For married couples and some de facto couples, how their property is to be divided on separation is provided for in the Family Law Act.
The Family Law Act requires an assessment of each party’s:
(a) contributions, both financial and non financial towards acquiring, conserving and maintaining assets;
(b) contributions in terms of homemaking and the care of children; and
(c) consideration about their individual or future needs, some of which include age, state of their health, ability to participate in paid employment, the effect of the relationship or marriage on a party’s earning capacity, etc
Once we have considered these factors we can estimate what their respective contributions would entitle them to each receive as a percentage of the net pool of assets. We then adjust that percentage depending on what future or individual needs exist. Consequently a couple may have made equal contributions but an aged infirm spouse party might receive 58% because of their future needs, with that additional 8% for that adjustment.
Whatever the percentage outcome, the Family Law Act requires it be just and equitable.
There is no one solution “fits all” approach in Family Law. Consequently, as every relationship is different each relationship presents its own different set of facts and it is those facts which will, within the legislative framework that the Family Law Act requires be followed, result in a range of outcomes for a range of different clients.
Some couples at the time of separation have a significant asset pool to be divided. Commonly they have high value investments such as shares, a property portfolio or other highly successful enterprise.
In these circumstances the courts have been asked by litigants when an investment has been so profitable for the person who worked on that profitable investment to be given extra credit for that contribution. Surely they say that they must have some special or extraordinary skill given the value of the assets so isn’t it fair that they receive a larger share of the assets?
In a recent Family Court of Appeal decision in the case of Kane (which is now being reviewed) the parties had a 30 year marriage. The superannuation fund had shares invested in a company which almost trebled in value in less then two years and which had a current market value of $3,420,294 at the time of the hearing.
During the trial, the husband alleged that it was his business skill, acumen and research which resulted in him being able to select profitable shares and but for that skill the superannuation fund would not have its current value. Further evidence was given that the Wife had reservations about the investment and cautioned him against investing in the company. However the Husband proceeded to do so and made a profit.
Initially the husband was successful in arguing that his special skills should be recognised in contributing to the superannuation. On appeal, however, the Court held that too much weight was given to the husband’s contribution to the superannuation fund and pointed out that the Family Law Act legislation does not refer to “special” or “extraordinary” contributions but rather financial and non-financial contributions towards acquiring, conserving and maintaining assets and caring for the home and children.
The Court also looked at the contributions of the wife and the contributions of both of the parties over a 30 year relationship, considered the fact that the husband’s investment contribution to the super fund only occurred in the last two years of the marriage and also looked at the hypothetical flipside of the husband’s argument, that is, if the superannuation investment had failed would he still be arguing that it was his special skill that led to the failure?
In our practice a significant portion of our clients are of the traditional type marriage whereby one party is in fulltime paid employment and the other a stay home parent or primary homemaker often supplemented with part-time income. Commonly in these cases the income earner alleges that the non financial contributions of either a stay home parent or homemaker could not possibly match their contributions towards paying for the mortgage, perhaps buying an investment property, shares and towards superannuation.
The case of Kane reminds us that we need to look carefully at each party’s contributions over the whole of the length of the relationship and follow the statutory framework in the Family Law Act.
Consequently, we need to look at what each spouse brought into the relationship, the type of contributions they made over the course of the relationship which can be direct eg., earning income and making the mortgage repayments with that income or indirect, eg., staying at home caring for children of the relationship so that the other parent can work in paid employment and have the benefit of the superannuation contribution guarantee levy into their nominated super fund or working long hours for that lucrative promotion.
What Kane and similar cases does not say is that assets must be divided equally.
Sometimes one party does contribute more. One party may take on a significant amount of the care of children as well as the household tasks as well working in paid employment, whereas the other party does very little and for no good reason. Other times a party has a significant amount of assets which they bring to the relationship and that relationship is relatively brief.
It will be interesting to see what the decision is on rehearing and whether at any time in the future the law will be changed. Even if parliament was to introduce a “special or extraordinary” skill as a subclass of contribution it would be inherently problematic and unfair. Would be it limited to contributions that create wealth or would it recognize an extraordinary stay home parent or home maker? It is difficult to see how such an amendment would work given that they are such subjective and difficult attributes to evaluate. For any further assistance you may require, please contact a member of our family law team.