‘Special contributions’ in financial cases a terrible mistake?

House and Euro [Image courtesy of njaj at FreeDigitalPhotos.net]

In the recent decision of Hoffman v Hoffman [2014] FamCAFC 92, the Family Court of Australia Full Court found that the previously relied upon ‘notion of special contribution has all been a terrible mistake’ (Hoffman at [61], citing D & D [2005] FamCA 1462 at [271]).

The appeal in this case centred on the Husband’s argument that the trial judge had erred by failing to apply the principle of special contributions in the Husband’s favour. The couple – who had been married for 32 years – shared a combined asset pool of approximately $10m. The trial judge had initially split the couple’s assets 50:50, rejecting the Husband’s argument that the significance of the couple’s assets was the result of the Husband’s ‘[s]pecial [s]kills and ‘[e]ntrepreneurial [f]lair’ in property ‘acquisition, development and value adding’ (Hoffman at [7]).

The trial judge declined to make any contribution-based adjustment on the basis of the Husband performing home renovations on the couple’s various properties. Agreeing with the trial judge, the judges of the Full Court were hesitant to give greater weight to either of the parties’ contributions during the marriage, describing the process as a difficult qualitative assessment and a ‘comparison of apples and carrots’ (Hoffman at [61]).

The trial judge rejected the Husband’s argument stating that it was inappropriate to afford greater weight to one party’s contributions over the other, particularly in a lengthy marriage involving children. In addition to this basis for rejecting the Husband’s argument, the trial judge held that some exceptions may be made for ‘big money cases’ (Hoffman at [15]), however, he did not regard the couple’s position as being a ‘big money case’ (Hoffman at [65]).

Ultimately, the Full Court upheld the trial judge’s decision, reiterating that ‘nothing said by the High Court, or this [Family Court], about “special contributions”…amounts to a legal principle or “binding rule of law” the failure to observe which constitutes an error of law’ (Hoffman at [20]). The Husband was ordered to pay the legal expenses incurred by the Wife.

Sources:

Hoffman v Hoffman [2014] FamCAFC 92

Image courtesy of njaj at FreeDigitalPhotos.net