Ensuring fairness when dividing relationship property – Section 15 of the Property (Relationships) Act 1976 and “economic disparity”

Usually, when a marriage or qualifying relationship ends, both partners and spouses are entitled to an equal share of the relationship property under section 11 of the Property (Relationships) Act 1976. This equal division is designed to fairly set up both partners following the end of their relationship.

However, in certain circumstances, this division is not always fair. When this is the case, section 15 of the PRA can override equal division, to deal with the “economic disparities” between the parties.

The Family Court can assess each partner’s different contributions to a relationship and consider the impact of these roles on future earning capacity at the time the relationship ends.

Section 15 is designed to compensate a partner or spouse who is likely to face a lower future income or living standard because of the division of functions that existed within the relationship. A common example is where one partner took on the domestic/caregiver role while the other worked for the household’s financial resources.

In such circumstances, the individual who did not participate in the workforce and relied on the income of the other partner may be significantly disadvantaged come the end of the relationship in a way that the other partner is not.

Section 15 was brought in because the standard equal division of relationship property was disproportionately affecting stay-at-home partners, in most cases these partners were women. Often, one partner had given up their career progression, either temporarily or permanently, to raise children and as a result would leave the relationship with fewer prospects to earn the income they may have had if they had not made the career change.

Section 15 may apply if the Court is satisfied that after separation, one party is likely to have significantly higher income and living standards than the other party because of how functions were divided in the relationship. When deciding this, the Court can consider:

• The likely earning capacity of each spouse or partner
• The responsibilities of each spouse or partner for the ongoing daily care of any minor or dependent children of the marriage, civil union or de facto relationship
• Any other relevant circumstances.

If the Court is satisfied by these considerations that section 15 should apply to assist the disadvantaged partner (party A), then the Court can make two different types of orders that the advantaged partner (party B) must comply with:

• Order party B to pay party A a sum of money out of party B’s relationship property; or
• Order party B to transfer to party A any other property out of party B’s relationship property.

One key point to note is that the disadvantage must be because of the different roles within the relationship. If a partner’s earning potential or expected living standards are disadvantaged because of other factors outside of the relationship, then section 15 will not apply.

This provision provides a mechanism to depart from the rigid equal division of relationship property and aims to ensure equal footing between the partners to face life after separation.

If you are anticipating, or currently participating in, dividing relationship property and you feel as though section 15 may help you get a fairer outcome, it would be prudent to discuss these options with your lawyer or contact a family law expert.

Leading law firms committed to helping clients cost-effectively will have a range of fixed-price Initial Consultations to suit most people’s needs in quickly learning what their options are. At Rainey Collins we have an experienced team who can answer your questions and put you on the right track.

Please note that Rainey Collins is not contracted to provide Legal Aid, other than in the Treaty of Waitangi area.  We therefore are unable to take on any Civil or Family Legal Aid work. If you require Legal Aid in those areas, you can search the list of Legal Aid lawyers on the Ministry of Justice website.