Clayton v. Clayton

This case concerned the determination of what constitutes relationship property in a divorce proceeding and how trusts may affect this determination (e.g. if a sham trust is implemented to hide assets, therefore affecting a woman’s economic rights in a divorce). The term “relationship property” is defined in the Property Relationships Act of 1976, the principles of which focus on the equality of spouses and that at the end of a relationship, any economic divisions should reflect equal contributions made by the couple during the relationship. However, any property constituting “trust property” is not available for division under the PRA. In this case, the parties had been married for 17 years with two daughters. During the marriage, the respondent-husband had become a successful business owner and set up several discretionary trusts. The trusts ostensibly related to the business he had established. The appellant-wife had assisted with her husband’s business ventures and was the main childcare provider during their marriage. The Court concluded that, in this case, the powers under a trust deed constituted “property” under the PRA. In applying the two-stage approach of section 182, the Court concluded that one of the discretionary trusts settled during the Clayton’s marriage constituted a nuptial trust under §182 of the Family Proceedings Act 1980 because of its connection to the marriage. The court found that the “nature of the assets is not determinative of whether the settlement is nuptial or not,” and that a settlement “made for business reasons” and containing business assets can be a nuptial settlement. The New Zealand Women’s Law Journal described this as a “decision that provided a much-needed step towards a more equal recognition of the traditional economic disadvantages faced by women.”