Supreme Court Recognises Wife’s Contributions Towards Building Husband’s Asset Base

New Zealand’s highest Court has endorsed the importance of all contributions to the marriage relationship, making for a happy wife and a less than happy husband in the ground breaking case of Rose v Rose.

The case concerned the division of Mr and Mrs Rose’s property under New Zealand’s relationship property legislation, the Property (Relationships) Act 1976, after their marriage broke down after some 25 years.

When Mr and Mrs Rose married in 1979 the husband was the sole owner of a farm property, Cloverlea.  He farmed that property, and two others,  in a partnership with his father and brother.  When his father died in 1995 Mr Rose and his brother inherited one of the other farm properties, Poplars, and their father’s interest in the partnership.  By the time Mr and Mrs Rose separated in 2003 the partnership carried on a successful wine making business at Poplars and on Cloverlea.

There is no question that Cloverlea (other than the homestead on it) and the husband’s interest in Poplars were his separate property.  That is because the husband already owned Cloverlea when the relationship began, and he had acquired his interest in Poplars by way of an inheritance.  However, at issue in the court proceedings, were Mrs Rose’s claims that she was entitled to share in the increase in value of Cloverlea and Poplars.  Her claims were based on section 9A of the Property (Relationships) Act.

Poplars

Mrs Rose based her claim to an increase in value of Poplars on section 9A(1) of the Act.  This section provides that where an increase in value of separate property is attributable (wholly or in part)  to the application of relationship property, then the increase in value is relationship property – and therefore subject to the equal sharing regime under the Act.

Mrs Rose claimed a 50% share of the increase in value of her husband’s half share of Poplars since 2000, when the vineyard had been developed on the land.  The Supreme Court held that Mr Rose’s partnership income was the relationship property of Mr and Mrs Rose and that it had been applied towards development of the Poplars vineyard.  Therefore, the increase in value of the husband’s share of Poplars since 2000 was relationship property to which Mrs Rose was entitled to a 50% share.

Cloverlea

Mrs Rose brought her claim to an increase in value of Cloverlea under section 9A(2) of the Act.  This applies where an increase in value of separate property is attributable, wholly or in part, and whether directly or indirectly, to the actions of the other spouse or partner.  Then, the increase in value is relationship property.  The respective shares of the partners are to be determined in accordance with their respective contributions to that increase. 

Mrs Rose argued that the increase in value of Cloverlea since 1979 was in part due to her actions in caring for the children and the household, and to her earning a significant portion of the household income from her “off farm” employment.  She asserted that because of her domestic contributions the husband was freed up to work long hours in the farming business, including on the development of Cloverlea.  Further, without her contributions to the household income her husband could have been forced by the level of indebtedness at the end of the 1980’s to sell Cloverlea.  In that event the spectacular increase in value in more recent years would have been lost to him.  She asserted that in those indirect ways she contributed to the increase in value in Cloverlea.  The Supreme Court agreed and found that Mrs Rose was entitled to a 40% share of the increase in value.  It rejected the husband’s argument that because the wife did not work physically on the farm she could not establish a sufficient causal link between her efforts and the increase in value.

Net Result

As is usual in Family Court matters the value of assets to be divided was assessed at the date of the Family Court hearing.  At that date, Mr Rose’s separate property values were:

The effect of the Supreme Court’s findings (upholding the Court of Appeal) was that Mrs Rose is entitled to a share of those assets of $555,517.  This was considerably more than she had been awarded in the High Court – just $75,000.  But, it was significantly less than the $835,735 she had been awarded in the Family Court.

Conclusion

Following release of the Supreme Court’s decision Mr Rose was reported as being “pretty disappointed”.  Mrs Rose’s lawyer said that:

“She is extremely pleased that her contribution as a wife and mother over a quarter of a century has really been appropriately acknowledged.” 
(The Press, 20 May 2009).

Few could argue with these sentiments when Mrs Rose’s contributions enabled her husband to work long hours and increase his asset base, while she kept the home fires burning, raised their children and made important financial contributions from her own employment.  In context, the husband did fairly well out of the relationship and the assets he contributed to it.  He ended the relationship with separate property interests of some $2.8m, of which his wife was awarded some 20%.

Cases of this nature, often involving farms, require a delicate balancing exercise by the Courts.  On the one hand, the husband has contributed the land (which has often been held in his family for generations).  However, the wife, by her efforts in raising their family frees the husband up to work on and develop the land.  In this case, the balance ultimately struck by the Court was reasonable.

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Last updated: 8 June 2009

The contents of this publication are general in nature and are not intended to serve as a substitute for legal advice on a specific matter. In the absence of such advice no responsibility is accepted by Brookfields for reliance on any of the information provided in this publication.