“Special Contributions” Are Just Like Any Other Contribution: The Full Court’s Decision of Hoffman and Hoffman [2014] FamCAFC 92

25 Sep “Special Contributions” Are Just Like Any Other Contribution: The Full Court’s Decision of Hoffman and Hoffman [2014] FamCAFC 92

Recently the Family Court of Australia Full Court came down with an important decision on contributions.  It is a decision the writer was lucky to see argued at the Family Court of Australia, Sydney Registry in early November last year.

The ultimate holding of Hoffman and Hoffman [2014] FamCAFC 92 is that in property proceedings there is no principal under s 79 of the Family Law Act 1975 (Cth) that financial contributions are more important than other contributions, such as being a homemaker or the primary care giver of children.  Additionally, this case rested the notion that “special contributions” are a legitimate guideline, a binding principle of law, or are to be given more weight in assessing each party’s contributions in property proceedings.

The parties in Hoffman were together for 36 years. At the Federal Magistrates Court in 2012, Brewster FM (as he then was) divided equally the parties’ property and superannuation with a combined net value of approximately $10 million.  Each party was to retain real and personal property except that the husband was to pay the wife approximately $3 million in cash.  The husband represented himself and appealed those orders.

The Husband argued that Brewster FM was bound to apply a principle of “special contributions” and his failure to do so was an error at law.  The error, the Husband argued, was his Honour’s finding that he was not bound to apply a principle of “special contributions” and did not.  The Husband argued that his “[s]pecial [s]kills and [e]ntrepreneurial [f]lair” in property “acquisition, development and value adding” were crucial in the parties having the amount of assets that they did at the hearing.  Hoffman at [7]

The Full Court noted that Brewster FM did not make any contribution based adjustments for when the husband worked on the party’s properties, which took him away from the home and imposed a greater burden on the wife in caring for the children.   Brewster also declined to make any contribution based adjustment based on the husband’s “special contributions”, as he found via precedent that he was not bound by a rule of law to observe such a principle.  Consequently Brewster FM assessed the contributions of all types made by each of the parties as equal.

The Full Court agreed with Brewster’s finding that there is no binding rule of law relating to “special contributions”.   Moreover, the Full Court found that it is charged to “give guidance in the form of guidelines rather than binding principles of law”. Hoffman at [25] citing Norbis v Norbis (1986) 161 CLR 513 at 520 per Mason and Deane JJ). Moreover guidelines given by the Full Court to the lower courts are to help “guide the exercise of discretion”; and not replace the judge’s discretion mandated under s79(4).

The Full Court analysed previous cases including Ferraro (1993) FLC 92-335, Whiteley (1992) FLC 92-304, McLay (1996) FLC 92-667,Stay (1998) FLC 92-751, JEL & DDF (2001) FLC 93-075,  as to whether “special contributions” cases imposed a legitimate guideline on the lower courts to use in subsequent cases.

The Full Court specifically highlighted In the Marriage of Waters and Jurke (1995) FLC 92-635 at 82,379 where Forgarty J stated that the “[h]omemaker contributions are to be given as much weight as those of the primary breadwinner” Hoffman at [50].  Practically, such contributions are not so easily assessed and “there is no principle or guidelines (or indeed, anything else emerging from s 79), that renders the direct contributions of income or capital more important – or “special” – when compared against indirect contributions and, in particular contribtions to the home or the welfare of the family”.  Hoffman at [52].

Moreover, under the gender neutral language of the Family Law Act 1975 (Cth) the Full Court noted that any guidelines relating to “special contributions” “predispose[s] to discriminate against a spouse on the basis of roles which have been agreed (expressly or by evolution over time)” as part of either their marriage or de facto relationship.  Hoffman at [55].

And referring to O’Ryan J’s decision in D & D [2005] FAMCa 1462 at [271] the Full Court highlighted that “…the notion of special contribution has all been a terrible mistake…”  Hoffman at [61].  The Court’s role under s 79 “is to make findings as to the nature, form, characteristics and duration of each and all of the contributions made by each of the parties”  Next the court must assess “how those respective contributions, often of differing types (…a comparison of apples and carrots…) find expressions in qualitative assessment.  Hoffman at [61].  Moreover the court found  in this case “the duration of the marriage has an important influence upon what evidence is relevant in respect of contributions”.  Hoffman at [61].

In that assessment, the Full Court did not consider there is any “legitimate guideline” of “special contributions” at [62].  Moreover even if Brewster FM did not take into account the husband’s special contribution it would not be because of any binding principle of law or legitimate guideline but because his Honour failed to consider a particular contribution made by the husband.   Ultimately, the Husband did not challenge Brewster FM’s contributions findings except in respect of the wider argument of “special contributions” at [75].

The Full Court found the Federal Magistrate’s reasons revealed he considered and made findings as to all of each party’s contributions and weighed them in coming to his assessment.  The Full Court found Brewster FM did not err in failing to take account of any relevant consideration Hoffman at [81]. Ultimately the Husband’s appeal was dismissed and he was ordered to pay the wife’s costs of the appeal.