Carrying the load

Economic disparity provisions in relationship property splits – to compensate a partner who has put their career on hold to look after the children, for example – have been a confusing failure.

Lawyers had hoped for clarification in the landmark case of Scott and Williams, who separated in June 2007 after a 26-year marriage, but a Supreme Court decision in December 2017 offered anything but. The couple had built up a substantial property portfolio, including two Remuera properties, three commercial properties in West Auckland, a beach house in Omaha, a half-share in a Fiji property and another in Auckland, and Williams’ interest in his legal practice. Scott, a former lawyer, sought economic disparity compensation for giving up her job after the birth of their second child in 1992 and later working only part-time.

The Family Court awarded Scott $850,000, but this was reduced to $280,000 in the High Court and then increased to $470,000 in the Court of Appeal. In the Supreme Court, all five judges issued separate judgments with diverse opinions on their interpretation of the law, although a majority of three ordered an increased award of $520,000. Family lawyers say this failed to offer any guidance for couples in similar situations. Now, the Law Commission has proposed that the economic disparity provisions in the Property (Relationships) Act be done away with, and replaced by the Future Income Sharing Arrangement (Fisa).

The commission has also suggested repealing and replacing the maintenance provisions of the Family Proceedings Act, which sit alongside the economic disparity laws – an overlap it said had been described as “baffling” and raising “perhaps the greatest question of uncertainty and confusion” since 2001 reforms to the maintenance regime.

Its replacement, Fisa, would be decided by a statutory formula that equalised the partners’ incomes for a period that was roughly half the length of the relationship, up to a maximum of five years.