Following separation, what contributions should be factored in?

When a relationship ends, dividing property is not simply a matter of drawing a line at the date of separation and splitting the assets and liabilities that existed at that point. The process also requires an equitable accounting of what has occurred between separation and the eventual settlement, including the contributions each partner has made during that intervening period. New Zealand’s Property (Relationships) Act 1976 (Act) provides the framework for this exercise.

Section 18: What counts as a contribution to a relationship?

Section 18 defines what constitutes a “contribution” to a marriage, civil union or de facto relationship. The nature and extent of each partner’s contributions can influence how property is divided, particularly where the court is considering whether to depart from equal sharing. The Act recognises both financial and non-financial contributions, including:

• caring for children, elderly relatives, or dependents;
• managing the household and performing domestic duties;
• earning income or providing money for the relationship;
• acquiring or improving relationship property;
• giving up opportunities, for example, forgoing a career or a higher standard of living so that the other partner could benefit; and
• supporting the other partner in gaining qualifications or running a business.

Importantly, monetary contributions are not presumed to be of greater value than non-monetary contributions. A partner who dedicated their time to caring for children or managing the household is recognised as having contributed just as meaningfully as a partner who earned the family’s income.

Section 18A: The role of misconduct

Section 18A establishes a general rule that the court may not take misconduct into account when dividing relationship property. This reflects the Act’s policy of focusing on contributions and equitable outcomes rather than apportioning blame. The court may, however, consider misconduct in limited circumstances where the conduct was “gross and palpable” and it significantly affected the extent or value of the relationship property. Both conditions must be satisfied.

The threshold is deliberately set high. In one matter, a partner who gambled away approximately two-thirds of the total relationship property pool was found to have engaged in gross and palpable misconduct, and the dissipated amount was effectively reintroduced into the pool before equal division. By contrast, conduct such as excessive expenditure on hobbies or personal struggles such as alcoholism have generally not met the threshold. Dissatisfaction with a partner’s behaviour alone is unlikely to alter the property outcome.

Section 18B: Compensation for contributions made after separation

The period between separation and the final court hearing can extend over months or even years. During that time, one partner may continue contributing to the relationship property. Section 18B empowers the court to compensate a partner for those post-separation contributions. The “relevant period” runs from the end of the relationship through to the date of the hearing. Contributions are assessed against the same broad definition in section 18 and may include:

• mortgage repayments, which represent the most frequently encountered form of post-separation claim;
• occupational rent, where one partner continues to reside in the family home and the other may be entitled to compensation for being excluded from the use of that property;
• care of children, although this must be distinguished from the financial costs of raising children, which are addressed under separate child support legislation; and
• work or services in respect of the property, such as managing a business, undertaking renovations, or remaining in employment to preserve the value of an employment-related asset.

Even where a qualifying contribution is established, the court will only award compensation if it considers it just to do so. The contributions of both partners are weighed, and one may offset the other. A common scenario involves one partner vacating the family home but continuing to pay the mortgage, while the other remains in occupation rent-free. The paying partner may be entitled to compensation, though the occupying partner may contend that their ongoing care of the children offsets the financial contributions.

Section 18C: Compensation for dissipation of relationship property after separation

Section 18C addresses a distinct concern: the protection of the relationship property pool where one partner has deliberately diminished its value following the end of the relationship.

Where, during the period after separation but before the hearing, one partner’s deliberate action or inaction has materially diminished the value of the relationship property, the court may order that partner to compensate the other.

Two critical requirements must be satisfied:

1. The action or inaction must be deliberate. The courts have determined that this requires proof that the partner acted with the intention of diminishing the property’s value. It is not sufficient that the value happened to decline as a consequence of their actions. A decline in value attributable solely to market forces, for instance, would not satisfy this requirement.
2. The diminishment must be material. A minor or insignificant decrease in value is unlikely to be sufficient.

Compensation can take the form of a monetary payment or a transfer of property.

The courts have applied this provision in various circumstances. In one case, a partner ceased paying the mortgage, rates and insurance on the family home and resisted all attempts to resolve the dispute, resulting in the property’s value diminishing by approximately $200,000. The court found the conduct deliberate and awarded compensation. In another matter, a partner wound down a jointly-owned business to relocate overseas with a new partner, making no effort to preserve the business’s assets, which the court found constituted deliberate dissipation.

Obtaining tailored legal advice

These provisions of the Act can interact in complex ways, and their application will depend on the particular facts and circumstances of each case. No two relationships, and no two separations, are the same.

If you are navigating a relationship property dispute, or anticipate that one may arise, our Relationship Property and Family team can help you understand your rights, evaluate the merits of any potential claims, and work towards the most favourable outcome for your situation.