Under New Zealand law, the family home and chattels are normally divided 50/50 for a marriage of more than three years.  In many cases it does not matter if one party has owned that property beforehand, it remains a case of equal sharing.  

Under the Property (Relationships) Act 1976 unequal sharing is only granted if there are “extraordinary circumstances which make equal sharing repugnant to justice.”  Extraordinary circumstances are a high threshold to meet.  

A High Court decision from March 2015 challenges this exception to equal sharing and may encourage a change in the landscape of equal sharing.   The High Court upheld the decision of the Family Court that relationship property was to be divided 85  /  35 in favour of Mr T. It was held that exceptional circumstances were established and the relationship property was divided on the basis of the parties’ contributions instead of equal sharing.  

The parties, Mr T and Ms V, had been in a relationship for four years.  Mr T (in his 60’s) owned the house that the parties lived in and was solely liable for the outgoings on it. Mr T paid for almost all the holidays and extra spending items with Mrs V (in her late 40’s), applying for earnings as she wanted to.  Mr T owned the house that the parties lived in which was around 95% of the relationship property.

Mrs V was not economically disadvantaged by entering the relationship, but was advantaged as she lived rent or mortgage free and did not have to give up work for the relationship.   The Family Court Judge held that this was a case where there was a high disparity of capital contribution brought into a relationship of a brief duration.  She considered that there was a combination of factors (along with financial contributions) that supported the finding that extraordinary circumstances were established.  

The other factors she considered were such as the parties were “neither young”, they had kept finances separate, there were no children and there was no relationship property as a result of the relationship. The High Court found that no error was made in the approach taken by the Family Court Judge.  

 

Is the landscape of equal sharing changing?

This decision creates an opening for litigants to challenge the presumption of equal sharing.  However, this opening is not a flood gate.  Several observations must be made:

  1. This decision is a High Court case and does not establish a robust precedent. For greater change to be achieved, decisions in favour of equal sharing will need to be given in higher Courts.
  1. Every case is circumstantial and must be heard on its individual facts. Both parties had previously been married and there were no children involved. It was clear the case was decided very much on its facts. The threshold still remains high.

 

To conclude, many divorce lawyers and clients have been fascinated by this decision. The case does demonstrate that for older parties, there may be greater opportunities to argue unequal sharing where finances are kept separate, and where there are marked variations in the financial contributions. However, to provide a strong precedent for what constitutes “extraordinary circumstances” litigants need to continue to challenge the presumption in higher Courts.  


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