August 2003

Not just a Formality

Relationship Property – Independent Legal Advice

A recent decision of the High Court of New Zealand has re-emphasised the thoroughness required of a lawyer when giving independent legal advice as to the effects and implications of a proposed written agreement pursuant to the Property (Relationships) Act 1976 (“the Act”).

The Act deals with the division of property after a couple break up. It covers both legally married couples and defacto couples. Section 21 of the Act allows for property matters to be wrapped up with a binding written agreement providing that procedures set out in the section are followed. In particular, it is essential that independent legal advice is given to both parties. Although to some people this may appear to be merely a case of creating more work for lawyers, the need for independent advice is clear.

Sometimes an agreement is prepared where one party has been pressured or coerced to agree to terms that do not reflect their entitlement under the Act. On other occasions, there may be problems with the agreement in relation to tying up loose ends that need to be sorted out.

Once signed, the agreement is intended to be full and final in nature. Although the Act provides a potential route for an agreement to be re-examined, the reality is that it is a very high threshold to get past before you are able to have such an agreement set aside.

In the case of Graham v Graham, the wife received legal advice from her lawyer regarding an agreement drafted by her husband’s lawyer. The High Court set aside the agreement signed as it concluded, from the evidence, that there had been:

  • insufficient investigation of the parties financial situation by the lawyer;
  • insufficient emphasis was given by the lawyer to the wife of the implications of her accepting the husband’s offer; and
  • insufficient written evidence was retained by the lawyer of the advice given to the wife.

This judgement confirms the appropriateness of our approach over the years to the providing of independent legal advice under the Act. The giving of such advice is not just a formality; it is an essential part of an important process. The cost of obtaining independent legal advice will vary according to the complexity of the matters to be addressed. However, we will not cut corners – the process is too important for everyone concerned.