The court has the power to address economic differences that exist between couples after separation which would make equal sharing unfair. The income and living standards of one partner might be much lower than the other’s after separation, so the court has the power to award compensation for that inequality. An example might be where one partner had made sacrifices by staying home to raise children or run the household, so the other partner could further their career. The court has the power to order unequal distribution of relationship property in these circumstances and will take into consideration the income capacity of each party along with responsibility for children and other relevant circumstances.
Who does the Property Relationships Act apply to?
The act covers de facto relationships (same sex and heterosexual), married and civil union couples, as well as relationships ended by the death of a spouse or partner.
Does it only apply to couples after their relationship has ended?
No. Usually the Act is only relevant where parties have separated however it may apply when there is no intention of splitting up. For example one party might feel the other is behaving irresponsibly with property and so applies to the court to divide it.
What is a de facto relationship?
A de facto relationship involves a relationship between two parties who are over the age of 18 and are living together as a couple. In deciding whether two people live together as a couple, the Court will consider all the relevant circumstances, including:
- Whether the parties live together;
- Ownership and use of property;
- financial arrangements and shared finances;
- arrangements for the care of children;
- length of relationship;
- existence of a sexual relationship;
- The extent to which each person is committed to a shared life;
- Share of housework and other tasks;
- The reputation of the couple and their relationship (e.g. whether their family and friends consider them to be “a couple”).
How is property divided?
Generally, where a marriage, civil union or de facto relationship has lasted more than 3 years, all relationship property will be divided equally between the parties unless the Family Court considers there are extraordinary circumstances which would make equal sharing repugnant to justice. Where a marriage or civil union is of short duration, the above general rule is departed from and property will be divided according to the contributions made by each party. Most de facto relationships which last less than 3 years will not fall under the ambit of the Act, however there may be exceptions where there is a child/children, or where one party has made a substantial contribution to the relationship.
What if we lived together before we were married/entered into a civil union?
If the couple lived together prior to the marriage/civil union, the period of that de facto relationship may be counted toward the length of the marriage/civil union (which may put the marriage/civil union over the 3-year mark).
What is relationship property?
The Act establishes two major principles in relation to classification of property; the first being that essential family property will be classed as relationship property, regardless of how it was purchased. Furthermore, all items acquired by reason of the marriage, civil union or de facto relationship will be relationship property. Relationship property includes:
- The family home;
- Family chattels (property), such as furniture and vehicles;
- Life insurance or insurance over the family home;
- Any Superannuation scheme if it is based on the fact of the marriage or relationship;
- Property owned jointly by the parties;
- Property acquired by either party during the relationship;
- Property which parties agree is relationship property;
- Wages or salary;
- Trust property: if a trust was formed after the relationship began, it may be the case that some or all of that trust is relationship property;
- Gifts or inheritances which has become mixed with other relationship property;
- Property acquired by one party before the marriage in contemplation of the relationship.
What is separate property?
Separate property is anything that is not relationship property, it includes most property that a person owns before entering into a marriage, civil union or de facto relationship. Separate property will stay separate as long as it is not shared during the marriage, civil union or de facto relationship. You can protect your separate property by entering into an agreement with your spouse or partner (see below).
Do we have to go to court to get our property divided?
The easiest way for relationship property to be settled is for the parties to come to an agreement themselves. In this situation the parties will instruct different lawyers, who will offer independent advice, draw up the agreement and arrange for the parties to sign it. However when the parties are unable to agree, then settlement will be attempted through letters, or a meeting between the parties and their lawyers. If an agreement still has not been reached, then one or more of the parties can apply to the Family Court for assistance. The settlement of disputes without having to resort to the court is encouraged, so assistance is provided to achieve this. Almost all cases are settled through negotiation and mediation, as the normal rule of a 50/50 split, usually encourages settlement. Only around 1% of cases will progress to a Family Court hearing.
How much does it cost to go to court?
There is a fee associated with filing a relationship property application with the court and further hearing fees for every half day spent in court if your case is decided before a judge. Please see the Ministry of Justice website for an up to date overview of these costs. You can apply to the court for a waiver of these costs if you are unable to pay.
How can we ensure the Act doesn’t apply to us?
If you do not want the Act to apply to your relationship, you can enter into an agreement to ‘contract out’ of the provisions of the Act. This will set out how you will own the property, how it will be managed and how the property will be divided if your relationship breaks down. A typical example is where one party brings more wealth into the relationship, for example, a house and they wish to avoid having to split the house equally in the event of a break up. A contracting out agreement usually enables the relationship property to be settled more easily, quickly and with less legal costs, if a break up occurs.
What if my spouse/partner has died?
The Act applies in the event that your spouse or civil union partner dies. You will have a choice of taking what is left to you under the deceased’s will, or receiving a half-share of relationship property under the Act. This decision must be made within 6 months of the death, or at the latest, 6 months after administration of the estate is granted.
How can we help? Please call us to arrange an appointment. In our first meeting with you, we will explain the law, your options and the outcome you can reasonably expect. We will also advise a fixed fee for your case and the likely time it will take to settle. You can contact us by phone on (09) 309 4647.
“The information posted on this website is prepared for a general audience, without investigation into the facts of any particular case. This information is no substitute for legal advice and does not create a lawyer-client relationship; you are advised to consult with a lawyer on any legal issue.”