Charging orders for unpaid child support registered over the family home are secured debts deducted from the sale price before division of relationship property, the High Court ruled in a test case.
Kelly-Anne Hare argued child support was her spouse’s personal debt and should not be taken into account when assessing value of relationship property. Once a charging order for unpaid child support is registered against title to the family home under the Child Support Act it becomes a secured debt charged against the home, the High Court ruled.
Ms Hare and her spouse Jonathon Keith Hare had been in a de facto relationship for over three years before Mr Hare was adjudicated bankrupt in March 2016. Their family home in the Wellington suburb of Tawa was owned solely by Mr Hare. The length of their relationship entitled Ms Hare to claim a share as relationship property.
Evidence was given that the house owned by Mr Hare now has a market value of about $320,000. Registered against the title is a bank mortgage ($86,000) and a child support charge ($81,900). The child support arises from a prior relationship. This charging order was registered before his de facto relationship started with Kelly-Anne.
With the child support charge excluded on a notional sale of the family home, as Ms Hare argued, a half share of the equity would amount to $120,000. Of this $120,000, she would receive $103,000 as a ‘protected interest’ specified in relationship property legislation. With the child support charge included, as the High Court ruled, she is entitled to $78,500. The court was told Ms Hare is negotiating with Insolvency Service to buy out her bankrupt spouse’s interest in the home.
Hare v. Hare – High Court (31.10.19)
19.180