K3 Insights

The well-known starting point under New Zealand law is that once you have been married, in a civil union, or a de facto relationship for 3 years or longer, when you separate, you will each get half of all relationship property. This includes the family home, chattels, any savings earned during the relationship, and even your pet dog “Buddy” (See Relationship Property and Pets Article)

Often however, when people separate, many may find themselves asking the question — ‘Is equal division really fair?’ What if I bought the family home and paid off the mortgage years before I even met my partner? What if I gave up my career to take care of the kids? Surely there must be more to the law than just adding everything up and dividing by 2?

If this sounds like you, two sections of the Property (Relationships) Act 1976 you’ll want to know about are sections 13 and 15.

What is section 13?

Section 13, titled ‘Exception to equal sharing’, provides a mechanism for the Court to refuse to order equal sharing of relationship property if it finds that there are extraordinary circumstances that make equal sharing repugnant to justice.

If the Court finds this, it will instead order each spouse or partner’s share of relationship property to be determined in accordance with their contribution to the marriage, civil union, or de facto relationship.

It is worth noting that contributions are not only limited to financial contributions and may include things such as caring for children, or even intangible things such as providing love and affection.

Section 13 claims can involve a wide variety of fact scenarios. For example, one party may have brought the majority of assets into the relationship, one party may have received a large inheritance near the end of the relationship and applied it to the family home, or perhaps one party single-handedly supported the household while the other gambled away their income.

While the case law is diverse, one thing that the decisions all show is that there is a very high bar for making out a section 13 claim.

In an often-quoted passage from the case of Martin v Martin, Richardson J stated:

"Clearly enough ‘extraordinary circumstances’ and ‘repugnant to justice’ are strong words and reflect a Parliamentary intention that the primacy of the equal sharing of the matrimonial home and the family chattels is not to be eroded in the ordinary circumstances of marriage. … ‘Extraordinary circumstances’ imposes a stringent test, particularly when it is recognised that such matters as the provision of the matrimonial home by one spouse or by gift to that spouse are not in themselves extraordinary circumstances."

That is not to say that bringing the family home into the relationship can never be an extraordinary circumstance supporting a section 13 claim, but rather each individual case will simply turn on its facts.

What is section 15?

While parties may bring their claims under section 13 for a variety of reasons, section 15 (colloquially referred to as economic disparity) is tailored to just one — when a division of functions during the relationship leads to a significant disparity between the income and living standards of the spouses or partners following separation.

If this is the case, the Court may, if it considers it just, order the party that comes out of the relationship economically better off to make a compensatory adjustment to the other out of their relationship property. In essence, this results in unequal division where the party who is worse off following separation gets a larger share of the pie to redress the economic disparity.

Section 15 is often thought of as the response to the inadequacies of equal division for traditional marriages where the husband earns 100% of the income for the family, and the wife attends to all household chores and childcare duties. In relationships of this kind, the party who is not earning income will be left in a vulnerable position if the relationship were to end.

However, what many people don’t realise is that section 15 is not only limited to such scenarios. It can still be relevant even when both parties work and earn income, so long as there was a division of functions in the relationship along traditional lines which caused the post-separation economic disparity. For example, in Darwin v Garner, the Court awarded $384,000 to the wife to redress economic disparity in circumstances where the spouses began their marriage as lawyers earning similar incomes, with the wife then breaking away from her career to care for the parties’ children, only later returning to full-time work as the children got older.

On the other hand, even if there were both a division of functions and economic disparity post-separation, that doesn’t necessarily mean a section 15 claim is guaranteed to succeed. In Douglas v Douglas, the Court refused to grant a section 15 award to the wife, who predominantly worked part-time to accommodate the needs of her children. The Court found that the marriage was unlikely to have affected the trajectory of the parties’ careers because the wife had 4 dependent children from a previous relationship which she took care of during the marriage. Her childcare responsibilities therefore already existed at the start of the marriage, and the same constraints on her income-earning ability would have existed irrespective of the marriage.

Final Word

Although equal division is the starting point, the reality is that there is no one-size-fits-all approach to relationship property division.

Even if sections 13 and 15 aren’t applicable in your circumstances, there may still be questions around what property should be equally divided, which post-separation contributions should be compensated for, who keeps what, what gets sold, and whether or not spousal maintenance is appropriate.

If you’re thinking about separating, it’s important to consult with a lawyer for advice on the full extent of your legal rights and entitlements, so that you can work out an agreement with your spouse or partner that’s fair for both of you.

At K3 Legal, we have an experienced team of family lawyers who can help you through the process.

Read our 'Thinking about Separating?' guide and get in touch with us at info@k3.co.nz or 09 366 1366.