The Property (Relationships) Act 1976 is at the center of a decade-long legal battle over a deceased estate, a case that highlights a gap in New Zealand succession law. The dispute involves David Rimmer, who died in 2016 without a will, leaving his children and surviving partner, Carolyn Wilton, at odds over the distribution of assets.
Bethan Read, special counsel at Morris Legal, explained that the issue stems from two separate sections of the PRA: s 21 and s 61. Rimmer and Wilton signed a s 21 agreement in 2002, which allows couples to contract out of the default inheritance rules. This agreement stipulated that if one partner died, the survivor could live in their shared home in Hunua for the rest of their life.
When Rimmer died in 2016, Wilton retained the right to live in the house but also had a choice under s 61. This section allows a surviving partner to opt for a half-share of relationship property or to rely on the default inheritance rules under the Administration Act 1969. Wilton chose the latter, a decision that would later complicate the division of assets.
The couple’s Hunua property was sold in 2021 for $1.2 million. Wilton kept the proceeds, arguing that her lifetime right to the home extended to the cash from the sale. Her children argued that by opting for the s 61 inheritance rules, she was barred from also claiming under the s 21 agreement, which they viewed as a full and final settlement of all claims.
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In 2023, the High Court ruled that the s 21 agreement sits outside the PRA, meaning Wilton was entitled to whatever the agreement promised her plus her s 61 choice. The siblings appealed, pointing to the “full and final settlement” clause in their agreement, but the Court of Appeal disagreed. The court ruled that clear wording would have been necessary to cut Wilton out of the estate entirely.
Given the current legal uncertainty, the profession is advising caution. The case, which is now before the Supreme Court, has exposed a flaw in standard contracting-out agreements. Many practitioners now recommend using explicit wording rather than implied intention, though the safest course remains to create a will alongside the agreement to ensure intestacy does not dictate the outcome.
This legislative gap has far-reaching implications beyond the Rimmer case. Emma Tonkin, a partner at Hesketh Henry, noted that the “full and final settlement” wording has failed in other situations. She cited the 2009 case of Murray Trotter, where a wife acquired her husband’s entire estate after separation because the couple’s “full and final settlement” agreement was deemed insufficient to override the default inheritance rules.
Once a surviving partner has taken possession of assets, the estate’s options narrow sharply. To claim against them, an executor or administrator must first get the court’s leave under s 88(2) of the PRA, which is granted only if refusal would cause serious injustice. Henry Stokes and Mary Rozeboom, senior legal counsel at Perpetual Guardian, noted that the legislation does not define “serious injustice,” making outcomes unpredictable.
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While some cases have succeeded, such as in Public Trust v Whyman where a surviving partner was ordered to pay back assets because the deceased had seemingly left his children destitute, others have failed.
A recurring complication is that the surviving partner is often the person administering the estate. In this case, Wilton distributed substantially all of the estate to herself without the children’s agreement or court approval. Stokes said this creates an inherent conflict of interest. “They’re just on a loser right from the start… there’s no other way to put that,” he added.
In practice, the solution often involves removing the surviving partner from their administrative role and appointing an independent third party, such as a statutory trustee company, to act as a neutral party in the proceedings.
Executors seeking to overturn such distributions face steep hurdles under the Act.
