Speaker 3 0:14

Welcome to Divorce Cafe, the podcast where we demystify, detangle, and hopefully detox the legal processes that follow a separation. We are relationship property lawyers ourselves, and this podcast is about upskilling everybody, lawyers and people going through a separation, to remove some of the conflict that happens after a separation. Occupation rent is an area of relationship property law that is just not very well understood. It involves maths, but it's not just that. Occupation rent is a bill that one party might send the other when the family home finally gets sold. But it's not even mentioned in the act. It could do with some demystifying, which is where today's guest comes in. Twenty-five years of family court lawyer. She is a director at Central City law firm Haig Lyon, a straight talker, formidable advocate, a little bit scary, but seems like a lot of fun, and obviously mathematically gifted because just like our Shelley here, she is a big lover of Excel spreadsheets. It is her love of spreadsheets that drew us to her for the topic of occupation, rent, and post-separation adjustments. Amanda Donovan, welcome to Divorce Cafe.

Speaker 1:27

Thank you very much. What a lovely uh uh uh um entry that was.

Speaker 3 1:30

Yeah, well thank you for having us here at your offices. Very beautiful, um, down in central Auckland. So uh Shelley's got the icebreaker today.

Speaker 4 1:40

Uh okay, so your icebreaker today, so your biography on your website says on the inside she says the firm's go-to for solving problems. Her intuition is her superpower. So can you give us an example of when intuition has served you well? Oh.

Speaker 1:57

We we all have those. I quite like that part of the end of the um website blurbs. Um otherwise known as your spidey senses, right? Um, that you do know. I think this comes from um uh being able to empathize with people and to really sort of understand um what it is you're actually trying to do here. Because eventually we all know the law and everybody can understand what it is that the legislation says, more or less what you're supposed to be interpreting, to help people through that part of the process. The more difficult part sometimes is trying to help your client understand the other client's perspective. Because if you can help someone understand somebody else's perspective, and sometimes you need to intuitively be able to work out what it is because the issue is not the issue, we all know that. Um then that's the sort of thing I'm thinking of when I talk about intuition.

Speaker 1 3:04

Yeah.

Speaker 3:05

Sitting in a room at a round table meeting, something's not quite right, and you're looking over there and you think, hang on a minute, and then you sort of say, So what's important to you with respect to this? And then like blah blah blah blah blah. And you're like, okay, that was it. So you're sensing something.

Speaker 4 3:22

So it's that sort of thing that I was thinking about when I So it's not really one example, it's every time that you use your intuition, I think. It's probably the case.

Speaker 3 3:33

As a supplementary, the psychology question, let's put that one in now.

Speaker 4 3:37

Number. Okay, so we we're this was question number 12, but we're gonna segue into it now. How is a background in psychology a useful thing for a lawyer?

Speaker 3:47

Sure, okay. And this comes up with a lot of clients often, actually. They look at the website and they're like, oh, you know, I am not a practicing psychologist, so let's be really clear about that. But I do keep up with the studies and I do keep up with things just to understand where the research has gone, because some of that sort of defunct research from 20 years ago that that we've we've moved on now. But again, you know, all of that is helping to understand somebody else's perspective. But the biggest part I think that comes out the most when you meet people is that some people turn up and they are you you lots of lawyers say, look, it's irrelevant why you separated. Sort of it's irrelevant, um, we need to get on to the division. And I think, and this is why I think maybe it's psychology related, is that it is relevant because if I learn that you separated um from your husband three months ago, but you were thinking about it for two years prior, um, and I dovetail that in with the grief cycle, that when that wife started thinking about separating two years ago, she started on her journey around that wheel. And by the time she made the decision to separate, she probably reconciled herself that we're at separation, right? And now I'm I'm ready to get on and do the things that we need to do with lawyers. She'd done her grieving. 100%. But once you if you're the husband who finds that out by surprise three or six months ago, and you start to think about where they are on the grief cycle, then you could potentially try to negotiate with angry or somebody who hasn't got anywhere near their acceptance yet. And if that's the case, then it's very difficult. Because people always say to me, you know, you know, if it's so straightforward, you know, because I always say identify, classify, value, divide, so straightforward, why does it take three years and cost hundred thousand dollars, you know, on those really extreme cases? And it's often that. Um, because if you get anyone even to a room for mediation and you're trying to negotiate rational with angry, it's very hard to do.

Speaker 3 5:57

Or rational with haven't been heard yet.

Speaker 6:00

All of that or sad or betrayed.

Speaker 4 6:04

Can you just say those four things that you quickly?

Speaker 6:07

Oh, the legal part? Yeah, straight out of the PRA in my mind, and how I always explain it to our juniors, is that, and that flows through to your Excel spreadsheet, is that we're identifying four easy steps in a relationship property case. It's easy. Four easy, super basic. And all my clients sort of chuckle at me in our first meeting and I write them down. Identify all your assets and liabilities. And I say that's easy. Yeah. You know, most of the time, unless someone's hiding stuff, you know what that write them all down. Secondly, look at them all, and then we're gonna classify them as either relationship property, something you're probably gonna divide equally, or separate property, something that's not, inheritance or the like. Then we're going to value them, then we're gonna divide them. And then I put my hands up always and I sort of say, and then say you've got a million bucks each, five hundred each, and then we have to say, hang on a minute, does that seem fair? Because you've got a salary of two hundred thousand, I've got a salary of zero. That's great, but if I take my two hundred thousand down to the bank husband, they'll say, Great deposit, great serviceability, you're in, and you'll take your five hundred thousand down, and they'll say, Great deposit, no serviceability, you're out. Yeah. There's an economic disparity there between you, and then I go through those adjustments, which ties us probably quite nice and nicely into this. Your section 15 type adjustments, has there been an economic disparity? And then um, as at the date of separation, and then from that date through to the date you settle, are there any other adjustments that need to be?

Speaker 3 7:35

There's something that needs to happen uh to even things up or make it fair as between separation, the time that you separate, and when you're actually getting to the end of your four-stage list. Yeah. So that does bring us up. So that's perfect.

Speaker 4 7:48

So today we are talking about occupation rent, and so that we're all up to speed, Amanda. Can you tell us what is occupation rent?

Speaker 7:57

Well, it's as clear as mud to start with, so I understand why it's a tricky topic for people. Um, but where it came from was sort of a um uh equitable accounting type situation. So uh in equity before it was codified badly, perhaps, um, is what does it look like and what's equitable between these two people post-separation. And um, so then from there we have our section 18B of the Property Relationships Act, which sets out that from the date of separation to the date that you settle all of your matters, you can make some of those equitable adjustments between you as to what's necessary based on contributions to the relationship. So, and that's sort of the case. From the data separation. Yeah.

Speaker 3 8:49

And sometimes, yeah, we'll get on to that. Sometimes nothing is necessary to balance those up, and sometimes there needs to be some moving around of money so that it's just between the parties, right? Yes. What happens after separation.

Speaker 9:03

Yes.

Speaker 3 9:04

So the legal basis for it then is 18B.

Speaker 9:07

That's right.

Speaker 3 9:08

So 18 uh occupation rent just it it ended up as the way, one of the ways that judges could work out how to do that equitable accounting. I love that.

Speaker 4 9:18

Yes. Yes. But and so when like for to go completely back to basics, what what is it and when does it apply? So when one person lives, continues to live in the house?

Speaker 9:32

Yeah, so so it used to be if you sort of look at those equitable things, if someone had been ousted from the house, using the old money language um with respect to that, then the other party would give notice that they seek occupational rent and um there would be some adjustments in the equitable accounting later. I think what happens now is that at the start the conversation's too hard. And it that really needs to be ranged back in. Because if the situation is not clear to both parties at the start as to you're going to be responsible for this and have this benefit, I'm going to be responsible for this and not have that benefit, um, whatever that might be, then you are never going to be able to get to that equitable accounting because neither will think it's equitable. Why should I pay you this when you didn't tell me? If you'd told me I wouldn't have stayed in the house, I would have gone and lived somewhere else that I could afford, and that's where it all becomes unjust.

Speaker 3 10:33

Yeah. Um the reason they call it, well, I think what you were getting at, what the reason they call it occupation rent is so the one person at home is an asset, but it also is an asset that has um benefits coming benefits coming from it. One is the benefit of living there, another one's the benefit of getting a rent or an income from it. So the person who stays is Oh, there's three.

Speaker 10:56

The third is the benefit of using the other person's capital for a period of time. Because if that didn't happen and they could release their capital. Yes. They could go and do that.

Speaker 3 11:06

So when one person sits in the home for a number of years, the other person doesn't have their capital out of the out of the home. And so that can create some inequity. So this person's getting the benefit of that person's share as well as the benefit of living there for rent. And so the ATB comes in to try and say, well, how do we make it fair for this person who had to go and rent somewhere else?

Speaker 4 11:28

Who's having to go and rent somewhere somewhere else, or they're having to pay money to rent somewhere else.

Speaker 3 11:34

Yeah. So what problem is occupation rent trying to solve is our next question.

Speaker 11:40

Well, it's trying to create an element of fairness and what's just, as you said, um, with respect to those contributions to the marriage or the um relationship. And you're trying to s to to uh equalize those and I or offset them. And the thing that we see them get offset against the most is spousal maintenance. So there's really two sort of scenarios here. Well there's a few, but there's uh often a mother and children that maybe are staying in the house because she doesn't have an income. Um, children are young or the the she hasn't been working, and so in those circumstances, if there was an occupational rent charge to her, it's going to turn up in a spousal maintenance claim. So if the husband says, Well, I want to charge you $500 a week by way of occupational rent, she says, sure, no problem. Here's my spousal maintenance budget to pay for that.

Speaker 3 12:38

If it's raised at the time, right, he says, Don't you worry, I'm going to do the right thing by you guys, you and the kids stay in the house, I'll keep paying the mortgage, or or you you stay there. Um and he doesn't say, or he maybe doesn't even know, isn't aware that when he goes to see a lawyer a couple of years down the track, they'll say, Well, you're entitled to something on account of your capital being left in and you paying rent elsewhere. So if that had been said at the time, then the wife could have said, Well, now I'm going to need spousal maintenance to pay for that. If it's not discussed at the time, the wife doesn't even know that maybe she should be applying for spousal maintenance, right?

Speaker 13:18

And the courts have been quite big on notice. You know, if there hasn't been notice from one party to the other of um a claim for occupational rent, they're not so agreeable to granting the occupational rent.

Speaker 3 13:34

Yes. It's an indication, which yeah.

Speaker 13:36

And then you get the aggressive notice, which is on day three of separation. I will be claiming occupational rent from you, which sort of flies over the top of everybody, but later we'll come back. So that's why I think everyone just needs to be really clear as to what that looks like. There's always a lot of stress around this because you go straight away for the average home, you go straight away of having a disposable income of dollars X, which goes this far, and now you need to make it go this far. And that's just stressful. Um and so nobody wants to deal with it. One person thinks it's both people consider it incredibly unjust because I'm not getting enough and I'm paying too much. How am I supposed to set myself up over here when you've got everything there? And so that's the earliest conflict I think that we see is with respect to agreements around occupational rent.

Speaker 4 14:30

Yeah. So talk to your lawyer early, I guess, straight away, before you set up that arrangement, so that you're both on the same page. That's right. To break it down, what you're talking about is that uh in your scenario, the husband with the salary is charging her occupation rent, and then she says, Well, you need to pay that as spousal maintenance. That's what you mean when you talk about spousal maintenance. So it just basically cancels each other out, right? Yeah. Because he was meant to pay for it. So that's what you're talking about when you're talking about offsetting it against spousal maintenance.

Speaker 3 15:06

Well that's not a discussion, but there is there can be quite a fight about it, right? Because if she didn't claim spousal maintenance, um and that's where um the the So another thing that can offset occupation rent, right, is other kinds of contributions. So you were mentioning Section 18B is meant to be making things fair or just as between the parties in respect to contributions that they've made after separation. And their contributions are the exact same contributions, the same definition as in the act, right? So you've got financial contributions, you've got care of children, foregoing a better standard of living, uh, use of capital, those kind of things. So the if one party, there are cases where one party's been in there for an extended period of time, but they've been caring for the children pretty much 100%. And at the end of the day, the court has said, okay, yes, there's a there's half of the net rental back, maybe. So half of the profit that you might have gotten if both of you'd moved out goes back in occupation rent to the other party. But then there's an offset of X amount for the contributions you made to the children, which is part of why it gets a lot of people.

Speaker 16:14

And spousal maintenance. And when when it's that scenario, I say you're using spousal maintenance as a shield. So because when you get hit with the economic uh with the um occupational rent claim, you're shielding yourself by pushing back with the spousal maintenance claim to offset that when you have one income that's not earning money. If you've got spouses where um, say this time the husband stays in occupation and is the higher earner and the other one's earning, but maybe not to the same capacity, or they're similar. What I quite like to do, and remind me to come back to the wife scenario at home with the children again, but what I quite like to do is um get a rental appraisal. Or if it's if they don't want to spend money on a valuer, then just three appraisals and we'll take a midpoint. And then I say to the person in occupation, right, you pay that into the joint account. So that's you are paying rent, and then anything in a b above that, then you divide that equally because then they are meeting what would be the standard rental payment. Often it's a little bit discounted because you're in the house and you'll look after it better than a tenant would. But it gives you then a very clean parameter as to how to So then you take the outgoings from that account. Yes.

Speaker 3 17:30

Yeah.

Speaker 17:30

And if there's a shortfall, you both have to top up that account. Right.

Speaker 3 17:33

And if if the person who's expected to pay the rent can't afford it, then you talk about it then. Okay, so and that's when you could say, okay, well, I'll pay half and you pay half. Yeah. And we'll that will be spousal maintenance. It's not going to be an extra, you're not going to owe it back to me.

Speaker 17:47

Yeah. Yeah. And you're just thinking about that because the rent that they're paying that's going in, of course, it's it's um if you're paying a thousand dollars a week and there was no mortgage, well, five hundred of that's yours as well. And five hundred of it's theirs. So, you know, that's the yeah, that's right.

Speaker 4 18:06

Yeah. Okay, so next question, how does it work? How does occupation rent work?

Speaker 18:13

So a bit like what we were just describing. And I think sort of two parts. So maybe it works in it. What you're trying to do is give notice early, reach agreement early as to what that would look like, so that by the time you get to that division, you've got some easier counting on who owes who what. And what often happens is just before we've reached an agreement, da-da-da, and then bang, in comes this, in comes I got the pool fixed and the pump fixed, and this done, and all the rest of it, and the list starts to grow and that creates tension, then there's no agreement. So I think um for clients, either themselves or we do it, we just keep an Excel spreadsheet. In fact, it's in our big spreadsheet that has adjustments. So um, and as if you're the client, if you're the spouse and you need to get the pool pump fixed and it's going to cost money and you're gonna want half back, get it approved. So pull pumps blowing. I've had a few quotes. This is um which one do you agree to? And um, you know, can we pay half? I don't mind paying it now if we can adjust later. Off you go. So that you're keeping a schedule of those because nobody, even in an intact relationship, you wouldn't like to be sprung with a big bill that you didn't know about. It's like, oh, why haven't we talked about this? You know, so it's only worse when finances are tight and it's and it's on um separation. And get consent because if one party ends up keeping the house and you've gone and you know fixed all the light fittings and done a whole lot of things that weren't agreed, the other party will say, Well, you always knew you wanted to keep the house and now you've just got a really nice house, and I've paid for all of those things to be done. So lo many touch points of of conflict. So keep a spreadsheet on all of those things, and then how going back to the um maybe the mother with the children in the home, there is um uh uh arrangement that's not passed through legislation yet, in fact it's it's a way away, which is um what did we say, financial income sharing arrangement, family, family income sharing arrangement, Pfizer. Now I still use that. So if you're listening to this um podcast, uh a husband or wife, and you think, well, what's the cleanest way to do this, actually? You know, we're we're not super tight on money, but we would like to find a fair way. What this arrangement suggests is that if you earn 40,000, husband earns 100,000, that you just keep pulling that and that you both agree no big expenses, nothing outrageous, you just keep going with everything, income sharing, for a period of time until you can get on. And um the legislation itself strictly says that your income post-separation is your separate property. So um it's it's allowing an arrangement that's outside the act, but it's actually very fair to both parties until you if you want something that's not messy and super clean.

Speaker 3 21:11

And it avoids disappousal maintenance concerns, and I think it's in it's also in substitution for a section 15 adjustment, right?

Speaker 21:18

So you're income sharing, yeah. That becomes a whole different podcast almost. But um, yes, because that's the intent behind that, but we're not quite there.

Speaker 4 21:29

So I think because it doesn't take two years, it takes more than two years to raise your income earnings. Yeah, yes.

Speaker 21:38

It was five, yeah. For a long relationship, which they were um clocking at seven to ten years, so it was considered a long relationship.

Speaker 3 21:47

Um what is the biggest misconception about occupation rent?

Speaker 21:53

Oh, I how to treat um interest payments and principal payments, I think is. The most um tricky one because um I feel like that's wrong all the time. So if quite often we when money's tight, we advise people to see if you can drop it down onto interest only anyway, because that creates a little bit more cash flow. Same with Kiwi Saver. If you're on a six or four or eight percent kiwi saver, drop it down to three percent. I know it's your separate property income, but it um does allow a bit more cash flow to let everybody get on with things. And I always ask to see where the Kiwi Saver's at because this, oh my income's only this, but you're putting 8% in over there, which is reducing your available funds. Anyway, back to principal and interest. Yeah, um principal and interest, uh interest and principal payments. Principal payments, if your mortgage is $100,000 and you've got a spouse that's paid off $50,000 of that over the period of time, then they both benefit from the principal reduction, and that person gets the principal repayments that they paid back in full. And the interest payments are halved. So the the which part gets halved and which part doesn't get after the relationship ends.

Speaker 4 23:10

When you're doing the full division. You're talking about during the relationship if they pay 50 grand after the relationship.

Speaker 23:17

Yeah, your occupational rent type payments. Yeah.

Speaker 3 23:20

And then occupational rent, and then on the other side you've got the deductive the shareable in outgoings like insurance, uh, rates and interest on the mortgage. And then you've got the capital, which is actually increasing the equity stuff.

Speaker 23:36

And they all need to be thought about separately. So if you go back to um the scenario where the husband's in the house and they've got a similar income or something like that, and he's paying rent, I've effectively asked the couple to put two hats on. One is the landlords. You're both the landlords, you're responsible for the mortgage, the rates, and the insurance. And he's the tenant and he pays rent and is responsible for all of his utilities, water, whatever, Netflix, etc. And so there you're just and clients, if you put the two hats on, then they go, Oh, okay, I get that now. And that's where he's paying rent. Now, if he's not paying rent, maybe the agreement is actually you just pay the mortgage. And so then you need to be really clear as the landlords, you are paying occupational rent, but you're doing it by way of paying the mortgage. That's you're meeting your half share and her half share each week. So then what? If it's just the mortgage, we've still got a couple of other things here as the landlord, we've got the rates and the insurance. Because sometimes people just bowl it all in together, mortgage rates, insurance, and that actually starts to become a bit punitive, perhaps, depending on how big their loan facility is and whatnot. Or maybe it's not quite enough.

Speaker 3 24:57

You mean if one person stays in and they and they they um uh take on all the outgoings if they say, okay, you're in the house, because that general rule people talk about is if you're in the house, you're paying the outgoings. But you're right that once you lump those all in together, sometimes that's a negative number, isn't it?

Speaker 25:13

The rent and all those outgoings. Yeah, that might be too much. So um are you actually paying a rent? So you pay take out of your pay, put it in there, and then the landlords use that how they see fit and top it up as they need to equally, or are you just taking over the mortgage payments and that's your occupational rent? Or is it mortgage rates and insurance, and that's your occupational rent? And just sort of be clear about all the different things: mortgage, rates, insurance, with mortgage two part, principal and interest, how are we going to treat those? And then, you know, things that need to happen on the on the house. Why are you um uh doing that if it's what we all face that's most difficult is you've got a mum with the kids in the house, and maybe an ex-spouse who's aggrieved and someone just says, Well, I don't want to pay you anything. You know, so that's when you've already supported you, yeah. Whatever that looks like, you know, and um then you're looking at your sort of spousal maintenance applications, and if they're not paying the mortgage, then your spousal maintenance application needs to encapsulate everything that you need to keep that house running. And if the funds from all sources were available to the husband, you know, that's going to be an unsuccessful application for them. So um that's why I think you know there are options there, but that one and spousal maintenance applications are awful because they're still, you know, costing a spouse money to try and achieve um, you know, an outcome that is just, you know, which is where we're trying to get to.

Speaker 4 26:53

Yeah. It's difficult when you're already getting half of what you thought you had anyway. Um we've probably already covered it. How how how do you go about calculating it and giving us a few worked examples? I guess you've given us examples of how you can structure it at the beginning so that it's neat and tidy with paying rent. What about calculating it at the end?

Speaker 27:16

Um, so I just run a spreadsheet.

Speaker 3 27:18

When both parties are are going are continuing to pay the mortgage 50-50. So that isn't a common one because it's so expensive in Auckland to handle the mortgage on your own. One party stays in the home, but they're both sharing mortgage and the other party's renting. How would you go about calculating that?

Speaker 27:35

So I still come back to um the if both parties exited the property and you could get a rental amount for that property, what would that look like? And um if it's dollars X, then that's your, you know, take your three appraisals and take the average and that's your um occupational rent claim. Um all else being equal, that's your occupational rent claim. Why it's very important to give notice of that early, coming back to what I said earlier, is that they need the opportunity to say, well, actually, I can't afford that, I don't want to do that. Um, if you don't give notice of that rent, I'll go pay half markets.

Speaker 4 28:15

Absolutely.

Speaker 28:16

And as a lawyer, especially junior lawyers, um, when you're drafting your application, always say, and I think it was, you know, um Usha Patel and Judge Adams, as he was then, um, who ran a junior um family lawyers course, they still do it. When I did it 25 years ago, um and they said, you know, the difference between the A lawyer and the B lawyer is that the um A lawyer will always go back to the legislation and have a look. So when you're drafting those applications and they throw in with everything else, um, you know, section 15, 18B, da-da-da-da-da, think about 18B at that point. Say, if I'm going to file submissions in a year and I'm going to be claiming something here, um, then what do I need that to look like now? What sort of things do I need to be doing? And it this particular thing I think is a trick for young players because not in the act.

Speaker 2 29:06

Yeah. Right.

Speaker 29:07

If you're reading 18B, it's not actually saying, make um sure you give notice for occupational rent or something of the like.

Speaker 3 29:14

Yeah. And occupational rent isn't even automatic. It's not, you know, it it um it's discretionary. It's discretionary. And it has to be fair in all of the circumstances. Do you think that that takes us into too much of a grey area? So our law, you know, foreign overseas lawyers say you're so lucky you've got a lot of clarity in your act, which is kind of a surprise. Some people work in it. But do you think that occupation rent in section 18B should be more codified, or that occupation rent should be brought in, should be codified in the act to make that.

Speaker 29:46

Yeah, I think it would be much easier, obviously, if everybody was running to the same rule book um or playbook, and when n you know, there's a general practice. But even if it was codified, often we don't see the clients until lots of that time has passed already. And you know, then you s if then the lawyers roll in and you're making that claim, you know, you can but uh you still need to do that, especially if you're filing court proceedings. And if you haven't yet, you need to, but the letters shouldn't be my client claims occupation rent, you know, it should be. Your client's been in occupation and that's been fine. Now need an opportunity to be able to claim occupational rent. If they don't think that they're going to be able to sustain this, then we need to look at, you know.

Speaker 3 30:30

And there are other ways, I think we're getting to another way. So are there any general principles that you can point to um with occupation? Like broad, we've already talked about how it's not actually set out in in section 18B. So what are the general principles? For example, you hear about a grace period.

Speaker 30:48

Oh, I see, yeah. Yeah.

Speaker 3 30:49

Is it anything like that that you have?

Speaker 30:51

Um so the grace peri the grace period did exist sort of for a period of time to allow everybody to settle into um their new circumstances. But I think it really is quite fact-specific because if you have, and it really just depends on disposable income. Because if you have somebody that's in the house and all of a sudden it was already, everyone was already using their disposable income pretty much every week, and now you have to create a new home for that. Yeah. And there's no extended family to stay with or whatnot, even that's temporary.

Speaker 3 31:25

And it's reflected in the cases, isn't it? So that if the other parties had to start paying rent straight away and they don't have other forms of income or that some some separate income like a business, so they are suffering, you're more likely to have an occupation rent, um, successful occupation rent claim later. Whereas because it's not automatic in other circumstances where the person goes and rents or lives with mum or you know isn't quite so hard off, harder, they might say, well, it's not actually just to provide an adjustment here or or a smaller adjustment, not half of the market rent after outgoings.

Speaker 32:00

So you do get you do get that. Um the other one that I see quite a lot is where there's not enough. If they have some sort of revolving credit facility, then one party starts to use the revolving credit facility to pay rent and their expenses outside of the home. Well, more often than not, no one talks about it. Yeah. I see. And so then you turn up and say, Oh, yes, but they've had 85,000 off the revolving credit facility. So when we do the division of the home, that needs to come off their side of the ledger. And then they say, Well, I'm claiming occupational rent from you. And they say, Well, then I'm claiming spouse and maturity. So then you end up in the dis the situation that we're trying to avoid just because it's easier to carry on that way. So then you say, Do those costs, if they're reasonable, are they actually just shared? You know, you had occupation and you had this.

Speaker 3 32:54

But like pooling expenses, that example, like like keeping pooling and the Pfizer type um arrangement, yes.

Speaker 33:02

So um again it's communication early on, because if the agreement is you can use that account for for rent and your utilities or whatever's reasonable, then um great, you know, so be it. But it will come off.

Speaker 3 33:17

And there was a case where the um the wife actually stayed in the family home for 20 years. She had nine children, or there were nine children of the relationship, and at the end of the day, sh her the occupation rent she she had to pay to him was was can very low. It wasn't the outgoings off a market rent paying him half. It was um yeah, it was lower than that. And the judge said part of that was that they'd agreed that she could stay in the home until the youngest was 18 if she paid the outgoings. And the mortgage was quite low, so the outgoings weren't massive. But there wasn't able to be a retrospective claim for occupation rent there because they had talked about enough of the terms to be like this is their arrangement, even with a 20-year-old.

Speaker 4 34:02

And it wouldn't seem fair to charge someone 20 years.

Speaker 3 34:11

And that's the claims that come in. Because if you look at it from the other side, the poor um person who moves out, they don't have the benefit of their say $300,000 half share in the home, and they're paying rent elsewhere, and they're paying maybe child support or whatever else they're paying. So, you know, it's sometimes it isn't. But the the bit it's not enough that one party made a contribution. It's not enough that someone left their money in. It has to be just in all the circumstances that an order is made. And I think that is one of the things that would be Yeah.

Speaker 34:41

I wonder if that case was around at the same time as sort of section 26. Although this was just contributions, wasn't it? It wasn't the division itself. Yeah. Because allowing her to live in the house.

Speaker 3 34:52

Okay. Yes. Okay. So um contributions are very broadly defined in the Act, but occupation rent only takes into account financial contributions and the use of the capital. Um if trad if the traditional division of roles has continued since separation, how does ATB deal with non-financial contributions?

Speaker 35:15

Well, you're looking at section 18 to see what um for the legal people who want to know where to go. Is it a contribution and what does it look like? So the the non-financial contributions, whilst you don't say, you know, $100,000 equals this much, you know, two children and three days a week um at home or something like that. There's no calculation per se. It all comes back to what's equitable and just again. And I suppose the one area where some of the um the the cases were going quite well in supporting um women who have been out of the workforce with children at home. Um, and then there's a couple that sort of went took us a bit backwards again by saying things like, well, actually, this shouldn't be factored into section 18B. These non-financial contributions is an offset here.

Speaker 3 36:08

That's what child support's for.

Speaker 36:09

Well no, that's what section 15's for. Is that actually you get your award in section 15. So it's not a contribution to the relationship, which is sort of flies against the face of what we've been think thinking. It's a contribution, yes. Yes, sort of putting one M or what uh you know all the sections together, um, you would think that um but I think you can ignore that mostly and um simply say that if there are young children, those contributions will be valued as equally as um the financial contribution.

Speaker 3 36:44

And in a few of the cases they did quantify it, one of them was like fifteen thousand dollars a year per child was how they quantified it. And that was child support was neutral, so they took that out, but they quantified, I think in that case the the person had more, much more of the care or all of the care of the children. So they did put a financial figure on it and then they offset it to um to come up with the adjustment that was due to the the other party. So yeah, again, what's just in all the circumstances um factory?

Speaker 37:15

Yeah, yeah.

Speaker 3 37:16

And um you, I think we skipped the question. Would you when would you use interest on capital rather than occupation rent? Um So can you just tell us what interest on capital, what that means?

Speaker 37:29

Yes, I uh you're tying up my use of the capital and I I I should get some sort of interest some return on that. Um I haven't pleaded that um in any cases because lots of the decisions um that what I'm usually relying on is um capital gain. Now that's not always the case, especially at the moment. I mean, the the last two contracting out agreements I've drafted, it's the first time I've put negative equity clauses back in since 2002, I think. So it's true if there's some parties. In Auckland, yes, or or in respect to their initial contributions or whatever, you know, so whatever that looks like for those particular spouses. So um there have been interest payments on funds that should have been paid that haven't. I've claimed that. So you're supposed to have paid dollars X, you haven't paid it, I've paid it, you've had the use of my funds to pay that, so I want that amount. Or on spousal maintenance due that hasn't been paid, interest on spousal maintenance um amounts. Um but with respect to the equity on the home. The equity on the home. Um, no. If occupational rent's been claimed, I haven't claimed interest, and usually I claim occupational rent.

Speaker 3 38:44

Um we've had one case, um, Stuart at our office who when he he was successful in claiming interest on capital, so uh an amount for the money that she had the use of, and some occupational rent, because that's what all of these tools they're just ways that the judges um will grab onto to say, Well, yeah, this is a way of making this fair.

Speaker 39:08

This seems about my actually now you say that we have just done that, but not um Ben Jefferson of our office has uh and I had an interesting case and he was running it, um, whereby the couple separated twenty something years ago and the boy stayed with the son, the wife went on to have uh another relationship and then that ended. There was a settlement agreement, they had a dissolution, etc., a long time. And she's just come back and said, Oh, I now want my half share of the family home. He had paid all of the mortgage, he'd been in it for occupation and bought up their son, you know, so many things to get take into consideration. Well, where they got to in the end so far as settlement is say your use of capital um will apply an interest component to it and you can have that plus the interest component, not occupational rent for 20 years. Yeah. Because that would become, if you go back to your equitable There'd be no equity left in your side. And she's seen lawyers along the way, so you know, um again that's sort of misunderstood, I think.

Speaker 3 40:16

Occupational Yeah, there's a I've just sticking for a quote here um in terms of Griffiths and Griffiths, which alternative course is taken to remedy whatever the unfairness is essentially a matter of judicial discretion. So really the judge is looking at it, and there was a what the quote that I was actually looking for is the judge said something like, I refuse to be um to be bound by our ri uh any kind of any more arithmetical accuracy than that or something like that because that's what they're saying. They're standing back and saying okay, well, I'm gonna balance up this, and that's why the sending a bill at the end saying, and that'll be twenty-four thousand dollars in occupation rent, is not the end of the story. All right, we should crack on to the next one. You were going to do the top one. Uh uh I think we maybe have talked about this. Is it is it fair to retrospectively put a rent on occupation on an occupation right when that rent was never really discussed?

Speaker 41:10

No.

Speaker 3 41:11

Yeah, so how do you you deal with that by talking about it early, right? Yeah.

unknown 41:15

Yeah.

Speaker 41:16

Okay, so I mean it's it's not fair to not have it as well if the circumstances allow. So but um and if you um are involved with lawyers, just get that conversation going quickly. I've just done a spreadsheet for a client actually because I think where things become tricky sometimes is if we have a lot of clients who are are self-employed or have their own company, and what they tend to do is they don't have an employment agreement for themselves saying you're a director of the company and you get paid 100,000 per annum, and then all the rest should be declared in dividends, and that's your profit. And that goes to the shareholders. What actually happens is they just have a card and they pay for everything all year, for everything. Yeah, with rent. And then you have a scenario whereby um the accountants just flush out anything personal and that becomes drawings dollars X. So then when you're saying, right, we want you to pay um occupational rent or spousal maintenance, they say, Oh, that's not my actual income, but you don't have an actual income. So quite early on, I like to try and get somebody to assign themselves a market income so that we're very clear, both for economic disparity and for income sharing, what's income and then what's your sort of super profits or what's you know, where where are the dividends coming from with respect to the value of the sh uh with respect to the shares.

Speaker 3 42:40

And that is really important because in that was it the Iguasu case where they said if you've been working in a relationship property company after separation, but you haven't been f paying yourself a fair salary, actually I think the guasu was about the fact that it went downhill. There was another one. You haven't been paying yourself a fair salary at the time. Maybe you're leaving money in or whatever, you can't claim that back retrospectively because you could have paid yourself, then you didn't. So that that thing is it's good for the person who's working in the company as well as to sort of be clear on what those buckets are, you know, your salary.

Speaker 43:13

So then if you do have your salary, um, and get everyone's IR3s, because then you're seeing what their income is from all sources. You know, the last five years, people say I can't afford it. I have your IR3s, please. You know, you're the detective, you're the lawyer, chip away. Well, just to see if there's anything left in the business. But with respect to income, then I say, right, look at the bank statements. This m has been coming in sort of every fortnight. Let's put that in and just share it all. And then even at the end, you know, the same, maybe this more of your global division. Um, say you both want to buy a million dollar house, but the wife's getting eight hundred thousand in the division and he gets two hundred thousand, he's gonna need an eight hundred thousand dollar mortgage, you're gonna need a two hundred thousand dollar mortgage. So then what do those expenses look like if we make everything equal? Between you, what's the surplus? And then you start to get a better idea, his income, her income, and all their equal. Like there's no sort of savings in there in lavish holidays or cleaners, it's just your basics.

Speaker 3 44:14

And then does your clean break come into that?

Speaker 44:16

Well, that is their clean break. So that's on their division when you're maybe trying to assess going forward. They say, well, that's the division, but then you might have um a wife that says, I want spousal maintenance of $1,500 a week. So I can't afford $1,500 a week. And they say, Well, then what about the um, you know? Um, but you start negotiating on that. But if you can start to look at actually what's left if we make you neutral based on what you'll get and what you'll get, then you get to sort of a quite a fair result, another spreadsheet.

Speaker 4 44:45

What are the factors that tell against um the court either awarding it or reducing it?

Speaker 44:51

So if I run my brain through some of the cases, it would be things like um no notice was given. Um, so they didn't have the opportunity to find somewhere else uh to live, or they were only going to be able to pay it if they got an equalization of spousal maintenance.

Speaker 3 45:09

Um overwhelming contribution on the other side of the ledger, like to children or the family.

Speaker 45:15

Something like that.

Speaker 3 45:16

Um because it'd be offset.

Speaker 45:19

Yes.

Speaker 4 45:20

No income, basically.

Speaker 3 45:22

If the person who moved out if the person who moved out isn't paying to that one, a trust property, yeah. Well, that brings me to question 13. Does the same thing apply when the family home is owned in a trust?

Speaker 45:35

So um this is a bit more tricky, a few legal hurdles um here, or not. So first of all, we've got um a Supreme Court decision that says no, there's no jurisdiction, so you're out. And then Supreme Court decision. Um that was something and was it PACs? PACs. Um I've got that.

Speaker 3 45:58

We'll edit that up. Do you want to give that out? No, no, I can I can I can find that for you.

Speaker 46:02

I have no problem. Simpson and SACS, SACs. And um the court in that case, and since you're gonna ask me, it's probably right here, sort of had a list of things, but basically at the end of the day said um that uh you there's no occupational rent claims. So what we've seen a little bit of is that if your substantive claim is maybe a 44 or a 44C or um some provision where you're trying to back the property out of a trust and into a um back into the relationship property pool, then you'll get your claim. After that, yes. So don't think just because it's in a trust that you don't want to give notice and you run into that scenario.

Speaker 3 46:48

And you can't that that generally is not occupational rent, you can't charge it on a trust property because the trustees are usually the the two parties and trustees would need to be unanimous. Because I think there was a case that said the trustees are the ones who decide if somebody should be paying rent or not.

Speaker 47:04

Yeah, so in this um SACs, uh Simpson and Sachs, I feel like it had initial name after that, um, the court uh said payment of occupational rent is based on the understanding that the co-owners of property are the trustees to each other of uh the other's beneficial interest in the property. Um and a trust cannot claim occupational rent from a discretionary beneficiary where it has allowed the discretionary beneficiary to have free use of the property and has not revoked the permission. Um and then um there are a few other things in that decision.

Speaker 4 47:38

So usually that's how it's set up in the initial stages, right? The trust owns the house and the beneficiaries can live in it as long as they pay the outgoing. Yeah. And so if they haven't given, if they haven't made a decision to change that, they can carry on. And trust no need to be unanimous, so you're generally not.

Speaker 47:54

Depending on what the trustee said. But yes, yes, more often than not. What one thing that was interesting in here was that um they did say that if you I mean most in New Zealand, most of our trusts are discretionary family trusts, but say you have a fixed trust, then you can bring a claim against the other beneficiaries for occupational rent. So um that was quite interesting.

Speaker 4 48:17

Um not too many of those though.

unknown 48:20

Okay.

Speaker 48:21

But what so just take that a step further. Um we don't have an answer on this yet, but um Jenny Hawker in our office has just run a case where she sought occupational rent on um a trust home, but a brainstorming got in through section um through rule 141. So that's now our provision um to get trust act decisions into the family court. And there's two ways that you can do it. You do it by consent, um, which this wasn't, so she used the other avenue. And then what uh she said to the court is that the decision that the trustee made, because you make your application under 126, the decision that they made wasn't reasonably open to them at the time, etc. etc. Look at those pres provisions, 141, section 126 of the trust act, and then 127 allows the court to make a determination about that.

Speaker 3 49:19

Um What about 182 of the Family Procedure Act? Settings act if they were married.

Speaker 49:25

Hang on, so one step further. So that case then she said um that that would then allow the judge to, under section 182, exercise their discretion as they saw fit.

Speaker 3 49:40

Uh so now we're at the quick fire question part. Um Amanda hasn't seen these questions before, so um very unfair of us to be setting a timer.

Speaker 4 49:48

Is occupation rent an automatic right when one party stays in the home after separation?

Speaker 49:54

Uh a legislative right but not automatic, no.

Speaker 3 49:57

Does it affect occupation rent if one party is paying and the other party's doing more of the child-related work?

Speaker 50:04

All taken into consideration. Because even if somebody's doing more of the child-related work but um and they're in the home and they have a good income, there might be circumstances super facts specific um for each family.

Speaker 4 50:17

Uh the question is should lawyers face a selection process like doctors to ensure they have the EQ for the job? You can deal with all lawyers or just family lawyers. There might be different answers.

Speaker 50:30

Oh, that's hilarious. Um, you know, some sort of EQ psych testing.

Speaker 3 50:35

Doctors have to do it, bedside manner, yeah, they do.

Speaker 50:39

All lawyers. I think all lawyer for child lawyers shit.

Speaker 3 50:43

Yeah, but they're self-selecting for the nice ones, aren't they?

Speaker 50:45

Yeah. And um, do you know what? Even if it wasn't a legislative requirement, do it for yourself. See where you fit.

Speaker 3 50:53

Awesome. Uh are you a telephone, email, or letters lawyer?

Speaker 51:01

So I still dictate um because I can still talk faster than I can write. But I anything difficult I like to pick up the phone. Um because um I just think I can't use my intuition coming back to the start if I can't talk to people. And then you just get a feel for what's not there. I think there's a lot of benefit in a phone call, and I think there's probably not enough of that.

Speaker 4 51:29

What's your strategy for dealing with work stress?

Speaker 51:33

Oh, I'm quite a good shutter offy person. Um very technical term. Shuttery off. I like um to um I do you know what? If you go straight to my family, my kids are amazing, but they're teenagers still, and they're a they're a lot of talking. Um, I do a sauna, love the sauna, that's really good. At the end of the day, I'll call someone and say, Can you turn it on, I'll be home in an hour, and by the time I get home, I'll just have 25 minutes in there by myself quietly, and then you come out sort of having purged the day. I try to have a really careful balance of coca cases to property cases because those high moving, um, high stress coca cases um become too much, and I will only usually at the moment I've got two, but I would only usually run one lawyer for child case at a time because those ones actually, out of all these complicated relationship property cases, they're my most angst is um look making sure that you know uh the welfare and interest that I'm considering for these children is the right decision. So balancing my caseload is impossible because I'm a yes person. I find it very hard to say no to things. So um I'm working on that.

Speaker 3 52:47

Uh what is your top tip for lawyers starting out? A 10-second top tip.

Speaker 52:53

Um don't feel as though you have to be pigeonholed into the first thing you do. Um because if actually you can get in somewhere and you start doing property or you're doing wills and estate work or um you're doing commercial work, if ultimately you end up wanting to be a family lawyer, none of those skills are wasted. Because I always say, especially with respect to relationship property, you have to know everything. You need to know trust law, commercial law, you're not in a deep dive, but enough to know what you don't know and who to speak to and what to do. Accounting, also not wasted. You had a lot of young lawyers who have got accounting and legal backgrounds. Just keep your yeah, just keep your horizons open and don't think you need to be pigeonholed in it. And sometimes you need to go a little bit backwards to go forward. If you later decide, oh actually I would have liked to get into family law relationship property, take the step backwards to go forward. It's it's it'll be worth it. What is your top tip for someone who has recently separated? Breathe. Find a good support person who's non-judgmental in your immediate community because by the hour. Yeah, because you're flip-flop all the time. One day you'll be like this, and the next day you'll be like that, and um, somebody who's not going to tie you to those previous decisions because you're allowed to change your mind a hundred times through that process. And um not every lawyer is the right fit for someone, it's a bit like going to see a counsellor or a psychologist. You might go, oh, not quite right. Don't feel like you can't move. We're not precious. We know sometimes that you might need someone more expensive or cheaper or more empathetic or a male or a female. It's just um, you know, take your time on that. Yeah.

Speaker 3 54:43

Cool. Uh what is the worst thing to do when you separate?

Speaker 54:47

Make any big decisions because um your brain is already in a state of fight or flight, and um going and make making a too big a decision, you know, I'm going to move here, or I'm going to quit my job, or I'm going to, you know, get a boob job or whatever, you know, just anything that's too dramatic physically or mentally, um, just pause and say, that might be a good idea. Do I trust my decisions right now? I mean, everybody in the moment is not going around going, right, I'm going to do this decision, and it's a bad decision.

Speaker 2 55:25

No.

Speaker 55:25

You're only trying to make the best decisions you can at any given moment. But in hindsight, when you're not in that fight or flight mode, you might go, actually, I don't want to do that anymore.

Speaker 3 55:35

And that's one of the exceptions to when you should use your intuition, right?

Speaker 55:38

Yeah.

Speaker 3 55:38

Is when you're in a high stress um situation. Because you're you're getting messages from all over the place and it's not necessarily your intuition.

Speaker 55:46

Oh, I know the hairdresser and the taxi drivers, they know everything, um, often, you know, so it's take it all on board, use that trusted confidant that you've got or few people to sound them out. Um, some people are really keen to make decisions for you, that being helpful that it means to, but be aware of those people and say, hang on, is that your decision for me? Is that my decision for me? And um, you know, just take your time through that process. You can um find people to help you think quick and slow. It's sort of what you're trying to do often, isn't it? Is think quick and slow when you're in that heightened state.

Speaker 3 56:23

Different people to serve different purposes. You need your family to talk to, you maybe need someone who's not going to get sick of you talking to them, and you might have to pay them, like a counselor, someone to work out your thing. Yeah. And then when you talk to your lawyer, you're not paying for a counselling session, I suppose. As awful as that sounds. So uh we reached the part of the podcast when we ask the best question ever. Uh, and for Amanda Donovan, that question is what has been your hardest case ever? Why was it hard and how did you get through it?

Speaker 56:55

Mmm. That's a hard question. That's a mean question.

Speaker 3 56:59

It's a good one for every more. It's a good question.

Speaker 57:01

Just revisit the um PTSD around those cases. Um my hardest case ever was a relationship property case, trust case, very few um legal avenues to follow, so lots of dead ends. People want results, but there aren't any. I had a very difficult client um in that case, and I had a very difficult counsel on the other side in that case. Yeah. So um what made that difficult probably were the legal issues and the people. And so that was one where we had to get through you're thinking all the time, what's your way through? And the way through for that one is that they need to be in a room. The legal avenues weren't great, so really be in a room, because then you can work out what the issues are. The issues not the issue, and um, and then how I managed it personally, um, wasn't great. It did cause a bit of anxiety. Yeah. Um, but I had a senior legal counsel that I would talk to and say, Am I going mad? You know, um, and that often helps. Yeah. Having a team environment helps because everybody um talks about the things that are hard and the things that are funny, and that sort of keeps it, keep it light if you can, because it's a tough job if you take it all home with you all the time. You just um have to be able to um, you know, put these things into their little respective boxes from time to time. And so there's not many cases that I would say, ugh, that kept me up at night, but it was mostly because I'd get an email at quarter past five from the lawyer on the other side that was just horrific and was never going to be congestive. Now, maybe based on their instructions, of course, but I still think um that there was lots of that that was unnecessarily aggressive.

Speaker 4 58:57

Um, when we talk to clients and we'll say, Oh, it's really good, they've got a really good lawyer on the other side, and the client's your client's initial reaction is all no, that there's a good lawyer on the other side, but it's actually a good thing. It's really good.

Speaker 59:20

Yeah, absolutely. Yeah, which ties you back into the start where I talked about Tony Lindrum's mediation um slot with you guys, and you know, allowing people that that environment to be able to have their moment to say the things that they probably wouldn't get to in court um in the same way, allows a bit of a clear the air, and if you can clear the air, you can get on, right?

Speaker 3 59:44

Actually, Gay Greenwood in our FDR episode um she talks about the same thing lawyers let us, lawyers leaders, in her own personal case. Then the two of them got in, they were like, could the lawyers leave the room for a minute? And then yeah, they worked out a solution. And um, I mean, obviously the lawyers were a big part of side as well.

Speaker 1:00:01

But anyway, well that's rare, but anyway.

Speaker 3 1:00:04

She isn't there yet about the same with Tony. Um awesome. Okay, so that's been Divorce Cafe. Uh, thank you so much to our special guest, Amanda Donovan at Haight Lion. Uh, so many great insights into um both occupation rent in Section 18B and being a lawyer and how you survive it, and um, and being a client and how you survive that. Um, if you'd like more information on this topic, there'll be links in the show notes. Um, and we hope that you join us again for divorce campaign. Thank you, Shelley. I never thank you, do I? Thank you. So much. All right.