What to do when a relationship property dispute arises
Property division between partners following the end of a relationship can become a complicated and drawn-out process. This is sometimes the case because parties may feel that filing Court proceedings against one another is the only way forward. Indeed, the NZ Family Court is designed to facilitate effective family dispute resolution, however, individuals can avoid the stress, cost and time associated with Court proceedings, by creating an enforceable property division contract of their own. This course of action can be facilitated by lawyers, mediators or arbitrators with special expertise in family law, even if agreement or good will between parties is lacking. This article provides some information on these out of court avenues. Note that the information provided here is intended as a guide only. If more information is required in relation to a personal property dispute, it may be that the team at CODR can help by providing more information.
The Family Court
The Family Court is empowered under the Property Relationships Act 1976 (the Act) to order division of relationship property in the event of a marriage, civil union or de facto relationship ending. For a brief account of how the Act requires the Courts to categorise, evaluate and divide property between individuals, see “Relationship Property – The Fundamentals”.
Filing an application with the Family Court may be appropriate if urgent steps need to be taken, as the Court can make interim orders that are immediately binding. The Family Court may also provide the most suitable forum if multiple and varying claims need to be dealt with. For instance, a relationship property dispute can be heard in the Family Court alongside a family protection claim or some other matter implicating a third party who may be unwilling to become involved in alternative forms of dispute resolution.
However, these scenarios aside, Court proceedings can be time-consuming and unsettling for all involved. Standard court procedure, as well as file backlogs can result in significant delay for parties. Further, so long as the dispute does not involve a vulnerable person or a minor younger than 18 years, accredited news media representatives are granted full access to proceedings.
Dealing with relationship property disputes through the Family Court can also become very costly, especially if evidence is lacking or a point of law arises which proves complex. Pursuant to the Family Courts Fees Regulations 2009, an upfront $700 filing fee must be paid for any application lodged. If the dispute is heard before a Judge, an additional $906 fee must be paid for every half-day. Legal fees also need to be added to the total cost of proceedings.
Finally, filing an application with the Family Court is sometimes not a viable option if considerable time has passed since the relationship in question ended. For those previously in a marriage or civil union, court proceedings must be filed within 12 months of its dissolution (this is usually taken to be the divorce date). For those previously in a de facto relationship, proceedings must be filed within three years from the point at which the relationship ended.
For the reasons stated above, dealing with a relationship property dispute in Court can be stressful, prolonged and costly. However, these shortfalls of the Court system can be avoided if parties choose to work through their relationship property dispute via alternative dispute resolution services.
Alternative dispute resolution services
Disagreements over relationship property are particularly well suited to out of court management. This is because the Act expressly allows for dispute resolution by contract. This means that so long as certain requirements are met (as set out in the article mentioned above), and so long as the contract adopted by the parties does not lead to outcomes that are or become seriously unjust, relationship property contracts are binding and enforceable.
Arbitration can provide a speedy and cost-effective way to resolve property disputes. Unbound by court protocol, arbitrators can speed up the dispute resolution process considerably. Further, arbitrator fee structures can be negotiated and fixed at the beginning of the dispute resolution process, and forum and service fees can be avoided or significantly discounted .
Arbitration also affords complete privacy to parties. The number of persons involved in the property dispute and contract formation process can be reduced if desired and the opinion of intimately affected third parties such as children or dependents can be integrated into proceedings flexibly. Further, parties can agree upon an arbitrator of their choice.
Another advantage of this kind of dispute resolution is the ability that the arbitrator has to gather information. Though a Judge in the Family Court can order discovery, request affidavits and make interlocutory orders, she is still bound by standard Court procedure. Alternatively, an arbitrator can arrange a one-off meeting, calling parties, lawyers, accountants and any other relevant parties as witnesses. This power, in practice, often leads to speedy and effective information collection, a crucial requirement for successful dispute resolution and contract formation.
Mediation can also be an effective way to resolve relationship property disputes. Like arbitration, this avenue can offer parties a streamlined, confidential and cost-effective dispute resolution service. As stated above, simplified processes and agreed upon fee arrangements can result in significant cost reductions, and procedural flexibility can lead to thoughtful and effective outcomes.
Importantly however, the role of a mediator differs from that of an arbitrator. Whereas an arbitrator will hear submissions from both sides before arriving at a considered decision (thereby acting as decision-maker), a mediator facilitates and guides the parties to define issues, produce relevant information and arrive at a consensus. Mediation therefore can prove very effective if goodwill remains between the parties, or, even if not, if there is a will to achieve a timely and confidential settlement that the parties can live with.
It may be that a trained mediator or arbitrator is not necessary for two parties to arrive at agreement as to how their relationship property should be divided. In this case, the help of a lawyer on the part of both parties may be all that is required. This avenue may be the simplest and most cost-effective way forward, especially if both parties are largely in agreement as to how they wish to divide their property but need reassurance that their agreement will be enforceable. There are particular requirements that have to be met for such an agreement to be enforceable, including that each party have had independent legal advice before signing the agreement and that the lawyer certifies that he or she explained the effect and implications of the agreement to the party before signing. For more information see “Relationship Property – The Fundamentals”.
Because NZ Lawyers are required to follow certain standards of professional behaviour, any insight a lawyer gains into private family arrangements remains strictly confidential. Such standards also insist that fees charged by lawyers are reasonable and fair.
Negotiating an agreement which sets out how relationship property is to be divided between partners following the end of a relationship, with the help of arbitrators, mediators and lawyers is advantageous to the extent that much time, money and stress can be avoided. Indeed, the statutory regime encourages these options. If you are interested in engaging in any of the dispute resolution processes mentioned above, CODR’s online platform can be used to bring all parties together to arrive at the appropriate outcome confidentially, expertly and efficiently.