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David Hodson on International Family Law: Special contribution in Australian law

Date:14 FEB 2014
Family lawyer

International Family Law Practice by David Hodson

David Hodson

A very important decision has been handed down in a landmark full Family Court decision in Australia in respect of financial outcomes on divorce, especially affecting wealthy families.  The decision in the case of Kane has ended a long line of decisions giving significant weight to the so-called ‘special contribution' of the spouse who financially created the wealth of the family.

Australia has not followed the equality starting point of English case-law from White (2000) through Miller (2006) and Charman (2007) and other leading authorities and likely to find its fulfilment in proposed legislation in a Law Commission report published later in February 2014.  Although certainly there have been many advocates for this position, a number of leading Australian court decisions have specifically eschewed the concept of equality of division of marital assets.

Instead Australian financial provision on divorce is strongly wedded to ‘contribution' of the various forms, invariably crystallised into percentages between the spouses leading with other factors towards the outcome.

In a potentially yet to become Republican country, in Australia the King of contribution was special contribution.  It was evoked in circumstances of exceptional contribution, special skill, etc invariably therefore applicable only in the bigger money cases.  Moreover the special contribution was almost always (and only) financial.  Inevitably in almost all cases the special contribution was by the man rather than the woman.  Special contribution was distinctly not motherhood, home making or creating the opportunity for the wealth creating spouse.  The result of a successful special contribution argument would be an outcome of perhaps 60% or even 75% of the marital wealth going to that spouse.

However it was not only in what would be construed as big money cases in England.  Kane itself was a 28-year marriage but the asset pool was only $4.2m, approximately £2.25m and regarded as a good level of middle-class case rather than a big money case.  The husband was a retired successful businessman who had invested their money in a self managed superannuation, pension fund.  At first instance he had received two thirds of that fund.

The full Family Court held there was no doctrine or mandate or binding law requiring division according to some concept of special skills.  It was a decision much awaited across the Australian family law profession with many other cases held back pending this decision.

In another similar decision of Smith v Fields, the husband received 60% of the assets of, at most, £20m because of his so-called ingenuity and stewardship in running the family business in which both the husband and wife had worked.  This 60% was despite the judge recognising that the spouses had ‘a practical union of both lives and property' and both had made an exemplary contribution in their respective spheres of marriage.  The case has been appealed and many family lawyers expect it to be overturned following the Kane decision.

In Smith v Fields, the court had been informed of six leading decisions in so-called big money cases with long marriages in which the wife had received at best 40% and at worst in three of the cases 30% or less.

In the immediate aftermath of White, England had a short dalliance with special contribution.  It was found by the Court of Appeal in a case of Cowan (2001) but within a year and after adverse comment, it was effectively overturned in Lambert (2002) after which special contribution was very rare and exceptional.  Curiously the Court of Appeal in Lambert found comfort in declining the adoption of special contribution by the comments of Chief Justice Nicholson in the Australian leading case of Figgins (2002) in which he said he thought special contribution in Australian law should be reconsidered and that there was much force to the White equality argument.  It took 10 years or so

Many leading Australian family lawyers expect the pendulum between the pro-husband financial special contribution and the pro-equality division based on different but equal roles and contributions within marriage now to be swinging distinctly towards equality.  In this Australia will be following many other common law jurisdictions which have moved in a similar way over the past decade.

Moreover it will in fact make common law outcomes increasingly similar to many civil law countries.  It may also mean that the English Law Commission recommendations, likely to be based on equality of division of marital assets as a starting point, might receive a more favourable viewing than when special contribution was King.

Perhaps not necessarily suitable or in good taste for a future Australian referendum but possibly: the King is dead, long live the equality of the people!

David Hodson is a Partner at The International Family Law Group LLP. He acts in complex family law cases, often with an international element.  

He is an English specialist accredited solicitor, mediator, family arbitrator, Deputy District Judge at the Principal Registry of the Family Division, High Court, London and also an Australian qualified solicitor, barrister and mediator. He is a Fellow of the International Academy of Matrimonial Lawyers and chair of the Family Law Review Group of the Centre for Social Justice.

David is the author of a new major reference work, The International Family Law Practice as well as A Practical Guide to International Family Law (Jordan Publishing, 2008). He can be contacted on dh@davidhodson.com.

The views expressed by contributing authors are not necessarily those of Family Law or Jordan Publishing and should not be considered as legal advice.