Relationship Property Review Raises IP Considerations

The Law Commission has released an issues paper titled: Dividing Relationship Property - time for a change? The review of the Property (Relationships) Act 1976 (Act) is wide ranging and intellectual property considerations arise in several areas...

In considering whether the definition of property is future proof it is noted that with increasing numbers of people being involved in developing software and other forms of digital design intellectual property is likely to become more of an issue when partners separate. It is noted that the Act’s current definition of property is wide enough to capture all sorts of intangible property, but raises the question of whether it provides sufficient guidance on whether and when such forms of property are property for the purposes of the Act. This can give rise to omission from the property pool on account of being overlooked or cause costly disputes about whether such an item is relationship property. There are also issues around valuing such property, especially when such values can be highly volatile. These considerations gave rise to the following consultation questions:

• Should the Act’s definition of property be retained so that questions of whether the PRA applies to emerging forms of property are left to the courts to decide on a case by case basis?
• Should the Act’s definition of property be amended so that it defines property in greater detail? If so, is it preferable to amend the definition to expand the items that are included as property? Which items ought to be included?

In considering cross-border issues it is noted that the distinction between movable and immovable property varies across different jurisdictions. The Act currently does not apply to immovable property outside of New Zealand, and applies to movable property anywhere provided at least one of the partners is domiciled in New Zealand at a complying date. Patent grants and Trade Mark and Design registrations are considered to be immovable property as they are situated where they can be transferred according to the law of their creation. Copyright on the other hand is movable as it automatically arises without being subject to registration.

The provision regarding the Act not having effect in relation to foreign immovable property is based on the Mocambique Rule that derives from a late 19th century UK House of Lords decision. A more recent UK Supreme Court decision notes that much of the underpinning of the Mocambique Rule has been eroded, such that the Rule now applies primarily to disputes relating to title or possession of immovable foreign property. New Zealand case law has established two exceptions to the Rule: (i) for the administration of deceased estates and (ii) where there exists some personal obligation between the parties arising out of a fiduciary relationship, implied contract or other conduct which an equity Court would consider unconscionable. These considerations gave rise to the following consultation questions:

• Should there be express statutory reference to exceptions to excluding foreign immovable property from the PRA in keeping with the exceptions to the Mocambique Rule?
• Should provision be made in the PRA to allow a court to order compensation to take into account foreign immovable property?

Author: Quinn Miller

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