How separate property can become relationship property

Relationships (Family)

The Property (Relationships) Act 1976 defines relationship property and separate property. Relationship property is the pool of common property and at separation it is to be divided equally (unless there are extraordinary circumstances that would make equal sharing repugnant to justice). This case exemplifies how separate property can become relationship property.

The Property (Relationships) Act 1976 defines relationship property and separate property. Relationship property is the pool of common property and at separation it is to be divided equally (unless there are extraordinary circumstances that would make equal sharing repugnant to justice.) Whereas separate property is the property that remains owned by only one party.

Relationship property broadly includes: 

  • The family home – whenever it was acquired
  • Family chattels – whenever they were acquired
  • All property jointly owned
  • All property acquired after the relationship began, unless it is separate property under certain exclusions (such as inheritance)
  • Increases or gains in relationship property value, subject to exceptions; and 
  • Increases in the value of one partner’s separate property, if the increase is attributable to (a) the use of relationship property or (b) the direct or indirect actions of the other spouse or partner.

Landmark Court Case New Zealand’s highest appellate Court, the Supreme Court, delivered its decision in Rose v Rose (2009).

The basic approach of the Courts has been that if the non-owning partner contributes to an increase in the value of the other partner’s separate property that increase in value becomes relationship property. In this case, Mr Rose’s separate property included a farm that he owned prior to the marriage. Mrs Rose sought to share the increase in the value of the farm at the date of separation. Mrs Rose argued that during the course of the relationship, her outside earnings combined with her duties as a homemaker enabled her husband to keep his farm and to develop it into a vineyard. During the term of the relationship the farm appreciated in value significantly due to inflationary pressures and its location within a prime grape region in Marlborough.

The Supreme Court accepted Mrs Rose’s argument and held that Mrs Rose was entitled to a 40% share in the increase in the value of the separate property. Mr Rose was given a 60% share giving him greater credit for the inflation and general increase in the value of the land.

This Court case is considered a landmark decision because despite the apparent indirectness of Mrs Rose’s contributions, she was awarded a 40% share of the increase in the value of Mr Rose’s separate property.

When relationships end, division of property can often be a difficult and emotional negotiation. .

If you think that you (or indeed any of your friends or children) might benefit from such an agreement then please contact our firm to discuss this further.

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