The Law Commission is seeking input from lawyers on cross-border issues and relationship property.

The Commission is currently consulting on its issues paper Dividing Relationship Property: Time for Change? which is the basis for a review of the Property (Relationships) Act 1976, Submissions are due by 7 February 2018.

It says property matters under the Act are likely to be more complicated when there is a cross-border aspect. This can arise when a partner has a connection with another country or an item of disputed property is located overseas.

Resolving cross-border issues

The Commission says principles of private international law are used to resolve cross-border issues that arise in Property (Relationship) Act proceedings.

"Sections 7 and 7A of the Act determine which country has jurisdiction to hear a dispute and which country’s law applies. The outcome of the proceedings can be very different depending on the answer to these two questions. Indeed, the outcome may look nothing like what would happen under the Act if the dispute was purely domestic and did not have a cross-border feature."

The Commission provides two examples of how some of the issues can arise:

Jack and Charlotte are New Zealanders and live in New Zealand. They have separated and are fighting about an apartment in France in Jack’s name. Charlotte claims the apartment is relationship property. If the apartment was in New Zealand it would probably be relationship property and she would be entitled to half. In accordance with the rules of PIL, however, a New Zealand court cannot make an order relating to that apartment. This is because the apartment comes within the jurisdiction of France. Making an order about the apartment would be seen to encroach on the sovereign jurisdiction of France and its courts.

Tania and Henri are South African and live together in South Africa. After five years, they get married. They enter an agreement that says that if they separate each partner is to keep the property registered in their name. Two years later Tania and Henri move to New Zealand. They buy a house registered in Tania’s name. Tania and Henri separate a year later. It is likely that the PRA will require Tania and Henri to divide the house equally. Tania and Henri did not enter their agreement in South Africa at the start of their relationship as required under section 7A for an agreement to be upheld in New Zealand. The agreement also failed to state which law would apply, which means the PRA becomes the default law.

What the Commission would like input on

The Commission says it wants to know what should happen when people or property have a link to another country. In particular:

• Should the PRA let courts take into account all the property the partners own worldwide, provided the partners’ relationship had a close connection with New Zealand?
• Should a couple be able to agree at any point during their relationship, or even after separation, that a different law should govern how they divide their property?
• Should the PRA always apply if people do not say in their agreement which country’s law should apply? Or would it be better to work out which country’s law the partners expected would apply?

The Commission wants to know how practitioners think the rules could be improved.

“Practitioners have a unique insight into this relatively technical area of the law. It’s important that we hear from them about the issues we have identified, and the options for reform we suggest,” says Commissioner Helen McQueen.