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Stay at home Mum receives more than 50% of the property pool

Stay at home Mum receives more than 50% of the property pool

Stay at home Mum receives more than 50% of the property pool

Monday 15 June, 2020

When one party in a relationship is likely to have significantly higher income and living standards after separation, the courts can order them to compensate the other party out of their share of relationship property if the disparity is due to the different roles that the parties took on during their relationship.

In a recent case, the High Court agreed with the Family Court’s decision that the husband should pay his wife an amount equal to 10% of his share of relationship property, in addition to her half share, because the division of roles in the family was for her to stay home and look after the children and run the family home, while he worked as a shift worker.[1] The Court considered that the wife would have continued with further study, if not for the division of roles within the relationship. As a result of the role division, the wife had a significantly lower income earning ability, which meant that her future standard of living was likely to be much lower than the husband’s.

The husband appealed the amount that he had to pay his wife on the basis that the flexibility of his shift work meant that he could have looked after the children while his wife worked or trained. However, the Court found that there was clear evidence on the division of roles that had actually existed in the relationship. Section 15 of the Property (Relationships) Act operates on the assumption that any disparity at the end of the relationship due to different roles is equally attributable to both parties. Where the parties have been in a long-term relationship, it is not easy to rebut that assumption and allege that the party with the lower income earning potential should bear all the burden of that disparity.

The Court concluded that the award of 10% of the husband’s share of relationship property was not unjust as it was unlikely to make up for the significant disparity in likely earning capacity between the husband and wife.

However, in another recent case, the High Court agreed that the Family Court had been correct when it refused to order one partner, Mr P, to compensate the other, Ms C, for a difference in likely earning capacity.[2] The Court acknowledged that there had been a disparity of income when the parties separated, but the disparity had disappeared within 15 months. The Court also considered that any future disparity of income would be due to Ms C’s choice to establish a business instead than returning to her former field of employment, rather than to any division of roles within their relationship. Finally, and most importantly, any compensation under section 15 must come from relationship property.  As the parties’ debts exceeded their assets, there was no relationship property pool, and therefore no power to make a section 15 compensation order.

Do you have questions about how you would be affected in the event of a separation? Our Family Team can help.

[1]H v H [2020] NZHC 1210.
[2]P v C [2020] NZHC 1178.

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