Palmer v Alalaakkola [2021] NZHC 2330

An appeal to the High Court this month raised a novel question: is copyright in an artistic work relationship property?

Ms A is a painter who painted a number of original works during her 20 year marriage to Mr P. This month the High Court determined the copyright in these paintings was relationship property and therefore subject to the presumption of equal sharing under the Property (Relationships) Act 1976 (“the PRA”).

Background

After separation, both Ms A and Mr P had each retained numerous paintings created by Ms P. The parties agreed that Mr P could keep the paintings in his possession. However, there was disagreement as to whether the copyright of those paintings was relationship property and therefore could be transferred to Mr P.

Mr P wanted the copyright in order to reproduce copies of the paintings and sell those copies to derive a future income stream. Ms A strongly objected. She was concerned she would no longer have control over the number or value of those prints which could ultimately undermine the value of her original works.

Family Court decision

The Family Court Judge determined that the paintings and their copyright fell under the definition of property contained in the PRA. He found the paintings themselves were relationship property as they were created during the relationship.

However, he concluded the copyright did not become relationship property as it involved the skill of the artist which was something that Ms A had prior to the relationship. His Honour held this approach was consistent with s 16 of the Copyright Act which vests the copyright in the author of the art. Therefore, the copyright to the paintings was Ms A’s separate property.

His Honour noted that he would not have ordered the copyright to be transferred to Mr P even if he was incorrect to classify the copyright as separate property. His reasoning was that to do so would mean the parties would likely to be in conflict throughout the life of the copyright which would be contrary to the clean break principle of the PRA. Also, Ms A would be in competition with her own artworks in the future if Mr P produced copies of her work.

High Court appeal

The High Court recognised that the Family Court had to grapple with “two very different pieces of legislation” – the PRA and the Copyright Act 1994. The Court acknowledged that copyright tends to be an “intensely individual right whereas the PRA has the presumption of equal sharing at its core. This case is the first time the the two Acts have interacted in a decision of the Court.

The High Court disagreed with the Family Court that the copyright was Ms A’s separate property because:

• There was no doubt that the copyright is a proprietary right
• There is nothing to suggest that the property rights created by the Copyright Act should be treated any differently from any other sort of property produced or acquired by a partner or spouse during the course of a relationship
• Focusing on the skill rather than the property that arises from that skill is not where the focus should lie in the division of relationship property
• When Ms A applied her skill to create a piece of art during the relationship, the copyright of that work became relationship property.

The High Court was not prepared to accept that where property was created from a skill possessed before the relationship would mean that property created was separate property. If that reasoning was accepted it would allow others to avoid the equal sharing presumption on the basis that the skill was ‘theirs’. That would be inconsistent with the scheme of the PRA which recognises equal contributions to a relationship.

Summary

Property rights created by the Copyright Act are treated no differently to any other sort of property produced or acquired by a partner or spouse during a relationship. Therefore, the copyright of an artistic work will be considered relationship property if that work is created during the relationship.