No special treatment for self-made wealthy spouses

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A recent decision of the Full Court of the Family Court has cast a shadow over the idea that the special skill or contributions of a spouse entitles them to a greater share of relationship wealth.

This idea is known as “special contributions” and it has long been controversial. It refers to contributions by spouses which are exceptional or use special skills or talents that result in financial wealth. A famous example occurred in the case of Whitely, where the Court ruled that artist, Brett Whitely had made a special contribution to the matrimonial asset pool through the sale of his artworks. His special skill as an artist was the major contribution to the asset pool, and assessed by the Court to be 70% of the total asset pool.

Part of the controversy is that a “special contribution” is difficult to identify and assess unless it a financial contribution.  Several Judges have expressed concern at the gender bias this creates, since the winners when special contributions arguments are accepted are most often self-made husbands rather than stay-at-home wives. In the recent case of Hoffman v Hoffman, a Canberra Judge denied a special contributions argument where the husband claimed his special skill and acumen in managing investments. Judge Brewster called for the Full Court to appeal on the issue, stating that there is no meaningful way to compare financial and non-financial contributions and to do so is like comparing “apples and carrots”.

In December 2013, the Full Court gave judgment in another “special contributions” case – Kane & Kane. In that case, the wife appealed a decision awarding the husband two thirds of the contents of a self managed super fund (SMSF). The parties were married for just shy of 30 years and the initial investment to set up the fund came from joint funds. The husband argued that his contributions to the SMSF were disparate to the wife’s, because they each made individual investment choices and his choices resulted in prosperity. He claimed his acumen and successful investments entitled him to a greater share of the SMSF assets. The increase in value of the fund was largely due to one particular investment in shares.

On appeal, the Full Court held excessive weight had been given to the husband’s contributions, noting that it is “difficult to correlate effort or skill (even if special) with result” and that external factors (for example, market forces) should not be overlooked. The original decision was overturned on appeal and the Court noted “…the notion of ‘special contributions’ necessarily predisposes matters to an outcome that may not otherwise be available…”.

If you are separated and dividing property, you need to obtain sound legal advice about each of your contributions and how they might be treated by the Court.

Jacquelyn Curtis is an Associate at Dobinson Davey Clifford Simpson located at 18 Kendall Lane, NewActon, Canberra ACT 2601 and can be contacted on (02) 6212 7600.

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