Last week, New Zealand's Supreme Court delivered its landmark decision in Rimmer v Wilton [2026] NZSC 122, overturning the Court of Appeal's decision and confirming that partners can contract out of intestacy laws through a relationship property agreement (sometimes known as a "pre-nup" agreement) under section 21 of the Property (Relationships) Act 1976 ("PRA").
Background
Mr Rimmer and Ms Wilton began a de facto relationship in September 2000. In early 2002, they purchased a property together, as tenants in common in equal shares, in Hunua ("Hunua Property"). On 6 June 2002, they entered into a relationship property agreement under section 21 of the PRA ("Agreement"), by which they contracted out of that Act's default property division regime. Broadly speaking, the PRA specifies which property is to be categorised as a couple's "relationship property" and requires that such property be divided 50/50 between them when the relationship ends. By a section 21 agreement, a couple can agree that different categorisations should apply to their property, and specify a division other than 50/50.
In this case, the Agreement recorded that:
- The Hunua Property was to be categorised as "relationship property", as was all plant and equipment used in relation to the Hunua Property, all stock held there, and all other property acquired by the parties jointly or as tenants in common. The Agreement provided that, should the parties "separate or cease to live together as parties to a de facto relationship" all such property was to be divided between them in the same proportions as the value of their respective capital contributions towards it. In the event of the death of one party, the remaining party was to have the right to lifetime occupancy and use of all relationship property, to be extinguished on the survivor's death.
- All of the parties' other property (including, for example, another house that had been purchased by Ms Wilton prior to the relationship, and other chattels and personal possessions held in each party's own name) was to be categorised as that party's "separate property" and be retained by that party when the relationship ended.
The Agreement was comprehensive. It was stated to cover all property, including future property, and to apply on death. It was specified as being in full and final settlement of all claims which either of them may have against the other, under any statute whatsoever, at common law or in equity. The parties agreed to make "no demand" on the other's separate property.
Mr Rimmer died in March 2016, without a will. Under section 61 of the PRA, when one partner dies, the survivor must choose which "entitlement pathway" they wish to apply in relation to the deceased's assets. Where the survivor chooses Option A, they are electing to "make an application under [the PRA] for a division of the relationship property". Where the survivor chooses Option B, they are electing not to make an application under the PRA for a division of the relationship property, but to receive any entitlements they may have under either the deceased's will (if they had one) or under intestacy laws (if they did not). Where no election is made, the survivor is deemed to have chosen "Option B".
Ms Wilton elected Option B. She was appointed the administrator of Mr Rimmer's estate. She then distributed certain amounts of cash and Mr Rimmer's personal chattels to herself, on the basis these were her entitlements pursuant to section 77 of the Administration Act 1969 (the relevant intestacy provision). She also transferred Mr Rimmer's share in the Hunua Property to herself, and then lived there rent-free until 2021, when she sold the property for $1.2 million. Mr Rimmer had two adult children from a previous relationship. No distributions from Mr Rimmer's estate were made to them. The children filed court proceedings against Ms Wilton as administrator of the estate. They alleged she had breached her fiduciary duties as administrator and trustee of Mr Rimmer's estate, including by not distributing any property to them.
High Court and Court of Appeal decisions
The crux of the plaintiffs' argument in the High Court was that, having elected Option B, Ms Wilton was only able to receive intestacy entitlements. Had she wanted to receive the benefit of the Agreement in relation to the Hunua Property, she should have elected Option A. The High Court disagreed. It ruled that it was consistent with the provisions of the PRA and Administration Act for Ms Wilton to have received under both the Agreement and the intestacy provisions. The Court reasoned that the election of Option B prohibits only the default division of property under the PRA. Given that the Agreement contracted out of that default division, there was no barrier to Ms Wilton receiving both sets of entitlements.1
Mr Rimmer's children appealed. In the Court of Appeal, they were granted leave to advance a further argument: that the effect of the Agreement was that Ms Wilton's only entitlements were those set out in the Agreement, as the parties had each contracted out of any default intestacy entitlements. The Court of Appeal disagreed. It did not consider that the language of the Agreement was sufficiently express to override the otherwise mandatory allocation of property under s 77 of the Administration Act.2 It held that Ms Wilton was able to receive her entitlements under both the Agreement, and intestacy laws.
Supreme Court decision
Mr Rimmer's children appealed to the Supreme Court. Leave was granted in general terms, but the parties were asked to focus on the interplay between section 21 agreements under the PRA, and entitlements under the Administration Act.
The appellants focussed on their argument that Ms Wilton's entitlements were restricted by the terms of the Agreement, and that she accordingly had no entitlements under intestacy law. In a development from the position originally advanced in the High Court, the appellants submitted that the terms of the Agreement took precedence regardless of whether Ms Wilton elected Option A or Option B.
Ms Wilton's counsel argued that she had not contracted out of the Administration Act; the wording of the Agreement was not sufficient to have that effect, and the idea of contracting out of the distribution rules in the Administration Act was incompatible with that regime, which is mandatory.
The Supreme Court unanimously overturned the Court of Appeal's decision and found for the appellants. In particular, it concluded:
- First, that an agreement under sections 21-21B of the PRA is capable of displacing the entitlements that would otherwise arise under the Administration Act. Depending on the terms of the agreement in any given case, a surviving partner may be contractually required to relinquish those entitlements.
- Second, the statutory distribution scheme under section 77 of the Administration Act applies when the deceased has failed to express testamentary intentions. While Mr Rimmer had not left a will, his testamentary intentions had been expressed in the section 21 agreement. The parties and the executors of their estates were bound to follow its terms.
- Third, such an agreement can regulate the surviving partner's entitlements irrespective of whether they elect "Option A" or "Option B" under section 61 of the PRA. The Court reasoned that there was nothing in the PRA indicating that such an agreement is only binding if Option A is chosen. Likewise, s 95(2) of the PRA confirms that the election of Option B "does not prevent that person from disclaiming any interest as a beneficiary" under the deceased's will or the Administration Act. When there is an agreement that comprehensively determines entitlements to property, the choice referred to in section 61 is less practically significant, and may become irrelevant.
Key takeaway
The decision brings some much-needed clarity to a complex area of the law. It is crucial that parties to section 21 agreements and their advisers appreciate its effect; that is, that such agreements can constitute an agreement by the parties to forego any intestacy entitlements they might otherwise have had. The terms of any such agreement should be carefully checked to ensure they remain fit for purpose in light of the Supreme Court's clarifications, and accurately capture the parties' intentions.
In most (if not all) cases, the safest approach to asset and estate planning will be for parties to prepare or update their will at the same time as entering into any section 21 agreement, with the intended interaction between the two documents made clear, and therefore with no need to have recourse to intestacy laws at all. This will best ensure that, when the time comes, an executor can be confident they are upholding the wishes of the deceased.
Russell McVeagh acted for the appellants in the Supreme Court appeal, alongside Vanessa Bruton KC and instructing solicitor Luke Acland of RMF Lawyers.