When an engagement is called off, the question of who keeps the ring can be contentious.

If an engaged couple separate before being in a qualifying de facto relationship pursuant to the Property (Relationships) Act 1976 (PRA), that is living together in the nature of marriage, the Domestic Actions Act 1975 (Domestic Actions Act) allows the court to “restore each party…as closely as practicable to the position that party would have occupied” had the agreement to marry not been entered into.

Accordingly, where a couple become engaged and agree to marry, and purchase an engagement ring in contemplation of their marriage, in the event that they separate, the partner who purchased the ring is able to apply to the court for its return, or compensation for its value.

In the case of Zhao v Huang [2014] NZHC 132, the Court ordered compensation to the applicant for a second-hand Mercedes Benz with a value of A$21,340.00, a solitaire diamond engagement ring with a value of NZ$30,000.00, and a bank cheque of NZ$100,000.00, which were all acquired by the applicant in contemplation of marriage to the defendant during their six week relationship. The Court restored the applicant to the position he would have been in if the parties did not agree to marry, and ordered he be compensated for the value of the property retained by the defendant, including interest.Once a couple are in a de facto relationship and living together in the nature of marriage for a period of three years or more, the Domestic Actions Act no longer applies and the division of property on separation is governed by the PRA.

Under the PRA, property that one spouse or partner acquires by gift from the other spouse or partner is not relationship property unless the gift is used for the benefit of both spouses or partners. As such, arguably, an engagement ring purchased by one spouse for the sole benefit of the other is likely to be the separate property of the partner who receives the ring. This means that they would be entitled to retain the engagement ring on separation without compensating the purchasing partner for a half share of its value. When an expensive ring has been purchased this can be a difficult realisation for the aggrieved party.

The position becomes further complicated if a loan is taken out to acquire the engagement ring. In such a case investigation into the funding of the ring would be required to determine its status and the status of the loan on separation.

In each instance determining which party is entitled to retain the engagement ring will depend on the specific facts of the case and advice should be sought to ensure a fair division of assets is achieved on separation.