Australian family court overturns ruling that divorcing husband should receive more

business chart showing successAn Australian family court has overturned a ruling that a divorcing husband should receive a greater proportion of the couple’s assets after he successfully invested in shares.

In the case, known as Kane & Kane, a wealthy couple separated in 2009 after being married for nearly 30 years.  By that point, the couple had more than AU$4 million in assets, the majority of which was held in a superannuation fund.

This fund was set up with equal contributions from Mr and Mrs Kane. But Mr Kane later invested a large sum on the stock market, the Sydney Morning Herald reports. His investment was successful and generated a large profit.

As a result, when the couple split, the family court judge awarded two thirds of the fund, based on “his skill in selecting and pursuing the investment”. This equated to an additional $1 million.

The remainder of the couple’s assets – approximately $800,000 – was divided equally. The woman appealed and the decision was overturned by the Family Court of Australia who declared that the original judge had given “unacceptable weight” to the husband’s investment skills. The unequal division “could not be justified, said Deputy Chief Justice John Faulks.

There is often an element of luck in special contributions made to a couple’s wealth, he added:

“It is difficult to correlate effort or skill (even if special) with result. Frequently, the financial result of a contribution (whether by physical or intellectual labour or imagination foresight and perspicacity) will be influenced by external factors beyond the control of the party contributing.”

The case will now be reheard before a new judge.

This is an interesting case, but the reality is that, up here in the English courts, most judges would be unlikely to see a financial contribution of this nature as sufficient to depart from the fundamental principle of asset equality in divorce. Only a ‘stellar contribution’ to joint assets is normally sufficient – i.e. earning a “vast fortune” that it would clearly be unjust not to recognise.

In the 2005 divorce of advertising tycoon Sir Martin Sorrell, Mr Justice Bennett defined a stellar or “special contribution” as “a comparatively simple concept that one of the parties has within him/her a seed of genius which will be recognised when seen”. Sir Martin was duly awarded 60 per cent.

Sir Martin’s wife, incidentally was represented by future High Court judge Sir Nicholas Mostyn.

A similar principle applied in the later case of Charman v Charman. By the time this three-decade marriage came to an end, the couple had a fortune totalling £131 million, an achievement which earned them a place on the Sunday Times Rich List.

Although the court rejected Mr Charman’s initial argument that his wife had been no more than a “housewife” and she should therefore content with a settlement of £20 million, he still received the lion’s share of the couple’s assets (62 per cent), thanks to his ‘stellar’ contribution. Mrs Charman walked away with a mere £48 million.

But such headline-hogging cases are very much he exception rather than the rule. For most divorcing couples, a 50-50 split will the central principle of their financial settlement.

Photo by s_falkow via Flickr under a Creative Commons licence

Marilyn Stowe

The senior partner at Stowe Family Law, Marilyn Stowe is one of Britain’s best known divorce lawyers with clients throughout the country, in Europe, the Far East and the USA.

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3 comments

Luke - January 10, 2014 at 7:29pm

I have sympathy with people in the past, because it wasn’t common knowledge that the courts would make these perverse judgements on asset redistribution the default position in divorce.

For the ones getting married now that will get asset stripped in the future I will have much less sympathy – because anybody with half a brain should be well aware that if you have any significant assets or a stellar talent then marriage is an absolutely barmy institution to enter into.

anon - January 10, 2014 at 11:05pm

£1m seems rather minimal when compared to 4billion – if the report is correct.

Luke - January 12, 2014 at 4:10pm

The “billion” I assumed was a mistake – you don’t hold the best part of £2,000,000,000 in a superannuation fund unless you are a moron :-)

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