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University of Otago Law Theses and Dissertations |
Last Updated: 25 September 2023
Relationship Property in Aotearoa: Putting Discretion Back on the Table
Charlotte Rose McColl
A dissertation submitted in partial fulfilment of the degree of Bachelor of Laws (Honours) at the University of Otago – Te Whare Wānanga o Otākou
October 2022
Acknowledgements
First to my supervisor, Professor Margaret Briggs, for your kindness, enthusiasm, support and patience. Your guidance was invaluable, and our meetings were a highlight of this process. I am very grateful.
To my family, and especially my parents, for always believing in me and being my number one supporters.
To Thulacksha, Mackenzie and Keziah for being by my side through this whole journey. My best memories of law school involve you three. I am sorry for abandoning you in 2019!
To my fellow tutors and Laurie, for your moral support and putting up with my constant need to verbally process. You made this journey a lot less lonely.
To Emma, Zoe, Lilly and Lydia for being my support on the ground this year, and providing me with all the love, laughs and hugs I could need. I cannot express enough how grateful I am for you all.
Finally, my greatest thanks to Jesus Christ, through whom I do all things.
Introduction
The art of law-making is always a balancing act, with the law maker tasked with the unenviable job of managing tensions to create legislation that is acceptable to the masses. There is no perfect balance and no way to please everyone, but the hope is that we will always be working towards doing the greatest amount of justice possible. The predicament faced by legislators is illustrated clearly in the Property (Relationships) Act 1976 (PRA), which is the primary statute dealing with property division following relationship breakdown in Aotearoa. Here the areas of property law and family law come directly into contention.
Separation is a difficult time for all those involved, and while most people would like to believe that they will not have to interact with the law in this area, the unfortunate reality is that many people will come into contact with it in their lifetime. It is highly important that the law is correctly balanced and provides for fair outcomes for all. We must therefore be constantly turning our minds to consider whether the balance struck in the Act is the right one.
The PRA focuses on equal division of relationship property, with a strong presumption on equal sharing between partners on separation.1 This is based on the concept of marriage, civil unions, and de facto relationships being partnerships of equals who are assumed to have made equal contributions to their relationship.2 The PRA contains strict rules that are difficult to be departed from, with the goal of creating certainty and predictability. The balance that Parliament has opted for sits firmly towards a property law approach, although over the years family law ideas have rightly made their way in. This regime was first conceived of almost 50 years ago, and has been significantly amended only once since then, in 2001.3 Societal norms in relation to how families are structured have changed significantly since 1976, and even since 2001, so it is not surprising that the Act has fallen behind the times.4
The Law Commission has recently looked into whether or not the PRA is still meeting the needs of our society.5 In 2019 they released their final report concluding that wide ranging
2 Law Commission Dividing relationship property – time for change? Te mātatoha rawa tokorau – Kua eke te wā? (NZLC, IP41, 2017) at [3.6]. Hereafter referred to as “Law Commission Issues Paper.”
4 Law Commission Review of the Property (Relationships) Act 1976 Te Arotake i te Property (Relationships) Act 1976 (NZLC R143, 2019) at 5. Hereafter referred to as “Law Commission Final Report.”
5 Law Commission Final Report, above n 4.
Margaret Briggs
2022-10-06 00:31:00
--------------------------------------------
Should you add a footnote explaining why this is so?
reform is needed.6 They have recommended many changes to the regime, including an entire new Act.7 However, they have not gone so far as to majorly upset the underlying balance of the system, as they continue to favour a rules-based approach over one that is more discretionary.8 In fact, if the Law Commission’s recommendations are adopted, our relationship property law will be even more strict and formulaic in its application than it is currently.
This leaves us in a position where a comprehensive review of the law has taken place, but any reform is yet to occur, and it is unlikely to happen in the near future.9 It is therefore the opportune time to come to the PRA with fresh eyes and look deeply at whether the balance it strikes is in need of recalibration. There is a problem right the heart of the PRA that has not been addressed by the Law Commission. The scope of who is subject to the Act is wide, encompassing couples who have formalised their relationships and also those who have been in a de facto partnership for three years or more.10 This results in a wide range of people and different relationships being subject to the same strict rules. This is concerning, given that our society is far less homogeneous than it once was, and a one-size-fits-all approach seems difficult to justify in 2022 and looking forwards into the future. Perhaps our once modern, rules-based approach is now at risk of holding us back.
This dissertation will first briefly introduce the broad principles of property and family law. The remainder of Chapter I will focus on tracking the history of relationship property law in Aotearoa, looking at how it has been influenced by property and family law over time.
Chapter II will then turn to the PRA as it stands and outline the issues inherent in it. It will show that the Law Commission’s recommendations do not go far enough to solve these issues, as well as providing a summary of empirical evidence done in this area. Chapter III looks to a potential way forward that has not been well considered, the possibility of a more discretionary approach. Discretion is introduced in Chapter III, along with the discretionary approaches of England and Wales and Australia.
6 Law Commission Final Report, above n 4, At 5.
9 See Government response to the Te Aka Matua o te Ture | Law Commission report: He arotake i te āheinga ki ngā rewa a te tangata ka mate ana | Review of Succession Law: Rights to a person’s property on death (June 2022).
Finally, Chapter IV will address the advantages and disadvantages of discretion. This dissertation will argue that our current approach to relationship property division leaves too much room for injustice and does not set us up well for the future. It is my contention that shifting the balance of our regime more towards discretion, despite the potential problems with it, is the appropriate and most desirable way ahead. Various suggests will be made in Chapter IV as to how this could be achieved.
I Background
Relationship property law is deeply steeped in social policy and has been shaped by the needs of society. It is therefore important to track how the rationales that underpin our current regime developed and grew into what we understand them to be today. Relationship property is tasked with the difficult job of balancing family and property law, to achieve a regime that is acceptable to all. This chapter will first briefly outline features of the approaches of property and family law, before examining the history of relationship property law, with the aim to illustrate how property and family law have influenced the regime.
Property law is concerned with peoples’ relationships with property, the defining of those relationships into rights and interests, who they are enforceable against and what obligations arise out of them.11 Property as a concept dominates western capitalist culture. Much of our law touches on property rights. It is not difficult to understand why this is the case, with private property often seen as giving people freedom, self-sufficiency, and a sense of personal dignity.12 Property law is not stagnant, it evolves and adapts to society in many ways, but also has a strong grounding in concepts which have a long history. While this development has occurred largely through the common law, and later through statute, equitable principles also have had influence.13 Overall, property law is focused strongly on rules, favouring certainty and predictability, with little room for discretion. Any changes that we see now generally happen within the existing frameworks of what a property interest can look like, unless Parliament is willing to intervene.
Family law comprises of two aspects, the first being that it recognises that status of family relationships and the legal consequences of those relationships, and the second that it takes on a “protective jurisdiction,” protecting those minor children, and adults who cannot fully care for themselves.14 Family law deals with a broad scope of issues, including matters to do with children, domestic protection and relationship property, all linked to the idea of family. The Family Court was established as a specialist court, recognising the need for an approach that
11 Roger J Smith “Property Law” (4th ed, Pearson Education, England, 2003) at 11.
12 Samantha Hepburn “Principles of Property Law” (Cavendish Publishing, Sydney, 1998) at 1.4.4.
13 Roger J Smith, above n 11, at 23.
14 B D Inglis “New Zealand Family Law in the 21st Century” (Thomson Brookers, Wellington, 2007) at 1.1.
was not adversarial in nature but could facilitate agreement between parties.15 Over the years the scope of family law has broadened, rather than applying only to the traditional nuclear family unit consisting of a heterosexual married couple with children.16 Parliament has decided that special obligations arise when two people are “living together as a couple,” implying that it is this kind of family unit that gives rise to special obligations, based on how people are functioning in their relationship rather than any legal status.17 Family law is focused on fair outcomes, and is an area where judges often have discretion to make decisions. It is unique in that it deals with sensitive relationships and high emotional stakes, making it an uncomfortable area for the law to intervene in.18
Upon the colonisation of Aotearoa, laws of property were imported from England.19 Initially, relationship property was governed by the common law doctrine of matrimonial unity, which declared that on marriage spouses became one legal person, with only the husband having the power to deal with property, giving him the exclusive right to use and earn income from his wife’s property.20
The first fundamental reform was the Married Women’s Property Act 1884.21 This Act declared that a married woman was capable of acquiring, holding and disposing of property as separate property.22 This development was seen as a triumph for women’s emancipation,23 however the changes did little to improve the position of wives, as many earned no income.24 Unless a wife could show financial input, they would have no claim to their husband’s property. Women therefore were disadvantaged, with no recognition of their contributions to the household and child rearing. 25 Property was split according to strict property law principles
15 B D Inglis, above n 14, at 2.3.
17 Mark Henaghan “Legally Defining the Family” in Mark Henaghan and Bill Aitkin (Eds) Family Law Policy in New Zealand (5th ed, Lexisnexis, Wellington, 2020) 1 at [1.3].
18 John Dewar “The Normal Chaos of Family Law.” (1998) 61(4) MLR 467 at 467.
19 Law Commission Dividing relationship property – time for change? Te mātatoha rawa tokorau – Kua eke te wā? (NZLC, IP41, 2017) at [2.15]. Hereafter referred to as the “Law Commission Issues Paper.”
20 R L Fisher Fisher on Matrimonial Property (2nd ed, Butterworths, Wellington, 1984) at [1.4].
22 Married Women’s Property Act 1884, s3(1).
23 Nicola Peart and Mark Henaghan “Children’s Interests in Division of Property on Relationship Breakdown” in Jessica Palmer and others (eds) Modern Family Finances: Legal Perspectives (Intersentia, Cambridge, 2017) 65 at 68.
24 Law Commission Issues Paper, above n 2, at [2.20].
25 Law Commission Issues Paper, above n 2, at [2.22].
with little ability for concerns of fairness to lead to any adjustments, a clear favouring of a property law approach over a family law based one.
Concerns about the lack of recognition of housewives’ contributions grew in the first half of the 20th century. In the 1950s, the idea of marriage as a partnership began to grow in prominence.26 This concept first emerged in the United Kingdom, with the Royal Commission on Marriage and Divorce stating that they “fully endorse the view that marriage should be regarded as a partnership in which husband and wife work together as equals.”27 This was an implicit acknowledgement that strict rules of property law and a lack of ability to adapt to different situations might not be appropriate when dealing with property within a marriage.
Woodhouse J explained that, despite legislative development expanding on the rights married women gained through the 1884 Act, pre-1963 it was generally considered that there was no jurisdiction for strict legal or equitable rights to be overridden in the name of justice.28 He further went on to mention the common criticism that a wage-earning husband was at an advantage given that he was able to make financial contributions to property, while a wife was only able to make contributions of domestic rather than financial importance.29 There are then special problems that come about as a result of marriage, which the strict rules of property law are ill-suited to resolve, as these rules were developed in the context of strangers.30
In light of the concerns about the marital property scheme, the Matrimonial Property Act 1963 (MPA 1963) was enacted. This Act maintained a separate property system, with an added ability for courts to make any orders with respect to property that they saw fit.31 In exercising this discretion they had to give regard to the contributions of the husband and wife, in whatever form.32 Woodhouse J remarked that this legislation was considered to have “effected marked and far-reaching changes in the law.”33 The Act was progressive for its time and certainly
26 Mark Henaghan “Sharing Family Finances at the End of the Relationship” in Jessica Palmer and others (eds)
Modern Family Finances: Legal Perspectives (Intersentia, Cambridge, 2017) 293 at 299.
27 Royal Commission on Marriage and Divorce (UK) Report of the Royal Commission on Marriage and Divorce
(London, 1956) at 644.
28 Hofman v Hofman [1965] NZLR 795.
33 Hofman v Hofman, above n 28, at 800.
liberal in its intent.34 It showed the government recognising that it was appropriate for the courts to have a discretion to depart from the strict approach of property law and instead focus on individual circumstances.
This liberal intent however was undermined by the Court of Appeal in E v E, with both North P and Turner J taking a narrow view of the legislation, looking only at financial contributions.35 North P took issue with the idea of a community of surplus approach,36 where the couple would share equally in result of their joint efforts, concerned that a husband may be deserted by his wife for another man, and that she could then access the husband’s wealth.37 The court at least partly disagreed with Woodhouse J’s judgment in Hofman, and the approach of Lord Denning in the UK case Hine v Hine, who spoke of the matrimonial home as a family asset and used strong language of partnership.38 This was a frustrating backstep and shows resistance to departing from focusing on strict property entitlements, likely as a result of misogynistic views making their way into the judiciary.
Dissatisfaction with the MPA 1963 grew as women continued to struggle to get a fair share of property. Reports to the Government in the 1970s recommended a move to a single comprehensive statute that would assume equal contributions to the relationship from a husband and wife and that equal sharing would therefore be automatic.39 This was a rejection of traditional property law entitlements and a recommendation that an approach based on the relationship between the parties is more appropriate in the context of marriage. The most famous statement to come from this time period, before the idea of partnership was embedded into our relationship property regime, came from Lord Simon of Glaisdale. While discussing the way that division of labour within a marriage allows a man to earn income and accumulate capital, he said “The cock bird can feather his nest precisely because he is not required to spend most of his time sitting on it.”40 By the mid-1970s this idea was widely accepted and the time
34 Law Commission Issues Paper, above n 2, at [2.24].
35 E v E [1971] NZLR 859.
36 Robert Fisher “Should a Property Sharing Regime be mandatory or optional” in Jessica Palmer and others (eds) Modern Family Finances: Legal Perspectives (Intersentia, Cambridge, 2017) 329 at 249.
38 E v E, above n 35, at 872; Hine v Hine [1962] 1 WLR 1124.
39 Special Committee on Matrimonial Property Matrimonial Property Report of a Special Committee: Presented to the Minister of Justice in June 1972 (Department of Justice, June 1972); Select Committee on Women's Rights The Role of Women in New Zealand Society (June 1975); Law Commission Issues Paper, above n 2, at [2.25].
40 Lord Simon of Glaisdale “With All My Worldly Goods” (address to the Holdsworth Club, University of Birmingham, 20 March 1964) at 32.
came for the Government to enact law that reflected it, resulting in the Matrimonial Property Act 1976 (MPA).
This history shows us that the devlopment of relationship property law has been strongly linked with social policy and the need to meet the demands of society. Gaining increased property rights for married women was important for them to be on equal standing with men and be financially independent. Increasingly over the 20th century the need for wives’ contributions to property to be recognised became a significant policy concern that ultimately led to reform. The balance between an approach rooted in property law, and one that recognises the inherit importance and uniqueness of the family unit, had started to shift away from the former and towards the latter.
The MPA represented a monumental shift in the approach to relationship property. In 1975 the Minister of Justice outlined that the previous regime had fallen short of achieving equal justice and was not reflective of how married couples were treating their property.41 He also stated that the government wished to uphold the idea that marriage is an equal partnership.42 The Government recognised the need for a codified law of matrimonial property that acknowledged the family unit, rather than treating the marriage partners as strangers. Traditional property law principles were no longer seen as suitable to govern property that exists within a marriage, but the wide discretionary approach had failed to bring about the desired outcomes.43 Therefore, family law ideas were embedded into the regime, however through a rules-based approach that more closely aligns with property law.
The MPA saw emphasis move from contributions made to property towards contributions made to the marriage. These contributions were regarded as equal, forming the basis of the presumption of equal sharing.44 The MPA set out a deferred sharing regime, meaning that during the marriage, the spouses are largely free to deal with their own property as they see fit.45 However, if that marriage broke down, the provisions of the MPA applied. The
41 AM Finlay “Matrimonial Property – Comparable Sharing: An Explanation of the Matrimonial Property Bill 1975” [1975] II AJHR E6 at 3.
43 Reid v Reid [1979] NZCA 30; [1979] 1 NZLR 572 at 581 per Woodhouse J.
44 Henaghan “Sharing Family Finances at the End of the Relationship,” above n 26, at 301.
45 Fisher Fisher on Matrimonial Property, above n 20, at [1.2].
presumption of equal sharing was strongest in relation to the matrimonial home and family chattels, which are split equally unless one of the narrow exceptions apply.46 The balance of matrimonial property was also to be split equally, unless one party’s contribution to the marriage partnership could be shown to be clearly greater than that of the other party.47
The MPA applied only to marriages.48 This reflected conservative views on the sanctity of marriage and the belief that only when couples made a formal commitment to each other in law should property consequences follow. Another feature quietly embedded into the regime was the clean break principle,49 which dictates that where possible matrimonial property division on separation should be complete and final.50 In Ford v Ford, Casey J affirmed the fact that the overall policy of the Act works to enable parties to draw a line across the past and start afresh soon after the separation.51 The desire to uphold this principle further supported the shift to a rules-based regime with little discretion.
The MPA did not apply on death, with the MPA 1963 continuing to be applied in that situation. Another key feature of the regime is that it created an opt-out system, where parties are able to contract out of the regime, provided they follow the requirements.52 Contracting out is allowed to promote autonomy and to give partners an alternative to the strict regime. However, given the social nature of the legislation and the need to protect against inequalities in bargaining power,53 these contracts are not absolute and may be set aside by the court, either as a result of not following the requirements in the Act or if the court felt it would be unjust to enforce it.54 Pre-2001, it was common for the court to use this power.55
The MPA brought with it a new era of relationship property law, as radical legislation that put us on a separate path from other common law nations. Equal sharing was seen as the most
47 MPA, s 15.
48 Fisher Fisher on Matrimonial Property, above n 20, at [2.8].
49 Bill Aitken and Wendy Parker Relationship Property in New Zealand (Butterworths, Wellington, 2001) at [1.2].
50 Fisher Fisher on Matrimonial Property, above n 20, at [17.47].
51 Ford v Ford (1984) 3 NZFLR 317 at 319 per Casey J.
52 MPA, s 21.
53 Law Commission Review of the Property (Relationships) Act 1976: Preferred Approach – Te Arotake i te Property (Relationships) Act 1976: He Aronga Mariu ai (NZLC, IP44, 2018) at [8.3]. Hereafter referred to as “Law Commission Preferred Approach.”
55 David Howman “Critique of Justice Hardie Boys’ Paper” in Bill Aitken, Graeme Austin and Virginia Grainer (Eds) Family Property Law and Policy (NZIALS and VUWLR, Palmerston North, 1995) 43 at 45.
convenient and fair way to increase the property share of wives.56 Parliament favoured the certainty and simplicity of rules over individualised justice, leaving limited opportunities for discretion. The government made a decision as to how it would balance the competing concerns of people and of different legal approaches, to create a system that could be acceptable to all.
Richardson J described the statute as not a technical one, but instead “social legislation of the widest general application,”57 which saw the statue developing through the courts in the following years as Judges figured out how it should be applied.58 As we drew closer to the 21st century society continued to change, with such changes highlighting problems and gaps within the relationship property regime, and again calls for reform grew.
The new model of equal sharing quickly became accepted by most New Zealanders, with the Act not only responding to social expectations but also moulding them.59 However society is always changing, and along with it the way family lives and financial affairs are structured, so a once radical Act can quickly begin falling behind the times. Issues with the MPA started emerging throughout the 1980s. In the 1980s two reports were tabled with the government, both of which identified significant issues that needed to be addressed.60
One major shortcoming of the regime was its focus strictly on formal equality between partners.61 Formal equality focuses on equal treatment of partners in all circumstances, ignoring the fact that there are structural disadvantages that women face, which persist despite changing social dynamics.62 Evidence showed that after divorce women were usually left in a worse financial position than their ex-husbands.63 Benefits and losses related to earing capacity
56 Fisher Fisher on Matrimonial Property, above n 20, at [1.2].
57 Reid v Reid, above n 43, at 605 per Richardson J.
58 Nicola Peart “The Property (Relationships) Amendment Act 2001: A Conceptual Change” (2008) 39 VUWLR 813 at 816.
59 John Priestley “Whence and Whither? Reflections on the Property (Relationships) Act 1976 by a Retired Judge” [2017] OtaLawRw 4; (2017) 15 Otago LR 67 at 74.
60 Royal Commission on Social Policy Report of the Royal Commission on Social Policy (Wellington, 1998); Working Group on Matrimonial Property Report of the Working Group on Matrimonial Property and Family Protection (Department of Justice, Wellington, 1988).
61 Regina Graycar “Matrimonial Property Law Reform and Equality for women: Discourses in Discord?” in Bill Aitken, Graeme Austin and Virginia Grainer (Eds) Family Property Law and Policy (NZIALS and VUWLR, Palmerston North, 1995) 9 at 23.
63 Margaret Briggs “Historical Analysis” in N Peart, M Briggs and M Henaghan (eds) Relationship Property on Death (Brookers, Wellington, 2004) at 14.
for spouses come about as a direct result of the division of roles within the relationship, and so should be accounted for as part of the relationship property division, however this was not possible under the MPA.64 While treating partners exactly the same looked like equal treatment, it was not leading to equal outcomes.65
Furthermore, the exclusion of de facto couples from the regime grew as an issue as these relationships became more prevalent, and social stigma surrounding living together outside of marriage waned.66 Judges worked to develop property law concepts that could provide remedies for de facto partners.67 However, many partners were unable to meet the threshold for an equitable interest, and if they did they often received far less than they would have under the MPA.68 The sense grew that these relationships were in reality not dissimilar from marriage, and that the potential for injustice in post-separation allocation of property was high.69 Many de facto couples had children of the relationship, who could not benefit from the protection of maintaining their permanent residence that is offered under the MPA.70 The Human Rights Act 1993 outlawed discrimination on the basis of marital status and sexual orientation,71 which some thought the MPA was in contravention of.72 Although there were people who preferred the regime to apply only to marriage in order to preserve its sanctity, this view was becoming increasingly outdated and out of touch with social reality.
By the end of the 20th century other issues without the MPA became apparent, including the rise of trusts being used to circumvent the relationship property regime,73 the ease that Judges had in setting aside agreements made to opt-out of the Act,74 and the fact that the regime could
64 Peart “The Property (Relationships) Amendment Act 2001: A Conceptual Change”, above n 58, at 818.
65 Margaret Wilson “Policy and Law in the Development of Relationship Property Legislation in New Zealand” [2017] OtaLawRw 5; (2017) 15 Otago L Rev 89 at 94.
66 John Priestley, above n 59, at 74.
67 Michael Hardie Boys “Judicial Attitudes to Family Property” in Bill Aitken, Graeme Austin and Virginia Grainer (Eds) Family Property Law and Policy (NZIALS and VUWLR, Palmerston North, 1995) 31 at 40.
68 Bill Aitken “Family Property Law Reform” in Bill Aitken, Graeme Austin and Virginia Grainer (Eds) Family Property Law and Policy (NZIALS and VUWLR, Palmerston North, 1995) 77 at 81.
69 Judith Tizard “An Opposition Commentary” in Bill Aitken, Graeme Austin and Virginia Grainer (Eds)
Family Property Law and Policy (NZIALS and VUWLR, Palmerston North, 1995) 47 at 47.
70 D A M Graham “The Minister of Justice’s Opening Speech” in Bill Aitken, Graeme Austin and Virginia Grainer (Eds) Family Property Law and Policy (NZIALS and VUWLR, Palmerston North, 1995) 3 at 6.
72 Judith Tizard, above n 69, at 47.
73 Jessica Palmer “What To Do About Trusts? in Jessica Palmer and others (eds) Modern Family Finances: Legal Perspectives (Intersentia, Cambridge, 2017) 177 at 179.
not apply on death.75 The need for reform was already accepted by 1988, but for political reasons it was not until the late 90s that the matter came before parliament.76 After spending more than 2 years in the House, amendments were finally passed into law in 2001.77
The name of the MPA was changed to the Property (Relationships) Act 1976, as it no longer only applied on marriage. The inclusion of de facto couples was one of the biggest changes to the regime.78 A definition for de facto relationships was established as “living together as a couple.”79 The PRA applies to a couple who have been in a de facto relationship for 3 years or could also apply at least in part if there is a child of the relationship.80
Another significant change was the addition of s 15, which allows for departure from equal sharing to avoid future disparity in income or living standards as a result of division of functions in the relationship.81 This served to address the problem of unequal outcomes, while also holding fast to the clean break principle.82 The PRA was also extended to apply on death, with partners being having the option to either take what property they inherit under the deceased partner’s will, or forfeit their entitlements under the will and instead assert their property rights under the PRA.83 The sections on contracting out were tightened to make it more difficult for the court to set aside agreements made by the parties.84 The presumption of equal sharing was strengthened by the amendments, with the lowered standard for the balance of matrimonial property removed, meaning that all property is to be shared equally unless it would be repugnant to justice.85 A final important change was that the PRA has added sections which allow the courts to look into transfers of property made to trusts and potentially claw back some of that property in certain circumstances.86
The PRA did not change the main focus of the regime, as it maintained the principles of equal sharing and partnership, and extended these to cover more relationships. The 1988 Working
75 Nicola Peart “Family Finances on the Death of a Spouse or a Partner” in Jessica Palmer and others (eds)
Modern Family Finances: Legal Perspectives (Intersentia, Cambridge, 2017) 95 at 111.
77 Property (Relationships) Amendment Act 2001.
78 Margaret Briggs “Which Relationships Should be Covered in a Property Sharing Scheme?” in Jessica Palmer and others (eds) Modern Family Finances: Legal Perspectives (Intersentia, Cambridge, 2017) 37 at 47.
82 Peart and Henaghan, above n 23, at 85.
85 Peart “The Property (Relationships) Amendment Act 2001: A Conceptual Change”, above n 58, at 824.
Group was guided by the principles of equality between the sexes, marriage as an equal partnership and the desire for a clean break, looking at how the regime could better give effect to these.87 This shows that the intention was to stay true to the aims of the MPA, while modifying it to respond to developments in society.88 Aitken said that the PRA would “build on the firm foundations laid down by our uniquely New Zealand matrimonial property law.”89 The process to update the Act was long, and since then the only major change has been the inclusion of civil unions in 2004.90
This brings us up to date with relationship property law as it stands. Chapter II will dive into the problems that have emerged since 2001 and the need for further change.
87 Working Group on Matrimonial Property, above n 60, at 3.
89 Aitken and Parker, above n 49, at [1.11].
Margaret Briggs
2022-09-10 01:51:00
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Good point. It’s worth going for a system that has some built-in longevity.
Where We Are
Having reviewed the background of the relationship property regime in Aotearoa, I will now discuss the problems inherent in the PRA, and what the Law Commission has suggested for a new regime. This chapter will also look to empirical research that gives insight into our society and the operation of the PRA. It will become clear that a larger step back needs to be taken and we should return to the drawing board in order to create a regime fit for not only 2022 but potentially the next 50 years or more.
As has been discussed, the PRA is social legislation, born out of public values and expectations.91 It is not surprising then that it is not particularly coherent in its underlying rationales. This is as a result of the way in which it has been created and also a reflection of the extremely difficult area of law that is relationship property. The PRA contains within it competing policy objectives, reflecting concerns from property and family law, attempting to strike a balance between these objectives. It is my contention that this balance has been incorrectly struck.
The Law Commission describes the overall policy of the PRA as being achieving the just division of property at the end of a relationship.92 This leads to the question of what exactly is just. To answer this, the Law Commission refers back to “the broad statutory concept of justice outlined in PRA.”93 This is a circular methodology that highlights the way in which the PRA itself sets the standards of justice that it must achieve, rather than appealing to broader notions of justice.
The purposes and principles of the PRA, in ss 1M and 1N, reflect and give context to this overarching policy goal. It is evident in these sections that there are conflicting objectives in the PRA. The clean break principle, reflected in s 1N(d), creates a qualification on how justice can be achieved in this area. It is at odds with s 1N(c) for example, which expands the equality sought by the Act beyond formal equality and towards substantive equality. Something else
91 Nichola Lambie "Review of the Property (Relationships) Act 1976” [2019] NZLJ 304 at 304
92 Law Commission Issues Paper, above n 2, at [3.4].
Margaret Briggs
2022-09-10 02:00:00
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Good – this is one of the foundational articles on the MPA.
that is clear is that we are not concerned with ordinary commercial dealings in this Act, where people are treated as strangers, but instead with personal relationships and everything that those relationships entail.94 Prescribing property consequences to those relationships, which are infinite in variety, is what makes this exercise so difficult.
Much has been made of the conceptual incoherency of the PRA. In 1977, academics Anthony Angelo and Bill Aitken considered the concepts and structure of the MPA.95 They concluded that the Act steered an acceptable middle ground between competing demands, containing within it some aspects of a community of property regime, and was otherwise a community of surplus regime.96 This scheme was seen as appropriate, recognising the inevitably of some community property in marriage while also understanding that given the prevalence of divorce, a full community of property regime is not tenable.97 Although the Act did not fit squarely within any one regime, given the characterisation of marriage as a partnership and the focus on the relationship, the choices made largely made sense. In practice, and following Court of Appeal decisions that settled the law surrounding the MPA, the Act operated as a system of deferred community property.98 Interestingly, Angelo and Aitken also spoke about the MPA as representing a return to a more traditional concept of marriage.99 At a time when the law and the state were already playing a lesser role in regulating marriage, the MPA imposed strict rules on couples as a result of their marital status.100
The shifts that came with the PRA proved far more problematic. The change to include de facto relationships in the regime meant that it is no longer a couple’s legal status that brings them within the ambit of the PRA, but the fact of them living together as a couple.101 De facto relationships became treated as a partnership of equals in the same way that marriage is, with limited distinction drawn between the two.102 This was a change that was called for, given the functional similarity between marriages and some de facto relationships. However, de facto relationships are, by their very nature, uncertain, and including them in the statutory framework
94 Bill Aitken “What Kind of Property is “Relationship Property”” (2016) 47 VUWLR 345 at 351.
95 A H Angelo and W R Atkin "A Conceptual and Structural Overview of the Matrimonial Property Act 1976" (1977) 7 NZULR 237.
98 Peart “The Property (Relationships) Amendment Act 2001: A Conceptual Change”, above n 58, at 817.
99 Angelo and Aitken, above n 95, at 248.
101 Peart “The Property (Relationships) Amendment Act 2001: A Conceptual Change”, above n 58, at 821.
inevitably invited imprecision.103 The possible ways in which people can structure their relationships are endless, making exhaustively defining what exactly is and is not a de facto relationship impossible.104 This leaves the situation where the PRA contains an inflexible, codified community property system, with equal sharing of all relationship property almost inevitable, and yet the ambit of the Act is uncertain.105 Professor Nicola Peart suggested that based on the repeal of the weaker presumption of equal sharing when it came to non-domestic relationship property, the PRA shifted from a system of deferred participation to one of deferred community of property.106 There are therefore serious property consequences to being in a de facto relationship, even more so than under the MPA. Miller J recognised this problem, remarking that “these decisions are intrinsically difficult in the marginal cases that reach hearing” but also that the decisions “matter all the more” as a result of the consequences attached to being in a de facto relationship for more than three years.107
Section 21 does allow people to opt out of the PRA, however couples can only opt out of a system when they know that they are a part of it. De facto couples who have not made a conscious choice to define the nature of their relationship are likely to drift into the regime without realising.108 The court retrospectively applies the status of de facto to a relationship, whether or not that matches the expectations of the parties.109 Professor Margaret Briggs aptly sums up the problem created by including de facto relationships in the PRA by saying “such an uncertain pathway into a rules-based equal property sharing regime therefore creates an awkward mix of discretion and inflexibility.”110
It is my contention that this is an unacceptable issue lying right at the heart of the PRA. Legislators have sought to appease the concerns of family law by creating an inclusive regime that covers many relationships, while also maintaining the rules based approach of property. The balance that has been struck is, in my opinion, a major cause for concern, and the possibility that it will create injustice for parties is only going to increase as we continue to progress as a society.
103 Bill Aitken “Property Division: Lessons From New Zealand” (2017) 7 VUWLRP 129 at 139.
104 Peart “The Property (Relationships) Amendment Act 2001: A Conceptual Change,” above n 58, at 822.
107 DM v MP [2012] NZHC 503; [2012] NZFLR 385 at [24] per Miller J.
108 Briggs “Which Relationships Should be Covered in a Property Sharing Scheme?”, above n 78, at 54.
109 DM v MP, above n 107, at [23] per Miller J.
110 Briggs “Which Relationships Should be Covered in a Property Sharing Scheme?”, above n 78, at 54.
Margaret Briggs
2022-09-10 02:09:00
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Good point.
While this is, in my view, the biggest issue with the PRA, it is not the only one. Much has been said about s 15, which also ushers in unpredictability into the regime, undermining the clear rules.111 The application of s 15 requires a high level of judicial discretion, which has created a significant amount of litigation.112 This dissertation does not have the scope to venture into this in any detail, but it is undoubtedly one of the major incoherencies in the Act.
Another area where the Act fails to make sense is in regard to the definition of relationship property. The family home and chattels are given a special status in the PRA, becoming relationship property no matter when they were purchased,113 and are therefore always subject to equal sharing.114 No explanation was given for this conversion of pre-relationship property into property that formed part of the pool for equal division.115 The Law Commission discussed in their reports the three different approaches to the classification of property taken under the PRA; the “fruits of the relationship” approach, the “family acquisitions” approach and finally the “family use” approach.116
It is this third approach which is relevant to the family home and chattels, and that does not fit well within the regime. While the former approaches are rooted in the idea that the relationship is a joint family venture to which the partners contribute equally, the Law Commission considers that the basis for the “family use” approach is unclear.117 It is likely that the rationale was purely social, and specifically influenced by the fact that the main concern the legislation was dealing with when first enacted in 1976 was the lack of recognition of women’s contributions in a relationship.118 Allowing equal sharing of the home in all circumstances was a clear way to make inroads into achieving equality for women upon separation. While this may be been important 50 years ago, it is difficult now to justify the family use approach, which sees the family home and chattels divided equally between partners simply because they was used by both parties during the relationship.119
111 Peart “The Property (Relationships) Amendment Act 2001: A Conceptual Change,” above n 58, at 828.
112 Aitken “Property Division: Lessons from New Zealand”, above n 100, at 150.
115 Fisher “Should a Property Sharing Regime be mandatory or optional,” above n 36, at 338-339.
116 Law Commission Final Report, above n 4, at [3.13].
117 Law Commission Final Report, above n 4, at [3.20].
118 Fisher “Should a Property Sharing Regime be mandatory or optional,” above n 36, at 339.
119 Law Commission Preferred Approach, above n 53, at [2.90].
It is clear that the PRA is outdated and no longer is reflective of society’s expectations around what should happen when a couple separates.120 It needs more than just small adjustments to update an otherwise functioning regime. The balance that lies at the core of the PRA has been incorrectly struck, so that we have a regime that is simultaneously rigid in its application but broad and somewhat unclear in who it applies to. Further, it contains concepts that are unjustified and further entrench the unfairness of the incorrect balance. The nature of dealing with family relationships means that there will never be a regime that meets all the competing concerns, however the PRA fundamentally contradicts itself in a way that ought not to be accepted.
As has been mentioned, the Law Commission has made very clear that the PRA is in need of reform, describing it as “no longer fit for purpose for 21st century New Zealand.”121 Their final report contains 140 recommendations that lay out a preferred way forward in this area.122 The report was presented to the House of Representatives in 2019, who accepted the need for a separate inquiry to be made into relationships ending on death as part of a wider review of succession law.123 Following the release of that report, the Government has again responded, saying that the reform of these areas of law will be a significant undertaking that will take years of policy work.124 There will therefore be no changes to the regime in the near future. Nevertheless, it is worth looking at the Law Commission’s recommendations on the basis that they will inform any reform that does eventuate.
The Law Commission reports are undoubtedly thorough and well done. The recommendations cover the entire scope of the Act as well as surrounding issues. Unfortunately, it is my belief that these recommendations do not fully resolve the core issue that this dissertation is concerned with. Ultimately if the recommendations are adopted in their entirety the Act would retain its inclusive nature and still be strict and rule based in its application.
120 Lambie, above n 91, at 304.
121 Law Commission Final Report, above n 4, at [2.15].
123 Government Response to the Law Commission Report Review of the Property (Relationships) Act 1976 Te Arotake i te Property (Relationships) Act 1976 (191127, June 2019).
124 Government response to the Te Aka Matua o te Ture | Law Commission report: He arotake i te āheinga ki ngā rewa a te tangata ka mate ana | Review of Succession Law: Rights to a person’s property on death (June 2022) at 6.
Under the recommendations, the Relationship Property Act (the new Act) would replace the PRA.125 The same overarching purpose would apply, with some new principles included such as taking into account the best interests of children and recognising tikanga Māori. For current purposes, a significant change would be that the “family use” approach in terms of the family home would be mostly abandoned, with the home not automatically becoming relationship property.126 Partners who bring a home into a relationship would retain the pre-relationship value of that home as their separate property. This is an important step to bring the regime up to date and more acceptable to the wide range of relationships it seeks to cover.127 However, this change does not fully remedy the concerns surrounding the family home and the connected conceptual issues.
For example, any increase in value of the home during the relationship will be treated as relationship property under the new Act.128 This undermines the fruits of the relationship approach, given that the application of separate property may be the reason for any increases.129 Further, if a new home is purchased during the relationship or in contemplation of the relationship, it will become relationship property, even if separate property was used.130 It is not clear why the fruits of the relationship approach need be undermined in this way. These treatments of the family home depending on when it was purchased are inconsistent, because when a partner brings a home into a relationship, they may still intend it for common use during the relationship. However, the new Act would dictate a different outcome in that situation than if that home is bought during, or in contemplation of the relationship.131 While in some situations it may be the case that the parties are expecting to share a home bought during their relationship despite the origins of the funds used, there are situations where this will not be the case.132 Therefore, while this change could be a step in the right direction, the underlying problem of the regime having strict rules but applying so broadly to every situation still remains.
125 Law Commission Final Report, above n 4, at 24.
126 Lambie, above n 91, at 404.
127 Law Commission Preferred Approach, above n 53, at 290.
128 Law Commission Final Report, above n 4, at 26.
129 Nicola Peart “Comments on NZLC IP 44: Review of the PRA 1976: Preferred Approach,” at [2.1.6].
130 Law Commission Final Report, above n 4, at [3.82].
131 Peart “Comments on NZLC IP 44: Review of the PRA 1976: Preferred Approach”, above n 129, at [2.1.4].
A further change that is recommended is repealing s 15,133 and replacing it with a Family Income Sharing Arrangement (FISA).134 This would remove the discretion to make adjustments to equal sharing and instead provide a formulaic mechanism to account for the division of functions within a relationship that leads to one partner earning more than the other. The Law Commission is clearly looking to remedy the issue of having s 15 sit so uncomfortably within the regime, while still wanting to acknowledge the risk of inequity. The discretionary model offered by s 15 did not result in the desired outcomes, with Elias CJ saying that it "cannot be accounted to have been successful in meeting its purpose."135 As a result the recommendation has been made to swing fully in the other direction towards strict rules, with a limited place for discretion only when there is a risk of serious injustice.136 Once again this will not be discussed at length, but it is a good example of the Law Commission favouring a legislated, rules-based, programme to cover all situations.137
One area where the Law Commission has opted to not recommend significant changes in the new Act is to what relationships the regime applies. De facto relationships would retain the same definition and three year qualifying period under the new Act.138 However, it would introduce a rebuttable presumption that “two people are in a qualifying de facto relationship when they have maintained a common household for a period of at least three years.”139 The purpose of this is to make it easier for partners to identify when they enter into a qualifying de facto relationship, given that a major difficulty in this area has been establishing a start date.140
Overall, the Law Commission has recommended a new regime based on substantially the same underlying ideas of rules and property law based entitlements. They have stuck firm in their favouring of certainty and made adjustments so that the rules are more palatable for the current context. The new Act would be an improvement on the PRA, bringing it more up to date with society and the expectations people have when entering relationships. However, these recommendations will not create a regime with longevity. Society changes rapidly, and in 20 years’ time it is likely that again we will have an outdated system. It is worth seriously
134 Law Commission Final Report, above n 4, at 38.
135 Scott v Williams [2017] NZSC 185 at [351].
136 Law Commission Final Report, above n 4,at [10.115]-[10.121].
considering ideas beyond the bounds of what New Zealand has had for the past 50 years, to find a new balance between family and property law approaches that is more appropriate for the broad scope of relationships that are covered. The Law Commission has shuffled around the balance, avoiding some of the injustices that are currently at risk, but has not provided sufficient changes to really correct the core problem.
There is a lack of evidence surrounding relationship property division, making it difficult to obtain wider societal views on these issues and understand what the reality is for people who are subject to the regime. The Borrin Foundation and the University of Otago have sought to fill this gap by undertaking a research project to examine relationship property division in Aotearoa.141 In 2018 the findings from the first phase of the project were released, looking at public values and attitudes towards property division (the first Borrin report).142 This was followed by a second report that focuses on hearing the experiences of separated people as they went through relationship property division (the second Borrin report).143
The first Borrin report showed that while 79 per cent of respondents were aware of the equal sharing law, only 48 per cent were aware that it applies to de facto couples who have lived together for three years or longer.144 This awareness was lower for respondents of Māori, Pacific or Asian decent and for younger people.145 Approximately three quarters of respondents agreed with the equal sharing rule.146 Initially, this looks like quite strong support. However, 88 per cent of those who supported the rule in principle responded in a way that suggested they did not always support equal sharing in practice.147 People thought that a range of factors should be considered when deciding if equal sharing should apply, such as whether the couple
141 Megan Gollop and Nicola Taylor Relationship property division in New Zealand: The experiences of separated people. (Children’s Issues Centre, Faculty of Law, University of Otago, Research Summary, March 2022) at 1. Hereafter the “second Borrin summary report.”
142 I Binnie and others Relationship Property Division in New Zealand: Public Attitudes and Values – A general population survey (Michael and Suzanne Borrin Foundation, Technical research report, October 2018).
Hereafter referred to as “first Borrin report.”
143 Megan Gollop and others Relationship property division in New Zealand: The experiences of separated people (Children’s Issues Centre, Faculty of Law, University of Otago, Descriptive Research Report, October 2021). Hereafter referred to as “second Borrin report.”
144 I Binnie and others Research summary – Relationship property division in New Zealand: Public attitudes and values. A general population survey. (Michael and Suzanne Borrin Foundation, Research Summary, October 2018) at 3. Hereafter referred to as “first Borrin Summary report.”
has bought a house together and whether they have children.148 This shows a recognition that different scenarios require different responses, and support for equal sharing in all circumstances cannot therefore be described as especially strong.149 When it came to how long a couple should be together before equal sharing applies, there was no clear consensus, but the average answer was three years and three months.150 Once told what the current law is, around 60% agreed with this.151 It seems that people on the whole are relatively happy to accept the law as is, but do not hold strong views either way.152 It is likely that the law itself is setting the norm, as there is no natural right answer and people do not have strong feelings on what the law should be apart from what it already is.
Another finding was that only a quarter of respondents had considered a pre-nuptial agreement in the past, and only 7 per cent had finalised any such agreement.153 Therefore, the ability of partners to contract out of the PRA is not sufficient mitigation against the strict rules of the regime, given the small amount of people who consider this an option.
The second Borrin report looked at how couples in practice divide their property.154 This gives insight into how the regime operates on the ground, particularly as most couples come to a resolution outside of court.155 The survey had 378 participants who had completed all or most of their property division with their former partner in the past five years. 82 per cent of these were women.156 An interesting point to note is that 60 per cent of respondents indicated that there had been family violence in their former relationship, either during or after having separated, which primarily consisted of psychological abuse such as threats and bullying.157 It is difficult to say whether this is representative of separating partners across the country, and this violence may have affected the answers in this survey. The Law Commission has wisely recommended that the Government look into the relevance of family violence to the division of property.158
148 First Borrin Report, above n 142, at 34.
154 Second Borrin summary report, above n 141, at 1.
157 Second Borrin report, above n 143, at 5.
158 Law Commission Final Report, above n 4, at [42].
Margaret Briggs
2022-09-10 04:45:00
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More discretion might not help – even less certainty!?
Most of the survey participants were well informed about the relationship property rules, with only 21 per cent indicating that they knew “hardly anything.”159 The majority of survey participants experienced emotional distress (81 per cent) and stress or anxiety (78 per cent) while in the process of property division.160 One participant commented “It was the most dreadful, draining, damaging event I’ve ever been through. I wouldn’t wish it on anyone. I still feel physically sick over it.”161 A separation is an incredibly difficult and emotionally charged time for people, making it all the more important that the process and regime is the best it can be. Respondents dealt with many other issues during the property division process, including 9 per cent who had a difficult time with the Family Court, representing 92 per cent of people who had to go through the Court.162 Some participants painted a rather bleak picture of the current regime, describing the law as grossly outdated, unfair and poorly designed. A number of participants also considered that equal sharing of relationship property is unfair.163 There was a variety of reasons for this, such as because of assets brought into the relationships, unequal contributions to property or the division of functions during the relationship.164
Overall, 43 per cent of people were satisfied with the outcome of their property division and a third were dissatisfied, while 45 per cent thought the outcome was unfair compared to 40 per cent who thought it was fair.165 Less than half of respondents then received fair and satisfactory outcomes under the current PRA, indicating that it is not fit for purpose. One respondent explained her situation:166
I was totally left with nothing apart from my children and had to buy everything from scratch, even though when I met my husband I owned a home and everything in it. ... [Now] I will never own a home again, I have no Super, I will be bankrupt.
This is not the sort of outcome we should be accepting. While this is just one woman’s subjective view of her experience, the report chronicles multiple negative experiences, which are not significantly outweighed by positive ones. Some negative experiences are likely
159 Second Borrin report, above n 143, at 20.
160 Second Borrin Summary report, above n 141, at 6.
161 Second Borrin report, above n 143, at 102.
165 Second Borrin Summary Report, above n 141, at 8.
166 Second Borrin Report, above n 143, at 152-153.
Margaret Briggs
2022-09-10 04:49:00
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Charlotte, I think this is a good chapter that will act as a “bridge” into chapter three. Possibly, some of the language could be dialled back a bit (eg, “huge” is a strong adjective etc, etc). Overall, the chapter sets the scene for your examination of alternatives. I think the last bit on the Borrin study is fairly well balanced.
inevitable but having 45 per cent of respondents reporting an unfair outcome suggests that there is a larger problem at play.
The Borrin reports are extensive pieces of work that cover a broad range of topics relating to relationship property division and people’s experiences with the regime. This has been only a short overview of some of the relevant points, to highlight that there are problems with the PRA that need fixing. While it is entirely likely that some of these problems would be addressed in the new Act should it eventuate, it is worth assessing whether a shift in the underlying balance of the regime would be more appropriate to facilitate fairer outcomes for all.
III Introducing a Discretionary Approach
Given the conclusion that the balance struck in the PRA needs to be recalibrated, the question then becomes how this might be done. One option that I propose is worth discussion is moving away from strict rules in favour more discretion. This is not something that the Law Commission discussed in depth in their review of the PRA, stating that they consider a rules- based regime remains appropriate.167 A discretionary approach is therefore not on the table as an option for future reform. It is my contention that we should not be constrained by the system we have, because it is what we have known for 50 years. It is important to step all the way back to consider the possibility of a completely different regime. It would be a shame to waste the opportunity to really give thought to whether discretion could be the solution to the issues discussed in the previous chapter. This chapter will look at how discretion is used in family law currently, analyse the relationship property regimes in Australia and England and Wales, and finally discuss why this might be a useful approach to consider for Aotearoa. The final chapter of this dissertation will deal with the issues and practicalities of a possible discretionary regime.
Legal philosopher HLA Hart describes discretion as what happens when officials are left to make a decision that is not rigidly determined by specific rules, but instead where there is a choice for them to make.168 This choice must be made responsibly, not on a whim but withwisdom or deliberation.169 Legal problems are not maths problems, there is not one clear
solution and often the decision to make is one where reasonable people would disagree on the outcome. This leaves room for judges to use their discretion when making such decisions, not randomised choices but ones grounded in principles.
Hart further justified the use of discretion within the law as it provides a solution to the common problems of the relative ignorance of fact and the relative ignorance of aim.171 This is referring to the fact that rule makers cannot know the full range of facts to which any rules they make
167 Law Commission Final Report, above n 4, at 1.5.
168 HLA. Hart 'Discretion' (2013) 127 Harv L Rev 652 at 657
171Geoffrey C Shaw, 'H. L. A. Hart's Lost Essay: Discretion and the Legal Process School' (2013) 127 Harv L Rev 666 at 669.
will apply to and may also be unable to articulate or reach agreement on the principle that should be applied when making a decision.172 Discretion therefore becomes a tool to resolve these problems, with rule makers promulgating a general principle and leaving it to the relevant official, here the Judge, to look to the facts and decide how the principle should apply. Discretion is deeply embedded into the legal system, there is no perfect rule that can be universally applied to the human experience, always situations with no obvious right answer, cases that exist at the margins and require judges to use their experience and training to come to a conclusion.173 Hart for one saw discretion not as something to be overcome but a part of the law to be perfected.174 We are also not faced with a choice between a solely rules-based system and a solely discretion-based one.175 Instead, as is often the case, it is all about the balance between the two extremes that is being struck.
The balance in family law is weighted more towards discretion than in many other areas of law. 176 Family law is concerned with the relationships between people and looks to cater to the future needs of the parties in those specific familial relationships.177 The problem of relative ignorance of fact is common in many of these contexts.178 The variety of situations that come before the family courts, with many nuances and individual factors to consider, make it near impossible to lay out any defined rules. The aims of family law too have become murkier over time.179 The proper basis for law governing family relationships is not immediately obvious, even more so as our idea of what constitutes a family has broadened.180 All of this puts legislators in a politically difficult position and pushes them to dictate principles that are broad and uncontroversial, leaving judges to pass their own judgment on individual cases.181
It also makes intuitive sense that discretion would have been favoured over rules in family law, specifically when it comes to children. The ‘rough justice’ provided by rules is far less palatable
172 Joanna Miles “Should the Regime be Discretionary or Rules-Based?” in Jessica Palmer and others (eds)
Modern Family Finances: Legal Perspectives (Intersentia, Cambridge, 2017) 261 at 269.
173 Carl E Schneider "Discretion and Rules: A Lawyer's View" in K Hawkins (eds) The Uses of Discretion
(Oxford University Press, Oxford, 1992) 47 at 47.
174 Shaw, above n 171, at 669.
175 Miles “Should the Regime be Discretionary or Rules-Based?”, above n 172, at 262.
176 Joanna Miles “Property Law v Family Law: Resolving the Problems of Family Property” (2003) 23(4) LS 624 at 628.
178 Miles “Should the Regime be Discretionary or Rules-Based?”, above n 172, at 268.
180 Dewar, above n 18, at 474.
181 Mark Henaghan “Legally Rearranging Families: Parents and Children After Break-up” in Mark Henaghan and Bill Aitkin (Eds) Family Law Policy in New Zealand (5th ed, Lexisnexis, Wellington, 2020) 293 at [7.5].
when dealing with the lives of children.182 Reducing decisions around children’s lives to a purely formulaic assessment with no room for the individual situation to be considered would be inappropriate given the deep importance of these decisions and the care which they require.183 It is for similar reasons that family is a specialist jurisdiction with its own court and particular requirements for judges, the aim is for individualised justice to be achieved.184The merits of this approach are not the focus of this section, instead I aim to show how discretion is currently an important part of the operation of family law in Aotearoa, and why this might be the case.
The approach of family law is clearly demonstrated in the Care of Children Act (COCA) 2004, where Parliament has stated that “the welfare and best interests of a child in his or her particular circumstances must be the first and paramount consideration” in applying the Act. Section 5 provides further guidance for Judges, containing six principles relating to be taken into consideration.186 There is then discretion left to judges in how they apply the overarching principle and the further guidance that COCA offers.187 Parliament has opted to limit the discretion somewhat by the inclusion of s 5, providing some clarity for judges, litigators and the public as to what is relevant when considering a child’s welfare and best interests. While some cases may be clear cut, a lot of the time judges will have to weigh up factors with little or no guidance on the relative importance of those factors and end up using their experience and knowledge to make a call.188
Aotearoa of course had a discretionary relationship property regime for 12 under the MPA 1963, which left much to be desired.189 Judges were reluctant to use their discretion to award property to the non-owning spouse.190 It is likely that these unsatisfactory judgments were as a result of the prevailing social attitudes of the time that did not value the contributions of housewives. Justice for these housewives in terms of complete equality with their spouse was not going to happen without social change. A radical reframing of the status of property in
182 Emma Hitchings and Joanna Miles “Rules Versus Discretion in Financial Remedies on Divorce” (2019) 33(1) IJLPF 24 at 26.
183 Gillian Douglas An Introduction to Family Law (Oxford University Press, Oxford, 2001) at 19.
184 Bill Aitken and others “Fifty Years of New Zealand Family Law” (2013) 25(4) NZULR 645 at 651.
187 Aitken and others “Fifty Years of New Zealand Family Law,” above n 184, at 655.
189 Nicola Peart, Jessica Palmer and Margaret Briggs “Introduction” in Jessica Palmer and others (eds) Modern Family Finances: Legal Perspectives (Intersentia, Cambridge, 2017) 1 at 3.
relationships needed to occur, and for this to happen quickly rather than over many decades, parliament had to lead the way.191 Therefore, the MPA was implemented with its radical rule- based approach, a clear rejection of the previous discretionary approach.192 This approach was amended and in some ways strengthened when the Act become the PRA in 2001.193
This is not to say that there is no discretion in the PRA. As discussed, it is difficult, and perhaps impossible, to ever fully remove discretion, and the PRA does not purport to do so. There are places in the Act where judges are given a direct discretion, namely s 2G and s 34.194 Despite these being the only direct references to discretion in the PRA, there are other places where the rules are not prescriptive, and judges therefore are left to fill in the gaps.
For instance, de facto relationships are defined as two people living together in the nature of a couple.195 This leaves much room for interpretation. 196 Further guidance is provided through a list of factors that judges are able to consider, however there is no direction on the relative weight of these factors, nor which factors, if any, are determinative.197 Gendall and Ellen France JJ in Scragg v Scott discussed the process of applying s 2D, saying that “the test is inevitably evaluative” and that the judge is tasked with weighing up the factors in s 2D and any others that are relevant to the best of their abilities.198 They referred to the need for a common sense, objective judgment and a broad approach to be taken.199 What is being referred to here is the principled exercise of discretion, demonstrating what was envisioned by Hart.
Other sections where judges are left to fill gaps in the rules are sections 13 and 15, both of which offer exceptions to equal sharing.200 Section 13 states that where there are extraordinary circumstances that would make equal sharing repugnant to justice, then sharing is to be determined by the partners contributions to their partnership.201 This leaves the court an ability to depart from equal sharing, although it has been interpreted as a narrow discretion given the
191 Henaghan “Sharing Family Finances at the End of a Relationship,” above n 26, at 301.
192 Priestly, above n 59, at 73.
193 Peart “The Property (Relationships) Amendment Act 2001: A Conceptual Change,” above n 58, at 824.
196 Briggs “Which Relationships Should be Included in a Property Sharing Scheme?” above n 78, at 52.
198 Scragg v Scott [2006] NZFLR 1076 at [37].
strong words of parliament in the section.202 Section 15 gives the court the power to award an unequal sharing of property where, due the division of functions in the relationship, it is likely that one spouse will enjoy significantly higher income and living standards than the other.203 This is a discretionary power, there is no obligation for the court to award payment from one partner to the other, with s 15(3) saying that the court “if it considers just, may...”204 The courts have developed factors over time that are relevant to this question and aid in determining what will be just in the circumstances.205 Further if the court determines that an award will be made, they also have to assess the quantum of said award, to which they take a broad brush approach.206 This is not the extent to which discretion exists within the PRA, but merely an example of how it plays its role in the otherwise heavily rule-based system. The courts treat this discretion with considerable caution, given the overall framework of the regime and the aims of it which they are giving effect to.
This brief introduction has served to pinpoint what discretion is and some places where it currently operates. In some areas of family law, such as the care of children, we see the court having broad discretionary powers, contrasted with the PRA, where the discretion is far more limited but nonetheless exists. It is for the moment tolerated within the system, although hardly embraced by academics.207 I will now turn to overseas jurisdictions before analysing the merits of a discretionary approach in chapter four.
Countries across the world organise their matrimonial property law in a variety of different ways. For the purpose of this dissertation, I will look only to the approaches taken in England and Wales, and Australia. These approaches are worth considering because both jurisdictions have taken a vastly different approach to Aotearoa. Given that England and Australia are the jurisdictions that we most often compare ourselves to and are generally most similar to, it is interesting that they have failed to embrace a rules-based approach as we did here. Set out
202 Nicola Peart (ed) Relationship Property & Adult Maintenance Acts & Analysis (looseleaf ed, Thomson Reuters, 2013) at 177-178.
204 PRA.
205 Peart Relationship Property & Adult Maintenance Acts & Analysis, above n 202, at 199.
207 For example, see Henaghan “Legally Rearranging Families: Parents and Children After Break-up,” above n 181, at [7.5].
below is an introduction to the approaches of these jurisdictions and a look to where they may be headed in the future.
The law surrounding matrimonial property in England and Wales cannot be described as a regime, any categorisation as such has been expressly rejected.208 Instead judges have full discretion, with the aim of providing for a fair outcome in each individual case. It is important to note that first, there are no changes to property rights on marriage, it is a separate property system, and second, that there are no specific property rules for de facto couples when they split. Therefore, the English approach directly contrasts that of Aotearoa in two main ways, not only is it highly discretionary, it is also highly exclusive in who is able to access the courts discretion.209 Where New Zealand risks being too open and places high property consequences on many couples with little room for individualised justice, England has an open path to individualised justice but only for those who have the formalised their relationships, which presents its own problems.
The courts in England and Wales are given their discretionary powers in Part 2 of the Matrimonial Causes Act 1973 (Eng&W). They are able to make a vast range of financial orders relating to the arrangement of a couples finances post-divorce.210 Guidance in the statute as to when orders shall be made is found in s 25, which provides a non-exhaustive list of factors to which the court shall have regard.211 The needs of dependent children are to be the first consideration when considering property division. The court is also directed to consider whether it is possible to facilitate a clean-break between the parties.212 Beyond this, there is no further guidance from statute as to how exactly the court might undertake its discretionary
208 Jens M Scherpe “Contracting Out of the Default Relationship Property Regime” in Jessica Palmer and others (eds) Modern Family Finances: Legal Perspectives (Intersentia, Cambridge, 2017) 357 at 374.
209 Joanna Miles and Rebecca Probert “Sharing Lives and Dividing Assets: Legal Principles and Real Life” in Joanna Miles and Rebecca Probert (eds) Sharing Lives and Dividing Assets: An Inter-Disciplinary Study (Hart Publishing, Oxford, 2009) 3 at 5.
210 Law Commission of England and Wales Matrimonial Property, Needs and Agreements (LAW COM No 343, 2014) at [2.3].
211 Matrimonial Causes Act 1973 (Eng&W).
212 Section 25(A).
exercise.213 The court therefore has been left to develop a workable and somewhat principled approach to the making of financial orders on divorce on its own.214
Until the new millennia there was no concept of equal sharing of matrimonial property in England and Wales, with awards limited to the reasonable requirements of the spouse making a claim.215 This changed with the landmark judgment of White v White in 2001,216 followed by Miller v Miller; McFarlane v McFarlane,217 where the Judges further developed the modern conception of fairness that would dictate matrimonial property proceedings.218 In White the House of Lords held that “there is no place for discrimination between husbands and wives and their respective roles,” and that it should not be presumed that the income-earner in the household will retain the majority of the assets.219 This cleared the way for England and Wales to join the majority of the world in recognising the equality of spouses, although they did not go so far as to make this a starting point.220 In Miller, the Court further outlined what a fair outcome is, identifying the three strands of fairness as needs, equal sharing and compensation.221 While these strands have been criticised as being contradictory and not unified in their view of marriage,222 they provide a much needed grounding from which judges can reason.223 It also added some level of predictability, with the Law Commission considering that while a lay person may be unable to look to the common law and make a prediction as to what the outcome of their situation may be, a lawyer in the area would likely be able to identify a reasonable range within which a possible order would fall.224 It is expected that in most cases the property pool will only go so far as to be meeting the needs of both parties, and this remains the priority of the law.225 The concept of equal sharing is seen as appropriate to apply unless there are good reasons to the contrary, however is not a rule, only an aid.226
213 Law Commission of England and Wales Matrimonial Property Agreements: A Consultation Paper (CP 198, 2011) at [2.6].
214 Law Commission of England and Wales Matrimonial Property, Needs and Agreements,” above n 210, at [2.13].
215 Scherpe “Contracting Out of the Default Relationship Property Regime,” above n 208, at 376.
216 White v White [2000] UKHL 54; [2001] 1 AC 596 (HL).
217 Miller v Miller; McFarlane v McFarlane [2006] UKHL 24, [2006] 2 AC 618.
218 Scherpe “Contracting Out of the Default Relationship Property Regime,” above n 208, at 376.
219 White v White, above n 216, at 599.
220 Miller v Miller; McFarlane v McFarlane, above n 217, at [16] per Lord Nicholls.
221At [11]-[16] per Lord Nicholls.
222 Law Commission of England and Wales Matrimonial Property, Needs and Agreements, above n 210, at [3.30]
223 Scherpe “Contracting Out of the Default Relationship Property Regime,” above n 208, at 377.
224 Law Commission of England and Wales Matrimonial Property, Needs and Agreements, above n 210, [2.6]. 225 Law Commission Of England and Wales Marital Property Agreements: A Consultation Paper, above n 213, at [2.54].
It is clear that England and Wales have opted for a vastly different approach than New Zealand, with a highly discretionary system that places high value on individualised justice. The law approach is holistic, looking overall at the situations of the parties, and also has a strong focus on any dependent children. Parliament has stayed far removed from the development of the law, rightly or wrongly. The Law Commission (UK) has released two reports in the last 10 years, indicating that some reform is needed in this area.227 Their recommendations have focused on clarifying what is meant by “needs” and allowing parties to make binding contracts regarding their financial arrangements on separation.228 However, in the following years no legislative action has occurred, and no large scale reform is on the cards.229 The main criticisms of the law in England and Wales seem to be the lack of clear principles and unified view of marriage, as well as the exclusion of de facto couples.230 While some have expressed that it could be beneficial for a more rules-based approach to be adopted, and that it could be possible to do so while retaining the focus on fairness,231 there does not seem to be any strong push for change. Instead, courts seem to be wary of rules, instead preferring to provide a fair outcome in each individual case.232
The legislatory framework in Australia, once again bestows on judges a broad discretionary power. The Family Law Act 1975 (Cth) (FLA) has two parallel parts for dealing with relationship property, with powers set out in s 79 to alter the interests of the parties to a marriage in property, and s 90SM as the equivalent for de facto couples. These sections require the court to determine whether it is “just and equitable” to alter the property rights of the parties, taking into consideration a list of factors including contributions to property and contributions to the welfare of the family.233 This is even less legislative guidance than in England and Wales, with
227 Law Commission of England and Wales Matrimonial Property, Needs and Agreements, above n 210; The Law Commission of England and Wales Marital Property Agreements: A Consultation Paper, above n 213.
228 Law Commission of England and Wales Matrimonial Property, Needs and Agreements, above n 210, at 175- 177.
229 Jens M Scherpe “England And Wales. A Jurisdiction Without a Matrimonial Property Regime.” (2022) 16 Actualidad Jurídica Iberoamericana 1602 at 1618.
230 Miles and Probert, above n 209, at 8.
231 Jens M Scherpe “Towards a Matrimonial Property Regime for England and Wales?” in Rebecca Probert and Chris Barton (eds) Fifty Years in Family Law: Essays for Stephen Cretney (Intersentia, Cambridge, 2012) 133 at 146.
232 Scherpe “England And Wales. A Jurisdiction Without a Matrimonial Property Regime,” above n 229, at 1608.
233 Family Law Act 1975 (Cth), ss 79 and 90SM.
no prioritised principle regarding dependent children.234 There is no presumption of equality either in the legislation or that has been developed through the court, although in many cases equality may be the outcome.235 The High Court of Australia in 1984 concluded that there could be no presumption of equality as this would restrict the discretion of the court, without any legislative intent to do so.236 Overall there is no right to a property order, it has to be concluded that it is just and equitable to depart from the ordinary rules of property and equity.237
Again, in Australia we encounter the problem of conceptual uncertainty, with little clarity over what principles courts are applying when exercising their discretion, as well as confusion over the extent to which judicial statements are binding.238 The court in the leading case of Stanford v Stanford emphasised however that the power bestowed by s 79 is not an unlimited judicial power but instead requires principled reasoning.239 Stanford served to reemphasise the importance of s 79(2),240 that any order to alter property rights may only be made if is just and equitable to do so, whereas previously this requirement was seen more as a part of the consideration.241 There is a significant amount of case law that demonstrates how the court might achieve a just and equitable outcome, but not a lot of specific guidance akin to the three strands of fairness developed in England and Wales.242
The Australian Law Reform Commission undertook a wide reaching review of its family law system in 2019.243 This included a look at family property law and recommendations for the future. The Commission turned its attention to the long running debate around retaining the discretionary system or adopting a rules-based approach.244 While recognising that there would be some benefits to having more certainty in the system, the Commission placed a high emphasis on the desire for just and equitable outcomes and for cases to be decided based on
234 Lisa Young and Jo Goodie “Is There a Need for More Certainty in Discretionary Decision Making in Australian Family Property Law?” (2018) 32 AJFL 162 at 166.
235 Patrick Parkinson “Family Property Division and the Principle of Judicial Restraint” [2018] UNSWLawJl 15; (2018) 41(2) UNSWLJ 380 at 384.
236 Mallet v Mallet [1984] HCA 21; (1984) 156 CLR 605 at 610 (Gibbs CJ).
237 Alexandra Harland and Others Family Law Principles (2nd Ed, Thomson Reuters, Sydney, 2015) at [12.80].
238 Young and Goodie, above n 234, at 162.
239 Stanford v Stanford (2012) 247 CLR 108 at [39] (French CJ, Hayne, Kiefel and Bell JJ).
240 FLA.
241 Parkinson “Family Property Division and the Principle of Judicial Restraint,” above n 235, at 386.
242 Harland and Others, above n 237, at [12.90].
243 Australian Law Reform Commission Family Law for the Future — An Inquiry into the Family Law System
(ALRC Report 135, March 2019).
their individual facts. They also expressed specific concern about applying strict rules to couples in de facto relationships, believing that it would be unjust to do so.245 They do recommend a presumption of equality of contributions, but maintain that the court should begin its assessment by ascertaining the existing legal and equitable rights to property the parties enjoy.246 The door to rules is not closed in Australia, but for the meantime they seem to be holding tight to judicial discretion and being able to provide individualised justice.
Other academic commentary in Australia seems to support a continued focus on just outcomes. Belinda Fehlberg and Lisa Sarmas favour preserving a broad and nuanced discretion, but with guidance on what the key principles that underpin the exercise of that discretion are.247 They recognise the high importance of equitable outcomes for women and children which has not been enough of a focus of the law, and express concern that any attempts to simplify the system would only make these outcomes worse.248 Patrick Parkinson expresses different concerns, worried that given social shifts which are seeing the rise in de facto partnerships and people structuring their finances in many different ways, any formalised community of property would be based on an outdated view of marriage.249 He considers that it is not acceptable to have a one-size-fits-all approach to property division.250 Finally, Lisa Young and Jo Goodie are critical of the courts’ approach to reasoning, arguing that they have not paid enough attention to the operation of precedent and therefore have not developed clear law.251 Again, however, they focus on the purpose of the legislation being to provide fair remedies, and do not see the issues of inconsistency and lack of clarity being enough to require an overhaul of the law.252
Discretion is an important part of our legal system, not something to simply be tolerated but an integral feature of the law. Australia and England and Wales demonstrate systems that have favoured a family law approach that prioritises discretion and individualised justice. Aotearoa’s regime has been more progressive than Australia, England and Wales, by implementing a presumption of equal sharing and moving past strict contributions to property. However, this
245 Australian Law Reform Commission, above n 243, at [6.35].
247 Belinda Fehlberg and Lisa Sarmas “Australian family property law: ‘Just and equitable outcomes?” (2018) 32 AJFL 81 at 103.
249 Patrick Parkinson “Family Property Division and the Principle of Judicial Restraint,” above n 235, at 399.
251 Young and Goodie, above n 234. at 187.
Margaret Briggs
2022-10-02 00:09:00
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All makes good sense Charlotte.
does not mean that there is nothing to be learned from these discretionary approaches. The following chapter will consider what these lessons might be and whether or not it is feasible to recalibrate the balance struck in the PRA with increased discretion.
IV The Case for a New Approach
Having introduced discretion as it currently exists in Aotearoa and how it operates in relationship property law overseas, I now shift attention to considering whether a more discretionary approach is a feasible and desirable way forward. This chapter will explore the benefits and disadvantages of discretion and conclude that despite concerns, discretion should not be completely abandoned in the conversation of law reform in this area. The intention of this dissertation is not to provide for a new regime, but instead to open up the conversation about how we could recalibrate the underlying balance of the PRA.
The arguments in favour of a more discretionary approach have already featured heavily in this work. The main benefit is that it provides flexibility and the ability in theory to achieve a just outcome in each individual circumstance.253 This is in contrast to the “rough justice” that rules provide, where the aim is to achieve justice overall but not in each individual case.254 Rigid rules can produce unjust results where the situation is one that law makers failed to anticipate or provide for; discretion allows the judge to promote the purpose of the law in every situation.255 This is particularly important as we have a regime that covers many types of relationships.256 In Australia and England and Wales they are wary of rough justice and are unwilling to relinquish the ability to consider individual circumstances.257 There is a high cost to getting answers wrong, which justifies bearing the higher transaction costs associated with discretion.258 This may be an area where the amount of possible situations for a rule to apply are so diverse that no effective rule can be written.259 Having set rules also can lead to evasion of those rules, a discretionary system can fill gaps and prevent people from undermining the spirit of the legislation.260
253 Carl E Schneider “Discretion and Rules: A Lawyer’s View,” above n 173, at 63.
254 Emma Hitchings and Joanna Miles “Rules Versus Discretion in Financial Remedies on Divorce” (2019) 33(1) IJLPF 24 at 26.
255 Carl E Schneider “Discretion and Rules: A Lawyer’s View,” above n 173, at 61.
256 Carl E Schneider “The Tension Between Rules and Discretion in Family Law: A Report and Reflection” (1993) 27(2) FLQ 229 at 234.
257 Australian Law Reform Commission, above n 243, at [7.7]; Law Commission (UK) Matrimonial Property, Needs and Agreements: The Future Of Financial Orders on Divorce and Dissolution. Executive Summary (LC343, 2014) at [1.9].
258 Hitchings and Miles, above n 254, at 27.
259 Schneider “Discretion and Rules: A Lawyer’s View,” above n 173, at 61.
260 Hitchings and Miles, above n 254, at 27.
Furthermore, a discretionary approach enables the law to meet the many competing concerns that arise in this area. For example, given the way many modern couples structure their relationships, there is an argument that the partnership principle and automatic equal sharing may not reflect the reality of these arrangements.261 Those principles are based on the view of marriage in 1976 and are most suited to couples who build their assets together over the course of their relationship.262 They are less appropriate in the context of a couple who comes together later in life when they have already established their assets, as one example.263 However, it is still the reality that women are most often financially worse off than men following separation.264 Further, it is very important to consider the effects of separation on children and for the law to do all it can to protect the interests of said children.265 The presumption of equal sharing for some couples may be in direct contrast to their expectations of their relationship, and in other situations it may disadvantage women and children. This problem can be dealt with by creating a lot of rules to try and cover all situations, and/or rules that strike a middle ground but offer not quite satisfactory solutions.266 Another way to solve this problem however is to have discretion and treat each situation based on its individual facts. This allows for more nuance and also accommodates different views of what relationships are and what property consequences they should therefore have. This is an important benefit of discretion as I have grappled with both taking a firmly feminist and child-first stance, and the view that relationships nowadays are often fundamentally different than what was in contemplation in 1976. Increased discretion provides a way forward where neither of these views need to be compromised.
Overall, I propose the benefit of discretion is solving the problem set out in chapter II of this dissertation. The current regime covers a broad range of relationships, without sufficiently accommodating for the nuances within that range.267 The inherent balance in the PRA between property and family law needs recalibrating to shift away from a focus on property rights. This focus may bring more certainty, but the risk of injustice for individuals is higher than we ought
261 Patrick Parkinson “Reconsidering Family Property Law in the Post-Marital Age” in Jessica Palmer and others (eds) Modern Family Finances: Legal Perspectives (Intersentia, Cambridge, 2017) 15 at 36.
264 Fehlberg and Sarmas, above n 247, at 88.
265 Peart and Henaghan, above n 23, at 92.
266 Schneider “Discretion and Rules: A Lawyer’s View,” above n 173, at 47.
267 Miles “Property Law v Family Law: Resolving the Problems of Family Property,” above n 176, at 648.
Margaret Briggs
2022-10-03 20:38:00
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? I think I get what you mean here, but maybe tweak this statement for greater clarity.
Margaret Briggs
2022-10-03 20:41:00
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Good points here.
to accept. The discretionary system brought in by the MPA 1963 produced unsatisfactory results, and so it is natural that we would be wary of returning to this approach.268 However, society has moved on from the misogynistic views that were filtering through to the courts and preventing women from being adequately provided for upon separation. Instead, it is hoped that now a more discretionary regime would provide outcomes that match the expectations of society and also protect those who need it.269 Not only this but the regime could essentially be future-proofed as the courts could keep up with the changing values of society without requiring law change, which has been demonstrated to be a lengthy process.270
The Law Commission has good reason to have rejected a shift away from a rules-based approach.271 In the family law space where discretion is relied upon heavily, there are arguments that we would benefit from introducing more rules,272 and similarly there is little support for introducing discretion back into our relationship property law approach. The main reason for this is the lack of certainty that follows from discretion.273 With rules people for the most part know what the outcome of their property division would be should it go through the court.274 This has a number of benefits. It should reduce litigation and encourage people to come to a resolution outside of court.275 If judges have greater discretion people may believe it is worth going before the court to try and increase their share of the property division. With firm rules people are aware of the most likely outcome if they were to litigate their dispute, and therefore are less incentivised to spend time and money on trying for a different outcome. The family law system aims to, as much as possible, encourage people to come to an out-of-court resolution,276 and having a rules-based system for relationship property supports this.277 Rules enable people to bargain in the shadow of the law, giving them a clear picture of what they are entitled to, which they can then bargain on the basis of.278 This argument has particular strength
268 Peart, Palmer and Briggs, above n 189, at 3.
269 Schneider “Discretion and Rules: A Lawyer’s View,” above n 173, at 64.
270 Wilson, above n 65, at 96.
271 Law Commission Preferred Approach, above n 53, at [1.5].
272 Mark Henaghan “Discretion, Status and Money: The Essence of Family Law in New Zealand” (2011) Int'l
Surv Fam L 281 at 300.
273 Law Commission Issues Paper, above n 2, at [3.10].
274 Miles “Should the Regime be Discretionary of Rules-Based,” above n 172, at 266.
275 Patrick Parkinson “Family Laws and Access to Justice” (2016) 8(1) Contemp Read Law Soc Justice 37 at 56.
276 Henaghan “Legally Rearranging Families: Parents and Children After Break-up,” above n 181, at 299.
277 Miles “Should the Regime be Discretionary of Rules-Based,” above n 172, at 266.
278 Schneider “The Tension Between Rules and Discretion in Family Law: A Report and Reflection,” above n 256, at 237.
when considering the potential for unequal bargaining power in relationship property disputes, particularly where there is a bread-winner and a homemaker.279 Coming from a starting point of equal division when bargaining gives parties a neutral place from which to negotiate and helps to remove any disadvantages. 280
Less litigation is potentially better for families generally as couples come to an agreement faster than could be achieved through the courts and therefore move on with their lives independently. The second Borrin report showed that reaching a fast resolution and detangling their lives from a former partner was important to survey respondents.281 Further, bargaining outside of court should be less adversarial which is especially desirable where there are children involved.282 It is also more cost effective for families to come to an agreement outside of court, which is beneficial for the parties and for the state.283 Overall, the benefits of having certainty and predictability in relationship property law are strong and have dominated the conversation in Aotearoa. There is not however clear evidence that supports the claim that there is significantly more litigation with a discretionary system, and it is possible that when faced with an uncertain outcome in court people prefer to privately bargain rather than take a risk.284
Another argument is that discretion can introduce arbitrariness into the process as judges are making decisions not based on set rules but on their own reasoning, which may not be sound.285 Giving judges discretion will inevitably personalise the decision-making process and result in some variability in outcomes.286 An advantage of discretion is that people may be grateful to have the opportunity to state their case in front of a judge, even if the decision ultimately does not end up in their favour,287 but on the other hand they may feel like the wrong decision was made, and with no good reason.288 People may be more willing to accept outcomes they perceive as wrong if they are aware that the decision was made following a rule, rather than
279 Hitchings and Miles, above n 254, at 41.
280 Miles “Should the Regime be Discretionary of Rules-Based,” above n 172, at 277.
281 Second Borrin Report, above n 143, at 172.
282 Henaghan “Discretion, Status and Money: The Essence of Family Law in New Zealand,” above n 272, at 284.
283 John Dewar “Reducing Discretion in Family Law” (1997) 11(3) AJFL 8 at 16.
284 Hitchings and Miles, above n 254, at 41.
285 Schneider “Discretion and Rules: A Lawyer’s View,” above n 173, at 68.
286 Aitken and others, above n 184, at 656.
287 Schneider “The Tension Between Rules and Discretion in Family Law: A Report and Reflection,” above n 256, at 236.
Margaret Briggs
2022-10-03 20:44:00
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Yes, that is an advantage of rules – blame the rule not the person who applies the rule.
feeling frustration and blaming the decision maker.289 Judges, however, would dispute that their reasoning is ever arbitrary, but instead is based on principle and the legitimate exercise of discretion.290 This leads on to another point in support of rules, that legislators are in a better position than judges to be deciding what principles should be applied in relationship property division.291 Legislators have the resources to adequately get a picture of society’s expectations and values, whereas it might not be desirable to have judges deciding what principles apply in each situation.292
Ultimately, a rules-based system is what we have known in Aotearoa since 1976.293 It is this system that enabled us to move beyond the stage of recognising only contributions to property and pushed us to come from a starting point of equality, and these principles have as a result become social norms.294 Where Australia and England and Wales have lagged behind in the progressiveness of their regimes, legislators in Aotearoa have taken steps to address the inequalities that have made themselves apparent in relationship property division. This system has never been perfect, but it has provided certainty and predictability. People are able to know what the law is, and that law is created though the democratic system.295 Many argue that placing the PRA at the rules end of the rules to discretion spectrum actually leads to fairer results, with discretion seeming beneficial in theory but in practice the benefits that rules bring may far outweigh any possibility of individualised justice.
There are significant downfalls of discretion, and hence the preference of the Law Commission is to remain firmly on the rules side of the spectrum.296 However, the downfalls of discretion are overstated and can be mitigated by a skilled judiciary and a strong commitment to development of precedent. It is not necessarily true that there can be no certainty and predictability with increased discretion, nor is the lack of these things necessarily as bad as we may believe. Australia and England and Wales demonstrate that it is not completely unworkable to have a discretionary system, although of course these systems have their flaws.
289 Schneider “The Tension Between Rules and Discretion in Family Law: A Report and Reflection,” above n 256, at 240.
290 Hitchings and Miles, above n 254, at 42.
291 Schneider “Discretion and Rules: A Lawyer’s View,” above n 173, at 72.
292 Miles “Should the Regime be Discretionary of Rules-Based,” above n 172, at 272.
293 At 289.
294 Schneider “Discretion and Rules: A Lawyer’s View,” above n 173, at 77.
296 Law Commission Preferred Approach, above n 53, at [1.5].
I would not go so far as to suggest that Aotearoa should adopt a system modelled on theirs, but rather learn from them and consider how we could incorporate more discretion going forward. The question is always what the appropriate mix of rules and discretion is, not a choice between one or the other.297 The point is not to completely reject rules and embrace an entirely discretionary system, but to recognise that there are benefits of discretion that are worth pursuing.
Believing that it is possible to recalibrate the balance in the PRA away from a property law approach and towards a family law one, without the negative consequences that discretion brings, requires an idealistic view of our legal system. A realistic view recognises that given the downfalls of an adversarial system and the practical realities of operating courts, a rules- based approach is more appropriate and will produce fairer results than a discretionary one. This view accepts rules as the least imperfect of two imperfect options in a very delicate area of law, and within the constraints of the family legal system. While currently this may be the case, I am not willing to abandon the idea of shifting the balance towards more discretion. The benefits of discretion are such that it is worth keeping in the conversation. The PRA is simply too blunt an instrument for the breadth of situations it covers. This problem will not be solved with minor rule changes, and currently we are being limited by the bounds of a system we have created. The way that we know is not the only way, we should always remain imaginative and be looking for a better solution. Perhaps what is really needed is a completely fresh look at the operation of our family legal system, with any combination of rules and discretion inevitably going to have its problems when existing within a process that is not well suited to the family context. This however goes far beyond the PRA and into much larger conversations that it is hoped will happen in the future. In the meantime, disregarding discretion does us a disservice, instead it should be on the table as we constantly look forward to a future where we can achieve even greater justice.
Now is the opportune time for Aotearoa to be seriously considering a different relationship property approach, as it is accepted that far-reaching reform is needed.298 Leaving aside for now the conversation of wider reform of the family justice system as a whole, I will consider what relationship property law in Aotearoa could look like into the future if we are to be open
297 Schneider "Discretion and Rules: A Lawyer's View," above n 173, at 47.
298 Law Commission Final Report, above n 4, at [2.14].
Margaret Briggs
2022-10-03 20:54:00
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Long sentence – reword or break in two?
Margaret Briggs
2022-10-03 20:51:00
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Very well written and flows nicely. The pros and cons are set out very clearly. Possibly some repetition? However, the end of the chapter feels like you leave things “hanging”. Do you think there is any way to strengthen your conclusions?
to the option of discretion. One aspect of the regime that should remain is the initial presumption of equal sharing. This will be important to ensure that people, particularly who are bargaining outside of court, understand that equal sharing is still expectation in most cases. This is in contrast particularly to Australia who begin with ascertaining who has what property rights under the law, before deciding if justice requires those rights to be changed.299 This is not a desirable approach, as if one of the partners is in the position of having foregone their earning capacity in order to contribute to the relationship, they would begin the relationship property division process on the back foot. Coming from a starting point of equal sharing point puts parties on a more level playing field from the beginning. Introducing the presumption of equal sharing was vital in pushing forward social views in Aotearoa to accept that the value of partners’ contributions to a relationship are equal. This is not a view that we want to lose, as to do so would be a regressive shift to the pre-1976 ideas that were detrimental women. Therefore, to signal that these ideas have no place in the regime, and that domestic contributions are still to be valued the same as financial ones, it is important to retain the presumption of equal sharing.
However, where currently it is difficult to displace this presumption under the PRA, fundamental to any recalibration would be the recognition that there are situations where this will not be appropriate. A new regime should therefore provide judges with a stronger discretion than currently exists to depart from a 50/50 split. This discretion should be guided by clear principles, ideally with an indication of the relative weight to be given to some or all of these principles. The development of guidance could come from both the legislation itself and from judgments, as courts apply the relevant principles across different situations. It may take some time, but an acceptable level of certainty should be able to be reached. Further, if the aims of relationship property law are made explicit in legislation, the problem in England and Wales of conflicting views of marriage can be avoided.300 It is important that Aotearoa maintains the progressive elements of its regime, and even further promotes the aims of substantive equality, when making a change to a discretionary approach. Legislation that lays out principles which promote these aims will be key, as well as commitment from the judiciary to uphold these goals. The aim of having a regime with increased discretion is to ensure its longevity, avoiding the need for constant amendment to the legislation. To achieve this it
299 Australian Law Reform Commission, above n 243, at [7.10].
300 Miles “Should the Regime be Discretionary or Rules-based?” above n 172, at 281.
should be clear that the legislation and its principles are not intended to be stagnant but are able to move forward with the times and be applied in new situations.One jurisdiction that has been able to strike an acceptable balance in its relationship property regime is Scotland. Their system, which sits between a wide discretionary approach and a rules- based one, is described as being “built to last.”301 The Act in question, the Family Law Act (Scotland) 1985, came into force almost 40 years ago, and yet has been able to keep up with a changing society.302 When considering the division of parties’ property, judges are instructed to make any order that is justified by the five principles set out in the Act.303 These principles allow the regime to achieve an appropriate balance between certainty and flexibility.304 The principles are high level enough to leave room for judges to appreciate the individual circumstances, but provide sufficient grounding so that decisions are not made on a judges whim.305 Section 8(2) also leaves room for judges to consider what is reasonable having regard to the resources of the parties, adding to their ability to achieve a fair outcome in each case.306 An approach akin to this one is worth considering for New Zealand, it does not suffer the same uncertainty and incoherency problems as England and Wales, but does achieve something that is closer to individualised justice than we do currently. A qualification on this however is that it would be preferable for our approach going forward to have a stronger focus on substantive equality than they do in Scotland.307 Equal sharing must be able to be departed from to remedy economic advantages and disadvantages that have occurred in a relationship.
As has been touched on in this dissertation, the current approach to remedying economic disparity in s 15 of the PRA is a major problem.308 The Law Commission’s recommendation to remedy this with a strict, formulaic approach is disappointing and is sure to create its own problems, given that it would be a one-size-fits-all system applying to families of all shapes and sizes. There is room for a more nuanced approach that would mitigate the downfalls of full discretion while also not taking on the blunt instrument of rules. The Canadian scheme for instance is one that sits slightly further towards discretion than a fully rules-based system.309
301 Jane Mair, Enid Mordaunt and Fran Wasoff Built to Last: The Family Law (Scotland) Act 1985 – 30 Years of Financial Provision on Divorce (Nuffield Foundation, 2016).
302 At 179.
303 Family Law Act (Scotland) 1985, ss 8 and 9.
304 Mair, Mordaunt and Wasoff, above n 301, at 172.
306 Family Law Act (Scotland) 1985.
307 Miles “Should the Regime be Discretionary or Rules-based?” above n 172, at 286.
308 Law Commission Final Report, above n 4, at [10.15]-[10.16].
309 Miles “Should the Regime be Discretionary or Rules-based?” above n 172, at 288.
Using guidelines to obtain a range of figures from which an appropriate amount and duration of payments can be decided would be a solid way forward for Aotearoa, not only for today but also into the future.310
Furthermore, any discretionary approach that Aotearoa may consider should prioritise the welfare and best interests of children. A strict adherence to equal sharing is not conducive to a child-centered approach as it focuses squarely on the rights of the parties to the relationship rather than looking at the family as a whole.311 The fundamental tension in the PRA between a family law approach and a property law one is most obvious when looking at how children are treated. The PRA comes down firmly on the side of property entitlements.312 One aspect of the English and Welsh regime that is done well is the clear prioritising of children. The welfare of minor children of the relationship is a paramount consideration when dividing relationship property,313 and the needs of the family is considered ahead of equal sharing.314 This should be emulated here, as part of the principles guiding division. One aspect of this could be deferred division of relationship property where the court is not satisfied that the needs of dependent children will be adequately met.315 Putting the needs of children first in relationship property division would bring the regime more into the realm of family law and improve the lives of children who are adversely impacted by separation.
The lack of children in a relationship could also be a factor when considering departing from equal sharing.316 It is worth discussing whether it is the fact of parenthood that should form the rationale for sharing in relationship property, particularly for partners in a de facto relationship who have not chosen to formalise their relationship. Parenthood has significant economic consequences that should be borne equally by both parents, and without these financial consequences it becomes more difficult to justify why adults who have made their own financial decisions should be subject to the PRA. As our society continues to progress, this argument is likely to come up more and should be anticipated in our law. A regime based on increased discretion could recognise situations where, particularly de facto partners, are not
310 For a full discussion of this point, see Zakary Trapski “Assessing the FISAbility of FISA: Will the Pendulum Swing Too Far?” (LLB (Hons) Dissertation, University of Otago, 2021).
311 Peart and Henaghan, above n 23, at 90.
313 Matrimonial Causes Act (Cmth), s 25(1)
314 Peart and Henaghan, above n 23, at 91.
315 Peart and Henaghan, above n 23, at 92.
316 Parkinson “Reconsidering Family Property Law in the Post-Marital Age,” above n 261.
operating in a way that indicates that equal sharing is the fair outcome, possibly on the basis of them not having children.
This is a far from comprehensive overview of the sort of regime we should be aiming towards in Aotearoa. One that is not restricted by rules which will hold us back, even though they once propelled us forward. With lessons from overseas informing any development here, it is possible to create a regime with increased discretion that is still workable for the many who need to access it. As we look to the future, and the continued societal change that it will inevitably bring, it is only right that the door to discretion within our relationship property regime is fully opened.
Conclusion
Overall, what this dissertation has aimed to show is first that the problems with the PRA are deeply embedded in its underlying approach. Now is the opportune time to be considering what a better way forward could be, with reform to the regime on the Government’s agenda but yet to be actioned. This opportunity needs to be taken to consider whether the balance in the PRA between family and property law approaches, and particularly between rules and discretion, requires recalibration. Unfortunately, the Law Commission have not gone so far as to address what this paper considers to be the most significant problem with the PRA, and therefore have not recommended any fundamental shift on the rules to discretion spectrum.
We live in an ever changing society that is becoming increasingly heterogeneous, further and further removed from the traditional family model that existed in 1976. A rules-based approach served us well initially and undoubtedly moved society forward, particularly in relation to achieving recognition of the value of contributions of women to relationship.
However, this does not necessarily mean that rules are the right option for the future. Where they once propelled us forward, they are now at risk of holding us back. We should leave this approach behind in history and forge ahead with a regime that incorporates the best of discretion while still maintaining the required level of certainty. We can learn much from overseas jurisdictions and apply these lessons to create an exciting new regime that will provide greater justice for all and last long into the future.
Failing to be imaginative and look beyond the regime that we have known does us a disservice. No regime will ever be perfect, but we should always be looking to do better by all. The second goal of this dissertation has been to show that a shift towards a discretionary approach is both feasible and desirable for Aotearoa. Discretion currently has been left far out of the conversation of reform; it is my intention to put it back on the table.
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