Why should ‘unreliable’ husband get even share of assets?
The Ex-Files: Navigating the financial pitfalls of a relationship breakup
Question: My husband and I are separating after 10 years of marriage. For most of the time we’ve been together, my husband has been unreliable, and I’ve always contributed the most to the mortgage and bills etc.
This has worsened over the past couple of years to the point where he hasn’t been working. We bought a small business for him that he wanted, but by his own admission he didn’t want to put the effort in and it came to an end — big waste of money.
I reminded him several times to renew his car insurance, but he managed to crash into the side of our house before the insurance was paid. This hasn’t been repaired as we can’t afford it. I’ve had enough and I’m leaving, but do we really need to halve our assets?
If he had at least made some effort I wouldn’t be so upset, but he has done more to deplete our assets than add to them for the past 10 years.
Answer: When you separate in New Zealand, all your relationship property should be split 50:50. It doesn’t matter why you’re divorcing, or how the partners have conducted themselves throughout their marriage. They can have affairs, waste money and behave badly, but they are still entitled to an equal share of relationship assets. This is what is called a “no-fault system” for the division of property.
What if one person’s behaviour is really bad?
A particular section of the Property (Relationships) Act deals with misconduct. It says the court may only take into account misconduct if it has been “gross and palpable” and “must have significantly affected the extent or value of the relationship property”.
This is a high threshold, so there have only been a few cases where people have been successful in using that part of the law to get a greater than 50 per cent share.
The behaviour has to be severe. For example, if someone set up a meth lab in the house without their partner’s knowledge and the value of the home plummeted, this might qualify. Another example could be one partner gambling the family’s assets away.
In one case where the section dealing with misconduct was successfully applied, a husband went to prison during the marriage for an aggravated robbery conviction. This led to the wife being unable to maintain outgoings on the mortgage, and she was compensated with a greater share of the relationship property.
Even if the behaviour is severe, there needs to be a significant impact on the assets that belong to both of you. Domestic violence — while extremely serious — won’t usually affect the value of what you own together.
Alcoholism and drug addictions are viewed as illnesses, rather than meeting the high threshold for misconduct under the law.
Would this part of the law apply in this case?
Losing a business because you can’t be bothered running it won’t meet the high threshold. Nor will failing to contribute to a household.
His accident wouldn’t be considered “gross and palpable” misconduct, and it doesn’t sound like it has “significantly” affected your house value either.
You could certainly ask if he would pay for the repairs with his share of the money from your relationship property settlement. You would hope that he might think this is fair, but he is under no obligation to do this. Legally speaking, your relationship will be split 50:50, including the house and car as they stand, in an unrepaired state. This may not seem fair, but it’s the law.
In most cases, misconduct will not be severe enough to warrant a change from the usual 50:50 assets split. There is a strong view that misconduct should be considered more often, but there have been very few cases that have challenged the use of the Property (Relationships) Act.
It sounds like you have been in a very frustrating situation and that the outcome for you, financially speaking, will be less than what you think is fair. The best advice I can give you is to try and keep your relationship amicable while you are separating. The more you can agree between yourselves in terms of the house sale and how you will split your property, the less costly it will be and the quicker you can move forward with your new life. Jeremy Sutton is a senior family lawyer, specialising in divorce cases where there are significant assets, including family trusts and complex business structures.