Relationship property - Valuation

Question: How is property valued under the Property (Relationships) Act 1976?

The courts have said that, in the general run of cases, a fair value is best arrived at on the basis of a “willing but not anxious seller to a willing but not anxious buyer” (Haldane v Haldane [1976] 1 NZLR 672 (CA), [1976] 2 NZLR 715 (PC)).

In looking at a claim to future earnings that included issues about the valuation of an interest in a partnership, the courts have said:

• an individual’s personal characteristics - such as skill and talent - are not “property”;
• future income and enhanced earning capacity are not “property”;
• a partnership interest can be property because it can constitute a “bundle of rights” which can be valued, despite a nil value being ascribed by the partnership agreement itself.

Therefore, the inability to realise or sell an asset or “bundle of rights”, as the court put it, does not make the asset worthless. It is enough that those rights can be given a money value (Z v Z [1997] NZFLR 241, Z v Z (No 2)[1997] NZFLR 258 (CA)).

At what point is property valued?
Generally, the most up-to-date valuation will produce the fairest result, given inflation and the effect of debts and mortgages. As a general rule, if a case goes to court, the date for valuing the property will be the date of the hearing.

Sometimes, if a hearing is long and drawn out, unfairness may result to one of the parties, necessitating an award of interest covering the period of the delay. Alternatively, the court may depart from the usual hearing date valuation and adopt a different date which will produce the fairest result.

Credit adjustments may also have to be made to one or other of the spouses or de facto partners for payments they have made to reduce joint debts in the period between separation and the actual division of property.

References: For Richer For Poorer, pp 32, 33.
Haldane v Haldane [1976] 1 NZLR 672 (CA), [1976] 2 NZLR 715 (PC).
Z v Z [1997] NZFLR 241, Z v Z (No 2) [1997] NZFLR 258 (CA).

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