Palmer vs Alalaakkola

In Palmer v Alalaakkola,[1] the High Court considered a novel question: can copyright in a party’s artistic work be relationship property?

Facts

Ms Alalaakkola created a number of original works during her 20 year marriage to Mr Palmer. On their separation, Mr Palmer argued:

• Ms Alalaakkola’s art created during the relationship constitutes relationship property under the Property (Relationships) Act 1976 (“PRA”) and should therefore be divided equally between the parties; and

• copyright in Ms Alalaakkola’s art created during the relationship was also relationship property, subject to the equal sharing presumption.

Family Court decision

The Family Court held that Ms Alalaakkola’s art created during the parties’ relationship was relationship property. However, the Court held that Ms Alalaakkola’s copyright in relation to that art was not relationship property, on the basis that the art was created solely by Ms Alalaakkola as a result of a personal skill that was particular to her and which she possessed prior to the relationship.

High Court decision

The High Court upheld the Family Court’s finding that Ms Alalaakkola’s art created during the parties’ relationship was relationship property.

However, in response to whether the copyright in Ms Alalaakkola’s art was relationship property, the High Court overturned the Family Court decision. The High Court found that copyright to Ms Alalaakkola’s art created during the relationship was relationship property on the following grounds:

• Copyright is a proprietary right, and therefore qualifies as “property” for the purposes of the PRA. Considering the breadth of what has been classified as property under the PRA historically (including fishing rights and rights to ACC compensation) this comes as no surprise.

• There is no policy position to suggest that property rights created by the Copyright Act 1994 should be treated any differently from any other sort of property produced or acquired by a party during the course of a relationship.

• The skill of a party, and copyright that arises from that skill, are distinct. A focus on the skill, rather than the property it creates, is not where the focus should lie in the division of relationship property given the purposes and principles of the PRA.

On this basis, the High Court remitted the case back to the Family Court to vest the parties’ relationship property equally in Ms Alalaakkola and Mr Parker.

Analysis

The practical implication of this case is that if a party applies their skill towards an artwork during the course of a qualifying relationship, the subsequent copyright in that work becomes relationship property, as it came into existence during the relationship. 

This outcome is consistent with the way the PRA typically functions. As the High Court found, were it otherwise, people who had any number of skills prior to a relationship who then produced property (in the broad PRA sense) from that skill during the relationship would be able to avoid the equal sharing presumption on the basis that the skill was “theirs”. That would be inconsistent with the scheme of the Act, which, among other things, recognises the equal contribution of both spouses to a relationship.[2]

This outcome may feel confronting to artists and authors as their work and the resulting copyright from it tend to be intensely personal. Copyright vests only in the author of the work to protect that individual’s form of expression. That said, the income of a person that is earned during a relationship through personal services or otherwise can feel very personal too, and yet the application of the equal sharing presumption to income is well established.

The High Court decision does not mean that the Family Court must vest half of an author’s copyright in their partner at the end of a qualifying relationship. If the partner’s right to half the value of the relationship property can be satisfied by way of other assets, the author may be able to retain full copyright in their work. However, in order to minimise the risks of losing copyright, authors and artists should consider entering into a contracting out agreement to ringfence the fruits of their labour as separate property.

[1] [2021] NZHC 2330.

[2] At [36].