Legal Reasoning and Economics

Stuart Birks

Centre for Public Policy Evaluation, Massey University

Paper for the NZAE Conference, Wellington, 12-14 July 2000

Abstract

Many economic interventions involve the use of law. Lawyers and the judiciary are guided by legislation, but have scope to interpret that legislation. This paper looks at the reasoning that lawyers and the courts consider acceptable, asking whether such approaches are likely to lead to appropriate and consistent decisions.

JEL: K0

Stuart Birks

Director, Centre for Public Policy Evaluation

Massey University, Private Bag 11222

Palmerston North

Phone: 06-350-5799 X2660

Fax: 06-350-5660

Email: K.S.Birks@massey.ac.nz

1.      Introduction

Lawyers have attracted much attention over the years. Coming from an economics background, I am inclined to view 

this attention and the behaviour of lawyers in the context of patterns of reasoning. Much economic thinking, with all its 

faults, is directed at methods of formulating and addressing issues to find the appropriate outcome or best decision. This 

may therefore serve as a useful perspective to ask the question whether legal reasoning is such that it can be expected to 

give "the appropriate outcome or best decision".

2.      General Context

The first problem to overcome is that of specifying what might be meant by "legal reasoning". This is somewhat elusive, 

but there are numerous clues. Some of these are discussed below.

2.1  Misinformation or activism

A 13th Century document suggests that, at that time, legal reasoning may have had its shortcomings:

Since these laws and customs are often misapplied by the unwise and unlearned who ascend the judgment seat before 

they have learned the laws and stand amid doubts and the confusion of opinions, and frequently subverted by the 

greater [judges] who decide cases according to their own will rather than by the authority of the laws, I, 

Henry de Bracton, to instruct the lesser judges, if no one else, have turned my mind to the ancient judgments of just 

men, examining diligently, not without working long into the night watches, their decisions, consilia and responsa, and 

have collected  whatever I found therein worthy of note into a summa, putting it in the form of titles and paragraphs, 

without prejudice to any better system, by the aid of writing to be preserved to posterity forever.

[1]

Judges' ignorance of laws may not apply only in the distant past. It is not clear how, given s 20(a) of the Guardianship 

Act 1968, otherwise to explain the statement in relation to obstructed enforcement of an access order that, "Judge Boshier 

found that there was clear contempt, but doubted whether there was power to punish for such contempt" [2].

Are there also judges who "decide cases according to their own will rather than by the authority of

 the laws"? In the third reading of the Protected Disclosures Bill on 29 March 2000, 

Stephen Franks MP, said:

“As a lawyer, I can tell members that there is more than ample obscurity in this bill. There is more than ample 

confusion about what was really expected or intended for any judge to pare back the protection as he or she feels 

fit. There is also more than ample opportunity for anyone who wants to misuse these procedures to take advantage 

of them, and we could well find that we have the opposite of our intentions.”[3]

To some extent, it is through legal processes that the specific nature of a law is determined. Cases are heard and decided, decisions may be appealed, and over time a body of case law develops which influences subsequent decisions. On this point, Richardson made an interesting claim. "I think it helped to have the same bench of judges hear all the early appeals [on the Matrimonial Property Act]".[4] Can this be likened to saying it is good to avoid political disagreements by having a dictatorship?[5]

Elsewhere I have addressed the question of judicial activism in some detail with particular reference to a paper by 

Judge Boshier.[6] The Judge has also been vocal specifically on this issue.[7] 

To quote:

"Expect Judges to be much more vocal in the development of family law.

The former Chief Justice, Sir Thomas Eichelbaum, has signaled in successive reports on the New Zealand judiciary 

that the public could expect Judges to be more visible in addressing issues of concern and participating in discussion 

on some of those issues." (p.51)

"…I see nothing wrong with Judges commenting on bad laws and/or areas where administration of the law is failing 

because of outdated statutes or failure on the part of the State to deliver as required by statute.

As long as there is a legislative presumption that Family Court cases may not be published, I think it inevitable and 

desirable that Judges incline to be more active in bringing matters of concern to public attention." (p.52)

The former Chief Justice called for participation in discussion, a two way process. Judge Boshier's suggestion is 

for a one way process.

A common criticism of judicial activism, where Judges are proactive in the development of the law, is that Judges do not have a mandate for this, nor are they accountable. It could also be argued, that they are not appropriately informed either. In particular, they are involved in and focus on individual cases, thus taking a "micro" rather than a "macro" perspective.[8] This is significant not only because a large number of individual cases may have a wider social impact, but also because individual cases can have an impact on many situations which do not involve court appearances. These situations involve operating "in the shadow of the law", and can be influenced by possibility of legal intervention.[9]

While Judges and others prominent in law are more active in promoting their own views, they have been reluctant to participate in debate. Principal Family Court Judge Patrick Mahony declined an offer to respond to a publication criticising the Family Court on the grounds that, "It is not normal for a Court to contribute to publications on policy issues".[10] However Teletext of 18 October 1999 reported, "Judge Patrick Mahony says in some cases it may be fairer to give one person more than half of the property or a portion of the future  earnings of their former partner." This was nothing new for him. He was reported eight years earlier, in the Dominion Sunday Times of 27 October 1991 (p.2), calling for women to get more that half the assets in a marriage breakup. The same issue reported that, "he would like the court's work to be put more before the public" (p.11).

Similarly President of the Law Commission, Honourable Justice Baragwanath, has not even responded to private and public invitations to comment on published criticisms of the work of the Law Commission.[11]

Reluctance to debate may be an engrained characteristic of judges. To quote Hugo Young:

"The possibility that the system has erred is the lifeblood of any barrister who finds himself in front of the Court of Appeal. Yet when that barrister becomes a judge, the same proposition inexplicably seems to tend towards one which he feels obliged to repudiate unto his final breath."[12]

2.2  "Plausible stories", Persuasion or Proof?

Further insights into legal reasoning can be gleaned from quotes on lawyers. To quote Colin Brooks:

"It is on his skill in leading a jury to take his view of fact and facts … that earns for a barrister the reputation of being … good with juries."[13]

Brooks is suggesting that such a barrister chooses one of possibly many interpretations of the facts. This is not a general weighing up of information. Rather, a selection may be made from the available information, this then being woven into a "plausible story". Juries are then presented with opposing stories, being faced with the choice of accepting one and rejecting the other.[14]

Others have espoused the view that the law is a matter of misinformation and trickery:

They have no lawyers among them [in Utopia] for they consider them as the sort of people whose profession it is to disguise matters." Thomas More, Utopia[15]

"There is no better way of exercising the imagination than the study of law. No poet ever interpreted nature as freely as a lawyer interprets the truth." Jean Giradoux, Tiger at the Gates[16]

This would suggest that legal reasoning is such that lawyers don't have to prove, they have to persuade. Although the terms "beyond reasonable doubt", and "balance of probabilities" are used, the doubts and probabilities are subjective.

If so, it may be that parallels could be drawn with the sophists of classical Greece:

"Protagoras was reputedly the first person to write a treatise on techniques of argument, and was notorious for his claim to make 'the weaker argument the stronger'."[17]

"[Sophists] emphasis upon worldly success as well as their advocacy of the idea…that the ability to plead a case and win depends on a skill that can be taught rather than on having a just cause…were factors in promoting the skepticism and moral relativism that were associated with their name."[18]

Lawyers' techniques have also been described by the Honourable Justice Robertson:

"The hallmark of most litigation was stealth and surprise. You kept both hands in your pocket, every rabbit still in the hat, and you hoped, by avoiding any forewarning, to be able to steal a march and win your client's case. That is not the law as I observe it today... At least from the perspective of the outsider it is a situation where the prime driving force frequently appears to be a fees budget which has to be met to maintain a predetermined standard of living and lifestyle."[19]

Contrary to Justice Robertson's opinion, the suggestion of money as a driving force is not new. Dickens observed that, "The one great principle of the English law is to make business for itself".[20]

2.3  Menu of Principles

Persuasion is a matter not only of "plausible stories", but also of the criteria that are applied. These influence the weight given to the various pieces of information. It would be desirable to have consistent application of principles, just as economic assessments would require consistent values. Sometimes there may be several principles, in which case there can be conflicts. With a lexicographic approach, the aim would be to proceed as far as possible to meet the first principle. If there are several options which are equally successful in this aim, then selection would be made according to their success with the second principle, and so on. It is more likely that we would be concerned about trade-offs between principles. How much simplicity would we be prepared to give up to achieve more equity, for example? Economists might attempt to weigh up competing objectives in this way. In law, however, we are more likely to see judges drawing from a "menu of principles". I have discussed this elsewhere[21], and there are further examples in 3.1 and 4.2 below.

The "menu" concept means that there is no set pattern for the application of principles. Rather, there are several principles available and it is merely necessary for a decision to be presented in such a way that it is clearly consistent with the chosen principle or principles. It may well be that the decision is inconsistent with other principles that have not been mentioned. The decision making process then involves not only the decision as presented, but also the choice of principles. This latter may be neither transparent nor explained. This introduces an element of uncertainty and scope for arbitrary and inconsistent rulings.

2.4  Are Results "Process-dependent"?

"The art of cross-examination is not the art of examining crossly. It's the art of leading the witness through a line of propositions he agrees to until he's forced to agree to the one fatal question." Clifford Mortimer[22]

We see this process described by Robertson and Busch:

"…the questions we ask to a large extent determine the outcomes we derive. It is one thing to ask, 'Did you hit her?' but if the next question is 'Why did you hit her?' the focus may immediately shift from the violence to the alleged failings of the victim…To posit that there may be circumstances in which violence is justified is to give the abuser the right to define, control and mete out punishment in respect of his partner's behaviour."[23]

Robertson and Busch object to the application, being dissatisfied with the resultant outcome, but they do not necessarily reject the method. It is a problem with any research that the approach taken may determine the outcome. In law this may be the deliberate intent. The lawyer's role is one of advocate for one of the parties. The lawyer is paid to present information so as to influence the outcome in the client's favour.

An alternative violence paradigm that Robertson and Busch might prefer is that there is no excuse for male domestic violence, that any violence or abuse shown by a male of the types described in the Duluth Wheel is evidence of a patriarchal power and control relationship, and that the male is then a "batterer" and the female and any children in the family are "victims".[24]

This is not to deny the possible suitability of either of these paradigms for some cases, but rather to illustrate that a paradigm might be adopted as a result of a strategy by an advocate for one side, rather than deliberate consideration and the elimination of other possibilities.

There has been some recognition that terminology may be important. Judge von Dadelszen has suggested that "parental responsibility" be used in place of "custody" and "access".[25]Similary Judge Blaikie has suggested the use of the term "contact". Hubin suggests that a more radical change might be needed to shift current perceptions:

"The phrase "award of custody" constitutes a strange twisting of reality in the context of divorce, dissolution and most other conflicts over custody between natural and adoptive parents. Such parents typically appear before the court at the outset each with full parental rights. Noone is awarded rights; one parent is deprived of rights."[26]

The representation of an issue can be crucial to people's perceptions and to the outcome.

2.5  Expertise and Experts

Some would contend that similar behaviour in the form of "advocacy research" is also adopted by some areas of academia. This raises additional questions about the quality of "expert" testimony:

"Over the last three decades ideological doctrines have infiltrated the curricula of many of the larger universities.  Spurious academic subjects such as 'black studies' and more recently 'women's studies', putatively designed to 'raise consciousness' and strengthen commitment to credos of 'emancipation', manifestly fail to meet the stringent requirements of scholarship: certainly the doctrines of these ideologically inspired 'studies' are not regarded by their proponents as provisional and refutable hypotheses.  Clearly arrangements being made for their systematic propagation in these circumstances do not comport well with the idea of a university as a forum for open-minded enquiry and impartial scholarship."[27]

Given these problems and motivations, how much faith should we place in the ability of lawyers to understand, present 

and weigh up information? Particular difficulties can arise if the information is outside the bounds of their legal training. 

Socrates, describing good artisans, said, “because they were good workmen they thought that they also knew all sorts 

of high matters, and this defect in them overshadowed their wisdom”[28]

Lawyers are trained in the law, but not in the specific issues to which the law is applied. Hence they are not experts on economics, or family relations, or medicine or the environment. This is illustrated in answers to Questions for Written Answer Nos. 10024 and 10025, lodged in the House on 30 May 2000:

"10024. Dr MURIEL NEWMAN to the Minister of Revenue: What training is given to child support review officers to enable them to critically assess claimed income and expenditure levels?

Hon Dr MICHAEL CULLEN (Minister of Revenue) replied: The Commissioner for Inland Revenue has informed me that review officers do not receive specialized training to enable them to critically assess claimed income and expenditure levels.

If a review officer is unsure of any income or expenditure details, then experienced staff (including accountants) are made available to work through the issues with them and enable them to make reasoned and appropriate decisions.

10025. Dr MURIEL NEWMAN to the Minister of Revenue: Are child support review officers required to be familiar with benefit entitlements, such as family assistance?

Hon Dr MICHAEL CULLEN (Minister of Revenue) replied: The Commissioner for Inland Revenue has informed me that it is not a requirement for child support review officers to be familiar with benefit entitlements as these type of enquiries would be redirected to the Department of Work and Income.

Child Support officers, as staff of Inland Revenue, will have knowledge on the concepts of benefits administered by Inland Revenue such as Family Assistance and Parental Tax Credit."

Hence child support review officers, most of whom have a law degree, do not have training so as to assess the accuracy of parties' claims of income and expenditure and the resultant circumstances under which they are living. Reviews are based on the evidence presented. If review officers do not have the appropriate background knowledge, they will not know what information to challenge. Even if they do question some of the information, they are unlikely to get informed advice while with the parties and will not be able to challenge the information later.

There are serious questions to raise about the way in which "expert" information might be included in legal deliberations, and how contrary expert opinions may be handled. To rely on someone trained only in law to resolve such matters could be likened to someone with no knowledge of French being used to select the winner of a French oratory contest.

Hence the legal mind is not informed on the wider issues, and legal reasoning appears not designed to give balanced evaluation of the information, rather it is one of selective use of information to present a story, and selective use of criteria to support the client's interests.

3.      Examples of Legal Thinking

Mention has already been made of judges who are unhappy with current laws. This dissatisfaction is likely to influence their decisions where they have some discretion. This can occur without public debate, and possibly even without public awareness. Occasionally we do get a more public glimpse into the workings of legal minds. Here are some examples.

3.1 Honourable Justice Baragwanath on affirmative action

David Baragwanath, President of the Law Commission, was interviewed by Brian Edwards in early 1998[29], said the following about the appointment of women to academic positions:

DB - "... the consequences of it include, the messages sent out, let's say to the potential women students that may go to that faculty if this woman is appointed, and they choose not to if she isn't. It's oversimple to say that the man has a right to the job. He has not."

BE - "Well, you and I are going to have to disagree on that. You've got to ask yourself how you're going to feel. So I swan in there with a first class honours degree in political science and there's a woman who's come in with a third class honours degree in political science and she gets the job purely because she's a woman."

DB - " Oh no. In that case of course you would appoint the man. I am referring to two people who are of equal potential, and if they are of equal potential, even though the male is a distinguished person of your age and the female is a youngster, if she's got it, if she has the capacity to perform equally to him, she may well have the capacity to perform better, you build that in. But ultimately it's to be remembered whose interests you are looking at. It is not his interests, it's not hers, it's the interests of the students and of the wider community whose taxes are paying for the appointment."

The approach involves the definition of an unmeasured variable ("potential"), which then allows someone to attach a desired value to it. In this instance it allows measured differences to be disregarded. The added assumption that women academics are needed to attract women students then supports preferential treatment over and above that afforded by the use of the newly defined criterion. This can support any decision, even if based on prejudice. In fact there have been more female than male tertiary students since 1986. To illustrate a possible weakness in the reasoning, let's follow the same theme further.

If the objective is to increase the number of women academics, criteria could be selected from a "menu of principles" to support this position in a range of scenarios. Consider the following possibilities:

1)      there are few women students - more women academics are needed to encourage women into the area.

2)      there are about the same number of women and men students - for balance, there should therefore be about the same number of women and men academics.

3)      Women students are in the majority - it is a woman-focused area and students would be uncomfortable with men academics, so most of the academics should be women.

In other words, this approach is not a reasoned and comprehensive assessment of the situation. It can be used to apparently support a whole range of positions and cannot be considered as sufficient on its own. In terms of decision making or policy advice, it is seriously deficient.

The approach involves reliance on a criterion, plus assumptions or information to support a conclusion based on that criterion. The choice of criterion, including the decision to reject other possible criteria, is not explained. There is no consideration of a simultaneous consideration and weighing up of several criteria. There may be problems with the relevance of underlying assumptions or accuracy of information used.

The approach can result in over-simplification of issues and inconsistency in approaches. If women are less than proportionately represented in one area, they must be more than proportionately represented in another. They are interconnected. If representation in one is defined as a problem, then so also is representation in the other. A solution could be directed at one, or the other, or both, but one cannot be changed without changing the other.

From an academic point of view, a requirement that might be specified for appropriate policy advice is that a range of alternatives be considered on the basis of consistently selected and justified criteria, with suitable weighing up of conflicting objectives and accurate underlying information. It should also be open to critical evaluation and peer review.

If such reasoning is displayed in public, what is happening behind close doors? It is to be hoped that it is not representative of approaches where legal minds are expected to consider factors other than simple points of law.

3.2 Annis Sommerville on superannuation

Annis Sommerville is a Dunedin barrister and solicitor. In 1998 she became chairperson of the Family Law Section of the New Zealand Law Society. The following is an extract from her paper at the 1995 New Zealand Law Society Family Law Conference. She compares the option of realising an interest in an ex-husband's superannuation in an immediate lump sum payment against an agreement whereby she would get a share of payments when they are made to the husband:

"Superannuation

If the earner has a superannuation fund, then the wife should consider negotiating payment in a lump sum at the time of settlement rather than a [Matrimonial Property Act 1976] s.31 agreement. Agreements persuant to s.31 have to be worded carefully if the wife is to be protected. The Deed should bind the husband to be paid out by way of a lump sum rather than by pension. If the husband has elected to be paid out of his Fund by pension when he retires, the wife should ensure that she is entitled in her own name to that pension. Her Legal adviser should ensure that her entitlement is not contingent on her husband’s survival or a spousal benefit (which is not applicable once she is divorced). If the husband dies soon after retirement and she does not have any right in her own name, she will miss out. Settlement agreements often trade off the husband’s share or part share in the house for his retaining the Superannuation Fund. The woman keeping the house ends up without a retirement fund but she has to weigh up the reality of a house or a retirement fund. There are not a lot of choices when she is the custodial parent."[30]

If Superannuation is correctly valued, there should be no difference between its value as a lump sum and its value as a possible future income stream. Nevertheless, Sommerville voices a preference for a lump sum payout at the time of settlement. This indicates that she considers the valuation for lump sum payment to overstate the true value of the superannuation. She then concludes by suggesting the woman loses out by not having a retirement fund later. She seems unwilling to accept that there are advantages and disadvantages to either option. She ignores the equity from the lump sum payout as a basis for a retirement fund, and she even suggests that s.31 splits should be taken as a lump sum payments rather than as ongoing payments.

There are other aspects about which she appears ill-informed.

She shows ignorance of the Government Superannuation Fund. The Fund only allows for a portion of the entitlement to be taken in lump sum on retirement, and it does not allow entitlements to be put into someone else’s name such that payments are not contingent on the contributing party’s survival.

If the husband dies soon after retirement, she is not the only one to lose out. He will also lose out. If she gets a lump sum on settlement and dies before he retires, then she is getting more than she would have had they stayed married.

The valuation of superannuation for matrimonial property settlement purposes should take account of the benefit of lump sum payouts giving cash in hand at the time of settlement to the non-contributing party. The contributor cannot obtain the funds before retirement without bearing a possibly substantial penalty.

S.31 involves a sharing of the uncertainty about the final sum paid out. Valuations for lump sum payments at settlement should be lower because they are offering a certain sum in exchange for an uncertain income stream. It is wrong then for Sommerville to suggest that s.31 penalises the woman because of such uncertainty.

If any contributions are made during a marriage, the Matrimonial Property Act considers superannuation entitlements as a result of contributions before marriage also to be matrimonial property, although they are clearly not a result of the marriage partnership.

If there is means-tested state superannuation, then the income from a contributory scheme may reduce the superannuation an individual receives from the state. This would arise even if the recipient has made a lump sum payment to an ex-spouse based on receipt of that superannuation. The recipient of a lump sum payment would face no such reduction in entitlement as a result of the lump sum received. The contributing party is therefore disadvantaged

Superannuation received by someone who chooses to reside overseas may be subject to tax in the country of residence, but superannuation is valued on the basis of tax-free payments. The superannuitant therefore faces a significant restriction that does not apply to the recipient of a lump-sum payout on separation, especially as the tax would be payable on all superannuation, including that portion in exchange for which the spouse received a lump sum payment.

4.      Equity and Law - Two Applications[31]

4.1  Equity

Outcomes are more likely to be acceptable if they are considered equitable. The Child Support Act 1991 refers to equity, and the Matrimonial Property Act 1976 refers to "just division". What might this mean?

Economists refer to horizontal and vertical equity. Horizontal equity relates to like circumstances, under which equitable outcomes require like treatment. Vertical equity refers to differing circumstances, for which an "appropriate difference" in treatment is required.

"Like circumstances" depend on the degree of detail considered - should one look at current income, or lifetime income, or how the income is earned, should one also consider the number of dependants, their ages and specific needs? If there are problems with the concept of horizontal equity, there are even greater problems with vertical equity. "Appropriate differences" in treatment depend on the variables used and the values placed on them. Should time with children be considered? How should it be measured - hours, days, nights? What costs should be included? What effect would specific differences have on treatment?

Discussion of disadvantage and discrimination hinge on the same points - what variables are selected to draw comparisons, what are "appropriate differences" and what values are assigned in terms of specifying the significance of a difference and whether it is considered beneficial or detrimental to a particular group. Policy debate frequently revolves around differences in choice of and interpretation of variables. For example, current proposals for unequal splitting of matrimonial property are based on the monocular consideration of caregivers' assumed sacrifice of earning capacity, disregarding numerous other dimensions. Resulting policy, often specified in legislation, can be confused and inappropriate.

4.2  Child Support

Section 4 of the Child Support Act 1991 lists its objects. It is stated on the IRD Child Support web page that: "Child Support is governed by the objectives set out in the Child Support Act 1991".[32]

Child support is paid by a liable parent to a custodial parent. Both parties are assessed in a shared parenting situation, with a net payment going from one to the other. I shall only consider the formula under sole custody. Key aspects of the basic child support formula in a sole custody situation are as follows:

·        Child support income is equal to taxable income up to a maximum level, now $68,436.00.

·        A living allowance is deducted from this as follows:

Child support is equal to the balance times a percentage rate, 18 percent for one child, 24 for two, 27 for three and 30 for four or more children.

·        The custodial parent's income is not considered.

·        The liable parent's time with the children is not considered unless it includes at least 40% of nights.

·        There is some scope to deviate from the formula through an administrative review or hearing, but most applications by liable parents are declined.

·        If a custodial parent is on the DBP, child support payments go first to offset that payment. Any additional child support is passed on to the custodial parent.

When the objects of the Act are compared with the formula, several inconsistencies can be observed. Neither the custodial parent's income nor the liable parent's time with the children are taken into account. Vertical equity cannot generally be achieved. If the formula assessment is correct for one level of custodial parent's income, then it is incorrect for others, and similarly for time with children. There are also problems with payments not being linked to expenditure on children, and with both parents potentially being caregivers for some of the time. To consider specific objects in the Act:

·         Object (a) is To affirm the right of children to be maintained by their parents, but the act does not ensure that payments are made by both parents, nor does it ensure that payments actually benefit the child(ren).

·         Object (b) is To affirm the obligation of parents to maintain their children, but the act focuses only on "liable parents".

·         Object (c) is To affirm the right of caregivers of children to receive financial support in respect of those children from non-custodial parents of the children, but non-custodial parents could be the caregivers for up to 40 percent of nights with no effect on child support obligations.

·         Object (d) is To provide that the level of financial support to be provided by parents for their children is to be determined according to their capacity to provide financial support, but only liable parents are required to provide, and the other parent's circumstances are generally not considered.

·         Object (e) is To ensure that parents with a like capacity to provide financial support for their children should provide like amounts of financial support, but under the formula this only applies for comparisons between liable parents. The other parents' circumstances are generally ignored.

·         Similarly, object (f), To provide legislatively fixed standards in accordance with which the level of financial support to be provided by parents for their children should be determined, refers to parents, but the formula only refers to payments by liable parents of money received by the state or by custodial parents.

·         Object (h) is To ensure that equity exists between custodial and non-custodial parents, in respect of the costs of supporting children, and is commonly not met because only the circumstances of the liable parent are considered.

·         Object (j) is To ensure that the costs to the State of providing an adequate level of financial support for children and their custodians are offset by the collection of a fair contribution from non-custodial parents, but can it be a "fair" contribution when there is no change in contribution as the liable parent's time with the children rises from 0 percent to 40 percent of nights?

In other words, the specifics of the law are inconsistent with its objectives.

The law commenced on 18 December 1991. There has since been a review headed by Judge Peter Trapski.[33] Not only was there no mention of these inconsistencies, but the Act also appears designed to achieve other unspecified labour market objectives. On consideration of the custodial parent's income the Consultative Document states: "a strong disincentive to workforce participation could result if every dollar earned by the custodian over a given threshold resulted in a decrease in child support. As 84% of lone parents are women, structural gender based inequities in the labour market could be worsened." (p.24)

The use of nights as a measure is also problematic. It is explained in Butterworths Family Law in New Zealand as follows:

The choice of 40 per cent of nights might at first appear curious but it is probably explained by the fact that most children spend a great part of the day time in school and most of the parental care is later in the day and in the early morning with sleep in between. [34]

Young children are not at school, but for those who are there can be a big difference between custodial and non-custodial parents’ time with them. Non-custodial parents would generally care for children at weekends and school holidays, when contact time and associated expenses can be much greater.

It could be suggested that anomalies can be allowed for through the review process. However review officers are lawyers and may be equally unaware of the problems. In fact some aspects, such as the “costs of enjoyment of access” for the liable parent, are expressly ignored. S 105(2)(b)(i) of the Act refers specifically to the costs of "enabling access" only.

Rather than ignorance, disregard for the inconsistencies may be tacitly accepted because the status quo is considered desirable. Benson describes how, in Commissioner of Inland Revenue v Aspinall [1999] 3 NZLR 87, certain objects were considered and others ignored.[35] Benson is concerned about the decision in the case. In fact he highlights a more serious problem, namely the judiciary's adoption of a flawed line of reasoning. I refer in section 2.3 above to judges selecting, as convenient, from a “menu of principles” to support of their preferred outcome. Benson describes this process also. The result is a post hoc rationalization for what may simply be the whim of the judge in question. Judge Boshier has actively encouraged lawyers to "push these boundaries".[36] This covert form of judicial activism can be very harmful given the judiciary’s limited information and understanding of the wider social implications of their actions. We see this in operation elsewhere in family law.

4.3  Matrimonial Property

According to its title, the Matrimonial Property Act 1976 is: “to recognise the equal contribution of husband and wife to the marriage partnership; to provide for a just division of the matrimonial property between the spouses when their marriage ends by separation or divorce”.

There are two key aspects to this, equal contribution, and just division. There is a rebuttable presumption of equal 

contribution. The decision as to whether contributions were equal or unequal would depend on the aspects considered 

(choice of variables), and the values assigned to each of these components. Hence, under the presumption, a greater 

paid work contribution by one party is considered to be balanced by a greater unpaid work contribution by the other. 

This places an implicit value on unpaid work which can be determined by the explicit value of income earned from paid 

work or other financial contributions. The difference in financial contribution is considered equal in value to the difference 

in unpaid work contribution. Taken as a firm rule, this can lead to ludicrous valuations.[37]

Some of the sections of the legislation, such as those relating to the matrimonial home and chattels and to 

superannuation, can serve to give extreme results. Unfortunately the Court is in a poor position to assess an 

alternative value.

Another weakness in legal thinking is apparent where possibly tortuous reasoning may give inappropriate 

results. Consider, for example, Lewis v Lewis [1993] 1 NZLR 569, which relates to the Matrimonial Property Act. 

Section 8(c) states that all jointly owned property is matrimonial property. Section 10 states that property 

acquired by succession or by survivorship or as a beneficiary under a trust or by a gift is separate property 

except under specific circumstances such as via intermingling or by use for a matrimonial home. There is therefore 

a conflict when the conditions for both sections are met. Which should be considered dominant? P.574 L54 to 

P.545 L2 of Lewis v Lewis read:

“It can be said that if Parliament had intended s 8(c) also to yield to s 10, a subordinating “subject to” 

would have been provided. Since Parliament did not do this there is no sufficient reason for the Court to 

read in such a qualification.”

The decision is based on the presumed intent of Parliament. Pp.4108-4111 of Hansard of 23 November 

1976 (Vol.408) contains Mr McLay’s speech presenting the report of the committee on the Matrimonial Property 

Bill. On p.4109 he defines matrimonial property, including the terms of section 10 without qualification by 

section 8(c). He is even clearer introducing the second reading in his speech of 9 December 1976 (pp.4721-4722):

“The other suggestion made, which is, in my opinion, an irresponsible suggestion, is that the Bill is some 

way represents a “confiscation of property”…The purpose of the legislation, in my view, is to enable possession 

to be given, or a just and proper apportionment to be made, of those capital family assets which Lord Denning 

has referred to as the things intended to be a continuing provision for the parties during their joint lives, the 

working capital of the marriage partnership that may be generically described – and I underline the words 

‘marriage partnership’, in contrast, for example, with formal gifts or investments brought to the marriage by 

one party or the other, or achieved by incomes ranging well outside the normal family needs.”

As if that was not clear enough, he then reiterated the significance of the term ‘marriage partnership’. The closing 

comment in the quote may also be of interest for those following Z v Z [1997] NZFLR 241.

The concepts of horizontal and vertical equity are useful for identifying the real interpretation of equal contribution 

under the Act. Consider two couples, identical except that in one couple someone entered with ten years of prior 

superannuation contributions. The presumption of "equal contributions" would mean that all the other contributions 

made by that person are found to be worth less by the value of the prior superannuation. How can this be justified? 

To add another dimension, should the consideration of this be different if that person had already made a lump sum 

payment to a previous spouse because of that superannuation? 

As another example, consider someone who received an inheritance. If it is kept separate, there is no change 

to the perceived value of contributions to the marriage partnership. If it is put into the family home, then the other 

contributions by that person are considered to be worth less by the amount of the inheritance. And for another 

dimension, if one person's inheritance is included in matrimonial property, should consideration be made of an 

anticipated inheritance by the ex-partner?

For yet another example, someone could consider marrying one of two people, then contributing by keeping 

house. The tasks performed in either marriage would be identical, but one potential partner has an annual income 

of $100,000, the other $25,000. If the partner does nothing besides earn, then keeping house is valued at four times 

more in one marriage than in the other.

Paradoxically, while the Matrimonial Property Act considers unpaid work in the home to be a significant and 

valued contribution, the Child Support Act does not. Equal sharing under the Matrimonial Property Act implies 

an intra-family sharing of income, but a homemaker who is a liable parent under the Child Support Act would be 

assessed as having no income, and an income earning liable parent will receive minimal consideration for the 

presence of a homemaker partner.

We could ask why marriage has a special significance, especially given proposals to apply the legislation to 

other relationships. A “just division” is called for if a marriage lasts for three years or more. Someone’s grown-up 

child could live in the same home for three years and have no claims on the family assets when leaving, but an adult 

can enter the family for the same time and leave with a claim on half the assets. While the Act's title refers to “taking 

account of the interests of any children of the marriage”, it makes no reference to other children from a previous marriage. 

Under the legislation, assets are transferred rapidly from one adult to another when one brings more wealth 

or earning power to the relationship than the other. The more someone brings to a relationship in terms of assets 

and earning power, the lower the Court values him/her as a person. What will the long-term social implications be 

in terms of people’s willingness to earn and save, to plan for the future, to acknowledge the contribution of others, 

and even to form stable relationships?

It is in this context that lawyers and the judiciary are intervening in people’s lives and applying policies in 

their own way, possibly quite at odds with the original intention of the policymakers. They do this with limited 

supervision and accountability and with a marked reluctance to publicly debate and justify their actions.

5.      Conclusion

Viewed from an economics perspective on the requirements for determining an optimal solution to a problem, legal reasoning appears to have several weaknesses. It may be that, in an ideal legal system, laws are correctly specified, lawyers then apply the laws as intended, and there is appropriate expert input in areas where the lawyers' expertise is inadequate. In practice it appears that lawyers are operating in areas where they are poorly informed, they do not always know when they need outside expert assistance, and they are working with laws that have shortcomings, in an atmosphere whereby the judiciary may be keen to modify laws at their own pace without external supervision. In addition, the approach taken in advocating for a client may affect the style and content of information presented.

Research funding is required to investigate these matters further.

[1] Bracton on the Laws and Customs of England (attributed to Henry of Bratton, c. 1210-1268)  http://bracton.law.cornell.edu/bracton/Common/index.html, this extract is at: http://supct.law.cornell.edu/bracton/Unframed/English/v2/19.htm

[2]  Butterworths (1995) Butterworths Family Law in New Zealand, 7^th edition, Wellington: Butterworths. S 20(a) of the Guardianship Act specifies penalties for hindering or obstructing access. See section 6.3 of Birks S (1998) Gender Analysis and the Women's Access to Justice Project, Issues Paper Number 2, Centre for Public Policy Evaluation, Massey University http://econ.massey.ac.nz/cppe/papers/waj1.htm)

[3]  http://rangi.knowledge-basket.co.nz/hansard/han/text/2000/03/29_045.html.

[4]  Para.2.11 of Richardson I L M (1999) "Family Courts: Some Questions for Consideration", Australasian Family Courts Conference, 16 October 1999

[5] Something similar was lampooned in The Mikado: "KoKo: … so I consulted the Attorney-General, the Lord 

Chief Justice, the Master of the Rolls, the Judge Ordinary, and the Lord Chancellor.  They're all of the 

same opinion. Never knew such unanimity on a point of law in my life." (From Act 2 of The Mikado, by W.S.Gilbert. 

All these posts were filled by one person, Pooh-Bah.)

[6]  See sections 2.8-2.10 of Birks (1998) The Family Court: A View from the Outside, Issues Paper No.3¸ Centre for Public Policy Evaluation, Massey University

(http://econ.massey.ac.nz/cppe/papers/cppeip03.htm), discussing Boshier P (1998) "Developments in Matrimonial Property", Family Law Conference, 31st August – 2^nd September 1998, Christchurch, New Zealand Law Society, pp.51-69.

[7] Boshier P F (1999) "Editorial: Judicial activism and law reform", Butterworths Family Law Journal, September, pp.51-52

[8]  See section 2.10 of Birks (1998) The Family Court: A View from the Outside, Issues Paper No.3¸ Centre for Public Policy Evaluation, Massey University, http://econ.massey.ac.nz/cppe/papers/cppeip03.htm

[9]  http://www.massey.ac.nz/~KBirks/gender/econ/shadow.htm, and section 3 of Birks S "Parenting and the Family Court: An Economist's Perspective", in Birks S and Callister P (eds.) (1999) Perspectives on Fathering II, Issues Paper No.6¸ Centre for Public Policy Evaluation, Massey University.

    (http://econ.massey.ac.nz/cppe/papers/cppeip06/cppeip06.htm)

[10]  Personal correspondence, 30^th September 1999.

[11]  See, for example, the letter in the New Zealand law Journal, December 1999, p.437.

[12]  Pp.164-165 of Young H, "Judges' convictions", in Course J (ed.) (1991) The Bedside Guardian 1991, London: Fourth Estate Books, pp.164-169, reprinted from The Guardian, 12 July 1990.

[13]  (Brooks, 1952, pp.74-75) Brooks C (1952) More Tavern Talk, London: James Barrie

[14] For more on "plausible stories", see section 4.2 of Birks S (1998) Gender Analysis and the Women's Access to Justice Project, Issues Paper Number 2, Centre for Public Policy Evaluation, Massey University http://econ.massey.ac.nz/cppe/papers/waj1.htm)

[15]  Rawson H and Miner M (1986) The New International Dictionary of Quotations, New York: Dutton, p.145, and http://www.d-holliday.com/tmore/utopia008.htm

[16]  Ibid p.144

[17] Hornblower S and Spawforth A (eds.) (1996) The Oxford Classical Dictionary, 3^rd edition, Oxford, OUP, p.1422.

[18] Howatson M C (ed.) (1997) The Oxford Companion to Classical Literature, 2nd edition, Oxford, OUP, p.531.

[19] Robertson, Hon. Justice (1999) "The 'Lost Lawyer' - Where Have She and He Gone?" paper to the New Zealand Law Conference, 1999

[20] http://www.fidnet.com/~dap1955/dickens/works.html

[21] See Section 4.2 of Birks S (1998) Gender Analysis and the Women's Access to Justice Project, Issues Paper Number 2, Centre for Public Policy Evaluation, Massey University (http://econ.massey.ac.nz/cppe/papers/waj1.htm); section 2.8 of Birks S (1998) The Family Court: A View from the Outside, Issues Paper No.3¸ Centre for Public Policy Evaluation, Massey University (http://econ.massey.ac.nz/cppe/papers/cppeip03.htm); section 3.4 of Birks S "Parenting and the Family Court: An Economist's Perspective", in Birks S and Callister P (eds.) (1999) Perspectives on Fathering II, Issues Paper No.6¸ Centre for Public Policy Evaluation, Massey University.

    (http://econ.massey.ac.nz/cppe/papers/cppeip06/cppeip06.htm)

[22] From John Mortimer (1982) Clinging to the wreckage (quoted in Sherrin N (1995) The Oxford Dictionary of Humorous Quotations, Oxford: OUP, p.173)

[23] Robertson N and Busch R, "The Dynamics of Spousal Violence: Paradigms and Priorities", in Pipe M-E and Seymour F (eds.) (1998) Psychology and family Law: a New Zealand Perspective, Dunedin, University of Otago Press, p.55

[24] This paradigm would be familiar to many and is described at: http://www.justice.govt.nz/pubs/reports/1999/family_conference/author_20.html, and at: http://actag.canberra.edu.au/actag/Reports/CLRC/r9/dov7.html (now at: http://www.dpa.act.gov.au/ag/Reports/CLRC/r9/dov7.html [22 August 2000]).

[25] Dadelszen von P (1995) “The case for change: ‘parental responsibility’ not ‘custody’ and ‘access’, Butterworths Family Law Journal, December, pp.263-268

[26] P.136 of Hubin D C (1999) "Parental rights and due process", Journal of Law and Family Studies, 1(1999) pp. 123-150. Also at: http://freeload.homestead.com/_ksi0701961573075034/pacecolumbus/files/prdp.pdf

[27] Mishan E.J. (1993) The Costs of Economic Growth, Revised Edition, Westport: Praeger, p.202

[28] Socrates Apology by Plato, from: Gibbons R (compiler) (1995) In Their Own Words, New York: Gramercy Books, p.10

[29] "Top of the Morning", on National Radio, possibly broadcast 10^th January 1998.

[30] P.56 of Sommerville, A (1995) "Money, Money, Money – The Economic Consequences for the Homemaker upon the Break Up of a Marriage in relation to Child Support, Spousal Maintenance and Matrimonial Property", Conference Session Papers, New Zealand Law Society Family Law Conference, Wellington 2-4 October 1995, pp.41-58

[31] A version of this section of the paper is forthcoming in the New Zealand Law Journal.

[32] http://www.ird.govt.nz/childsupport/csa.htm#legislation

[33]   See Child Support Act Working Party (1994) Child Support Review 1994: A Consultative Document, and Trapski P, et al. (1994) Child Support Review 1994: Report of the Working Party, Wellington: Inland Revenue Department

[34]    Butterworths (1995) Butterworths Family Law in New Zealand, 7^th edition, p.294

[35]  Benson S (2000) "Departures from Child Support Assessments", New Zealand Law Journal, May, pp.176-179

[36]  Boshier P (1998) "Developments in Matrimonial Property", Family Law Conference, 31st August – 2^nd September 1998, Christchurch, New Zealand Law Society, pp.51-69.

[37]  See Birks S (1994) Women, Families and Unpaid Work, School of Applied and International Economics, Massey University, Discussion Paper 9.49, October. A modified version is at: http://www.massey.ac.nz/~KBirks/gender/econ/unp4web.htm