 New Zealand’s highest appellate court, the Supreme Court, has recently
delivered its decision in Rose v Rose. The case is about the
classification of property. The Property (Relationships) Act 1976 (‘the
Act’) 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. However, Rose v Rose
exemplifies how there are also pathways whereby separate property
becomes relationship property.
Relationship Property
Relationship property as defined in the Act includes:
-
the family home – whether acquired before or during the relationship
- family chattels – whether acquired before or during the relationship
- all property jointly owned
- property owned immediately before the relationship began, if it was acquired in contemplation of the relationship and it was intended for the common use or the common benefit of the partners
- all property acquired after the relationship began, unless it is separate property (s9 and s9A) or the succession, survivorship, trust and gift provisions (s10)
- increases or gains in relationship property, subject to exceptions
- increases in the value of one partner’s separate property, if the increase is attributable to:
- the use of relationship property
- the direct or indirect actions of the other spouse or partner
Separate Property
Separate property is defined in the Act as being any property that is not relationship property.
Rose v Rose
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.
Tips to get the best price for your property
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 marriage relationship her outside earnings combined with her duties as a homemaker enabled her husband to keep his farm and develop it into a vineyard. During the term of the marriage relationship the farm appreciated in value significantly due to inflationary pressures and its location within a prime grape region in Marlborough.
The 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.
It 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 the separate property.
Our Suggestion
Our strong suggestion is to have a section 21 Agreement to prevent separate property becoming relationship property to specify that no matter what the contributions made to the relationship by the other partner during the life of the relationship, it is to remain separate property.
There was an interesting article in the NZ Herald by Susan Edmunds on how to get top dollar for your property.
Check out our website www.dglaw.co.nz to access this great article – which may make you money!
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