Supreme Court considers short marriages and nuptial settlements in Lassnig v Zhou

The Supreme Court’s latest judgment, Lassnig v Zhou [2025] NZSC 116, is the latest in a series of appellate decisions over the last 15 years that have reconstructed Section 182 of the Family Proceedings Act 1980.

The first, Ward v Ward [2009] NZSC 125 restated s 182’s remedial purpose; Clayton v Clayton [2016] NZSC 30 provided the modern analytical framework; and Preston v Preston [2021] NZSC 154 recast that framework as a three-stage inquiry, testing its limits in the difficult territory of blended families, pre-existing trusts and short marriages.

Lassnig v Zhou was the Supreme Court’s first opportunity to apply Preston v Preston and the three-stage test to a very short, child-free marriage where the financial contributions of one spouse significantly exceeded those of the other spouse.

Section 182: Established Principles from Ward, Clayton and Preston

Lassnig v Zhou confirms and applies the established principles of s 182. First, that the purpose of s 182 is to remedy the unfair consequences that flow from the failure of the underlying premise of a nuptial settlement, namely a continuing marriage. Second, the need for a “forward-looking” comparison between the spouse’s position under the settlement with the marriage dissolved (B) and the position had the marriage continued (C). Third, the Court also restated the rejection of any Property (Relationships) Act 1976 (PRA) style entitlement or presumption of equal sharing. Finally, it endorsed the now orthodox three-stage enquiry (Preston v Preston [39]):

1. Is there a nuptial settlement?
2. Is there a gap between the spouse’s position under the settlement with the marriage dissolved (B) and the position had the marriage continued (C)?
3. If so, how should the Court’s discretion under s 182 be exercised?

Preston v Preston broke new ground by formally splitting Clayton v Clayton’s second step and requiring a separate inquiry into measuring the gap between (B) and (C). The Court stressed that, once a gap is identified, an order will generally follow unless there are countervailing factors. The Court also warned against unedifying debates about dollar contributions and insisting that non-financial contributions are of equal worth. At the same time, allowing flexibility in orders: the Court awarded Mrs Preston a modest capital sum (approximately 15% of trust equity) rather than a mirror-trust or equal split.

Supreme Court’s Decision in Lassnig v Zhou

The marriage lasted less than three years and there were no children of the relationship. Both parties were trustees/beneficiaries of a “classic” family trust settled immediately after marriage. Ms Zhou contributed approximately $1,211,000 and Mr Lassnig contributed approximately $188,000. The parties’ non-financial contributions were roughly equal.

The Supreme Court agreed with the Court of Appeal’s outcome (an 80/20 split in favour of Ms Zhou), but not its reasoning. This distinction is significant: while both courts arrived at a similar practical result, the Supreme Court expressly identified errors in the Court of Appeal’s approach, particularly in its analysis of the second and third stages of the s 182 inquiry.

How the Supreme Court Differed from the Court of Appeal

The Court of Appeal undertook a detailed analysis of the parties’ expectations and the gap between the position on dissolution and the position had the marriage continued. It placed considerable emphasis on the parties’ financial contributions, the short duration of the marriage, and the lack of dependent children or other countervailing factors. The Court of Appeal also engaged in a granular assessment of the likely benefits each party would have received, including modelling the impact of mortgage responsibility and the possibility of capital distributions from the trust. Ultimately, the Court of Appeal concluded that the gap between the parties’ positions was narrow and that an 80/20 split (slightly above Mr Lassnig’s financial contribution) was appropriate to reflect the remote possibility of greater benefit had the marriage endured to retirement.

The Supreme Court, while agreeing with the outcome, was critical of the Court of Appeal’s method. The Supreme Court found that the Court of Appeal erred by focusing too much on short- and medium-term expectations and by conducting an unnecessarily detailed counterfactual analysis. The Supreme Court emphasised that the correct approach is a broad-brush, forward-looking assessment of the parties’ reasonable long-term expectations, rather than a granular modelling of possible benefits or living arrangements. The Supreme Court also clarified that, in short, child-free marriages with no countervailing factors, financial contributions will generally be the guiding factor in any s 182 resettlement. This represents a more streamlined and predictable approach than that taken by the Court of Appeal.

Key Takeaways for Family Law and Trust Practitioners

• Contributions assume more importance in short marriages: While Clayton v Clayton and Preston v Preston dealt with longer marriages or blended-family situations, Lassnig v Zhou supplies a rule-of-thumb for very short marriages: absent of children or obvious countervailing factors, financial contributions will ordinarily set the scale of relief. The Court qualifies this with “generally” to preserve flexibility, but the practical message is strong: in these factual settings, expect a near-pro-rata result.
• Streamlined approach; avoid granular counterfactuals: The Supreme Court in Lassnig v Zhou counsels judges to avoid elaborate (B)–(C) modelling where the expectations are obvious. The Supreme Court’s criticism of the Court of Appeal’s detailed modelling signals a preference for a broad-brush, expectation-based comparison, which is likely to shorten hearings and reduce expert evidence battles, especially in ordinary residential-property trusts.
• Status of non-financial contributions: The Court reaffirms Preston v Preston’s parity principle, but the Court’s reasoning gave financial contributions decisive weight in short, child-free marriages. Non-financial contributions are acknowledged, but of limited weight.
• What has not changed: First, the three–stage framework remains. Second, the relationship between s 182 and the PRA remains unchanged. The Court repeats Clayton’s warning against importing PRA presumptions. Instead, the Court uses s 14 of the PRA (short-duration unequal contributions rule) as useful policy context when dealing with short duration marriages involving unequal contributions.

Conclusion: Implications of Lassnig v Zhou for Section 182

Lassnig v Zhou is not a revolution, but it fills an undecided corner of the s 182 landscape. Advisers can now predict with some confidence that in a two-to-three-year, child-free marriage, the spouse who made the greater financial contributions will probably recover most of the value. Trust-settling couples who wish to avoid that outcome must evidence genuine countervailing factors (e.g., dependent stepchildren, health issues, or clear mutual intention to pool wealth irrespective of source).

The Supreme Court’s decision departs from the Court of Appeal by rejecting detailed, short-term modelling in favour of a broad-brush, expectation-based approach, and by making clear that, in this factual subset, financial contributions will usually dictate the outcome.

The guiding principles of Ward v Ward, Clayton v Clayton and Preston v Preston still apply, but Lassnig v Zhou adds a pragmatic gloss where “broad-brush, contribution-led” considerations should guide courts and lawyers in the growing number of late-life, short-term relationships involving family trusts.

Kate Bradley, Senior Associate – Wynn Williams Relationship Property Team

Georgia Johnston, Associate – Wynn Williams Relationship Property Team