“Special Skills” and Family Law

July 28, 2017

Historically, Family Law Courts have provided for property distributions which significantly favour a breadwinner who has utilised their “special skills” in a high wealth relationship. The principles regarding “special skills” contributions have long been a contentious issue in Family Law, and recent cases suggest that Australian Family Law Courts are beginning to move away from this historical approach to one which gives more weight to the contributions of a homemaker.

A Review of the Cases

In the case of Mallet v Mallet[1], the High Court of Australia stated that there is no presumption that the property of a marriage will be divided equally between the Husband and Wife, and that instead, each matter is required to be decided on its merits.

This principle was further developed in the matter of Ferraro v Ferraro[2], where the Court found that the Husband had used entrepreneurial skill to develop a property pool valued at $10.62m. At the beginning of the marriage the parties were aged 23 and 21 and had minimal assets. The Court found that this asset pool had been developed due to the “special skills” of the Husband, and ordered that the matrimonial assets be divided on a 70/30 basis in the Husband’s favour. On appeal, the Full Court of the Family Court of Australia altered the distribution to a 62.5/37.5 division in favour of the Husband but confirmed the Husband’s “special skills” should be acknowledged, despite the Wife’s substantial “homemaker” contributions.

In JEL v DDF[3], the Husband worked as a geologist and engaged in a speculative joint exploration which was ultimately successful. As a result, the Husband made significant profits. In this matter, the Court considered the Husband’s “special skills” and distributed the property on a 72.5/27.5 basis in the Husband’s favour. The Court justified its approach on the basis that “special skills” involve the skill of one of the parties and should be treated differently to a “windfall” such as a “lottery win” or an “inheritance”.

The recently decided cases of Fields v Smith[4] and Kane & Kane[5] suggest, however, that the Family Law Courts are beginning to take a different approach. In Fields v Smith the parties were married for 29 years. At the beginning of the marriage the parties had minimal assets, but by the time of separation the parties had assets valued between $32m and $40m. The Husband worked full time as a contractor in the construction industry and renovated houses as an owner-builder in addition to his full time work. He then developed a successful construction business. The Wife performed the role of a homemaker but also assisted in the management of the business. She raised three (3) children with minimal assistance from the Husband given his busy work schedule. The Trial Judge ordered a distribution of property on a 60/40 basis in favour of the Husband due to his “special skills”.  On appeal the Court found that the property should be divided on a 50/50 basis stating that the Court should consider “the nature, form, characteristics and origin” of the contributions. In its judgment, the Court made significant acknowledgement of the contributions made by the homemaker.

In Kane & Kane the parties began living together in September 1980, married in October 1981 and separated on 21 June 2009. The relationship was of thirty (30) years duration. There were four (4) children of the relationship. There was about $4.2m in property with about $3.4m in Superannuation entitlements. The Husband’s Superannuation was valued at approximately $2.8m and the Wife’s was valued at approximately $600,000. Both parties agreed they had equally contributed to the marriage except for the Superannuation. The Husband made investment choices which the Wife had disagreed with regarding his Superannuation interests. At trial, the Judge made allowance for the Husband’s “special skills” and distributed the non-superannuation assets on a 50/50 basis and the superannuation assets on a two-thirds to the Husband and one-third to the Wife basis. On appeal, the Judge found that there was an error made and there should not have been any allowance for “special skills”.

It would appear from the recent decisions that the legal principle of “special skills” is now becoming redundant. What are your thoughts? Should a breadwinner be rewarded for significantly remarkable contributions? Does this legal principle adequately consider the role of the homemaker?

[1] Mallet v Mallet [1984] 156 CLR 605

[2] Ferraro v Ferraro (1993) FLC 92-335

[3] JEL v DDF (2001) FLC 93-075

[4] Fields v Smith [2015] FamCAFC 57

[5] Kane & Kane [2013] FamCAFC 205

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