Recent High Court Decision Adds Weight to Unequal Sharing of Relationship Property

Article Published : 11.04.2019

The Property (Relationships) Act 1976 (“the PRA”) is the main piece of law in New Zealand that deals with the division of relationship property when a relationship ends.

The PRA applies if you have been married, in a de facto relationship or in a civil union of three years or more, although in certain circumstances it can apply sooner.

In the event the PRA applies the starting point, in the event a relationship ends (be that on separation or death), is that all relationship property is shared equally, although this is subject to a number of exceptions.

Exception to equal sharing

One such exception is section 13.  Under section 13 the court has the discretion to depart from equal sharing if there are extraordinary circumstances which render equal sharing repugnant to justice. If there is to be a departure from equal sharing, under section 13 the property in question is to be divided in accordance with the contribution of each partner to the relationship.

Extraordinary circumstances imposes a stringent test. The sorts of cases where the court has, in the past, found there to be extraordinary circumstances, rendering equal sharing repugnant to justice are, for example:

  • where there has been a substantial injection of capital from inheritance shortly prior to separation in a short marriage;
  • where there has been a gross disparity of contributions, for example, where one party has brought all of the assets of significance to the relationship.

There needs to be a compelling reason for the court to find that the disparity in contributions to a marriage or de facto relationship is so gross that unequal division is justified.

Kidd v Russell

A recent decision made pursuant to section 13 is the 2018 High Court case of Kidd v Russell.

In this case Ms Russell and Mr Kidd were in a de facto relationship lasting five years and 10 months.  They met later in life.

Ms Russell owned a home prior to the relationship in which they lived and which provided Mr Kidd with rent free accommodation for the first three years of the relationship. Ms Russell’s contribution of the house and substantial equity enabled both parties to jointly borrow funds for vehicles.

Mr Kidd did not bring any assets to the relationship but it was found his income, in turn, enabled the parties to borrow money for improvements to the house.  His income also enabled the parties to meet loan repayments and supported holidays undertaken by both parties for a period of almost half the relationship when Ms Russell was not working.

The court also took into account the non-financial contributions of each party. They both had periods when they were unwell and each relied on the support of the other during those times.

In this case, Ms Russell’s section 13 claim was successful: the Court departed from equal sharing of the net sale proceeds of the relationship home and ordered a 70/30 split in favour of Ms Russell.

The future

This recent decision, and others, would indicate that, in certain circumstances, the court may be more receptive to making orders that depart from equal sharing of the family home, in particular where one party has brought significant assets to the relationship, where the parties meet later in life and, whilst the relationship is one of more than three years, it is one that is still reasonably short in duration.

If you would like further advice in relation to the division of relationship property when a relationship ends (whether that be on separation or the death of one party), or advice on any other aspect of family law, please feel free to contact a member of our family law team.

Article by Sarah White

Sarah leads the family law team and is a family law specialist. Her practice at Malley & Co is principally in the area of relationship property, where she represents clients from a variety of backgrounds

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