Contracting Out Agreements (formerly known as pre-nups) can be set aside by the court. In order for this to happen, an applicant has to show that the agreement creates “serious injustice”.

Take the situation of David and Julia.  They purchased their first home together in 2002.  David provided the $60,000 deposit required to purchase the home.  Julia did not have any savings to contribute.  They entered into a Contracting Out Agreement to record that the house was to remain David’s separate property and that Julia would have no claims in respect of it.  They then married and went on to have three children.  Julia stayed at home with the children and David continued to progress his career as a lawyer, becoming a partner in a large firm.

The Contracting Out Agreement also recorded that their incomes would remain their separate property, as would their superannuation schemes and any property purchased with their incomes in the future.

In 2013, they separated.  Julia was still at home looking after their youngest child.  David relied on the Contracting Out agreement and claimed the house, his partnership interest, his superannuation scheme and all investments in his name were his separate property.  All Julia could claim was half of the chattels in the home and her own Kiwisaver policy, which wasn’t significant as she had only worked for a couple of years before having children.

Julia applied to the court to have the Contracting Out Agreement set aside on the grounds that giving effect to it would cause serious injustice.  The court agreed and set the agreement aside.  As a result Julia was entitled to claim half of all relationship property, including the house, partnership interest, superannuation policy and investments.  Because the entire agreement was set aside, not even David’s deposit was protected.

This example reminds us that Contracting Out Agreements do need to be reviewed from time to time to ensure that the agreement has not become unfair or unreasonable in light of any change in circumstances.

If you would like to discuss your Contracting Out Agreement, or find out more about agreements of this type, contact us on 04 473 6850 or at .

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.