Relationship property litigation
The “relationship property” of a qualifying relationship is generally divided equally between the parties on the ending of the relationship under the Property Relationships Act 1976 (“the Act”). The Court can make certain compensatory adjustments where it is permitted to do so under the Act.
“Relationship property” and “separate property” are defined terms in the Act.
The process the Court usually follows in relationship property litigation cases is: (1) information is obtained about all of the property interests of both parties; (2) those property interests are categorised into relationship property (capable of division under the Act) and separate property (not capable of division under the Act); and (3) the Court makes orders dividing the relationship property on the basis of the principles of the Act and making any compensatory adjustments allowable under the Act.
The Act allows parties make their own contractual arrangements to agree on what will be separate and relationship property on any ending of the relationship, and how the relationship property would be divided, as long as both parties have independent legal advice and the agreement is in writing.
In general terms, trust property and company property is not relationship property, although debts owed by trusts and/or companies to individuals can be relationship property and there can be consequences under the Act for parties who have effectively diminished the value of a claim under the Act by disposing of property to an associated trust or company.
In general, property received from third parties by way of an inheritance and property acquired before the commencement of the relationship are not classified as relationship property, unless such property has been put into the “family home” (which is always divided equally between the parties under the Act, unless there are compensatory adjustments for other reasons) or it is intermingled or used within the relationship to the extent the Court says it has changed its character.
Frequently encountered issues
Issues or problems that are frequently encountered in litigation in this area are:
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