Rules of play when partners split

A select committee has rejigged a bill changing how property is divided after a relationship breaks up. NAOMI LARKIN looks at what it means for those involved.

The clues were there. The lack of attention, long hours on the golf course, the smell of foreign perfume on work shirts. But the friend's tip-off that her partner was having an affair brought Bronwyn's life crashing down.

"It was absolutely devastating to find that you have someone who has been sleeping with someone else," she said. "You don't think it will be as bad as it is."

The news did not just spell the end of the romance, it signalled the beginning of financial hardship, because under the law Bronwyn, a de facto wife, did not receive any money from her seven-year relationship.

She and her former partner have a child. But despite the fact that her partner was, and still is, a "very financially secure" property developer, the drying-up of child support forced her to go on the domestic purposes benefit for the first six months after the split.

Then she returned to nursing, working shifts to be at home with their child.

After a legal fight, a $150,000 share in an Auckland unit was placed in a trust under the child's name. This settlement was also in lieu of any future maintenance for their child, who lives with Bronwyn in the unit.

Bronwyn has not seen a cent from any of her de facto husband's properties, some of which she worked on, nor has she received any payout for her emotional support, domestic work or the care of their child.

"I had to walk away with nothing," she said. "He would not recognise any of the contributions I made."

Bronwyn's life would be very different under the rejigged Property (Relationships) Bill, which a select committee this week reported back to Parliament.

The bill, which is expected to become law early next year, will replace the Matrimonial Property Act and put de facto couples, including those in same-sex relationships, on the same footing as married couples when there is a breakup.

The committee has recommended that for property-sharing purposes a de facto relationship exists when two people aged more than 18 have lived together for three years as a couple - dumping the earlier definition of a relationship "in the nature of marriage."

Courts could divide property from de facto relationships of less than three years only in special circumstances.

Judges will have the power to award lump-sum payments, which could include taking into account a partner's future earning power.

Select committee chairman Tim Barnett said that if the bill were passed, all people with existing agreements would need to have them reassessed to ensure that they were consistent with the new law.

Auckland family law specialist Antonia Fisher said it was people, more often women, such as Bronwyn, whom the bill would assist most.

She acts for large numbers of women, particularly aged in their 40s and 50s, who have put their careers on hold to have children and run the household.

When the relationship fails, under the existing 50/50 law split they may be able to buy a house and live there with the children but they can never attain the earning power of their husbands.

"Their husbands can go in five or 10 years to be completely back in the position they were in initially, whereas the wives have really been economically disadvantaged.

"They may have been able to buy a home, but they've got little income," Antonia Fisher said.

Under the bill, the court would have power to award lump-sum payments to one party if, after the relationship ends, the income and living standards of that person are likely to be significantly less than those of the other.

"That's a major change. Family lawyers have been pushing for changes such as this for a long time.

"Judges are beginning to understand the concept of 'feminisation of poverty,' which has long been recognised overseas.

"This is where the women who have not worked, and have spent time at home with their children, have really suffered economically as a result of the separation because, even though the assets have been shared equally, the really big asset is the income-earning power of the husband."

Spousal maintenance provisions under the bill would be extended to include de facto spouses and amended to give judges more flexibility in granting maintenance.

De facto spouses would be entitled to claims over a deceased estate. At the moment only wives or husbands are covered.

Antonia Fisher said the bill would also address the "sophisticated ploy" of one partner using trusts to keep assets away from anyone else's control - often his or her spouse's.

An example would be a couple who had been married for 15 years and were now separating. When they married the husband owned his own property and that was transferred over time into a family trust.

Despite existing laws providing for a 50/50 split of the matrimonial home, the wife would get little because all the assets were in the trust.

"A trust asset is currently not considered a matrimonial property asset and the Matrimonial Property Act has no power to deal with trusts," said Antonia Fisher.

The bill had provision for the court to take into account trust assets and provide compensation.

National's justice spokesman, Tony Ryall, said the move away from the traditional 50/50 division of property would create uncertainty.

"Judges are being asked to predict the future," he said. "Individual judges will make different assessments, giving different results ... The courts will be making the rules that Parliament should be making."

Mr Ryall said the new law would be a boon for lawyers.

"This bill will doom thousands of New Zealanders wanting out of relationships to languish in the clogged family courts.

"This will cost men and women dearly in legal bills."

As many as 80 per cent of relationship splits were likely to come before the courts, compared with 10 per cent now, said Mr Ryall.

Antonia Fisher dismissed Mr Ryall's claims as absurd.

"The bill is a good one and I think it will work.

"Yes, there are going to be some test cases to sort out how the courts actually approach some of the new issues.

"But this bill is just putting into legislation what the courts have been grappling with for the past 10 years."

The committee recommended a standardised agreement for couples who want to contract out of the law.

Such agreements could be overturned if they would give rise to "serious injustices" - a stronger measure than the existing test, which assesses only if it would be "unjust" to allow the agreement to stand.

Mark Henaghan, professor of family law at Otago University, said it was unfair to treat de facto couples in the same way as married couples.

"People have chosen to live a particular lifestyle and then their property rules are judged according to a lifestyle which is quite different to what they have chosen."

He believed it would be more appropriate for couples to be able to contract into the law, as opposed to having to contract out if they did not agree with it.

"It puts the burden on you to contract out."

The committee had recommended a definition of a de facto relationship which included considering its duration, whether it was sexual, ownership and acquisition of property, domestic arrangements and the care and support of children.

But Professor Henaghan said the definition was still too loose.

"None of those things has been weighted and that leaves room for discretion."

The committee has recommended reinstating the words spouse, husband, wife, de facto and marriage after overwhelming public opposition to the neutral term partner, which was originally proposed.

The Catholic Church welcomes the change. "The clear distinction between the marriage relationship and other relationships must not be blurred," said Bishop Peter Cullinane of Palmerston North.

However, the Church opposed legislation that would confer on de facto and same-sex relationships "even the appearance of equal validity as marriage."

In its submission, the Church said same-sex couples had every right to gain access to the legal rights and benefits available to married partners but "upholding the virtues of justice and equity is not to condone such people's sexual relationships."

"We do not propose that same-sex relationships as such constitute a basis for entitlements in law."

Associate Justice Minister Margaret Wilson said the legislation introduced a fair system for dividing property when relationships ended.

"The proposed new law is clear. It's about property. It's not about moral judgments on people's perfectly legal decisions about their relationships."

But Auckland gay couple Lindsay Zelf and Margy Pearl, who staged an unsuccessful High Court challenge to have same-sex marriage legalised, opposed the bill.

They said in their submission that gay couples should have been left out of the legislation.

"They shouldn't be regulating for the breakup of our relationship before the relationship has even been acknowledged in law."

Barbara Glenie, president of the National Council of Women, said there were many aspects of the bill that the organisation supported but it failed to make the interests of children paramount.

Although the changes are all too late for people such as Bronwyn, she believes that the bill will give women the freedom to leave unhappy relationships with a fairer deal for themselves and their children.