Why Rich New Zealanders Can No Longer Hide Wealth From Their Exes

An Auckland lawyer has won big in the Supreme Court and created a precedent which will make it harder for money-hogging spouses to hide their wealth after a split. In Clayton vs Clayton, Lady Deborah Chambers successfully argued that a series of trusts, in which a husband had been hiding $28 million from his wife, could be busted open and divvied up between the two during their divorce.

In 1976, the Property (Relationships) Act was passed to ensure an even split of property between a wife and husband in case of a divorce, equally valuing contributions from both – even if the wife was a stay-at-home mum. Yet rich spouses (mostly husbands) got around this by hiding millions of dollars in various trusts, meaning that on the day of divorce the ex-wife who stayed home to look after the children might walk out in relative poverty, receiving only half of assets that weren't hidden away.

VICE talked to Deborah about her recent win, the implications Clayton v Clayton will have on women and the other areas of marital law where equality is still lagging.

VICE: Hi Deborah, after getting rejected by all the lower courts, how did you manage to convince the Supreme Court to break into trusts and split up the bounty for a divorce?
Lady Deborah Chambers: The case was essentially about trying to attack this thing where people, when they separated, said, "Well, you can have half of that pile of money, but this is all in a trust and you can't touch it." And usually, not always, it's men that do it. So that was creating serious injustice where the fruits of the marriage had gone into the trust.

The time was right, because there is currently a whole atmosphere out there of "'are trusts just there to avoid the law that everybody else who doesn't have a trust has to comply with?"' You've got the Panama Papers, tax evasions, and so on happening and this is a similar kind of thing—using trusts to avoid the rules that everybody else complies with.

But why did this case change everything? You must have had a lot of betrayed, nouveau poor ex-wives as clients before this.
The facts were also very good for trust busting. The husband and wife had created a huge amount of wealth from humble beginnings working in a timber yard. By the end of the marriage they had assets of $28 million and they both worked hard, but he had done everything he could to try and protect himself against divorce. He had a very unfair prenup where she would've got $30,000 and he tried to uphold it, which just made him look like a rat. And then he had used a series of trusts in the relationship (about 12) and after the relationship, shoving property into new trusts to try and avoid her claim.

How will things be different from now on for women?
The case is a big win for women. I think Clayton will make a huge difference in terms of fairness for women, and obviously for men too in circumstances where wives have done the same thing, even though that's rarer.

Do you see this case as the final frontier of women's equality in marriage (and divorce) in New Zealand? Or do you see other areas of law that still need to be tweaked?
I think that the other issue, which we still haven't really wrestled to the ground yet, is economic disparity. I think that still has got some serious potential. So there's a section in the Act, section 15, which says that at the end of a marriage the court can take into account the economic disadvantages. It's really designed for traditional wives who've come out of the paid workforce to stay home and bring up the children, and to try and balance that out. But it's a really discretionary section.

While you were at university, you were the University Feminist Club's president and marched against the Springbok Tour. How do your convictions from your earlier life influence you now that you're a $1000 per-hour lawyer with a title and an office with ocean views?
Well, I came from a pretty working class background in Glenfield, and on the way up in the ladder you see a lot of unfairness. I think you kind of have a gut feeling which says, "Well I managed to struggle up the ladder to where I want to be, and it actually feels great up here and it's a lot better than down at the bottom of the ladder, but look at all those people who were just as talented as me and didn't really have the opportunities or chances I had." So I think you come in with a sense of social justice when you haven't just grown up with a silver spoon in your mouth and taken it all for granted.

And the second thing is, I think I got quite a bit of courage from that experience. Because it feels like a privilege to be where I am, and if it all goes pear-shaped, I can think, "Oh well, it was quite good while it lasted" and I can go back to where I was and be all right. You get a certain kind of strength.

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