The Property (Relationships) Act 1976 is under review. Photo / 123RF
The Property (Relationships) Act 1976 is under review. Photo / 123RF
COMMENT:
With my only asset being an $85,000 student loan, it seems I'm one of those insufferable millennials that is excluded from this week's column. Folks, it's time to delve into the Law Commission's review into the Property (Relationships) Act 1976.
Justice Minister Andrew Little said the Law Commission's report- released last month - was a "substantial and valuable piece of work". There were 140 recommendations, and Little was in the process of working through them with officials. He expected to have "more to say on this towards the end of the year".
What better person to talk to about the changes than family law aficionado and Donoghue v Stevenson enthusiast Mark Henaghan. The Timaru native was part of a University of Otago research team that conducted a Borrin Foundation study designed to help inform the Law Commission's work.
Throughout the study 88 per cent of respondents who supported equal sharing thought that it was appropriate to depart from a 50-50 split in certain situations. Where one partner gave up their career to care for children, 59 per cent thought that person should receive additional financial support.
On the issue of gender, almost seven in 10 people thought that a woman who gave up their career should receive additional financial support. But just over half thought a man in the same situation should receive additional financial support.
And case law backs up this contemporary view. In the 2017 Supreme Court case Scott v Williams, the homemaker was awarded $520,000 in the form of extra relationship property to compensate for the economic disparity due to giving up her career.
It is therefore no surprise that the commission suggested introducing Family Income Sharing Arrangements (FISA), which would replace the court's compensatory powers, and maintenance requirements under the Family Proceedings Act.
It would mean the amount and duration of a FISA would be calculated to ensure the economic advantages and disadvantages arising from the relationship was shared more fairly.
Little agreed with the commission's findings saying non-monetary contributions to the relationship were often overlooked in practice, and resulted in unequal awards.
"I would note that the report's focus on the prioritisation of the needs of the child under any new Act would also place a greater focus on the needs of the primary caregiver. These concerns are also addressed in several recommendations, which I am taking the time to consider and will respond in due course."
Justine Minister Andrew Little. Photo / File
New Zealand has been criticised for lagging behind Australia, which operates a discretionary regime, giving the court discretion to adjust the property interests of the partners on separation if it sees fit.
Australian courts consider meeting the needs of the post-separation circumstances, and the economic compensation resulting from the relationship as primary factors when making allocations of property.
Little said children's interests tend to play a greater role in the discretionary property regime in Australia, with children's needs being a specifically expressed interest for property division purposes.
"New Zealand's Law Commission has recommended a more flexible approach than at present, and this is under consideration."
The issue of trusts was also addressed in the report, and what Henaghan described as a bankrupt situation.
"Trusts have been used mercilessly in New Zealand to avoid obligations," he said.
Assets are no longer deemed to be relationship property if in trust in New Zealand, yet it's considered property in the traditional sense in the UK and Australia.
"In what world should a trust override relationship property. Sure, there's the whole 'dynasty trust argument' where people will argue that it's best to keep property in the family to avoid a quote unquote gold-digger situation. But once you allow an escape hatch, it leads to a floodgate."
Henaghan, a tear in his eye, went on to applaud the commission for its bid to crack down on the court delays. The "delay game" only works for those with lots of money for lawyers, he said. People stall the process and take an age to reveal what property they have. It could take up to five or six years of someone's life.
"We have to have a tougher system. I think if someone doesn't declare their assets during a specified period, I think they should lose those assets altogether. It seems harsh, but such an incentive would kick anyone into action - rich or not."
Little said it is a matter for the court in any case how it manages the case, but better supporting parents and children in the court would assist the timeliness of concluding cases.
And then there was the issue of the evaluation process. Henaghan was of the view: "You'll often have two different valuers for each party. They might come up with two entirely different results. It could mean one party is significantly disadvantaged."
These issues could be eradicated by implementing a specific mechanism, where valuers could be appointed by the court.
And finally, where the family home was traditionally divided equally on separation, if it was already owned by one partner before the relationship, the amount it increased in value during the relationship would be split.
If this recommendation were to be implemented it would better reflect New Zealand modern society, Henaghan said.
"It better reflects what should be defined as the 'fruits of the relationship'. I'm so incredibly happy with the commission's work and findings. It's beautiful."
As for Little, who has been tasked with looking at these recommendations, changing the wider Family Court framework, tackling abortion law reform, and essentially uprooting the entire justice system in his first term: "I deal with the issues that I am tasked with. I'm very satisfied with the responsibilities I've got, the support that I have and the progress that we're making."
If you've got any tips, legal tidbits, or appointments that might be of interest, please email Sasha - on sasha.borissenko@gmail.com
