CLAIMING ENHANCED EARNING CAPACITY IN MATRIMONIAL PROPERTY DISPUTES: LESSONS FROM NEW ZEALAND

Abstract

Upon divorce, the economic disparities between the spouses are usually disputed where the non-acquiring spouse is left with little or no matrimonial property. This article discusses the application of the enhanced earning capacity principle as practiced in New Zealand in order to examine possible adoption in Malaysia. Analysis of New Zealand’s judicial decisions is made in order to identify approaches in determining future assets as matrimonial property to compensate for the economic disparity between spouses. The article proceeds to consider applications of those principles by the Malaysian courts under Section 76 of Law Reform (Marriage and Divorce) Act 1976. Considering this issue, it is found that the enabling statute is New Zealand’s Property (Relationships) Amendment Act 2001 recognizes that upon divorce, the enhanced earnings acquired during the marriage are subject to a division on the basis that the other spouse has also directly or indirectly contributed to compensate the economic disparity suffered by the referred spouse. The case law analysis is conducted on selected cases merely to justify on the enhanced earning capacity distributed as matrimonial property in New Zealand. Undoubtedly, the claim on enhanced earning capacity as the matrimonial property will compensate the spouse if his or her living standards and income become significantly lesser than the other party due to divorce.