Appeal of Artistic Copyright Being Relationship Property Brushed Off

In Alalääkkölä v Palmer [2024] NZCA 24 the Court of Appeal upheld the High Court Judge’s finding that copyright in paintings created by Ms Alalääkkölä during a 20-year relationship are relationship property under the Property (Relationships) Act 1976 (PRA). 

Copyright in a painting is personal property (distinct from the ownership of the physical paintings) and depending upon the time of creation both can be subject to the PRA. But it was also recognised that copyright in paintings can be more “personal” than “property”.

The ownership issue arose after their separation when Mr Palmer entered the former family home and removed a substantial number of the paintings with the intention of  selling them and/or commercialising the copyright in them.

The Family Court Judge readily held that the physical paintings are relationship property. However, while finding that in theory copyright falls within the ambit of property subject to the PRA, the Judge justified finding that the copyright solely belongs to Ms Alalaakkola on the basis that the skill required for producing the artworks preceded the relationship.

As earlier noted, the High Court Judge overturned the Family Court Judge’s finding on copyright ownership on the basis that the skill required to produce the works and whether that skill preceded the relationship are irrelevant to whether copyright in the works is subject to the PRA. Rather, it is when the work was created that determines whether the copyright in the work was relationship property. The possession of a skill prior to a relationship, whether or not that skill can create a copyright work (or other intangible asset), does not make the use of that skill during the relationship exempt from the PRA. Taking a wider perspective, the High Court Judge noted at [34] “there is nothing to suggest the property rights created by the Copyright Act should be treated any differently from any other sort of property produced or acquired by a partner or spouse during the course of a relationship”.

The High Court Judge held that the artworks should be shared equally by value, and referred the matter back to the Family Court for that purpose noting that the Family Court has discretion to vest some, none or all of the works in one party, with an adjustment to the division of other relationship property in order to obtain overall equality of division.

The Court of Appeal agreed with the findings of the High Court Judge, noting that it is not necessary to broaden the traditional concepts of property in order to bring copyright within the scope of the PRA definition of property. They were also not persuaded that copyright works created during the relationship with personal skills that preceded the relationship would allow the copyright in those works to evade the reach of the definition of property in the PRA. Such skills were found to be distinct from the copyrights, forming no part of the bundle of rights that attach to the individual artworks created with those skills. Consequently, the Court of Appeal rejected the contention that the use of prior acquired skills justifies putting the property so produced or acquired beyond the reach of the PRA, which recognises that although the contributions of the partners to a relationship may be different, they are both valuable.

It was also noted that if there is any conflict between the Copyright Act and the PRA, it is the PRA that prevails as section 4A of the PRA provides that: “[e]very enactment must be read subject to this Act, unless this Act or the other enactment expressly provides to the contrary”, with the Copyright Act having no such express provision. Ms Alalaakkola’s best argument to the effect that the Copyright Act provides to the contrary was that under section 21 she alone is the first owner of copyright. Given the lack of prior New Zealand case law, the Court of Appeal sought to elucidate New Zealand’s property relationship law through comparative analysis with other jurisdictions. It was noted that there are five broad approaches to relationship property — unitary systems, separate property systems, judicial discretion, community property systems, and deferred community systems. On this analysis New Zealand’s system is most appropriately classed as a deferred community system as the general rule in New Zealand is that ownership by the community (relationship partners) does not apply until the relationship has broken down, and even then only when specified in a Court order or an Agreement under Part 6 of the PRA. As such the Court of Appeal found no conflict between the Copyright Act and the PRA as Ms Alalaakkola’s sole ownership of copyright applied until the relationship had broken down and thereafter became subject to a presumption of being relationship property until finalised in a Court order or an Agreement under Part 6 of the PRA.

After establishing that Mr Palmer is entitled to an equal share in the copyrights, the Court of Appeal then considered how the copyrights should be allocated within the context of the PRAs requirement that relationship property be allocated equally while taking into account the ‘clean break’ principle. The Court of Appeal agreed with the High Court Judge’s finding that there was nothing exceptional about the case that would make equal sharing repugnant to justice. Nonetheless, given the personal nature of artistic copyrights, it was considered appropriate and in-keeping with the ‘clean break’ principle to grant Ms Alalaakkola’s request that the copyrights be solely vested in her with an appropriate adjustment to the division of other relationship assets. Had the copyrights instead been in respect of less personal subject matter such as engineering drawings, the Court of Appeal would not have been as disposed to grant the request, although it also noted that competition issues can inform how assets are divided. The assessment of an appropriate compensatory adjustment was remitted to the Family Court for determination, and Mr Palmer was entitled to full costs on the appeal.

Authors: Quinn Miller and Jim Piper

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