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General, Relationship Property

Can the end determine the means?

A recent High Court decision found that the Family Court does not have the jurisdiction to consider an application under s 182 of the Family Proceedings Act if the order dissolving the parties’ marriage was not made in New Zealand.  See Jurisdiction, Divorce and Trusts.

s. 182

Section 182 of Family Proceedings Act 1980 enables the Court to vary the terms of a trust where a party to a marriage that has ended in divorce will not be able to benefit from the trust in the way expected.  Essentially the purpose of s. 182  is to enable the Court to restore that reasonable expectation, as far as is possible in the individual circumstances.  Althought the section was amended in 2005 to apply to civil union partners, somewhat controvercially s 182 does not apply to de facto partners.   

Appeal

On its face resolution of the matter is quite simple.  The opening words of s 182 make it clear that for the Court to have jurisdiction the divorce must have been granted in New Zealand.   However, given the increasing number of trusts in New Zealand and the global nature of modern life, an appeal has been allowed so that the matter can be reviewed by the Court of Appeal.

Lesson to be learned?

Until this matter is ultimately determined, trustees of any trust to which s 182 could apply would be wise to read the fine print on the order nisi.  Likewise, any party that stands to be advantaged or disadvantated by a s 182 claim should carefully consider where the divorce is obtained if there are jurisdicitional options.

References:

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