It’s time we discuss the Property Relationships Act NZ.
I know, it’s not a subject that most people like to talk or even think about. But it’s really important, and even more so if you’ve taken time out from your career to raise a family.
The Property Relationships Act NZ states that when people in a relationship separate, they should each get an equal share of the property connected with that relationship.
The problem is that equal sharing often means that partners leave the relationship on an unequal footing.
In most relationships, partners take on different roles, which can leave one of them financially worse off.
For example, in many relationships, one partner cares for the children and the home, and the other continues in paid work.When the relationship ends, one partner will continue to enjoy the benefits of a better career. The other partner will not have the same advantages because he or she has sacrificed work opportunities to work within the home.
To illustrate, here’s an example from the Law Commission (Te Aka Matua o te Ture):
Don and Nari marry. They are 20 years old. Don is training to be a pilot. Nari works as a junior manager.
Two years later, Don and Nari have their first child. Nari leaves work to care for the child.Over the next 15 years, Don and Nari have two more children. Don qualifies as a pilot and gets promoted to flying international routes. Nari is a full-time mum because Don is frequently away.When Don and Nari’s youngest child turns 16, they separate.
Don continues to work as a pilot, earns a hefty salary, buys a new house straight away. He continues to enjoy a very good lifestyle. Nari goes back to work at the bank, but she earns little because she does not have much work experience. Nari rents a house because she is not confident she can maintain mortgage payments.
Don and Nari’s children also come to live with Nari, which adds extra financial pressure.
If Don and Nari divide their relationship property equally, they will not be on an equal footing.
In cases like Don and Nari’s, the piece of law that tries to fix an unequal financial outcome is section 15 of the Property Relationships Act NZ (1976).
Section 15 allows one partner to claim compensation if she (or he) can show a significant difference in income and living standards because of the roles each partner took during the relationship.
The court can then award her, or him, a more significant share of the relationship property.
It’s fair to say that when a heterosexual relationship ends and the two ex-partners have different economic outcomes, it usually means the woman ends up financially worse off.
A successful claim under section 15 is far from easy though.
If a claim is submitted by the partner under section 15, the courts will consider the earning capacity of each person in the relationship, the responsibilities each person had, such as caring for children, and any other relevant circumstances.The costs of making this kind of claim can be HUGE!
This factor alone can deter many.
Add to that the fact that Courts have awarded compensation in less than half of cases they have heard, and, that it’s very rare for the court to award more than one-tenth of the total relationship property, you can see why the section 15 remedy is flawed.
We need a new law which is simple and fair! But who defines fair?
You do.We do.Everyone does.Sadly, submissions on the Property Relationships Act NZ Review have now closed but you can still check out all the consultation papers and submissions over at http://prareview.lawcom.govt.nz/