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PRA03

The PRA - hot topics

NZ $40.00
incl GST
Author(s): David Burns, Wendy Parker
Published: 9 June, 2003
Pages: 87



Introduction


For a long time now, New Zealand has had its own unique matrimonial property regime. Although mindful of a number of different schemes in overseas jurisdictions, we have always done it our way. New Zealand is certainly not the only country in the world to have based its scheme on equal division, but a number of other countries do not have this presumption in the law, relying instead on large doses of judicial discretion. Not only do other jurisdictions differ from us in not starting with a presumption of equal sharing, many do not end up with equal outcomes either. Recently, Australia considered whether it might move to a 50/50 starting point, in order to tighten judicial discretion and increase certainty within their scheme. In the end the Australians decided not to proceed. The primary reason for this was a concern that if equal division became the starting point, then it was more likely to also be the end point. There was a resistance to the idea of equal outcomes. A recent Australian study found that little had changed since the landmark Australian Institute of Family Studies Settling Up study published in 1986. Property division reflected an emphasis on financial contributions and concern with the future welfare of the children (unlike the New Zealand relationship property law, the Australian legislation contains many forward-looking elements).

The study also noted the continued undervaluing of non-financial contributions. This has been an issue in New Zealand too. Our approach has not been to extend judicial discretion but rather to further reign in discretion by extending the test for equal division (now s 13, formerly s 14) to both former matrimonial property categories - core and balance property. The thinking behind the change is to create certainty and remove the need to argue about who did what, reflecting the underlying philosophy of a relationship as a partnership of equals. The undervaluing of non-financial contributions is also behind the introduction of provisions that adjust division where economic disparity has arisen due to the division of functions within the relationship.

If doing it our way means emphasising formal equality, then the Property (Relationships) Act 1976 (PRA) is a very Kiwi piece of law because it further entrenches equal sharing as a cornerstone of the New Zealand scheme. Although this is well known in legal circles, public and media attention to the economic disparity provisions and to the inclusion of gay and other de facto couples have meant that the strengthening of 50/50 sharing within the new law has received less attention than other aspects of the PRA.

Although arguments to the contrary are beginning to emerge (and these are discussed in our seminar), the strictness of the test that must be satisfied to get a departure from equal sharing remains in place for the time being. And of course now this strict test applies to more property. Clearly, parliament is of the view that for most people, 50/50 sharing is a fair place to start. The presumption of equality was introduced in 1976. Considering the deficiencies that needed to be addressed in the Matrimonial Property Act 1963 (which included the way judicial discretion was being applied), the nature of New Zealand families in the early 1970s, and the focus at that time on formal equality, this makes a lot of sense. Such a scheme was no doubt appropriate for young couples starting out with nothing and building up assets together over time. But the one-size-fits-all approach can never work for all families. Some of the statistics we present suggest that New Zealand families look a little different than they did 30 years ago. There is a growing diversity in family types. The essential test for the PRA is whether it is going to serve this greater variety of family structures well – and fairly.

One of the key themes that we will return to in this seminar is that the law is about achieving fair outcomes in individual cases. The PRA, as did its predecessors, contains a number of ways to do this. Judges and lawyers have always been mindful of creative ways to apply family property law to achieve the best outcomes, whether it be through the development of equitable remedies in constructive trust law or by arriving at a valuation date that arrives at a fair outcome in a relationship property case, to provide just a couple of examples.

The PRA recognises that there will be cases in which unequal sharing is the fairest result. In this sense, it gives a legislative framework to some of the shifts that had been building through the previous development of matrimonial property jurisprudence. Section 15 formally introduces equitable notions and its application is of great interest to practitioners and others. But many other mechanisms exist and we cover these also, expanding the range of tools in the practitioner’s kit bag.

The challenge for lawyers is to make sense of the new mix of formal and substantive equality. That is, to understand the rationale for the simultaneous strengthening of formal 50/50 equality alongside the introduction of substantive, equitable principles premised on unequal sharing. This needs to be explained to clients and of course translated into an outcome the client is happy with.

In order to do this, the practitioner has to analyse the client’s situation, get all the relevant facts and then apply them to the law. We discuss the practicalities of doing this, including how to use the discovery process to get information. We consider the various ways that practitioners can add value for their clients – from the practicalities of running a case to a thorough knowledge of PRA jurisprudence. We take you through the cases, bringing you right up-to-date with developments. Both the practical tips and case law analysis presented during the course of the seminar will better equip practitioners to get the best possible outcome for their clients.

Although no hard and fast data are available, it is safe to say that a whole lot more cases settle out of court than go to litigation. This means that approaches to the PRA are being hammered out in lawyer-to-lawyer negotiations. This bargaining in the shadow of the law is clearly where the law relating to relationship property is having the most impact on New Zealand families. Equipped with a sound knowledge of the principles of the PRA, the outcomes of cases, as well as practical negotiation strategies, practitioners can continue the important task of ensuring that the intent of the law is carried through at the same time as securing positive outcomes for clients.

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