Death of ​‘spe­cial contributions’

In Brief

For a long time, there has been a debate in the fam­i­ly courts between those who believe that a court needs to recog­nise spe­cial and excep­tion­al con­tri­bu­tions and oth­ers who say there should be no recog­ni­tion of such a beast. Those who don’t sup­port it say that to recog­nise the exis­tence of a doc­trine of ​“spe­cial con­tri­bu­tion” cre­ates a gen­der bias which invari­ably favours (wealthy) males.

Fam­i­ly lawyers all over Aus­tralia eager­ly await­ed the Appeal court’s deci­sion in a case, report­ed as Smith & Fields, which promised to bring an end to this debate. In this case, the Tri­al Court recog­nised the hus­band’s spe­cial con­tri­bu­tion which led the court to make a split of the mar­i­tal pool in his favour of 60% because of his ​“inge­nu­ity and stew­ard­ship” run­ning the fam­i­ly busi­ness, in which both the hus­band and wife had worked.

The court on appeal has set that deci­sion aside order­ing that there be an equal divi­sion of the asset pool and effec­tive­ly dis­miss­ing the notion of a spe­cial con­tri­bu­tion, spe­cial skill or excep­tion­al contribution.

In this case the facts were:

• par­ties were mar­ried for 29 years

• they had 3 adult chil­dren, self-sup­port­ing at the date of the tri­al, being 31, 30 and 25 respectively

• the par­ties start­ed with min­i­mal assets at the begin­ning of their marriage

• the hus­band under­went fur­ther train­ing dur­ing the course of the mar­riage to become a builder – he con­struct­ed homes for the par­ties and every 2 years he would build a new home and they would sell the old­er one

• the wife was a full­time stay at home mum

• giv­en the hus­band’s capac­i­ty to use his skills as a trades­man to con­struct homes, the par­ties even­tu­al­ly had a suf­fi­cient cap­i­tal base from the sale of their homes which allowed them to start their own con­struc­tion company

• both the hus­band and wife were direc­tors and shareholders

• the com­pa­ny became very suc­cess­ful and it was found that the hus­band was the dri­ving force behind it although the wife had had some direct involvement

• in 2007 the hus­band met a woman who he lat­er married

• after sep­a­ra­tion, the wife became ill which result­ed in her not being able to attend a num­ber of direc­tors meetings

• the hus­band and wife divorced and the hus­band remar­ried and has a child of that union

• the net assets were found to have a val­ue of between $32,321,000 and $39,816,000

The wife had a num­ber of grounds of appeal which includ­ed the Tri­al Judge fail­ing to take into account that implic­it in her tak­ing on the home­mak­er and par­ent­ing roles in the mar­riage, as the chil­dren grew old­er, her con­tri­bu­tion would reduce and ulti­mate­ly stop. But where par­ties had agreed to take on dif­fer­ent roles, she argued, it was unjust and unfair to deval­ue the con­tri­bu­tion of the par­ty tak­ing on the home­mak­er and par­ent­ing roles. Giv­en that this role is usu­al­ly assumed by women, the approach would leave women with an unfair bur­den in the eco­nom­ic consequences.

The court of Appeal found that the con­tri­bu­tions of both par­ties in this lengthy mar­riage were sub­stan­tial and sig­nif­i­cant. The court also found that the wife’s con­tri­bu­tions to the wel­fare of the fam­i­ly are sig­nif­i­cant con­tri­bu­tions and that the Act does not sug­gest that one kind of con­tri­bu­tion should be treat­ed as less impor­tant or valu­able than the oth­er. The court con­firmed that by one par­ty free­ing up the oth­er par­ty, it results in each par­ty being able to make more con­tri­bu­tions with­in their role.

In this case, the wife’s con­tri­bu­tions were not lim­it­ed to her home­mak­er and par­ent­ing roles in the space of the wel­fare of the fam­i­ly. She also had involve­ment in the busi­ness itself and she con­tributed pri­or to the estab­lish­ment of the busi­ness by assist­ing the hus­band in improv­ing and sell­ing their homes. Sell­ing their homes and acquir­ing cap­i­tal required them to move reg­u­lar­ly. As a result, while the hus­band con­tin­ued to be involved in the busi­ness, the wife had to pack up the house on each occa­sion and move their belong­ings with­out the hus­band’s assistance.

The court found that plac­ing greater weight on the hus­band’s con­tri­bu­tions do not do jus­tice to the wife’s con­tri­bu­tions which led the Appeal court to con­clude that there should be an equal divi­sion of the asset pool.

When read along­side the Full Court deci­sion in Kane & Kane, in which the Full Court stat­ed ​“To the extent that the tri­al judge believed him­self to be oblig­ed by author­i­ty to deter­mine the divi­sion of the prop­er­ty of the par­ties by ref­er­ence to some doc­trine acknowl­edg­ing ​“spe­cial skills” in my opin­ion, for the rea­sons set out above, he was mis­tak­en. The Act does not require and in my opin­ion the author­i­ties do not man­date, any such doc­trine and if judg­ments of the Full Court of this Court might be thought to have espoused such a prin­ci­ple in my opin­ion, they should no longer be regard­ed as bind­ing” it appears clear that there is no doc­trine of ​“spe­cial con­tri­bu­tions” which would spec­i­fy that the par­ty to pro­ceed­ings who gen­er­at­ed sig­nif­i­cant wealth will be seen to have made greater con­tri­bu­tions in the con­text of a prop­er­ty set­tle­ment, than a spouse who has been a pri­ma­ry par­ent or engaged in mak­ing oth­er contributions.

It is impor­tant to note that not every case will result in an equal divi­sion of assets, the court will also con­sid­er oth­er con­tri­bu­tions which may lead to a dif­fer­ent result. Giv­en that each case turns on its own fact, expert advice should always be obtained for your per­son­al circumstances.