Supreme Court considers how to remedy economic disparity when relationships end

Publication Date 
13 April 2017

How do we value appropriately the work of those who forgo or curtail a career to care for children and support their partner while he or she continues to develop a career? This will be a significant question in the Law Commission's review of the Property (Relationships) Act 1976.

Interestingly, the Supreme Court is considering that very issue at the moment too: how to divide property justly when a relationship ends and one person in that relationship earns a lot more than the other, while the other person manages the household?

In Scott v Williams [2016] NZSC 149 [9 November 2016] the five judges of the Supreme Court have been asked to decide how to divide property between Mr Williams, a partner in a law firm, and Ms Scott, also a lawyer, but who had spent much of her married life caring for the couple's two children and supporting her husband, both at home and at work with accounting services and legal work.

There is a presumption under the Property (Relationships) Act that relationship property will be shared equally. This is only a starting point, however, as adjustments are possible for a number of reasons. One possible adjustment is contemplated by section 15, which allows the court to award lump sum payments or transfer property to redress economic disparity which arises when the two people in the relationship have very different roles.

Most often these disparities arise where one party in the relationship has built up a high-paying, successful career while the other party has stayed at home supporting the family.

When courts apply section 15 they have to take into account the likely future earning capacity of each person in the relationship, the responsibilities each person had for caring for children, and any other relevant circumstances. Unfortunately, the Act does not give any guidance on how to calculate any award.

Some people argue that while section 15 was intended to address economic disparity that occurs because people have different roles and jobs during a relationship, it has not achieved its potential. This has meant that, on average, men, who stereotypically earn more, end up in a stronger financial position and women, who traditionally raise children and take time away from work, end up less well off than their ex-partners.

The Law Commission will be considering whether addressing economic disparity remains an appropriate goal of the Property (Relationships) Act and if so, what is the best way to achieve that outcome.