Relationship property division — contracting out agreement — extraordinary circumstances — personal debt — child support — occupational rent — Property (Relationships) Act 1976, ss 8, 9A, 17, 18, 18B, 20, 20E, 21F, 21H, 21J & 32 — Child Support Act 1991, ss 32 & 125 — Mills v Graham FC Hamilton FAM-2004-019-001914, 3 March 2005 — Hammond v Hardy [2007] NZFLR 910. The parties were in a dispute over the division of property following the end of their 12 year relationship. The main issue was whether a contracting out agreement (the COA) was valid. The parties had entered into the COA in 2005 which established the parties' separate property interest in a house (68.5 per cent share to the respondent and 31.5 per cent to the applicant). It did not establish any specific mechanism for applying that separate property to subsequent property purchases. In 2013 they purchased a second property. The applicant submitted the COA did not apply to this property while the respondent said the parties had verbally agreed to continue the COA. The Property (Relationships) Act (the Act), creates a presumption that relationship property is to be divided equally. Section 21 allows people to "contract out" of this statutory presumption and organise their relationship property as they wish, as long as it is in writing, signed and with independent advice (s 21F). A court may give effect to a contracting out agreement that does not satisfy these requirements if it is satisfied the non-compliance has not materially prejudiced the interests of any party to the agreement (s 21H). Section 21J provides that a contracting out agreement can be set aside if it will cause serious injustice. The parties sold the first property, received their sums as separate property and agreed to apply those sums to purchasing the second property as the family home. Under s 8(1)(a) the family home, whenever acquired, is relationship property. Therefore, in the first instance, the COA did not apply to the second property. However, the respondent provided evidence that the parties had discussed with a lawyer that they would divide the second property 2/3 to the respondent and 1/3 to the applicant. They had changed their shares slightly on his advice, for simplicity. He also advised the applicant to get independent legal advice which the applicant refused. The respondent's evidence was more compelling than the applicant's and she said the parties had discussed whether they should update the COA but agreed it was applicable and carried forward to the second property. This was supported by the lawyer's notes. The Judge was satisfied there was a meeting of the minds as to the continuation of the COA. As the continuation of the COA did not meet the requirements under s 21F, the onus was on the applicant to prove that non-compliance would not materially prejudice the respondent. The Judge was satisfied there was no material prejudice in this case. The applicant was aware of the consequences of agreeing to a 1/3 share of the property, had been offered and declined independent legal advice and there was little change (his share was increased slightly) from the original COA. There would be no serious injustice if the COA was upheld, so the Judge concluded it was valid. The respondent held a 2/3 share as separate property and the applicant held 1/3. Residual issues were resolved including that the applicant was to pay the respondent $12,640 as compensation for a personal debt he had for child support arrears that was paid for from the parties' relationship property. In the absence of sufficient evidence the Judge declined to make an order requiring the applicant to pay a lump sum child support payment to the respondent. Finally, the applicant was awarded $23,452 from the respondent for occupational rent. Judgment Date: 2 October 2019. * * * Note: names have been changed to comply with legal requirements. * * *