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Opt-out contracts may not be worth the paper


Tony Ryall National Justice Spokesman

21 August 2000

Contracts may not be worth the paper they are written on

National's Justice spokesman Tony Ryall says the increased number of de facto and gay couples trying to opt out of matrimonial property laws may be wasting their money.

Lawyers are reporting a rise in the number of couples drawing up property contracts before the Government's changes to matrimonial property legislation take effect.

"Some submissioners to the select committee, notably the Law Commission, say the changes to property legislation will make it easier for judges to overturn these agreements whereas the Family Law Section and the Ministry of Justice say it will make it harder.

"The only way a couple will really know if they have successfully contracted out of the property sharing laws, is if the agreement is upheld by the Court during a dispute! It's too late then.

"These contracting out agreements don't come cheap - the Select Committee has been told they will cost between $600 and $1000 for each partner to contract out.

"The Government has no idea what impact these changes will have on current de facto relationships. Tim Barnett is playing down the impact these changes will have, saying it will 'apply only to those who cannot agree'.

"What Mr Barnett forgets is that lawyers are estimating that between 70 and 90% of cases will go before the courts, not the 10% that do now. Judge Mahony says even an additional six judges is unlikely to be enough to deal with the extra workload.

"The Government has set views on this legislation and no amount of submissions to the Select Committee will change those," Mr Ryall said.

Ends

Attached: case examples of potential injustice as a result of the changes

Four increasingly common scenarios where the Government's changes will produce injustice:

1. A woman with children of an earlier relationship has settled matrimonial property with her ex-husband and has purchased a home from the proceeds of that settlement for herself and children. She enters into a de facto relationship with a man who brings no property to the relationship. The relationship lasts only three years, following which she and her children lose their home as she must pay half of the value of her equity in the home to that man. She cannot afford the increased mortgage.

2. A woman of 50 years recently widowed or divorced and residing in the home of her earlier relationship enters into a de facto relationship with a man who brings minimal property to the relationship. The relationship fails after three years and she must pay to this man 50% of the value of her home. The home represents her life's work and superannuation. In her first marriage, she did not work in paid employment but raised the children of the marriage. Accordingly, at 50 years of age she is employed but will never earn a lot of money as her employment options are limited as a consequence of her years of child rearing. The home was her superannuation. She cannot afford to retain it and pay the ex de facto his half share. The Bill has destroyed her future.

3. A woman with children leaves the father of those children. She has no assets and is in receipt of the DPB. She enters into a de facto relationship with a man who owns his own home. He houses her and the children. She comes off the DPB and he supports her and her children. The children's father pays $10 per week child support. Three years later the woman is unhappy; she leaves the man taking half his house or more!

4. A man or woman in his/her seventies has survived his/her spouse and on the death of the deceased spouse he/she received by survivorship the matrimonial home of many years. The couple had mutual wills that provide that on the death of the survivor the home will pass to their children. A scenario I suggest typical of most persons of that age. Unfortunately, the survivor, lonely, enters into a de facto relationship. This turns out to have been a mistake. Three years later the survivor must settle half the family home on the de facto partner. The children lose the inheritance they would have received from the deceased spouse. At 70 years of age the surviving partner may not be able to afford to raise the mortgage necessary to pay out the de facto partner of three years. His/her work of 40 years is lost in three.

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