The Ex-Files: Unequal sharing - what you need to know

The starting point under the law is that relationship property will generally be divided equally, unless you ask the Court for an unequal division. Photo / 123RF

COMMENT:

Q. My partner and I are about to separate. We have been together only five years. I owned the house we live in prior to our relationship and I have paid for all our living costs, including our holidays from my income and an inheritance I received six months ago. We haven't accumulated much property together other than a new car which I purchased with my inheritance and some savings from my income.

We are both in our 50's and my partner decided to retire shortly after we moved in together as my income easily paid for our lifestyle. My partner also owns a house which she has rented out during our time together. She has kept the income from that property.

I have heard my house will be divided equally between us. That doesn't seem fair! Is there anything I can do?

A. While the usual rule is that all relationship property is divided equally, there are some exceptions.

What is relationship property?

Your relationship property will include your bank accounts, furniture, any superannuation or Kiwisaver entitlements accumulated during the relationship and in your case, the car purchased with your inheritance and the home you owned prior to the relationship.

Normally your inheritance would be your separate property, but it loses this status if it becomes intermingled with relationship property – that is, if it is paid into a joint account and expended over time on family expenses, or is used to purchase family chattels including motor vehicles.

Your home will also be relationship property because it has been your "family home".

Because you have not lived in your partner's house, that property is not a family home and will remain her separate property.

How will your property be divided?

The starting point under the law is that your relationship property will generally be divided equally between you, unless you ask the Court for an unequal division.

There are a few exceptions to the equal sharing rule which might be relevant in your case.

First, section 16 of the Property (Relationships) Act 1976 allows you to ask for compensation where both parties owned properties at the start of the relationship that were capable of becoming the family home, but at separation only one of those properties qualifies as the family home.

In those circumstances the Court can adjust the shares in the relationship property to compensate for the inclusion of only one of the parties' homes. So, you could pursue compensation for the inclusion of your home as relationship property.

The second remedy you could apply for is under section 13 of the Act. Under that provision, the Court can order an unequal division if satisfied there are "extraordinary circumstances" that make equal sharing "repugnant to justice". Circumstances where unequal sharing has been ordered include:

• Where there has been an injection of inheritance towards the end of the relationship.

• Where there has been a gross disparity of contributions. An argument on the basis of contributions is more likely to be successful when a relationship is of shorter duration.

• Where there is a non-contributing partner. These cases often focus on a partner who is unable to contribute due to illness or addiction.

• Where there have been negative contributions.

There are a number of these factors in your situation which could warrant the unequal sharing rule being applied. Your relationship has been relatively short, only five years.

You have made most of the financial contributions to the relationship, both in terms of capital and income. Also, you have recently injected inheritance into the relationship. These factors would likely support a finding that equal sharing would be repugnant to justice and you could achieve an unequal share.

The division of property would be up to the Court. The test for unequal sharing is extremely high and it is difficult for anyone to foretell what their decision might be. It has only been in exceptional circumstances that applicants have been awarded a share greater than 60 per cent. There has been one instance in a 2015 High Court case where the Court upheld a decision dividing the relationship property 15:85.

Next steps

While you might be able to receive a greater share of the relationship property if your case goes to Court, this would also take a long time to resolve (over a year) and be quite expensive if the case progresses to a full Court hearing.

I recommend you seek legal advice, and then try to negotiate a solution with your partner that you can both accept.

Do you have a family law question? Email it to js@bastionchambers.co.nz. Questions should not exceed 200 words. Please provide a phone number. Your name will not be published. Jeremy cannot answer all questions, correspond directly with readers, or give legal advice. Jeremy's advice is of a general nature, and he is not responsible for any loss that any reader may suffer from following it.

- Jeremy Sutton is a senior family lawyer, specialising in divorce cases where there are significant assets, including family trusts and complex business structures. www.jeremysutton.co.nz