Imagine this: after a long-awaited search you find the love of your life, and you start to share everything – the costs of your day-to-day expenses, family travel, your home, furniture, and that expensive ancient Greek vase in your living room are all paid for out of your joint bank account. There are the costs of your children and pets too, if you choose to have them, which you pay for together. You never talk about what would happen if your relationship broke down, because of course there is no need to – you love each other and that would never happen. But then it does, and you become bound together in a web of jointly owned property. You may start thinking: who gets what? Did you contribute more to the relationship? Do you deserve more? What happens if you get less? Should lovers really share everything?

In New Zealand, the Property (Relationships) Act 1976 (PRA) governs all decisions about relationship property. The PRA provides mechanisms for the division of relationship property that was acquired during a marriage (s 2), civil union (s 2AB), de facto relationship (s 2C-D), or relationship of short duration (s 2E). Generally and notably, unless the relationship falls under s 2E, it must have lasted for a duration for longer than three years for the PRA to be applicable. Whether or not property is to be divided will depend on whether it is categorized as “relationship property” or “separate property”. “Relationship property” is defined by s 8 as including the family home and chattels whenever acquired, all property owned individually that was acquired in contemplation of the marriage or was intended for common benefit, insurance pay-outs, superannuation, rent or other income from joint property, and all gifts and inheritances since mixed with relationship property. Alternatively, “separate property” is defined by s 9 as all property that falls outside of the scope of relationship property as defined in s 8. If property is separate property, it remains the sole property of its owner. All property that is categorized as relationship property, however, is divided equally between the two individuals to the relationship in accordance with s 1C(3). This means that all relationship property, your house, chattels, joint bank accounts, and even your family dog, will be divided equally between yourself and your partner.

I could guess what some of my readers are thinking: but I contributed more! I deserve to at least get the amount that I contributed, anything less would be daylight robbery! Whilst that may be true, I encourage you to pause here to consider what specifically it was that you contributed. Was it money? Time? Childcare? Did you forfeit an employment or educational opportunity for the relationship? Were you the breadwinner? The homemaker? Section 18 of the PRA provides that a contribution to the relationship extends beyond financial contributions to include non-financial contributions such as an individual’s decisions to forfeit employment or education in order to be a stay-at-home parent for a child of the relationship. Despite the provision in s 13 to do so, New Zealand Court’s appear thus far to be reluctant to diverge away from the equal division of relationship property rule contained in the PRA. If someone wanted to seek more than equal division, “extraordinary circumstances” making the equal sharing “repugnant to justice” must be demonstrated. This is not an easy threshold to meet.

An interesting, and some would argue a saving, provision of the PRA is s 21. This section allows spouses or partners to contract out of the provisions of the PRA and make any agreement they think fit with respect to the status, ownership, and division of their current and future relationship property. This is commonly referred to as a “prenuptial” or “contracting out” agreement. This means that the equal division prescribed in the Act is not an absolute in all circumstances, provided parties contract out. In my experience, drafting s 21 agreements is an enjoyable exercise; for the parties, however, it can be simple and straightforward, or difficult and emotional, or somewhere in between depending on the circumstances of their relationship and the nature of their relationship property.

The question posed, then, is whether lovers should really share everything? Like love, it is a gamble. You give your all and in doing so you risk loss. The provisions of the PRA may work in your favour, and you may be the party awarded more than expected, but it may also function in a way that makes you feel cheated by the system. Ultimately, what happens really depends on the circumstances of your relationship.  

Please feel free to contact us through the “contact” page if you have any queries about s 21 agreements or are looking for a lawyer to help you divide your relationship property!

J C R Cooper

(employed) Barrister