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Dividing Relationship Property – Time for Change?

Helen McQueen

The Property (Relationships) Act 1976 (PRA) tells couples how to divide their property when they separate or if one partner dies. It affects almost every New Zealander over their lifetime.

When it first became law in 1976, the PRA challenged and helped redefine the role of women in society. Parliament amended it in 2001 to include to de facto relationships and same-sex relationships. The Act has both reflected and shaped our values about relationships. Yet New Zealand in 2017 looks very different to New Zealand when the law first passed.

Some of the changes have been dramatic. The Law Commission has published a Study Paper looking at some of those changes.

New Zealand is now more diverse. Māori, Pacific and Asian populations have more than doubled since 1976. Children are now ten times more likely than older New Zealanders to identify with more than one ethnicity.

New Zealand’s marriage rate has dropped and de facto relationships are more common. In 2013, 1 in 5 couples said they were in a de facto relationship, compared to less than 1 in 10 in 1986. Nearly half of all children born last year were born to parents not married or in a civil union.

There is little research about people re-partnering, but it is becoming more common, as are stepfamilies. We know that a third of marriages are re-marriages.

More New Zealanders are living in extended family households. Family living arrangements often change. A recent study suggests that only a few children live their whole childhood in a household containing only nuclear family members.

So the question for us is whether, amongst all this change, the PRA still reflects New Zealanders values and expectations.

We are raising many questions with New Zealanders over the coming months. Here, we want to mention three of those big questions:

Who should the Act apply to?

We want to know whether the Act is capturing the appropriate relationships. It applies to marriages, civil unions and de facto relationships. Does the Act use the right factors to decide what a de facto relationship is? And does it give them the right weight?

The PRA defines a de facto relationship as two people who “live together as a couple”. It lists specific matters that show whether the two people were a couple. The matters include:

  • the length of the relationship;
  • whether the partners shared the same house;
  • whether the partners had a sexual relationship;
  • how much the partners were financially dependent or interdependent;
  • how the partners owned, used and acquired property;
  • how much the partners were committed to a shared life;
  • how the partners cared and supported their children;
  • how the partners performed household duties; and
  • the reputation and public aspects of the relationship.

But some people prefer to keep their finances separate even though they live as a couple. This may be because one or both partners have children from previous relationships and want to remain financially responsible for their own children. Should the PRA apply to such relationships?

Normally, the PRA says couples should share their property equally. The PRA covers most de facto relationships of three years or longer. We are asking if three years is the right time at which de facto couples who separate should share their property, or is a longer time fairer?

What property should the Act cover?

Relationship property will usually include:

  • property used by the family, like the family home, furniture, cars; and
  • property either partner acquires during the relationship, like savings and superannuation (including KiwiSaver).

Separate property is all other property, but includes:

  • property a person owned before the relationship; and
  • any gift or inheritance a partner receives.

If a family uses a partner’s separate property, that property will normally become relationship property.

Some people say that the PRA forces people to divide property they did not get as a couple. For example, people have told us when one partner brings a home into the relationship but the other does not, it is unfair to divide the value of the house if the relationship ends.

Should we change how we define relationship property to include only property the partners get during the relationship? This would affect the amount of property available to divide. It would move away from a long-established focus on families’ use of property.

The role of children in an Act about adults

Many children’s parents separate. Almost half of all divorces in 2016 involved children, affecting over 6,000 children under 17.

When parents split up, the way they divide their property affects their children. It can affect their accommodation, their standard of living, where they go to school and their ability to maintain relationships with family, whānau, friends and community.

The PRA refers to the interests of children. But we have found, that in practice, the law seldom takes children’s interests into account in relationship property matters.

When dividing a couple’s property, the court can make orders that can benefit children. For example, the court can put some of the parents’ property to one side for the children. Sometimes, the court can postpone the time at which the parents divide the relationship property.

But the court rarely makes these orders. Parents rarely ask the court to make them. The court can be reluctant to take property away from parents or to prevent parents from getting their share of property straight away.

So, a key question we face is whether the PRA should take greater account of children’s interests.

New Zealanders’ relationships and the way we form families have changed. There have been so many changes that it is time to look hard at the Property (Relationships) Act. Does the law still reflect our expectations – does it allow us divide property fairly and simply when relationships end?

We want New Zealanders to give us feedback on the issues we discuss. We hope people will to go to our website to answer our questions and tell us their stories. We also hope to see many New Zealanders at one of the public meetings we are holding around the country.

Categories: Law
Helen McQueen
About the author

Helen McQueen

Helen McQueen is one of four Law Commissioners at Law Commission Te Aka Matua o te Ture. She practised law at Chapman Tripp from 1992 to 2016. She was a Partner with the firm between 1997 and 2005 and subsequently a Consultant. Helen specialised in commercial litigation, with particular interests in competition law, private international law, procedural law and public law. She was a contributing author for Brookers’ publications McGechan on Procedure and District Court Rules. She has also published in the area of private international law. Helen has a BA and LLB(Hons) from Victoria University and an LLM from the University of Chicago.