Alalääkkölä v Palmer - [2024] NZCA 24
Date of Judgment
21 February 2024
Decision
Alalääkkölä v Palmer (PDF 423 KB)
Summary
Intellectual property — Copyright
Relationship property — Division of “balance of matrimonial property” — Personal property — Separate Property
An extension of time is granted for filing the notice of appeal.
The approved questions of law on appeal are answered as follows:
(1) Are the Copyrights “property” for the purposes of the Property (Relationships) Act 1976 (PRA)?
Yes.
(2) If the Copyrights are property, how should they be classified in terms of the PRA?
The Copyrights should be classified as relationship property.
(3) If the Copyrights are property, how should they be treated in terms of the PRA?
The Copyrights should remain in Ms Alalääkkölä’s exclusive legal ownership, with Mr Palmer receiving a compensatory adjustment from other relationship property to ensure an equal division of relationship property.
The assessment of an appropriate compensatory adjustment is remitted to the Family Court for determination.
The appellant must pay the respondent costs for a standard appeal on a band A basis, together with usual disbursements.
We certify for second counsel.
Ms Alalääkkölä is a successful artist. She created a number of artworks during the course of her 20-year marriage to Mr Palmer (the Artworks), many of which were sold to third parties.
It was common ground on appeal that the Artworks that remained in the possession of either party at the end of the relationship are relationship property in terms of the Property (Relationships) Act 1976 (PRA). Rather, the key issue on appeal was whether the copyrights in the Artworks (the Copyrights) are relationship property or Ms Alalääkkölä’s separate property. Further, if the Copyrights are relationship property, how they should be treated under the PRA regime? Ms Alalääkkölä sought to retain sole ownership of the Copyrights, with a compensatory adjustment being made to Mr Palmer from other relationship property. Mr Palmer, on the other hand, sought ownership of some of the Copyrights, so that he could commercialise them.
The Family Court found that the Copyrights were Ms Alalääkkölä’s separate property. On appeal, the High Court found that the Copyrights were relationship property, and remitted the issue of how they should be treated under the PRA to the Family Court. Ms Alalääkkölä appealed to this Court, having been granted leave to do so by the High Court on the approved questions of law.
Issue one: Are the Copyrights “property” for the purposes of the Property (Relationships) Act 1976 (PRA)?
Held: Yes.
The Copyrights fall within s 2(c) and (e) of the PRA definition of “property”.
Issue two: If the Copyrights are property, how should they be classified in terms of the PRA?
Held: The Copyrights should be classified as relationship property.
Ms Alalääkkölä submitted, in essence, that even if some of the bundle of rights and interests comprising the Copyrights were acquired during the relationship, the relevant bundle of rights and interests also includes (or is inextricably linked to) other property rights that pre-date or post-date the relationship. The inclusion of these takes the Copyrights outside the definition of relationship property and requires that they be categorised as separate property.
The Court rejected each of Ms Alalääkkölä’s arguments. First, the bundle of rights associated with the Copyrights was distinct from Ms Alalääkkölä’s personal skills and qualifications. Although those skills were used in the creation of the Artworks, they are distinct from the Copyrights that attach to the Artworks. Second, Ms Alalääkkölä’s art business, which was commenced prior to her relationship, is distinct from the Copyrights. Third, the fact that income may be generated, post-separation, from commercialisation of the Copyrights does not assist in determining the classification of the Copyrights under the PRA. Finally, there is nothing in either the Copyright Act 1994 or the PRA to suggest that Parliament intended to remove intellectual property from the reach of the PRA.
As the Copyrights were all acquired by Ms Alalääkkölä during the relationship (namely when each of the Artworks was created by her) they fell within the definition of relationship property in s 8(e) of the PRA (“all property acquired by either spouse or partner after their marriage, civil union, or de facto relationship began”).
Issue three: If the Copyrights are property, how should they be treated in terms of the PRA?
Held: The Copyrights should remain in Ms Alalääkkölä’s exclusive legal ownership, with Mr Palmer receiving a compensatory adjustment from other relationship property to ensure an equal division of relationship property.
Pursuant to s 21 of the Copyright Act, the author of a work is the first owner of copyright in that work. The Act therefore protects and promotes creativity by granting authors, artists, and other creators exclusive control over their original works. It is consistent with the overall policy objectives of the Act that Ms Alalääkkölä, as the creative force behind the Artworks, be able to control the commercialisation of the Copyrights. It would be inappropriate and unfair to require her to transfer ownership of some of the Copyrights to Mr Palmer, for a range of reasons. These include that: Ms Alalääkkölä’s art is highly personal to her, and she wishes to be able to control its commercialisation; any business Mr Palmer set up to commercialise some of the Copyrights would be in competition with and could undermine Ms Alalääkkölä own art business; Ms Alalääkkölä is a working artist whose reputation and personal brand (as well as her future livelihood) could be negatively impacted by Mr Palmer’s decisions in relation to any Copyrights he owned; Ms Alalääkkölä holds inalienable moral rights in respect of the Artworks, which could be a source of further ongoing conflict if some of the Copyrights were transferred to Mr Palmer.
Overall, the “clean break” principle under the PRA favours Ms Alalääkkölä retaining ownership and control of the Copyrights.
The Court therefore orders that Ms Alalääkkölä is to retain sole ownership of the Copyrights, with a compensatory adjustment to be made from other relationship property to ensure an overall equal division.
The Court remits the matter to the Family Court, to assess the quantum of any compensatory adjustment.
Relationship property — Division of “balance of matrimonial property” — Personal property — Separate Property
An extension of time is granted for filing the notice of appeal.
The approved questions of law on appeal are answered as follows:
(1) Are the Copyrights “property” for the purposes of the Property (Relationships) Act 1976 (PRA)?
Yes.
(2) If the Copyrights are property, how should they be classified in terms of the PRA?
The Copyrights should be classified as relationship property.
(3) If the Copyrights are property, how should they be treated in terms of the PRA?
The Copyrights should remain in Ms Alalääkkölä’s exclusive legal ownership, with Mr Palmer receiving a compensatory adjustment from other relationship property to ensure an equal division of relationship property.
The assessment of an appropriate compensatory adjustment is remitted to the Family Court for determination.
The appellant must pay the respondent costs for a standard appeal on a band A basis, together with usual disbursements.
We certify for second counsel.
Ms Alalääkkölä is a successful artist. She created a number of artworks during the course of her 20-year marriage to Mr Palmer (the Artworks), many of which were sold to third parties.
It was common ground on appeal that the Artworks that remained in the possession of either party at the end of the relationship are relationship property in terms of the Property (Relationships) Act 1976 (PRA). Rather, the key issue on appeal was whether the copyrights in the Artworks (the Copyrights) are relationship property or Ms Alalääkkölä’s separate property. Further, if the Copyrights are relationship property, how they should be treated under the PRA regime? Ms Alalääkkölä sought to retain sole ownership of the Copyrights, with a compensatory adjustment being made to Mr Palmer from other relationship property. Mr Palmer, on the other hand, sought ownership of some of the Copyrights, so that he could commercialise them.
The Family Court found that the Copyrights were Ms Alalääkkölä’s separate property. On appeal, the High Court found that the Copyrights were relationship property, and remitted the issue of how they should be treated under the PRA to the Family Court. Ms Alalääkkölä appealed to this Court, having been granted leave to do so by the High Court on the approved questions of law.
Issue one: Are the Copyrights “property” for the purposes of the Property (Relationships) Act 1976 (PRA)?
Held: Yes.
The Copyrights fall within s 2(c) and (e) of the PRA definition of “property”.
Issue two: If the Copyrights are property, how should they be classified in terms of the PRA?
Held: The Copyrights should be classified as relationship property.
Ms Alalääkkölä submitted, in essence, that even if some of the bundle of rights and interests comprising the Copyrights were acquired during the relationship, the relevant bundle of rights and interests also includes (or is inextricably linked to) other property rights that pre-date or post-date the relationship. The inclusion of these takes the Copyrights outside the definition of relationship property and requires that they be categorised as separate property.
The Court rejected each of Ms Alalääkkölä’s arguments. First, the bundle of rights associated with the Copyrights was distinct from Ms Alalääkkölä’s personal skills and qualifications. Although those skills were used in the creation of the Artworks, they are distinct from the Copyrights that attach to the Artworks. Second, Ms Alalääkkölä’s art business, which was commenced prior to her relationship, is distinct from the Copyrights. Third, the fact that income may be generated, post-separation, from commercialisation of the Copyrights does not assist in determining the classification of the Copyrights under the PRA. Finally, there is nothing in either the Copyright Act 1994 or the PRA to suggest that Parliament intended to remove intellectual property from the reach of the PRA.
As the Copyrights were all acquired by Ms Alalääkkölä during the relationship (namely when each of the Artworks was created by her) they fell within the definition of relationship property in s 8(e) of the PRA (“all property acquired by either spouse or partner after their marriage, civil union, or de facto relationship began”).
Issue three: If the Copyrights are property, how should they be treated in terms of the PRA?
Held: The Copyrights should remain in Ms Alalääkkölä’s exclusive legal ownership, with Mr Palmer receiving a compensatory adjustment from other relationship property to ensure an equal division of relationship property.
Pursuant to s 21 of the Copyright Act, the author of a work is the first owner of copyright in that work. The Act therefore protects and promotes creativity by granting authors, artists, and other creators exclusive control over their original works. It is consistent with the overall policy objectives of the Act that Ms Alalääkkölä, as the creative force behind the Artworks, be able to control the commercialisation of the Copyrights. It would be inappropriate and unfair to require her to transfer ownership of some of the Copyrights to Mr Palmer, for a range of reasons. These include that: Ms Alalääkkölä’s art is highly personal to her, and she wishes to be able to control its commercialisation; any business Mr Palmer set up to commercialise some of the Copyrights would be in competition with and could undermine Ms Alalääkkölä own art business; Ms Alalääkkölä is a working artist whose reputation and personal brand (as well as her future livelihood) could be negatively impacted by Mr Palmer’s decisions in relation to any Copyrights he owned; Ms Alalääkkölä holds inalienable moral rights in respect of the Artworks, which could be a source of further ongoing conflict if some of the Copyrights were transferred to Mr Palmer.
Overall, the “clean break” principle under the PRA favours Ms Alalääkkölä retaining ownership and control of the Copyrights.
The Court therefore orders that Ms Alalääkkölä is to retain sole ownership of the Copyrights, with a compensatory adjustment to be made from other relationship property to ensure an overall equal division.
The Court remits the matter to the Family Court, to assess the quantum of any compensatory adjustment.