Law to look at messy divorces

The courtroom at the Masterton District Court. Photo / Lynda Feringa

Dealing with messy divorces complicated by family trusts, blended families and de-facto relationships will be a major focus of an upcoming law review.

The decision on who gets what and why faced by couples ending marriages or long-term relationships will be decided in a 16-point review of the 40-year-old Property (Relationships) Act 1976.

Lisa Yarwood of the Law Commission said changes to New Zealand society since the Act was written had prompted the review, which would take three years.

There was a need, she said, to make sure the Act was best suited to modern life.

It is estimated there are about 500,000 trusts in New Zealand involving one million New Zealanders - more trusts per capita than any other country.

Trusts and relationship property would be reviewed to ensure all that should be included as relationship property was.

The review would also look at legislation around same-sex relationships.

"What that means is there might be other things within the Act that haven't adjusted to what New Zealand looks like today and we want to go through and look at these areas," said Yarwood.

"We are not saying there is an issue but these are the areas we need to look at."

The issue of trusts and whether they are part of relationship property was highlighted in the $28 million landmark divorce case Clayton V Clayton, which settled out of court last year.

Mark and Melanie Clayton were together for about 20 years and had two children before splitting up in 2006.

Mark Clayton set up his own business and in the mid-1980s established Claymark Industries, the brand under which he would develop a major sawmilling enterprise.

The Rotorua businessman considered none of the trust assets in his name were relationship property and argued his ex-wife was entitled only to their $850,000 home and $30,000.

Melanie Clayton, however, believed she was entitled to half of the value of the business and trust assets.

The case went to the Supreme Court where QC Lady Deborah Chambers argued that Mark Clayton was using trusts during the marriage and after the couple had separated to avoid sharing property the couple had built up together during their 17-year marriage.

The review will also look at de facto relationships, protection of children, pre-nuptial agreements and division of property after death.

The Law Commission expects to report its findings to by November 2018.