrimonial Property” [1999] NZLJ 151; and Geraldine Callister “Domestic Violence and the Division of Relationship Property under the Property (Relationships) Act 1976: The Case for Specific Consideration” (LLB (Hons) Dissertation, University of Waikato, 2003). During the lead up to the 2001 amendments to the Property (Relationships) Act 1976 (PRA), several submitters said to the Justice and Electoral Select Committee that family violence needed to be taken into account under the Property (Relationships) Act 1976 regime: Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 14–15. Note we use the term “family violence” rather than “domestic violence” to reflect the current terminology in the Family and Whānau Violence Legislation Bill 2016 (247-2).

12.29 New Zealand has the highest reported rate of intimate partner

violence38 in the developed world.39 The consequences of family violence can be devastating for the victims and their families. Discussing intimate partner violence, Cohen writes:40

Terrible and tragic things happen within the contexts of battering relationships, even beyond the violence and resultant injury

itself. These tragedies include the death of the battered victim; the physical and psychological abuse of others, especially children, within the household; the destruction of employment situations and opportunities; the withering away of basic trust, particularly trust in intimacy; and, often, the waste of what might, and should, have been rewarding and productive lives.

12.30 Several reasons have been given why family violence should have a greater bearing on the division of relationship property:

(a) Family violence can be seen as a repudiation and a negation of the violent partner ’s commitment to the relationship.41 As we discussed in Chapter 3, the PRA is built on the theory that a qualifying relationship is an equal partnership or joint venture, to which partners contribute in different but equal ways. Misconduct

of this severity has the effect of undermining that partnership and should have consequences.

(b) Family violence can have significant ongoing economic consequences that may not be reflected in the reduced value of relationship property. For example, a partner who has suffered physical or psychological abuse may experience a deterioration of his or her performance at work or in study.42 A partner will therefore potentially suffer a drop in work productivity, inhibited career advancement, or even loss of employment and loss of



38 Law Commission Understanding Family Violence: Reforming the Criminal Law Relating to Homicide (NZLC R139, 2016) at

187 describes “intimate partner violence” as “[a]ny behaviour within an intimate relationship (including current and/ or past live-in relationships or dating relationships) that causes physical, psychological or sexual harm to those in the relationship”.

39 Ministry of Justice Strengthening New Zealand’s legislative response to family violence: A public discussion document

(Wellington, August 2015) at 4–5.

40 Law Commission Understanding Family Violence: Reforming the Criminal Law Relating to Homicide (NZLC R139, 2016) citing

Jane Maslow Cohen “Regimes of Private Tyranny: What Do They Mean to Morality and for the Criminal Law?” (1995) 57

U Pitt L Rev 757 at 762.

41 G v G [1998] NZFLR 807 (FC) at 814.

42 Geraldine Callister “Domestic Violence and the Division of Relationship Property under the Property (Relationships) Act

income. These consequences are not reflected in the

PRA’s division of property.43

(c) There is an increasing awareness of the damaging effects of family violence, the need for perpetrators to take responsibility for their actions and the need to discourage family violence.44

12.31 To date Parliament has resisted calls to give misconduct greater weight in the division of property. In the lead up to the 2001 amendments the Select Committee responded to these calls by saying it was undesirable to introduce fault or misconduct as a basis for division.45 The Committee explained it would represent a significant departure from the current scheme and it could lead to pressure for other fault-based conduct to be taken into account.46

The Committee concluded that issues concerning the impact of family violence are most appropriately addressed in the context of the Domestic Violence Act 1995 and general criminal law.47

12.32 Under the Domestic Violence Act 1995 a court can make orders that affect the partners’ property. For example, a court can grant

an applicant the right to personally occupy a house,48 or to possess furniture, household appliances and household effects.49

12.33 We recognise the important considerations on both sides of

this issue. We are aware of the grave effects of family violence.50

Family violence should be firmly discouraged and the perpetrators should face consequences.



  1. The Ministry of Justice note the significant economic cost of family violence to New Zealand, from the impact on the healthcare system through to the cost of low productivity: Ministry of Justice Strengthening New Zealand’s legislative response to family violence: A public discussion document (Wellington, August 2015) at 3. The estimated cost of intimate partner violence and child abuse to New Zealand’s economy in 2014 is between $4.1 billion to $7 billion: Sherilee Kahui and Suzanne Snively Measuring the Economic Costs of Child Abuse and Intimate Partner Violence to New Zealand (The Glenn Inquiry, 2014).
  2. Wendy Parker “Family Violence and Matrimonial Property” [1999] NZLJ 151 at 153. The Family and Whānau Violence Legislation Bill 2016 (247-2) currently before Parliament is aimed at (a) recognising that family violence in all its forms is unacceptable, (b) stopping and preventing perpetrators from inflicting family violence, and (c) keeping victims safe from family violence (cl 1A).
  3. Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 15.
  4. Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 15.
  5. Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 15.

48 Domestic Violence Act 1995, s 53(1).

49 Domestic Violence Act 1995, s 67(1).

  1. See for example Law Commission Understanding Family Violence: Reforming the Criminal Law Relating to Homicide (NZLC R139, 2016); and Law Commission Strangulation: The Case for a New Offence (NZLC R138, 2016).

12.34 We acknowledge, however, the merits of dividing partners’

property without reference to the moral failings of each partner. It is undesirable to enable or encourage disputes that focus on fault and misconduct, particularly at separation, which is the most dangerous time for victims of family violence.51 This is also in keeping with the principle that questions under the PRA about

relationship property should be resolved as inexpensively, simply, and speedily as is consistent with justice.

12.35 There might also be practical difficulties in proving misconduct and its economic impact on the relationship property. Questions about the interaction of the PRA and criminal proceedings, and what standard of proof would be required, would also need to be given careful thought.52

Options for reform

12.36 If the PRA is to be reformed to give greater prominence to the effects of misconduct in a relationship, the question would be how to achieve this. We have explored two options for reform.

Option 1: Provide for misconduct to be considered an

“extraordinary circumstance”

12.37 One option is to amend section 18(2) to provide that a court can take into account a partner ’s misconduct when deciding whether there are extraordinary circumstances which make equal sharing repugnant to justice under section 13. The result would be that misconduct could be taken into account in deciding how the relationship property should be divided, if the test in section 13

is met. Section 18A(3) would ensure that only misconduct that is “gross and palpable” and has “significantly affected the extent or value of relationship property” could be considered under section

13. The court would retain a discretion to decide whether the misconduct satisfies the test under section 13 in the particular

circumstances of each case. This option relies on the courts to



  1. The Law Commission noted evidence that women are most likely to be killed by an abusive partner in the context of an attempted separation: Law Commission Understanding Family Violence: Reforming the Criminal Law Relating to Homicide (NZLC R139, 2016) at 31 citing Walter S DeKeseredy, McKenzie Rogness and Martin D Schwartz “Separation/divorce sexual assault: The current state of social scientific knowledge” (2004) 9 Aggression and Violent Behavior 675 at 677.
  2. Zoë Lawton “One Court, One Judge: An Integrated Court System for New Zealand Families Affected by Violence”(discussion paper, 2017) available at <www.lawfoundation.org.nz> considers how an integrated domestic violence court might operate in New Zealand.

develop an approach to determining when misconduct satisfies

the test under section 13.

Option 2: A specific exception for family violence

12.38 Parker explains that family violence may not be so uncommon as to constitute “extraordinary circumstances”, and argues there should be no requirement that the violence be extraordinary before the PRA responds.53 Neither should the victim have to prove that the misconduct was gross and palpable and devalued property.54 Rather, she says that the violence should be seen

as an injustice in its own right which should, as a standalone exception, displace the general rule of equal sharing.55 Therefore another option would be a new provision alongside section 13

that specifically deemed family violence as a standalone exception to equal division.56

C ONSU LTATION QUESTIONS

D3 Should misconduct, and in particular family violence, have a greater bearing on how property is divided between the partners?

D4 If it should, do you have a preferred option for reform? Are there viable options for

reform we have not considered?



Dissipations of relationship property

12.39 If a partner ’s “deliberate action or inaction” after separation has

“materially diminished” the value of relationship property, section

18C permits a court to order that partner to compensate the other partner.57 Compensation can be in the form of a payment of a sum of money or a transfer of relationship or separate property.



53 Wendy Parker “Family Violence and Matrimonial Property” [1999] NZLJ 151 at 154. See also S v S DC Whangarei FP

888/218/82, 22 April 1991. A husband had been abusive in the past on four specific occasions. The District Court noted the time that had elapsed between each episode, the fact that assault is regrettably not so uncommon in relationships and that the husband had generally been a good father and provider. The Court said that no extraordinary circumstances existed.

54 Wendy Parker “Family Violence and Matrimonial Property” [1999] NZLJ 151 at 154.

55 Wendy Parker “Family Violence and Matrimonial Property” [1999] NZLJ 151 at 154.

56 Wendy Parker “Family Violence and Matrimonial Property” [1999] NZLJ 151 at 154. Callister also supports this approach: see Geraldine Callister “Domestic Violence and the Division of Relationship Property under the Property (Relationships) Act 1976: The Case for Specific Consideration” (LLB (Hons) Dissertation, University of Waikato, 2003) at 39.

57 Property (Relationships) Act 1976, s 18C.

12.40 Section 18C sets a high threshold. The partner must have

deliberately acted or failed to act in order to reduce the value of the property.58 This can be difficult for the other partner to prove.

12.41 Examples of the courts awarding compensation under section 18C

include where:

(a) one partner made significant drawings for personal expenditure on a company in which both partners were shareholders, which led to the value of the company decreasing;59 and

(b) one partner sold an item of relationship property at undervalue.60

Does the PRA deal adequately with the dissipation of property during a relationship?

12.42 The PRA may not deal adequately with the dissipation of property during a relationship, when that property would have been characterised as relationship property and would have otherwise been available for division on separation.

12.43 We have been told that it is common for one partner during the course of the relationship to use significant amounts of relationship property for personal use, such as gambling, or to incur personal debts, such as credit card debts, for which both partners are liable.61 We have also heard stories of one partner draining the partners’ joint bank accounts before or immediately on separation.

12.44 Section 18C will not apply in these circumstances. It only applies when a partner has deliberately reduced the value of relationship property after the relationship has ended.

12.45 Rather, section 19 provides that, unless the PRA provides otherwise, nothing affects the power of either partner to deal


  1. M v M [2013] NZCA 660 [2014] NZFLR 418 at [37]. The Court of Appeal said that any diminution in value taken into account must have been deliberate. The Court rejected the argument that the word “deliberate” simply referred to the action or inaction. In declining leave to appeal, the Supreme Court said the Court of Appeal’s comments about the use of the word deliberate were “clearly right”: M v M [2014] NZSC 32, [2014] NZFLR 599 at [4]. See discussion in Nicola Peart (ed) Brookers Family Law — Family Property (online looseleaf ed, Thomson Reuters) at [PR18C.05].

59 S v S [2012] NZFC 4050.

60 C v C FC Auckland FAM-2002-004-2658, 8 September 2004.

  1. See for example Susan Edmunds “Kiwis Warned of Sexually-Transmitted Debt Epidemic” (13 February 2017) Stuff <www. stuff.co.nz>.

with or dispose of property as if the PRA had not been enacted. So

while the partners remain together, they may each deal with their property without any obligation to recognise the rights the other partner may have under the PRA if the relationship was to end. There are, however, a number of provisions in the PRA which can affect this general rule.

Section 44

12.46 The courts have sometimes relied on section 44. Section 44 provides that when a partner has disposed of property in order to defeat the other partner ’s claim or rights under the PRA, a court may order that the property be transferred back, or that the person who received the property pay compensation. In N v

R, for example, one of the partners in a de facto relationship had died.62 In the years prior to the partner ’s death, he had suffered from Alzheimer ’s disease. During this period the other partner

had transferred significant amounts of money from the partner to her own account. In the Family Court proceeding she would not explain what had happened to this money. The Family Court said that section 44 applied. The Court ordered that the partner repay the unaccounted sums to the deceased partner ’s estate.

12.47 Section 44 is not usually the appropriate tool to use in circumstances where a partner has dissipated property. Partners who have been disadvantaged by the disposition of property bear the burden of proving that the partner who made the disposition intended to defeat his or her claim or rights under the PRA.63 In some cases this can be difficult.64 The other major problem with section 44 is its remedies. It provides that the

person who receives the property must return the property or pay compensation for it. In cases where one partner has repeatedly dissipated property on a number of occasions to a number of third parties, such as by gambling over an extended period of time, it

is not possible for an affected partner to recover the property. The third party who receives the property will not be ordered to return

the property or pay compensation if the property was received in



62 N v R [2014] NZFC 5380.

  1. The level of intention required has been substantively lowered in recent cases. In R v U [2009] NZHC 2627; [2010] 1 NZLR 434 (HC) the High Court accepted that a partner ’s knowledge of the effects of the disposition can be equated with an intention to bring about that effect.

64 See our comments regarding s 44 of the Property (Relationships) Act 1976 in Part D.

good faith and for consideration.65 For most third party suppliers

or service providers, such as casinos, shops or bars, the third party will have a good defence to the recovery of the property.

Section 20E

12.48 The courts sometimes rely on section 20E to treat the expenditure as personal debts that have been paid from relationship property. In W v W, after the partners had separated a wife had spent approximately $38,000 on what the Family Court described as “clothing, toys and trinketry”.66 The Court said that, unlike things like groceries, the wife’s purchases could not be regarded as expenditure reasonably required for her maintenance. Rather, the Court said that the expenditure was used to meet her personal debts.67 The Court ordered the wife to pay compensation to

the husband for two-thirds of the amount of the expenditure. Although the expenditure in this case had occurred after the partners had separated, the Court noted that section 20E does not specify any time limits for when the partner paid his or her personal debt from relationship property. Consequently, section

20E could be applied.

12.49 In B v B a husband said that in the last 18 months of the partners’

marriage, his wife incurred considerable personal expenditure on personal items.68 He argued that this expenditure should be considered the wife’s personal debts that she had paid from the partners’ relationship property. The Court said that section 20E

did not apply in this instance. The wife’s expenditure was no more than normal everyday expenditure tacitly approved and expected in most relationships.69

12.50 We consider that section 20E does not provide a suitable remedy in these types of cases. The transactions in these cases involved a contemporaneous exchange of cash for the item that was purchased. They cannot properly be described as a debt.70

65 Property (Relationships) Act 1976, ss 44(2) and 44(4).

66 W v W FC New Plymouth FAM-2004-043-891, 18 April 2007 at [49].

67 W v W FC New Plymouth FAM-2004-043-891, 18 April 2007 at [49].

68 B v B FC Christchurch FAM-2004-009-3656, 13 July 2006.

  1. B v B FC Christchurch FAM-2004-009-3656, 13 July 2006 at [56]. The husband also complained that his wife had spent considerable sums of money gambling. The Court found that the husband had gambled alongside his wife on several occasions. The Court said at [63]–[64] that the partners’ joint gambling was a common enterprise which therefore characterised the debt as a relationship debt.

70 Allied Concrete Ltd v Meltzer [2015] NZSC 7, [2016] 1 NZLR 141 at [18] and [186].

Consequently, section 20E is arguably the wrong provision to use

in cases of one partner ’s excessive expenditure of relationship property.

12.51 Furthermore, section 20E only applies to situations where the personal debts of one partner have been paid from relationship property. It does not apply to situations where one partner pays the other ’s personal debts from separate property.

12.52 In light of the shortcomings we have identified with these various provisions, the question arises whether the PRA should be better equipped to deal with one partner ’s excessive personal expenditure or other dissipation of relationship property during the relationship. Any change would need to clearly exclude normal expenditure that is reasonably incurred and discourage partners from scrutinising and disputing each other ’s spending during and after the relationship, except in truly inappropriate circumstances.

C ONSU LTATION QUESTIONS

D5 Does the excessive expenditure or dissipation of relationship property by one partner during or after the relationship often lead to an unjust division of property?

D6 Are the current provisions of the PRA adequate to deal with excessive personal expenditure or the dissipation of relationship property?

Successive and contemporaneous relationships

12.53 The PRA provides special rules of division in sections 52A and 52B for successive and contemporaneous relationships.71 These rules apply when competing claims are made in respect of the same relationship property but in relation to different relationships and there is insufficient property to satisfy the claims.72

  1. Sections 52A and 52B of the Property (Relationships) Act 1976 (PRA) were based on a provision recommended in the Law Commission Report Succession Law: A Succession (Adjustment) Act (NZLC R39 1997) at 141 and C200–C206: see Matrimonial Property Amendment Bill 1998 and Supplementary Order Paper No 25 2000 (109-3) (select committee report) at 27. The provision recommended by the Law Commission was designed to manage competing claims in respect of contemporaneous relationships where there are insufficient assets in the deceased’s estate to fully satisfy orders and awards. It was developed in a different context involving only two living partners; the common partner being deceased.

It was not developed to address a scenario where all three partners are still alive, where the relationships were successive but not contemporaneous, or where one relationship ends and the other continues.

72 Sections 52A and 52B of the Property (Relationships) Act 1976 apply when two or more formal claims have been filed in court for orders under ss 25–31 or 33: s 52A(4); and [LC] v D (FC) Waitakere FAM-2008-090-000304, 20 September 2011 at [53].

12.54 Successive relationships are those that occur one after the other,

with no period of overlap. For example, after partner A’s marriage to partner B ends, she enters into a de facto relationship with partner C. Section 52A applies if partner A and partner B do not resolve their property matters before partner A’s new de facto relationship with partner C ends, and partner C seeks a division of property under the PRA. If partner A and partner B had been in a de facto relationship rather than married, then section 52B would apply.

12.55 Contemporaneous relationships arise when one person is in two or more relationships at the same time. For example, partner A

is married to partner B and at the same time is also in a de facto relationship with partner C. Contemporaneous relationships were discussed further in Part B.

12.56 If the relationships are successive, the relationship property is divided in accordance with the chronological order of the relationships.73 This recognises that the first relationship will generally stop accumulating relationship property when it ends. The common partner will only take property into his or her second relationship that is not claimable by the first partner.74

This means that the first partner ’s claim is determined first, in order to ascertain the balance of property available to satisfy the second partner ’s claim. The rules for successive relationships are not a true exception to the general rule of equal sharing as they simply set out a mechanism for determining the priority of claims. The general rule of equal sharing still applies to the division of property between the partners to each relationship.

12.57 If the relationships were contemporaneous, then there is a two stage process:

(a) to the extent possible, the claims must be satisfied from the property attributable to each relationship (stage one); and

(b) to the extent that it is not possible to attribute property to either relationship, the property is to be divided in accordance with the contribution of each relationship to the acquisition of the property (stage two).



73 Property (Relationships) Act 1976, ss 52A and 52B.

74 See Law Commission Succession Law: A Succession (Adjustment) Act (NZLC R39 1997) at C204.

12.58 The rules for contemporaneous relationships are an exception to

the general rule of equal sharing. They are also an exception to the general approach of examining contributions to the relationship, which is the approach that applies when there are exceptional circumstances under section 13 and when the relationship is a short-term relationship.75 The approach in sections 52A and 52B

is attractive in this context as it avoids comparing the worth of the two contemporaneous relationships.76 Such value judgements would be difficult to make and inconsistent with the principles on which the PRA is based.77

12.59 There is limited case law on sections 52A and 52B. This may be because it is relatively rare for competing claims from different relationships to be made. It may also be due to the difficulty of establishing a contemporaneous relationship (discussed in Part B). Nonetheless we have identified several potential issues with how sections 52A and 52B operate in practice.

Issues with sections 52A and 52B

12.60 The issues we have identified are with the way sections 52A and

52B work both generally and for contemporaneous relationships. We have not identified any material issues that are unique to the way sections 52A and 52B work for successive relationships.

12.61 The issues are:

(a) The rules are unclear. Reid says that the main problem with sections 52A and 52B is their lack of clarity.78

For example, it is unclear at what stage of proceedings

sections 52A and 52B apply79 and how a court will



75 Property (Relationships) Act 1976, ss 14–14A.

  1. However the situation is different where there is only one relationship. See Chapter 10 for a discussion of the problems with dividing relationship property on the basis of contributions to property, rather than to the relationship, in the context of s 9A(2) of the Property (Relationships) Act 1976.

77 See Chapter 3 for a discussion of the principles of the Property (Relationships) Act 1976. These include the principle

that men and women have equal status and their equality should be maintained and enhanced, and the principle that all forms of contribution to the relationship are treated as equal.

  1. Adrianne Reid “Have your cake and eat it too: The Treatment of Contemporaneous Relationships under the Property (Relationships) Act 1976” (LLB (Hons) Dissertation, University of Otago, 2007) at 57. This Dissertation also identifies other technical and procedural issues with ss 52A and 52B of the Property (Relationships) Act 1976.
  2. Adrianne Reid “Have your cake and eat it too: The Treatment of Contemporaneous Relationships under the Property (Relationships) Act 1976” (LLB (Hons) Dissertation, University of Otago, 2007) at 25-29. Reid says at 26 that “[t]he question that arises when considering sections 52A and 52B is whether they dictate what relationship property is available to be divided between the parties to each relationship, or whether property orders are made under the usual division of relationship property sections of the [PRA], and sections 52A and 52B only apply to rank the property orders made if there is insufficient property to satisfy them.”

determine which property is “attributable” to which

relationship.80

(b) The rules favour the common partner. This is because, however property is divided between contemporaneous relationships, if the general rule of equal sharing applies within each relationship, the common partner will receive half of the relationship property divided under section 52A or 52B, which amounts to half of the total.81

Reid says that:82

...sections 52A and 52B inevitably bring a result that is incongruous with the rest of the [PRA], with the common partner retaining half of the property while the other partners share the remainder in

a way that it is hard to predict. It seems that the common partner is allowed to have their cake

and eat it too, while the others must fight over the crumbs.

12.62 The rules may be used strategically to defeat or reduce one partner ’s claim. For example, if only one of the relationships

has ended, it is in the interests of the partner to the continuing relationship to bring a claim under section 52A or 52B to preserve as much property as possible for the continuing relationship.

12.63 The rules are difficult to reconcile with the PRA’s rules around misconduct. In the lead up to the 2001 reforms the Principal Family Court Judge highlighted the difficulty for the courts in reconciling section 18A with sections 52A and 52B.83 Section 18A allows “gross and palpable” misconduct that has “significantly affected the extent or value of relationship property” to be

taken into account in determining a partner ’s contribution to the relationship. Such conduct can also be taken into account

in determining what order to make under particular provisions


  1. The term “attributable” is not defined in the Property (Relationships) Act 1976 (PRA), although it is used in other sections of the PRA in different ways, for example, ss 8(1)(g), 8(1)(i) and 9A(2). The way an attribution analysis works in these other contexts could inform the interpretation of ss 52A and 52B. Adrianne Reid “Have your cake and eat

it too: The Treatment of Contemporaneous Relationships under the Property (Relationships) Act 1976” (LLB (Hons) Dissertation, University of Otago, 2007) at 7 makes the point that stage one of the test is redundant because “all property that is relationship property of a relationship is attributable to that relationship.”

81 See Adrianne Reid “Have your cake and eat it too: The Treatment of Contemporaneous Relationships under the Property

(Relationships) Act 1976” (LLB (Hons) Dissertation, University of Otago, 2007) at 36.

82 Adrianne Reid “Have your cake and eat it too: The Treatment of Contemporaneous Relationships under the Property

(Relationships) Act 1976” (LLB (Hons) Dissertation, University of Otago, 2007) at 60.

83 Principal Judge Mahoney “Submission to the Justice and Electoral Committee on the Matrimonial Property Amendment

Bill 1998 and Supplementary Order Paper No 25 2000” at 6.

of the PRA.84 The Judge gave the example of a husband who

throughout the marriage supports a clandestine relationship with considerable financial contributions sourced from relationship property, for example earnings.85 Henaghan says that there is an argument that a clandestine contemporaneous relationship may in fact satisfy the misconduct test in certain circumstances.86

12.64 The existing rules do not clearly cater for situations involving more than two contemporaneous relationships. For example, partner A is married to partner B and is also in de facto relationships with partner C and partner D at the same time. However this scenario may be unusual in practice.

C ONSU LTATION QUESTIONS

D7 Are there any issues with the way sections 52A and 52B work for successive relationships?

D8 Do the rules for contemporaneous relationships have the potential to lead to an unjust result? If so, in what circumstances?

Options for reform

12.65 Our preliminary view is that there is a need for provisions setting out the priority of claims when there are successive or contemporaneous relationships. The rules already provide mechanical clarity for successive relationships, but not for

contemporaneous relationships. As relationships in New Zealand are becoming more diverse, there may be an increasing need to better provide for contemporaneous relationships.

12.66 We consider several options for reform below. However we also note that some of the issues with sections 52A and 52B may

be less acute if the PRA’s rules of classification are changed.

As we have discussed in Chapter 9, one option is to move to a pure “fruits of the relationship” approach to the classification of property, which would likely reduce the pool of relationship

property that is divided between the partners in many cases. This may reduce the risk that sections 52A and 52B lead to an unjust

result when applied to contemporaneous relationships.

84 Property (Relationships) Act 1976, s 18A(2)(b). However see [12.25] above.

85 Principal Judge Mahoney “Submission to the Justice and Electoral Committee on the Matrimonial Property Amendment

Bill 1998 and Supplementary Order Paper No 25 2000” at 6.

86 Mark Henaghan “The three of us” (paper presented to the New Zealand Law Society Family Law Conference, 2001) at

9-10.

Option 1: Amend sections 52A and 52B to address their lack of

clarity

12.67 This option would accept that the policy underpinning sections

52A and 52B is basically sound. It would retain attractive aspects of the current rules, for example the nuanced approach and the focus on contributions to the property as opposed to contributions to the relationship. Careful consideration would be needed as to what directions the provisions could give to determine when property is attributable to a relationship.

Option 2: Divide all relationship property equally between all partners entitled to share it

12.68 Option 2 is to replace sections 52A and 52B with a new provision that says property that is relationship property of more than one relationship contemporaneously be divided equally between all the partners entitled to share in it.87

12.69 There is some precedent for this approach in the Administration

Act 1969, which contains rules that apply when the deceased

is survived by multiple partners who are entitled to succeed on intestacy.88 Those rules provide that the partners share equally what one of them would have received if only one partner had survived the deceased.89 This approach would have the advantage of clarity, but may in some circumstances deliver “rough justice” as opposed to a just result. An option to address this would be

to include an element of judicial discretion, for example giving a court flexibility to depart from the rule to avoid serious injustice.90

Option 3: Amend the PRA to better reconcile the rules around misconduct with the rules for contemporaneous relationships

12.70 Another option is to amend sections 13, 18A and/or 52A and 52B to expressly recognise clandestine or unsanctioned contemporaneous relationship(s) that significantly affect the

87 Adrianne Reid “Have your cake and eat it too: The Treatment of Contemporaneous Relationships under the Property

(Relationships) Act 1976” (LLB (Hons) Dissertation, University of Otago, 2007) at 58.

88 Administration Act 1969, s 77C.

89 Administration Act 1969, s 77C.

90 A “serious injustice” test is already used in other provisions of the Property (Relationships) Act 1976, for example ss 14A and 21J. See also Adrianne Reid “Have your cake and eat it too: The Treatment of Contemporaneous Relationships under the Property (Relationships) Act 1976” (LLB (Hons) Dissertation, University of Otago, 2007) at 57–58.

extent or value of the relationship property attributable to each

relationship as a form of misconduct that renders equal sharing repugnant to justice. This option has some similarities with option

1 under misconduct, discussed at paragraph 12.37 above.

12.71 Under this option the common partner ’s share of relationship property could be reduced and the share of the other partner(s) increased. This could mean that the common partner bears greater responsibility for the property consequences of maintaining contemporaneous relationships.

C ONSU LTATION QUESTIONS

D9 Do the rules for contemporaneous relationships require reform? If so, which of the options we have identified (if any) do you prefer and why?

D10 How should sections 52A and 52B relate to the rules on misconduct in section 18A?

Chapter 13: Valuation

Valuation of Property in the PRA’s overall

Scheme

13.1 Usually relationship property is divided as a global division. This means a court will first determine the value of individual items of relationship property to assess the total relationship property value. The valuation of property is integral to ensuring that each

partner obtains an equal share of the global relationship property pool.91 As the Court of Appeal explained in Reid v Reid:92

[T]he overall purpose of having various assets valued is to produce in a global sense a fair estimation of the worth of the matrimonial property so that its subsequent division will be achieved in a way which will be just as between the husband and wife.

13.2 The valuation of relationship debts is similarly important because those debts are deducted from the total value of the partners’ relationship property. It is only the remaining net value of the relationship property that is divided between the partners.93

13.3 Once a court has calculated the net value of relationship property it will then decide which assets go to each partner, with monetary adjustments to ensure equal sharing of all relationship property.94

Valuation and compensation

13.4 In certain cases a court must also value contributions and items

of separate property in order to calculate compensation payments or adjustments to the global division of relationship property.

The PRA has several provisions that allow a court to order one

partner to pay compensation to the other.95 In each case, a court

  1. RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [10.9]. The author explains that valuation is essential to global division process as value is “used as the medium for determining the respective entitlements in the overall division”.

92 Reid v Reid [1980] 2 NZLR 270 (CA) at 272, judgment of Woodhouse and Richardson JJ delivered by Woodhouse J.

93 Property (Relationships) Act 1976, s 20D.

94 RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [10.9].

  1. For example a court may order one partner to pay compensation to the other if, owing to the division of functions during the relationship, that partner is likely to enjoy significantly higher income and living standards than the other partner after separation: s 15; a court may require one partner, whose separate property has been sustained by the other

would have to assess the value of certain things. Under section

15 for example, a court must determine the likely economic disparity between the partners to quantify the appropriate level of compensation. Under sections 17 and 18B, a court must consider the value of a partner ’s contributions. If a partner has taken care

of the partners’ children after separation and a court determines that compensation under section 18B is appropriate, it could receive valuation evidence of the costs of providing a nanny in lieu of the care the partner provided.96

Determining Value

What is value?

13.5 The PRA is silent on what the term “value” means. Instead, its interpretation has been left to the courts to decide.97 We note four points regarding the courts’ approach to valuation.

13.6 First, valuation of property is a separate exercise to the initial exercise of taking stock of the partners’ property. The PRA will only apply to items that fall within the definitions of “property” and “owner” under section 2.98 A valuer might be able to ascribe a value to a particular item, but that item would not be property for the purposes of the PRA. For example, a person’s earning capacity is not property although the present value of a partner ’s future income can be determined.99

13.7 Second, a court must determine the appropriate standard of value.

The PRA frequently refers to the word “value”. It can, however, have several meanings because, as a matter of valuation practice, different standards of value are applied in different instances. In

partner, to pay compensation: s 17; a court may recognise a partner ’s contributions to the relationship after separation by requiring that a partner compensate the partner who made the contributions: s 18B and if one partner has materially diminished the value of relationship property after separation, the court can order that partner to pay compensation to the other: s 18C.

  1. Simon Jefferson and Paul Moriarty “Valuation of Relationship Property: An Evaluation of Practice and Procedure” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).
  2. In the years following the enactment of the Matrimonial Property Act 1976 the Court of Appeal addressed the question of valuation in a number of cases: see principally Haldane v Haldane [1981] 1 NZLR 554 (CA); and Holt v Holt [1987] 1

NZLR 85 (CA). The Court of Appeal’s decision was later upheld on appeal: Holt v Holt [1990] UKPC 34; [1990] 3 NZLR 401 (PC).

98 See Chapter 8 for a discussion of these terms.

  1. Z v Z (No 2) [1997] 2 NZLR 258 (CA) the Court of Appeal said that although the person may obtain considerable financial benefits from his or her qualifications, skills and experience, those aspects are purely personal characteristics which do not come within the Property (Relationships) Act 1976’s definition of property.

Haldane v Haldane, the Court of Appeal explained that “value”

could refer to the market value of the property, its intrinsic value to the owner, or its replacement cost.100 The Court concluded that ordinarily a just division of property under the PRA will require

a court to use the “fair market value” of the property.101 This is determined by assuming a hypothetical sale between a willing but not anxious seller and a willing but not anxious buyer.102 It

should be noted, however, that a court may not always adopt a fair market value standard. In some cases the courts have considered whether to use an alternative standard of value.103

13.8 Third, the PRA gives no guidance on the methodology to determine value. The courts have said no specific methodology should be elevated into a test for what value means, rather that valuation methodologies are aids.104 Some assets are simple

to value. For example, a fair market value of a family car can be appraised by a second-hand car dealer.105 The task is more complex when a court must determine the present value of an asset that will produce future income. The most common example of such assets in relationship property cases are company shares and superannuation scheme entitlements. The courts will usually accept a valuation based on a discounted cash flow analysis.106

This involves working out a present value by assessing future

100 Haldane v Haldane [1981] 1 NZLR 554 (CA) at 562 per Richardson J.

  1. Haldane v Haldane [1981] 1 NZLR 554 (CA) at 562 per Richardson J. This is the standard of value usually applied in relationship property cases: see RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [10.9]; and Nichola Peart (ed) Brookers Family Law — Family Property (online looseleaf ed, Thomson Reuters) at [PR2G.06]. Similarly, the courts will usually value relationship debts on a fair market value standard: Walker

v Walker [2007] NZCA 30; [2007] 2 NZLR 261 (CA) at [37-40]) (in other words, what a willing but not anxious purchaser would pay for the debt). The fair market value of the debt may differ from the book value of the debt depending on several factors, such as the debtor ’s ability to repay the debt.

  1. This test was adopted by the courts when determining value under estates and gift duty legislation and applied to the Matrimonial Property Act 1976 context: see H v Commission of Inland Revenue [1963] NZLR 641 at 661 (CA); Clark v Clark [1987] NZCA 140; [1987] 2 NZLR 385 (CA) at 388; Z v Z [1989] 3 NZLR 413 (CA) at 415; Holt v Holt [1990] UKPC 34; [1990] 3 NZLR 401 (PC) at 402-403; Sojourner v Robb [2007] NZCA 493, [2008] 1 NZLR 751 at [38]; Boat Park Ltd v Hutchison [1999] 2 NZLR 74 (CA) at 83–85; Sayes v Tamatekapua [2012] NZCA 524 at [21]; Sturgess v Dunphy [2014] NZCA 266 at [148]; Morganstern v Jeffreys [2014] NZCA 449 at [61]; and Clayton v Clayton [2015] NZCA 30, [2015] 3 NZLR 293 at [242].
  2. See for example Foley v Foley FC Christchurch FAM-2009-009-2141, 25 August 2011. The Family Court addressed the question of how shares in a family company that operated a farming business should be valued. The Court considered at [29]–[33] whether it would be appropriate to value the shares on a “fair value” basis rather than on a “fair market value” basis. Although the Court did not reach a clear conclusion on the applicable standard, it said that it was not appropriate to give a discount on the shares that would normally be expected if valuing a minority shareholding interests pursuant to a fair market value standard.
  3. H v Commissioner of Inland Revenue [1963] NZLR 641 (CA) at 661; Jamieson v Cox [1989] NZCA 135; [1990] NZFLR 165 (CA) at 167; Pountney v Pountney CA45/91, 20 September 1991 at 20; and Carter v Carter [2001] NZFLR 180 (HC) at 189–190.
  4. Simon Jefferson and Paul Moriarty “Valuation of Relationship Property: An Evaluation of Practice and Procedure” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).
  5. Brendan Lyne and Robyn von Keisenberg “Expert Financial Evidence in PRA Cases” (New Zealand Law Society Seminar, June 2016) at 27 and 36; and Shelley Griffiths “Valuing ‘bundles of rights’ for the Property (Relationships) Act 1976; when neither art nor science is enough” (2011) 7 NZFLJ 98 at 100.

income streams from the property and discounting for risks and

contingencies.107 Valuations based on complex methodologies will often require high level expert input. Sometimes expert valuers undertake extensive analysis and present that evidence in court. Issues around the value of property or debt can therefore increase the costs and time to resolve a dispute.108 Valuers will also need access to information about the property which can be difficult to obtain.

13.9 Fourth, if a court takes a fair market value approach, it will not usually consider the personal intentions or sentiments of the partners regarding the property. Instead, a court will make certain assumptions regarding the hypothetical market that may not accord with the facts of the case.109 In Holt v Holt, the partners could not agree on how the husband’s shares in a company should be valued.110 The company was used to carry on the business of

a family farm. The husband said he intended to bequeath his shareholding to his children so that the farm would stay in the family. The husband argued this intention should diminish the value of the shares. The Court of Appeal said that in hypothetical negotiations between the willing buyer and seller, purely sentimental matters and questions of personal financial need

or wealth had to be put aside.111 As the husband was under no obligation to bequeath his shares, the Court said it had to ignore the husband’s assertion. Instead, the Court said that the notional vendor and purchaser are arriving at a commercial bargain

uninfluenced by generosity or the prospect of generosity.112

  1. Brendan Lyne and Robyn von Keisenberg “Expert Financial Evidence in PRA Cases” (New Zealand Law Society Seminar, June 2016) at 27 and 36; and Shelley Griffiths “Valuing ‘bundles of rights’ for the Property (Relationships) Act 1976; when neither art nor science is enough” (2011) 7 NZFLJ 98 at 100.
  2. In some cases, if there is significant uncertainty as to the value of an asset, the courts will sometimes order that the property be sold and the proceeds divided equally between the partners. See Scott v Williams [2016] NZCA 356, [2016] NZFLR 499 at [25]. In February 2017 the Supreme Court heard an appeal from the Court of Appeal’s decision. The Supreme Court has not yet issued its judgment.
  3. Simon Jefferson and Paul Moriarty “Valuation of Relationship Property: An Evaluation of Practice and Procedure” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming). In RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [10.11] the author says that valuation is usually abstracted from the “personal whims” of the partners.

110 Holt v Holt [1987] 1 NZLR 85 (CA). The Court of Appeal’s decision was later upheld on appeal: Holt v Holt [1990] 3 NZLR

401 (PC).

111 Holt v Holt [1987] 1 NZLR 85 (CA) at 90.

  1. In Clayton v Clayton [Vaughan Road Property Trust] [2016] NZSC 29, [2016] 1 NZLR 551 the Supreme Court said that Mr Clayton’s powers under the trust deed gave him the unfettered ability to appoint all the trust property to himself. The Court said that these powers were property in their own right for the purposes of the Property (Relationships) Act 1976. As Mr Clayton had the ability to distribute all trust property to himself, the Court said at [104] that the value of the powers would equate to the value of the underlying trust property. Mr Clayton argued that valuing the trust property in this way would preclude the possibility that he might exercise his powers to appoint the property to other beneficiaries. The Court said at [102] this consideration was irrelevant. See also Clayton v Clayton [2015] NZCA 30, [2015] 3 NZLR 293 at [113]–[114].

At which date should property be valued?

13.10 The date at which the property’s value should be assessed is often a contentious issue in relationship property disputes. That is because the value of property can fluctuate. The date at which the property’s value is assessed will therefore determine the extent

to which the partners’ share in any increases or decreases in the property’s value.

13.11 Section 2G(1) lays down a general rule that the value of any property to which an application under the PRA relates is determined at the date of the hearing by the court of first instance.113 Section 2G(2), however, provides that a court may decide that the value of the property be determined as at another date.

13.12 The basis of the general rule in section 2G(1) is that a contemporary valuation of the property will usually provide a just division of that property.114 If the property has increased in value since the partners separated because of the market inflation, it

is usually considered fair that the partners share equally in the increase. In De Malmanche v De Malmanche, the family home had a value of $500,000 at the date the partners separated.115 By the hearing date, the property had increased in value to $640,000. The evidence before the Court showed that the increase in the property’s value was attributable to market forces rather than the efforts of either partner. The High Court said that the property

should be valued as at the hearing date. The Court said it would be unjust to deny each partner an equal share of the advantages of the post-separation increase in value.116

13.13 If the post-separation increase or decrease in value is attributable to the actions of one partner, it may not be just to share those increases or decreases equally. Prior to the 2001 amendments, a court was limited in its ability to take the post-separation actions of one partner into account. Its primary tool was to adjust the



113 The court of first instance is the court that hears the party’s application for the first time. This will usually be the Family Court although some cases are heard for the first time by the High Court. The appellate courts (the Court of Appeal and the Supreme Court) will not be the courts of first instance.

  1. Jorna v Jorna [1982] 1 NZLR 507 (CA) at 511: “[i]n a general way and in the absence of particular circumstances a contemporary valuation will produce equity”.

115 De Malmanche v De Malmanche [2002] 2 NZLR 838 (HC).

116 De Malmanche v De Malmanche [2002] 2 NZLR 838 (HC) at [148].

date of valuation so as to exclude the increases or decreases

attributable to one partner alone.117

13.14 Following the 2001 amendments, a court’s discretion to adopt a different valuation date under section 2G(2) is of less significance. That is because a court may now award compensation to a partner under section 18B for contributions the partner has made to

the relationship after separation. Likewise, a court can award compensation under section 18C against a partner who has materially diminished the value of the partners’ relationship property through deliberate action or inaction. The courts have said that the valuation date should not be changed under section

2G(2) if section 18B or section 18C applies.118

13.15 If one partner has retained use and enjoyment of the property after separation, but the property has depreciated, section 2G(2) may be relevant.119

Evidence of value

13.16 A court will usually determine the value of property by relying on the evidence each partner presents to the court. The most common way partners give evidence of value is to rely on an expert valuer.

13.17 How expert valuers give evidence in court proceedings is governed by the rules of evidence, which are found under the Evidence Act

2006 and the relevant court rules.120 We will not examine these rules but simply mention a few important aspects.

13.18 First, experts are under an overriding duty to assist the court.121

This reflects the position that expert evidence assists the fact-



  1. For example, if one partner had made improvements to property after separation but prior to the hearing and those improvements increased the value of the property, the court may have ordered that the value of the property be ascertained at the date before the improvements were made. See for example Meikle v Meikle [1979] 1 NZLR 137 (CA).

118 Fowler v Wills (2003) 23 FRNZ 703 (CA); and more recently Walker v Walker [2007] NZCA 30, [2007] NZFLR 772. See also

Burgess v Beaven [2012] NZSC 71, [2013] 1 NZLR 129 at [25].

119 Nichola Peart (ed) Brookers Family Law — Family Property (online looseleaf ed, Thomson Reuters) at [PR2G.03] relying on

G v G (2002) 22 FRNZ 990 (FC); and Loader v Loader [2003] NZFLR 553 (FC).

  1. Although s 12A of the Family Courts Act 1980 provides that in Property (Relationship) Act 1976 proceedings, the court may receive any evidence, whether or not admissible under the Evidence Act 2006, that the court considers may assist it to determine the proceeding.

121 High Court Rules 2016, r 9.43 and sch 4 (Code of conduct for expert witnesses), cl 1. The Code of conduct is incorporated into the District Court Rules 2014: r 9.34. All expert witnesses in the Family Court are expected to comply with the Code of conduct in preparing any witness statement or in giving any evidence in court: Nichola Peart (ed) Brookers Family Law

— Family Procedure (online looseleaf ed, Thomson Reuters) at [EF4.1.03].

finder in a court case.122 In the PRA context, the role of expert

valuers is to assist the court in finding the correct value of the property. A court will weigh the opinions presented by the expert. This will normally require a court to scrutinise the qualifications and credibility of the expert, and the reasons for each opinion and the facts and other matters relied on by the expert.123

13.19 Second, a court can manage how expert evidence is given. A court can direct a conference of experts in order for them to try to reach agreement on certain matters, and prepare joint statements on

the matters on which they agree and do not agree.124 A court can also direct that experts give evidence at the same time and in each other ’s presence.125 This process has become known as “hot tubbing”.126 A judge can ask the same questions to both experts at the same time. A judge effectively facilitates debate between the

two experts. This process may be more efficient than if each party called their own expert and the other party cross-examined that expert.

13.20 Third, a court can appoint its own expert. This ability is found in both the court rules127 and the PRA itself.128 Under section 38 of the PRA a court may appoint a person to inquire into the matters of fact in issue between the parties. The provision has occasionally been used by a court to determine the value of property.129 Section

38 inquiries are discussed further in Chapter 26.






  1. Evidence Act 2006, s 25; and A v R [2010] NZCA 57, (2010) 25 CRNZ 138. The court explained at [19] that the admission of expert evidence of opinion is an exception to the ordinary rules that a witness’s task is to speak facts rather than to offer opinions. See generally Simon France (ed) Adams on Criminal Law – Evidence (online looseleaf ed, Thomson Reuters) at [EA25.01]; and Matthew Downs (ed) Cross on Evidence (online looseleaf ed, LexisNexis) at [EVA25.1]–[EVA25.2].
  2. Crichton v Crichton [1991] NZFLR 529 (HC) at 534-535. See generally Simon France (ed) Adams on Criminal Law – Evidence (online looseleaf ed, Thomson Reuters) at [EA25.01]; and Matthew Downs (ed) Cross on Evidence (online looseleaf ed, LexisNexis) at [EVA25.1]–[EVA25.2].
  3. High Court Rules 2016, r 9.44; and District Court Rules 2014, r 9.35. See discussion in Simon Jefferson and Paul Moriarty “Valuation of Relationship Property: An Evaluation of Practice and Procedure” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

125 The procedure is available under High Court Rules 2016, r 9.46.

  1. See discussion in Simon Jefferson and Paul Moriarty “Valuation of Relationship Property: An Evaluation of Practice and Procedure” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

127 High Court Rules 2016, r 9.36; and District Court Rules 2014, r 9.27.

128 Property (Relationships) Act 1976, s 38.

129 See for example Johnson v Johnson [2005] NZFLR 301 (HC); and Cleland v Dixon HC Hamilton CIV-2006-419-571, 21

July 2006 cited in Nichola Peart (ed) Brookers Family Law — Family Property (online looseleaf ed, Thomson Reuters) at

[PR38.02(1)].

Issues and options for reform

Valuation disputes contribute costs and delay to the resolution of property matters

13.21 When all relationship property is to be sold and the proceeds shared, valuation disputes rarely arise. But sometimes one partner may want to retain a particular item of relationship property,

such as the family home or company shares. In other cases the property cannot actually be sold, such as a partnership interest in a professional firm or company shares that are subject to sale restrictions. Partners will often disagree on the value of these items of property. That is because the value ascribed to these

items will determine how much property the other partner should receive, either from the remaining pool of relationship property

or by way of a monetary payment from the partner who keeps the property.

13.22 We have no way of determining what proportion of property disputes involve issues over the valuation of property because many disputes are resolved out of court. From our research and our preliminary consultation with lawyers we have heard that disputes over the value of property are common, especially when the valuation exercise is complex. The partners may seek extensive expert evidence to support their preferred valuation.

This can cause delay to the resolution of disputes and the partners may incur considerable cost. Prolonged disputes may contradict the principle in section 1N(d) that questions arising under the PRA should be resolved as inexpensively, simply, and speedily as

is consistent with justice.

13.23 The complexities and contest over valuation evidence is often seen in the courts’ decisions. A recent example is T v T, where the Family Court had to ascertain the value of shares in a tourist business negatively affected by the Canterbury earthquakes.130

The partners presented valuations of the shares which were approximately $680,000 apart. The experts could not agree on

the correct valuation methodology, including what underlying

  1. T v T [2014] NZFC 5335, [2015] NZFLR 185. See also commentary on this case in Simon Jefferson and Paul Moriarty “Valuation of Relationship Property: An Evaluation of Practice and Procedure” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

assumptions to make about the future outlook of the business.

The hearing took four days and numerous valuation reports and updates to those reports were presented to the Family Court.

13.24 If disputed valuations are adding costs and delay to the resolution of property matters, the question that arises is whether any improvements to the PRA’s rules can be made. The PRA does not prescribe the standard and methodologies that should be used when assessing the value of property. Instead, the courts are left

to adopt a value that reflects a just division of that property. In our preliminary view, much can be said for providing a court with this flexibility. Some property will be inherently difficult to value. The value will depend on many factors that are specific to the case.

In T v T, the value of the company in question had been affected by the unprecedented effects of the Canterbury earthquakes on the tourism industry.131 The present value of the shares was based on the future income streams to the company which depended

on the recovery of Christchurch from the earthquakes. The Family Court acknowledged that the valuation of the shares was a “speculative exercise”.132 Valuers can legitimately hold different

opinions on these matters.133 As the Court of Appeal explained in

Holt v Holt:134

The valuation of shares in a family company is notoriously difficult. If the valuation of the appellant’s shares had been submitted to five valuers, it would not be unlikely that five different answers would have resulted.

13.25 It is not apparent to us whether any measures could be taken to help partners agree the value of their property out of court. We anticipate that in most cases, the majority of the partners’ property will be fairly easy to value, such as vehicles, furniture, savings and residential property. For these types of property, we are unsure whether reform is required to assist the partners and advisers. Rather, disputes over valuation that end up in court tend to arise where the value of the asset in question depends on estimated future income flow, such as shares or partnership

interests in professional firms. Such valuations are often difficult

and depend on many factors.

131 T v T [2014] NZFC 5335, [2015] NZFLR 185.

132 T v T [2014] NZFC 5335, [2015] NZFLR 185 at [185].

  1. Simon Jefferson and Paul Moriarty “Valuation of Relationship Property: An Evaluation of Practice and Procedure” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

134 Holt v Holt [1987] 1 NZLR 85 (CA) at 95 per McMullin J.

13.26 The main option for reform we can see is to introduce rules

into the PRA that prescribe in greater detail how property should be valued. We are unsure, however, whether this would reduce valuation disputes. The rules must still be applied to the circumstances of each case. There would probably still be scope for argument. In M v B (Economic Disparity), the husband and wife each engaged expert valuers to value the husband’s interest in a law firm.135 Both valuers were given the same set of instructions on how the interest should be valued. The valuer engaged by the wife arrived at a value of $1.341 million whereas for the husband the valuer gave a value of $182,000.136

13.27 If the rules were too prescriptive and inflexible, they could jeopardise a court’s ability to arrive at a value that is fair in the circumstances of each case.

13.28 Instead of amendments to the PRA, an alternative approach could be to reform the procedure around expert valuation evidence. Jefferson and Moriarty suggest that the courts could make greater use of expert conferences.137 These conferences could be like mediations between the experts. They could assist a court by assisting the experts to identify on which matters they agree or

do not agree. Also, the courts could better use the powers under section 38 of the PRA to appoint a single expert to undertake a valuation.138

13.29 Again, we are unsure whether reforms of this nature would be effective at minimising the length and costs of disputes around valuation. Jefferson and Moriarty suggest that if a court appoints a single expert, the partners may well retain their own “shadow experts” to challenge any report from the single expert.139

Similarly, if each partner ’s expert must attend a conference of

experts, the time and cost to each partner could be significant.




135 M v B (Economic Disparity) [2006] NZCA 535; [2006] 3 NZLR 660 (CA).

136 M v B (Economic Disparity) [2006] NZCA 535; [2006] 3 NZLR 660 (CA) at [59]–[60].

  1. Simon Jefferson and Paul Moriarty “Valuation of Relationship Property: An Evaluation of Practice and Procedure” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).
  2. Simon Jefferson and Paul Moriarty “Valuation of Relationship Property: An Evaluation of Practice and Procedure” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).
  3. Simon Jefferson and Paul Moriarty “Valuation of Relationship Property: An Evaluation of Practice and Procedure” in Jessica Palmer, Nicola Peart, Margaret Briggs and Mark Henaghan (eds) Modern Family Finances – Legal Perspectives (2017, Intersentia, Cambridge) (forthcoming).

13.30 Finally, some people we spoke with in our preliminary

consultation suggested there may be greater scope to offer partners tools that calculate an approximate value of their property. For example, online calculators could be developed to provide approximate valuations for things like superannuation scheme entitlements and company share valuations. Such tools would give partners a rough idea of the value of their property without engaging expensive expert assistance. The valuations given would have no binding effect; the calculation tools would

be for estimation only.140 If the partners have available a means of determining the approximate value of their property, they may be better equipped to resolve property matters themselves.

13.31 We have doubts about the efficacy of such tools. As we have noted, disputes over value mostly arise where the asset’s value is likely to be high but reasonable experts may differ on applying an appropriate methodology. We are unsure whether measures such as online calculators would assist with complex share valuations, or dissuade the partners from retaining their own experts and contesting the issue.

C ONSU LTATION QUESTIONS

D11 How often will a dispute between the partners involve a contest over the value of property?

D12 Are there any ways the PRA and/or dispute resolution processes could be improved to avoid disputes regarding valuation?

Is the fair market value standard relied on too often?

13.32 As we have noted, the PRA does not define what value means.

There are however many standards against which property can

be valued. Usually valuers will be instructed to determine the fair market value of property. As we explained above, this requires an analysis of what price a willing but not anxious buyer would pay for the property and at what price a willing but not anxious seller would sell.

13.33 Through our preliminary consultation we have heard that in the vast majority of cases lawyers will instruct valuers to value

140 The Inland Revenue’s online Child Support – Liability/Entitlement Calculator serves a similar function. See Inland

Revenue “Child Support Liability/Entitlement Calculator” <www.ird.govt.nz>.

property on a fair market basis without considering whether an

alternative standard may be appropriate. Sometimes a fair market value standard may not be the best approach because the fictitious willing buyer and willing seller analysis ignores the reality of the partners’ circumstances.141

13.34 A good example is the way the courts sometimes value shares in a company. Where a small company is run as a partnership between two shareholders, and the shareholders fall out, one shareholder may buy the other shareholder ’s shares. In these circumstances a fair value of the shares may not be captured by assuming a hypothetical arm’s length transaction. For instance, on a market value approach, there would usually be a discount for the shareholder ’s minority interest in the company, whereas in reality the remaining shareholder would obtain a majority interest in the company. The outgoing shareholder will also give up a great deal losing his or her interest in the quasi-partnership. Again, this loss may not be accurately reflected in a willing but not anxious seller analogy.

13.35 In these circumstances the courts sometimes adopt a fair value standard rather than a fair market value standard. Under a fair value approach, the value the court endeavours to ascertain is a value that is fair as between the vendor and purchaser.142 A court does this by recognising what the seller gives up in value and what the buyer acquires through the transaction.143 The fair value approach realises that the market value of the property is not actually the real or intrinsic value of the property.144

13.36 We are interested in responses to whether the courts should be more willing to value property against a different standard than the market value of the property. We can identify several items of property that may have greater intrinsic value to the partners over the property’s market value. The partners may have great affection and attachment to a family pet or a work of art. As part of the division of the partners’ relationship property, a court could order that the pet or artwork vest in one partner. That partner must

141 Allan McRae and Jai Basrur “Valuations of Unlisted Shares – is there a difference between Fair Market Value and Fair

Value?” NZ Lawyer (online ed, Auckland, 15 November 2011).

  1. Fong v Wong [2010] NZSC 152 at [7-8]; Re James Davern Ltd (1996) 9 PRNZ 456 (CA) at 459; and Allan McRae and Jai Basrur “Valuations of Unlisted Shares – is there a difference between Fair Market Value and Fair Value?” NZ Lawyer (online ed, Auckland, 15 November 2011).

143 Re James Davern Ltd (1996) 9 PRNZ 456 (CA) at 459.

144 Allan McRae and Jai Basrur “Valuations of Unlisted Shares – is there a difference between Fair Market Value and Fair

Value?” NZ Lawyer (online ed, Auckland, 15 November 2011).

then account for half the property’s value to the other partner.145

The price a third party would be likely to pay for the pet or

artwork in a hypothetical arm’s length transaction may not reflect the sentimental value the partner accords to the property but is forced to give up. Division of the property’s fair market value may not be a just division.

13.37 To take another example, the partners may have carried on business together through a company in which both partners held shares. As part of the division of the partners’ relationship property, one partner may allow the other to acquire his or her shares. Based on our discussion above, this may be a case where the remaining shareholder would have to account for the fair value of the outgoing partner ’s shares rather than the fair market value. The issue was considered by the Family Court in Foley v Foley.146 There the expert valuers had disagreed on whether the shares in the company through which the partners conducted a farming business should be valued at a fair value or fair market value. The Family Court noted that the concepts had never been fully analysed in any prior decision.147 Ultimately, the Court did not express a preference on the standard of value. The Court did, however, value the shares based on what the husband would obtain by acquiring the wife’s shares in the actual circumstances of the case rather than on a hypothetical market price.148

13.38 However we also see the advantages of valuing property by fair market value. A fair market value can be determined objectively, and the courts do not have to consider a partner ’s subjective intentions and sentiments regarding the property. This means that one partner cannot unfairly skew the valuation by what may sometimes be spurious or subjective claims about the property.

C ONSU LTATION QUESTIONS

D13 Should the courts be more willing to value property against a different standard than the market value of the property?

D14 In what circumstances should property be valued under an alternative standard of value?




145 See discussion on pets below in Chapter 14.

146 Foley v Foley FC Christchurch FAM-2009-009-2141, 25 August 2011.

147 Foley v Foley FC Christchurch FAM-2009-009-2141, 25 August 2011 at [29].

148 Foley v Foley FC Christchurch FAM-2009-009-2141, 25 August 2011 at [44].

Chapter 14 – How a court

implements a division of property

14.1 In Chapter 12 we looked at each partner ’s right to an equal share in relationship property. That does not mean that every asset is literally halved. As explained in Chapter 13, the partners share

in the value of the global pool of relationship property, after the value of relationship debts has been deducted. Once the net value of each partner ’s half share is ascertained, the court will make orders allocating certain items of relationship property (or a portion of their sale proceeds) to each partner.

14.2 In this chapter we focus on this process. We consider the orders a court can make to implement or facilitate the division of relationship property (division orders), and the court’s powers to grant interim distributions of property.

14.3 We also look at other orders a court can make that grant a partner certain temporary rights to property, but do not divide that property. We call these orders non-division orders. They include:

(a) occupation orders (section 27); (b) tenancy orders (section 28); and

(c) orders for furniture required to equip another household (section 28C).

14.4 Finally, we consider the PRA provisions that protect a partner ’s rights before the relationship property is divided.

Division orders

14.5 Although the PRA has very clear rules about each partner ’s right to an equal share of relationship property, the PRA is less prescriptive about how a court implements or facilitates a division of the property.

14.6 Section 25 is the key provision that enables a court to make any order it considers just, deciding the respective shares of each partner in the relationship property or dividing relationship property between the partners.

14.7 A court can make a range of orders to implement a decision

it makes about property division under section 25. These are “ancillary” orders because they must only give effect to a court’s decision under section 25.149

14.8 The court’s primary source of power to make ancillary orders is set out in section 33. Section 33(1) gives a court a general power to:

... make all such orders and give such directions as may be necessary or expedient to give effect, or better effect, to any order made under any of the provisions of sections 25 to 32.

14.9 The ancillary powers under section 33 can also be exercised in relation to orders under other provisions of the PRA, such as sections 44 and 44C.150 Section 33(3) sets out a non-exhaustive list of examples of powers a court could employ to carry out this task.

14.10 A court may exercise its powers under section 33 more than once in the same court proceeding. For example, section 33 can be used where there has been or will be an attempt to give effect to the court’s substantive order, but that has not or may not achieve the intended result.151 However a court cannot reopen its substantive findings and decisions on property shares and their division in a later application under section 33.152 The powers in section 33 can also implement a contracting out agreement and consent orders, but cannot be used to alter their terms.153

14.11 The PRA also gives a court specific powers to divide particular types of property:

(a) hire purchase agreements (section 29); (b) insurance policies (section 30); and

(c) superannuation rights (section 31).

14.12 Finally, a court has powers to make certain orders to provide for children:


149 Coxhead v Coxhead [1993] 2 NZLR 397 (CA), at 408.

  1. Section 44 of the Property (Relationships) Act 1976 (PRA) gives a court the power to set a disposition of property aside in certain circumstances and s 44C provides for compensation where relationship property has been disposed of to a trust. The ancillary powers in s 33 also apply to orders under other provisions of the PRA, such as ss 44 and 44C, by virtue of s 25(1)(b), which empowers a court to “make any other order that it is empowered to make by any provision of this Act”.

151 Lee v Lee (1987) 3 FRNZ 310 (HC) at 315.

152 Weir v Weir (1987) 3 FRNZ 289 (HC) at 293.

153 See for example Belt v Belt (1989) 5 FRNZ 258 (FC); and C v C FC Waitakere FAM-2006-090-1281, 18 June 2008 at [57].

(a) settling relationship property for the benefit of children

(section 26);

(b) postponing vesting any share in relationship property

(section 26A); and

(c) making or varying any order regarding maintenance and child support (section 32).

14.13 We discuss orders under sections 26 and 26A in Part I of this

Issues Paper.

Can a court make orders about property owned by a third party?

14.14 Section 25(3) provides that a court: “may at any time make any order or declaration relating to the status, ownership, vesting, or possession of any specific property as it considers just.” This suggests that a court can make orders or declarations regarding

any property, regardless of ownership. However the courts have said that section 25(3) is supplementary to section 25(1), which limits a court to orders regarding relationship property and other orders it is empowered to make under the PRA.154 Section 25(3) is simply intended to better empower a court to make appropriate orders within the general scheme and framework of the PRA.155

14.15 It is unclear whether, within the general scheme of the PRA, a court has the power to make orders regarding third party property. Sometimes the partners will have an interest in property that appears to be owned by a third party. A common example is a trust.156 In Yeoman v Public Trust the High Court explained that if a third party disputes a partner ’s property interest claim, a court has no jurisdiction under the PRA to determine the issue.157 Instead, the claim would need to be determined in separate proceedings.

As we explain in Part H, this issue often comes up when a partner

claims that a trust connected with the relationship is invalid.158

154 ANZ Banking Group (NZ) Ltd v Wrightson (1992) 9 FRNZ 1 (HC) at 8, referring to Hall v Hall (1989) 5 FRNZ 309 (FC) at 313.

155 ANZ Banking Group (NZ) Ltd v Wrightson (1992) 9 FRNZ 1 (HC) at 8, referring to Hall v Hall (1989) 5 FRNZ 309 (FC) at 313.

156 Another example is family homes built on Māori land. Māori land typically has multiple owners or is held on trust

for the descendants of a common tipuna. Māori land is excluded from the Property (Relationships) Act 1976, but the position in respect of family homes that sit on the land is unclear. See the discussion in Chapter 8.

157 Yeoman v Public Trust Ltd [2011] NZHC 1869; [2011] NZFLR 753 (HC) at [39]. In Jew v Jew [2003] 1 NZLR 708 (HC), the High Court

went further. It held that it was inconceivable that the Family Court had jurisdiction under s 25(3) of the Property

(Relationships) Act 1976 to make declarations as to ownership in respect of property owned by third parties.

158 See Part H.

14.16 It is also unclear whether any decision under the PRA about a

partner ’s interest in property which appears to be owned by a third party binds that third party. Again, in Yeoman v Public Trust the High Court explained that a decision under the PRA cannot bind third parties.159

14.17 These issues tie into the overall jurisdiction of the Family Court to consider claims that determine the rights of third parties. There is no settled view among the cases.160 We discuss these problems in relation to trusts in Part G and in relation to the jurisdiction of the Family Court in Part H.

Can the court vary trusts?

14.18 There is also uncertainty about a court’s ancillary powers regarding trusts. Section 33(3)(m) provides that a court can make “an order varying the terms of any trust or settlement, other than a trust under a will or other testamentary disposition”. This appears to

give a court broad powers to vary a trust deed, including to add or remove trustees or beneficiaries, vary the final distribution date or give one partner an interest in income of the trust.

14.19 However, there are several limitations on a court’s use of section

33(3)(m):

(a) First, as discussed at paragraphs 14.78–14.910 above, section 33 does not provide originating jurisdiction regarding trusts. The power to vary a trust can only be exercised if it is necessary or expedient to give effect or better effect to orders made under another provision of the PRA.161

(b) Second, if trust property is not beneficially owned by one or both of the partners, it will be outside the jurisdiction of the PRA unless the PRA provides the court with specific powers to make orders in respect



  1. Yeoman v Public Trust Ltd [2011] NZHC 1869; [2011] NZFLR 753 (HC) at [39] and [44]. In some instances however the Property (Relationships) Act 1976 gives the Family Court specific powers over property held by third parties (see s 31 in relation to superannuation scheme entitlements; and ss 44–44C in respect of trusts).
  2. See for example F v W (2009) 2 NZTR 19-024 (HC) where the High Court held the Family Court did not have jurisdiction to declare that a trust was a sham in proceedings under the Property (Relationships) Act 1976. In contrast, in B v X [2011] NZHC 2117; [2011] 2 NZLR 405 (HC) the High Court held that the Family Court did have jurisdiction to declare that a trust was a sham, as did the High Court in F v F [2015] NZHC 2693.

161 G v R FC Porirua FAM-2007-091-892, 4 September 2008; B v M [2005] NZFLR 730 (HC) at [223]; P v P (No 4) (2005) 25

FRNZ 320 (FC); and C v C HC Auckland CIV-2005-404-7124, 27 November 2006.

of the trust property.162 This appears to limit section

33(3)(m) to cases where sections 44 and 44C apply.163

However section 33(3)(m) does not expressly refer to those provisions. Section 33(3)(m) might also be used where the purported transfer of property to a trust

is invalid or ineffective, but this is unclear given the uncertainty around the extent of a court’s jurisdiction under the PRA, discussed above.164

(c) Third, as we discussed above it does not appear that a court can make orders under the PRA binding on third parties, including trustees.165 While trustees may be joined as third parties in PRA proceedings under section

37,166 the courts have observed this does not entitle a court to make an order affecting that party’s property entitlements.167

14.20 For these reasons we think that the application of section 33(3) (m) would benefit from clarification.

14.21 A further issue with section 33(3)(m) is that there is no requirement to consider the interests of the other beneficiaries. While a court would likely do so, it is desirable that this be clarified in the PRA.

C ONSU LTATION QUESTION

D15 Have we identified all of the issues with the operation of section 33(3)(m) to vary trusts?

  1. See discussion in Part G. However it seems that section 33(3)(m) would be able to be used to vary trusts where one party has a vested or contingent interest in trust property, on the basis that such an interest is considered “property” for the purposes of the Property (Relationships) Act 1976, and can therefore be classified as relationship property. However

note the problems identified at [14.15]–[14.16] above. See also Nicola Peart (ed) Brookers Family Law — Family Property

(online looseleaf ed, Thomson Reuters) at [PR33.13]; and C v C (No 2) [2006] NZFLR 908.

163 As discussed at [14.9], s 33 of the Property (Relationships) Act 1976 applies to ss 44 and 44C by virtue of s 25(1)(b). See

S v M FC Tauranga FAM-2004-070-823, 16 November 2006 at [54]. The Family Court relied on the High Court’s decision in McGill v Crozier (2001) 21 FRNZ 157 (HC) whereby section 33(3)(m) was used to vary the terms of the trust in relation to a yacht. However, the High Court in McGill v Crozier determined at [41] that the powers given by s 33(3)(m) had been invoked by the Family Court after it had acted under s 25 to determine that the wife’s half share remained relationship property. The Family Court in S v M instead used the s 33(3)(m) powers, via s 25(1)(b), to directly order the trustees to sell a home if the husband was unable to otherwise pay compensation due under s 44C.

164 See McGill v Crozier (2001) 21 FRNZ 157 (HC). In that case there were no third party trustees so the purported transfer

“must have been ineffective to convey title in those circumstances: at [41].”

165 See discussion in Part H; Yeoman v Public Trust Ltd [2011] NZHC 1869; [2011] NZFLR 753 (HC) at [39] to [45]; and F v F [2015] NZHC 2693 at

[102-103].

  1. Section 37 of the Property (Relationships) Act 1976 requires the court to notify any third party who has an interest in property that is affected by an order and to give the third party an opportunity to be heard as a party to the proceedings.
  2. Chesham v Chesham [1991] NZFLR (HC) 546 at 554. See also Johanson v Johanson (1993) 10 FRNZ 578 (CA) at 581. The Family Court in Naidu v Naidu FC Auckland FAM-2005-004-2700, 10 September 2009, at [55]-[58] invited the wife to join the family trust as a party if she intended to pursue an order requiring the trustees to vary the trust to transfer the former family home into her name. The wife was relying on the court’s decision in S v M FC Tauranga FAM-2004-070-

823, 16 November 2006, discussed above, to make the order.

Is there a need for clear guidance on when a court can vary trusts under that provision?

D16 Are there any other issues with the operation of section 25 or section 33 we have not identified?

Problems dividing particular types of property

Superannuation scheme entitlements

14.22 Under section 8(1)(i) of the PRA “the proportion of the value of any superannuation scheme entitlements ... that is attributable to the relationship” is relationship property. A “superannuation scheme entitlement” is defined in section 2 and only includes superannuation schemes where the benefit derives from contributions made by the person or an employer. It does not apply to State pension benefits.168

14.23 Applying the PRA to superannuation is complex when it comes to valuing and dividing the benefits from a scheme. Usually

the benefit will not accrue until some point in the future. The Court of Appeal has suggested that to achieve a clean break, the best option may be for one partner to pay a lump sum to the other from other property to account for the value of the

superannuation scheme entitlement.169 The courts have, however, acknowledged that there will be cases where a lump sum payment is not suitable, particularly when the contributing partner does

not have enough assets available to make the payment.170 In this situation there are two options under the PRA. One is to provide for a deferred payment. The other option is to make an order under section 31.

14.24 Section 31 enables a court to make an order requiring the superannuation scheme manager to pay the non-contributing partner out of that scheme. The court’s order is conditional on the partners entering a deed or arrangement which binds the manager of the scheme.





  1. GJ van Bohemen “Superannuation schemes and the Matrimonial Property Act 1976” (1979) 10 VUWLR 63 at 65. This is unlikely to be an issue in many cases; State pension benefits are universal so both partners will be equally eligible for benefits.

169 Haldane v Haldane [1981] 1 NZLR 554 (CA) at 557.

170 Haldane v Haldane [1981] 1 NZLR 554 (CA) at 556.

14.25 Atkin says that section 31 does not seem necessary.171 This is

because section 33(3)(l) and section 33(6) provide a court with the required powers to make orders to distribute payments from superannuation schemes.172 It is difficult to reconcile the broader, general powers in these sections with the more limited, specific power in section 31. We think this should be clarified.

14.26 Problems also arise under section 31 where there are other possible beneficiaries of the partner ’s superannuation scheme entitlement. For example, when the contributing partner enters a new relationship the new partner may have rights to the fund on the death of the contributing partner. This scenario arose in Sidon v Sidon.173 There the High Court made no section 31 order because it considered it would be inappropriate to alter the rights that

the former partner and the new partner had under the scheme. Instead, the Court ordered that the value of the contributing partner ’s future scheme entitlements should be quantified as

at the date of separation, but payment of half that value to the former partner could be deferred. The rights the new partner had on the death of the contributing partner were left unaffected.

14.27 It is not clear whether a section 31 order impacts on the way a superannuation entitlement is valued. In theory, when a section

31 order is made there should be no deduction for contingencies or the present value of money. That is because the non- contributing partner will only receive the money from the scheme at the later date and will take on the risk of the contingencies

and the cost of not having the money until retirement. Cases in which a section 31 order is made have not included reductions for contingencies in valuing the superannuation scheme.174

Sometimes an award has been made to the value of the scheme at separation date (including contingencies) plus interest.175

14.28 There are also issues with the process contemplated under section

31. The benefit in requiring the parties to enter an arrangement or deed is unclear. Evidence about the superannuation scheme and contributions to the scheme would need to be provided to

171 RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [18.39].

172 RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [18.39].

173 Sidon v Sidon (1991) 7 FRNZ 351 (HC).

  1. In Turner v Turner [1987] NZHC 1; (1987) 3 FRNZ 419 (HC) the High Court saw avoiding having to consider contingencies as a factor in favour of making a s 31 order under the Property (Relationships) Act 1976. Contingencies were not applied in Callaghan v Callaghan [1987] NZCA 139; [1987] 2 NZLR 374 (CA). However, very few cases have addressed valuation in the context of s 31 orders.

175 Brown v Brown (1994) 12 FRNZ 633 (DC).

a court to identify the proportion of superannuation funds that

constitute relationship property under section 2 and section

8(1)(i), and their value. In addition, evidence may need to be provided to the court to ensure consistency between the terms of a superannuation scheme and any agreement regarding contributions, including where there are other beneficiaries to the scheme.176 It would therefore seem more efficient to include the terms of the agreement about superannuation rights within the order itself and not require parties to enter any subsequent arrangement or deed.

14.29 The chief significance of a deed as contemplated by section 31 is that it appears to provide an additional mechanism for the partner concerned to enforce their rights against the superannuation fund manager.177 However, it is not clear if the extra protection a deed would provide, over a court order containing the terms of the arrangement, warrants the extra resource required.

14.30 A court order detailing the agreement would also minimise any risk that a later arrangement or deed made under section 31(1) contradicts directions in the order. There is a requirement to serve the arrangement or deed on the superannuation scheme provider under section 31(2) but not the order made under section 31(1). This should also be addressed.

C ONSU LTATION QUESTIONS

D17 Is it preferable for a court to have a specific power to deal with superannuation scheme entitlements rather than use its generic powers under section 33?

D18 Is the requirement under section 31 for a deed or arrangement useful or would a court order on its own be enough for the division of superannuation rights under the PRA?

KiwiSaver

14.31 KiwiSaver is similar to private superannuation schemes because both comprise a combination of employer and employee contributions and are often only accessible on turning the age

of 65. However in some cases it may be incorrect to describe a

KiwiSaver account as a superannuation scheme. This is because people can withdraw money from their KiwiSaver scheme before

  1. Nicola Peart (ed) Brookers Family Law — Family Property (online looseleaf ed, Thomson Reuters) at [PR31.03] recommend that counsel should make submissions as to the necessary paragraphs in any order and that trustees of the fund be called to confirm that the proposed terms come within the terms of the superannuation deed.

177 RL Fisher (ed) Fisher on Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [18.39].

the age of 65 in certain circumstances, for example, to fund

the purchase of their first home or when they are experiencing significant financial hardship.

14.32 The Court of Appeal has said that the definition of a superannuation scheme entitlement in section 2 is wide enough to include an interest in a KiwiSaver scheme, although that case was not about dividing a KiwiSaver account under the PRA.178

Section 127 of the KiwiSaver Act 2006 recognises that a court can make orders under section 31 of the PRA in relation to KiwiSaver schemes, which indicates an intention that KiwiSaver schemes would fall under the superannuation provisions of the PRA.

14.33 In other cases under the PRA the courts have treated KiwiSaver entitlements as the equivalent of money in a bank account which can be split evenly.179 This approach ignores the contingent

nature of KiwiSaver entitlements. It may be unfair on the contributing partner as he or she must account for half the value of the KiwiSaver scheme when the actual funds cannot usually

be accessed for many years. The time value of money is not considered in making half of the account payable on separation. These issues have not yet been raised in any cases. This might be because KiwiSaver is a relatively new scheme and as a result the sums of money in KiwiSaver accounts are usually small when compared to the size of the overall relationship property pool. However as KiwiSaver accounts become larger over time, the fact that the funds cannot be accessed immediately may see the courts move to treating KiwiSaver accounts as if they are superannuation schemes. This might also create issues, due to the unique aspects of the KiwiSaver scheme described at paragraph 14.31 above.

C ONSU LTATION QUESTION

D19 Should KiwiSaver schemes be treated in the same way as superannuation schemes on the division of relationship property? Or should there be a different approach? What would that approach look like?

ACC payments

14.34 In Chapter 11 we explained how an entitlement to payments under the Accident Compensation Act 2001 and its predecessors

178 Trustees Executors Ltd v Official Assignee [2015] NZCA 118, [2015] 3 NZLR 224 at [53].

179 Examples of this include S v S [2012] NZFC 2685; B v C [2015] NZFC 8940; and R v L FC Gisborne FAM-2011-016-147, 6

October 2011.

(ACC payments) will be classified as relationship property if the

entitlement arose during the relationship. It is not clear how ACC

payments should be divided.

14.35 Section 123 of the Accident Compensation Act provides that all entitlements under the legislation are “absolutely inalienable”. Section 124 provides that the Accident Compensation Corporation must provide the entitlements only to the claimant.

There are limited exceptions to these rules, such as deductions for child support, but division of relationship property under the PRA is not included.

14.36 The KiwiSaver Act 2006 has similar restrictions. Section 127(1) provides that a member ’s interest or any future benefits in a KiwiSaver scheme cannot be assigned or passed to another person. Section 127(2), however, provides that interests can be passed to another person if required by any enactment, or by court order, “including an order made under section 31 of the [PRA]”. The Court of Appeal has said that this express reference to section 31 indicates that any derogation from the clear language of section 127(1) of the KiwiSaver Act should be clearly and expressly provided for in some other enactment.180

14.37 There is no equivalent of section 31 to enable a court to make orders regarding a person’s ACC entitlements under the PRA. Nor does section 123 of the Accident Compensation Act refer to the PRA. It is therefore unclear whether the PRA gives a court

power to make orders dividing a partner ’s ACC entitlements. The contrary view, however, is that notwithstanding the prohibition on alienation under sections 123 and 124 of the Accident Compensation Act, the PRA will prevail. That is because section

4A of the PRA provides that every other enactment must be read subject to the PRA. Regardless, we think it is desirable that this be clarified in the PRA.

C ONSU LTATION QUESTION

D20 If ACC entitlements can be classified as relationship property, should section 123 of the Accident Compensation Act 2001 be amended to expressly allow division under the PRA?






180 Trustees Executors Ltd v Official Assignee [2015] NZCA 118, [2015] 3 NZLR 224 at [53].

Pets

14.38 The PRA’s definition of “family chattels” under section 2 includes “household pets”. Pets are therefore theoretically treated like any other item of property when partners’ property is classified and divided. Pets are, however, different from other types of family chattels. They are living creatures, and their ongoing care must

be factored into the division of relationship property. A partner ’s attachment to and affection for a pet is also likely to be of a different quality than their attitude to other types of property.

14.39 The PRA gives little direction on how these special considerations are to be taken into account when dealing with pets. The courts have, however, established some fairly clear principles:

(a) First, the courts have followed the PRA’s provisions and included pets when dividing the partners’ relationship property equally. In the case S v S for example, the Family Court ordered that the partners’ dog Milo was

to stay with Mr S at Mr S’s rural property.181 The Court accepted however that Milo was relationship property and that Milo’s value had to be shared equally. The Court ordered that Mr S pay Mrs S half Milo’s value, which was assessed at half the price Milo had been bought for.182

(b) Second, even though the value of the pets will be shared, the courts will determine which partner the pet should live with based on the best interests of the pet. For example, in the case Pence v Pence, the Court had

to decide which partner the couple’s two chihuahuas should live with.183 One partner argued that each partner should be awarded one dog. The Court did not agree. The Court said that it was in the best interests of the chihuahuas that they live together. The Court noted that four reasonably large dogs frequently visited one

of the partner ’s homes, and considered that the larger dogs would not be appropriate company for the smaller chihuahuas. The Court therefore awarded ownership of

the chihuahuas to the other partner.184

181 S v S [2012] NZFC 2685.

182 S v S [2012] NZFC 2685 at [30].

183 Pence v Pence (1978) 2 MPC 146.

  1. See also O’Brien v Tuer DC Waitakere FP090/327/03, 9 September 2003; S v S [2012] NZFC 2685; and Casey v Lyttle [2013] NZFC 9109.

14.40 Although these principles appear fairly well settled, there are

potential issues. The main concern is whether the PRA should contain more direction to the courts on how it should make orders regarding pets. Some overseas commentators suggest that the principles governing the post-separation placement of

family pets should be dealt with expressly through legislation.185

The Swiss Civil Code, for example, provides that ownership of

a pet may only be awarded to the partner who offers the better conditions of animal welfare in which to keep the animal.186

14.41 There is also uncertainty regarding pets that cannot be properly described by the term “household pets” used in section 2. A family may have an equally strong attachment to a pet horse or sheep, even though these animals are not technically “household pets”. There is also some uncertainty regarding the classification and valuation of pets used partly for business, like showing or breeding.187

14.42 Although these concerns are legitimate issues, we are unsure whether in practice they are creating problems to an extent that requires reform of the PRA.

C ONSU LTATION QUESTION

D21 Do the PRA’s provisions regarding pets give sufficient direction to a court? Are the provisions inadequate in relation to non-household pets?

Interim property orders

14.43 Separation or the death of one partner can have immediate financial consequences for the partners involved.188 When property matters under the PRA are disputed this can tie up a

  1. See Tony Bogdanoski “Towards an Animal-Friendly Family Law – Recognising the Welfare of Family Law’s Forgotten Family Member” (2010) 19 Griffith L. Rev. 197; and Paula Hallam “Dogs and Divorce: Chattels or Children? – Or Somewhere In-between?” (2015) 17 S. Cross U. L. Rev. 97.

186 Discussed in Paula Hallam “Dogs and Divorce: Chattels or Children? – Or Somewhere In-between?” (2015) 17 S Cross

L Rev. 97; and Swiss Civil Code 1907, art 651a. In contrast, some Canadian courts have resisted calls to determine the living arrangements for pets in a similar way to the guardianship of children. See Ireland v Ireland 2010 SKQB

454, 367 Sask R 130 at [12] “[A] dog is a dog. Any application of principles that the court might normally apply to the determination of custody of children are completely inapplicable to the disposition of a pet as family property” cited with approval in Henderson v Henderson 2016 SKQB 282.

187 Nichola Peart (ed) Brookers Family Law — Family Property (online looseleaf ed, Thomson Reuters) at [PRA 2.12.02].

  1. See Law Commission Relationships and Families in Contemporary New Zealand: He hononga tangata, he hononga whānau i Aotearoa o nāianei (NZLC SP22, 2017) at Chapter 8 referring to the findings of the Auckland University of Technology study regarding the economic cost of separation in Michael Fletcher “An investigation into aspects of the economic consequences of marital separation among New Zealand parents” (draft PhD thesis submitted for examination, Auckland University of Technology, 2017).

large proportion of a partner ’s wealth until those matters are

resolved. This can take a long time, often years, especially if the partners go to court.189

14.44 Sometimes a partner will need interim access to relationship property in order to pay for day-to-day living expenses or cover the additional costs of moving out of the family home, setting up a new home and/or getting legal advice. When relationship

property is in the other partner ’s name, and the partners cannot agree on how interim costs are to be met, an application for an interim property distribution may be necessary.

Interim distributions under section 25(3)

14.45 Section 25(3) provides that “the court may at any time make any order or declaration relating to the status, ownership, vesting, or possession of any specific property it considers just.” Section 25(4) then states that:

To avoid any doubt, but without limiting subsection (3), if proceedings under this Act are pending, the court, if it considers it appropriate in the circumstances, may make an interim order under that subsection for the sale of any relationship property, and may give any directions it thinks fit with respect to the proceeds.

14.46 A court can therefore order an interim distribution of property under section 25(3), and it can give effect to that order by making ancillary orders under section 33.190

14.47 The PRA does not provide any guidance on when an interim distribution should be made. However the courts have recognised a range of relevant factors, including:191

(a) the purpose and principles of the PRA;

(b) the needs and circumstances of the applicant;


  1. Of the PRA cases that proceeded to a hearing and were disposed in 2015, 93 per cent had taken more than 40 weeks from filing to disposal, and 50 per cent took more than 105 weeks from filing to disposal: data provided by email from the Ministry of Justice to the Law Commission (16 September 2016). In 2016, the average time the Family Court took to resolve an application (either through the Court granting or dismissing an application, or through the application

being discontinued, withdrawn or struck-out) from the time it was filed was approximately 74 weeks: this figure is from provisional analysis made by the Ministry of Business, Innovation and Employment’s Government Centre for Dispute Resolution, having analysed data from the Ministry of Justice’s Case Management System and provided by email to the Law Commission (26 September 2017). See Chapter 25 for further discussion on court processes.

  1. Murray v Murray (1989) 5 FRNZ 177 (CA); and Harrison v Harrison [2009] NZCA 68, [2009] NZFLR 687. We discuss child support in Part I.

191 H v P FC Tauranga FAM-2009-070-817, 11 January 2011 at [26]; and M v B [2013] NZHC 1056 at [30].

(c) the purpose for which interim distribution is sought;

(d) the applicant’s likely share of relationship property; (e) the respondent’s ability to give effect to an order;

(f ) the length of time until the hearing of the substantive issues;

(g) delays to date, and who had caused them;

(h) any uncertainty as to the applicant’s entitlements under the PRA;

(i) the effect of an order on the parties’ willingness and determination to finalise their claims;

(j) whether or not the respondent has dissipated relationship property;

(k) any possible prejudice that might arise from making a proposed order; and

(l) whether an interim distribution will cause further delays in finally determining the relationship property claim.

Limitations of section 25(3)

14.48 Because section 25(3) has not been designed solely for interim distributions,192 there are a number of limitations that undermine its effectiveness.

14.49 First, orders can only be made in relation to specific items of property. Section 25(3) cannot be used to make an interim distribution of a sum of money that represents part of the value of the global pool of relationship property.193 A court would instead need to order specific property to be vested in one partner or to

be sold, with orders as to how the proceeds should be distributed

between the partners.194

  1. Section 25(3) of the Property (Relationships) Act 1976 is also useful, for example, where partners are seeking a declaration on the status of a single item of property to assist the parties to resolve their property matters out of court, or where proceedings have been filed and the parties seek an order for sale so that they can take advantage of a favourable market.
  2. Munro v Munro [1997] NZFLR 620 (FC); and Burton v Burton [2001] NZHC 1264; [2002] NZFLR 172 (HC). Although the Court of Appeal has observed that there is nothing to prevent the court from achieving a general division of relationship property by making

a series of orders in relation to each specific asset owned by each of the parties: Public Trust v Whyman [2004] NZCA 327; [2005] 2 NZLR 696 (CA) at [21],.

  1. Property (Relationships) Act 1976, subs 25(3) and (4). In K v B FC Waitakere FAM-2001-090-1013, 5 March 2009, the court ordered chattels to vest in the applicant, which could then be sold, unless the respondent paid a specified sum on a

14.50 Second, it is unclear whether a court can make an order under

section 25(3) in respect of general funds. While orders have

been made in relation to funds held in lawyers’ trust accounts,195 the High Court in Owen v Thomas noted there were “serious difficulties” in obtaining an order under section 25(3) for the payment of a sum of money, because it does not readily fit within the description of “specific property.”196 The Court distinguished money frozen in an account by agreement or court order, from funds that can move in and out of a bank account and which can be replaced by funds of a different or mixed character in terms of being either relationship or separate property.197

14.51 Third, there is uncertainty as to whether section 25(3) can be used to make orders in relation to separate property. The High Court

has observed on several occasions that section 25(3) appears to extend to separate property,198 and in R v G the Family Court made orders under section 25(3) vesting in the respondent certain property which the partners had agreed was the applicant’s separate property.199 However in the more recent case of Owen

v Thomas the High Court, while not deciding on the matter, observed that it would need to be satisfied that the circumstances of the parties justified the separate property of one party being drawn into the pool of relationship property.200 Otherwise, the Court said, section 25(3) would enable a court to order an interim distribution of property that could not be distributed by way of a final order.201

14.52 Finally, an interim distribution converts the property into one partner ’s separate property, so the effect of the order is final

and cannot be revisited or recalled.202 A court must therefore be




specified date.

195 Murray v Murray (1989) 5 FRNZ 177 (CA); and M v M [2007] NZFLR 933 (FC). In Burton v Burton [2001] NZHC 1264; [2002] NZFLR 172 (HC)

the High Court held at [21] that it is not possible at law to take possession of money without vesting the ownership of it.

196 Owen v Thomas [2014] NZHC 2200 at [28].

197 Owen v Thomas [2014] NZHC 2200 at [29].

198 Cossey v Bach [1992] 3 NZLR 612 (HC) at 639; and M v B [2013] NZHC 1056 at [31]. See also RL Fisher (ed) Fisher on

Matrimonial and Relationship Property (online looseleaf ed, LexisNexis) at [18.59].

199 R v G FC North Shore FAM-2009-044-920, 31 March 2010.

200 Owen v Thomas [2014] NZHC 2200 at [25].

201 See Burton v Burton [2001] NZHC 1264; [2002] NZFLR 172 (HC).

202 B v B [2012] NZHC 1951 at [12]; and Burton v Burton [2001] NZHC 1264; [2002] NZFLR 172 (HC). Note that orders for possession under s

25(3) of the Property (Relationships) Act 1976 are not final in effect: Brown v Cheung [2016] NZHC 2408, [2016] NZFLR

860.

certain that an interim distribution will not exceed the applicant’s

entitlement. As the Family Court observed in A v R (No 2):203

The challenge, therefore is to determine the amount which can be safely released to the applicant at this stage without putting the Family Court in any difficulty when it comes to make [its] final determination under the Act.

14.53 This requires a court to have sufficient information regarding the value of both the specific item of property that is the focus of

the section 25(3) application and the global pool of relationship property. This can be challenging when there are unresolved disputes about the relationship property.204 In Chapter 13 we discussed how disputes over the value contribute to costs and delay to the resolution of property matters. This is also an issue for interim distributions.

Relationship between section 25(3) and the other pillars of financial support

14.54 In Chapter 2 we identified the different pillars of financial support available to families when relationships end. These are maintenance (including interim maintenance), child support and State benefits.205 Each addresses a different issue and together with the PRA they establish a framework of financial support.

14.55 Often these pillars of financial support will be better at meeting one partner ’s interim living costs than an interim distribution

of property under the PRA. While our review does not extend to these other pillars of financial support, it is important to understand how they operate to ensure there are no gaps or overlaps in terms of what each pillar is designed to achieve. We discuss interim maintenance below, as this is directly relevant to the role of interim distributions under the PRA. Maintenance is discussed further in Part F and child support is discussed in Part I.

Interim maintenance under the Family Proceedings Act 1980

14.56 One partner may be entitled to maintenance from the other partner to the extent that it is necessary to meet their

203 A v R (No 2) FC Christchurch FP/009/1430/99, 18 August 2004.

204 See for example B v B [2012] NZHC 1951 at [13].

205 Other pillars of financial support may be available when a relationship ends on death, as discussed in Chapter 2.

reasonable needs if they cannot meet those needs themselves.206

Maintenance may be available for married and civil union partners both during the relationship and after the relationship has been dissolved, and for de facto partners after the parties cease to live together.207 A partner seeking maintenance must apply to the Family Court or District Court under the Family Proceedings Act 1980.

14.57 Interim maintenance can be ordered when an application for maintenance has been filed but not yet finally determined.208 A court can make an interim maintenance order for the payment of “such periodical sum as the [court] thinks reasonable”.209 A court will consider the reasonable needs of the applicant, with reference to the partners’ previous standard of living, the applicant’s ability to meet those needs and the other partner ’s ability to pay.210

Interim maintenance orders can only be made for a six month period,211 and are a stop-gap measure designed for quick and

easy access to the courts.212 Interim maintenance is often sought immediately following separation when the final outcome of

the partners’ relationship, parenting and property matters is unknown.213

14.58 During preliminary consultation we heard from lawyers that applications for interim maintenance are relatively common and often a vital source of aid for many applicants. However, there can be delays in applications being heard and subsequent applications are often required once the six month time limit expires because the parties are still sorting out their affairs. We also heard that partners will often make private arrangements for the payment of


  1. Family Proceedings Act 1980, s 64. Section 2 defines maintenance as the provision of money, property and services and includes, in respect of a child, provision for the child’s education and training to the extent of the child’s ability and talents, and in respect of a deceased person, the cost of the deceased person’s funeral.
  2. Family Proceedings Act 1980, ss 63 and 64. Under s 70A maintenance cannot be ordered if a partner has entered into another marriage, union or de facto relationship. Note that costs for children cannot be included in adult maintenance claims: child support may be claimed for children under the Child Support Act 1991 and maintenance orders under s 79 of the Family Proceedings Act 1980 may be ordered against a natural parent.

208 Family Proceedings Act 1980, s 82.

  1. Family Proceedings Act 1980, s 82(1). The court is not bound by the factors relevant to determining substantive applications, but is not prevented from considering those factors: Family Proceedings Act, s 61; Ropiha v Rohipa [1979] 2

NZLR 245 (CA); and Langridge v Langridge [1987] 2 NZLR 554 (HC).

210 Ropiha v Rohipa [1979] 2 NZLR 245 (CA).

  1. Family Proceedings Act 1980, s 82(4). New applications can be made if Property (Relationships) Act 1976 proceedings have not been resolved or the substantive maintenance proceedings have not been heard: Zola v Abel [2015] NZFC 9058, [2016] NZFLR 81; and Cooper v Pinney [2016] NZHC 1633.

212 Beck v Beck [1975] 2 NZLR (SC) 123 at 125; and G v [LC] FC Auckland FAM-2011-004-2021, 16 December 2011 at [9].

213 H v H