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Federal Law Review |
A central question in family property law in Australia is how to place a value on the homemaker contribution in comparison with other kinds of contribution. The problem is especially difficult where the property largely consists of assets owned before marriage, acquired by inheritance, or received after separation. This article explores the relevance of the homemaker contribution to property division both in marriages and de facto relationships, challenging the popular assumption that living together per se justifies significant wealth transfers. It is argued that parenthood provides the most important justification for property alteration, and that withdrawal from workforce participation due to the care of children or other family members is the primary concern in evaluating the homemaker contribution. The article then goes on to explore what the homemaker contribution meant when the Family Law Act 1975 (Cth) ('the Family Law Act') was enacted, and how that conceptual coherence has become lost over time. There are now two different approaches which have emerged to the quantification of the homemaker contribution in the context of pre-marital property, inheritances, damages awards and property acquired after separation. These approaches are irreconcilable. The approach which is now finding favour in the Full Court of the Family Court is one which makes it impossible for the Court to explain how it has reached its decision on the quantification of the parties' proportionate shares. Furthermore, it is founded on an interpretation of the homemaker contribution that Parliament never intended and has not since authorised. This raises important questions about the legitimacy of the Court's approach to property division under s 79 of the Family Law Act. The article concludes by offering a new interpretation of the role which the homemaker contribution should play in the division of property on relationship breakdown which is consistent with the overall framework of s 79. It involves two distinct considerations of the homemaker contribution. The first is to examine how homemaker contributions should be rewarded. The second is to consider how they should be compensated.
One of the most controversial and difficult issues in Australian family property law, it seems, is how to value the homemaker contribution. Section 79(4)(c) provides that the Court should consider, as one of the factors in property distribution, 'the contribution made by a party to the marriage to the welfare of the family constituted by the parties to the marriage and any children of the marriage, including any contribution made in the capacity of homemaker or parent.' The 'homemaker contribution' is a shorthand for this.
The issue of how to value the homemaker contribution does not only arise under the Family Law Act. It is also an issue in the interpretation of state and territory laws concerned with de facto relationships and close personal relationships which, to this extent at least, mirror the approach adopted in s 79(4) of the Family Law Act. As a result of an agreement reached at the Standing Committee of Attorneys-General in November 2002, it is likely there will be a reference of powers from the States over the property of non-married couples, although the present Federal Government is only prepared to legislate in respect of heterosexual couples.[1] If, as is expected, non-married couples are brought under the framework of Part VIII of the Family Law Act, then the issue of quantifying the homemaker contribution will have an even greater reach.[2]
The homemaker contribution should not be understood only in terms of the pure role-divided relationship so common in older generations. In pure role-divided relationships, women devoted themselves to the care of the home and family, and also frequently did a great variety of unpaid work outside the home, such as involvement in schools, charitable organisations, and community groups. The withdrawal from workforce participation occurred usually just prior to the birth of the first child but sometimes well before then.
Pure role–divided marriages still exist, but the patterns of life for the great majority of mothers now is one in which the care of home and children is combined with workforce participation, with women moving in and out of part-time or full-time work at different stages of their lives, and their children's lives.[3] However, the homemaker contribution is no less important and significant in terms of property alteration on relationship breakdown, for the common pattern remains for women and men as parents to make differential life-course investments, with fathers' primary investment being in the market-place of career or self-employed business, while women's life investments are more diversified, and include a major orientation towards the care of children.[4]
Such specialisation may be an optimal arrangement if the marriage lasts, or even lasts for a significant period. The mother's specialisation in caring for the daily needs of the family represents an indirect investment in the earning capacity of the primary wage-earner, and his success in the workplace is to some extent their success as a partnership. Once the children reach an age at which they are more independent, the mother can, and usually does, alter the pattern of her investments and takes a greater role in paid work. But if the relationship breaks down, then both lose out on their investments. For fathers, that loss is typically a loss of proximity to children,[5] for agreed child-rearing arrangements following separation still predominantly leave mothers as the primary caretakers. For women, the lost investment is in her partner's long-term earning capacity, since her specialisation in child-rearing has been an investment in his career success or the development of his business, assuming that he is in an occupation or business with a growth trajectory. None of this is intrinsically gender-specific. The roles can be reversed, and occasionally they are.
Mary Ann Glendon has argued that mothers bear a 'triple burden'. There is not only the double burden of combining workforce participation with carrying the major role in domestic work, but also an additional burden associated with the economic risk if the relationship breaks down.[6] This triple burden provides the context in which we need to consider what is commonly termed the 'homemaker contribution'.
It might be thought that after 25 years of decision-making on the Family Law Act, the jurisprudence of how to evaluate homemaker contributions in comparison to other kinds of contributions would be fairly well settled. In reality, the reverse is the case. As this article will seek to demonstrate, the jurisprudence of family property law has become more and more confused. The central problem is that the Full Court is now assessing what it calls 'contributions' in a way which bears little relationship to the original meaning when the Family Law Act was first enacted, and without any coherent conceptual framework. The consequence is that property is being divided in some cases in a manner that Parliament never intended and has not since authorised.
The confusion is not evident in most cases. Where the assets have been built up by the efforts of the parties during the course of their relationship, courts readily reach a conclusion that there has been equality of contribution,[7] with the uncertainty resting in the assessment of the s 75(2) factors. This aspect of the law is fairly well settled.[8] However, where the Court has to decide how the homemaker contribution relates to assets acquired before marriage,[9] acquired in the course of the marriage by inheritance,[10] or acquired after separation,[11] then, as Professor John Dewar has observed,[12] there are now two completely different approaches. The two bodies of case law seem to exist side by side in the jurisprudence of the Family Court like estranged spouses who will not talk to one another or acknowledge each other's presence. As a consequence, decisions of the Full Court in these areas are impossible to reconcile with each other in terms either of approach or outcome.
It is timely, therefore, to engage in a fundamental re-evaluation of what we mean by the homemaker contribution, how to quantify it, and what its place ought to be in terms of achieving gender equity in the outcomes of decision-making under s 79. This article proceeds by examining first the nature of the principles needed for a coherent law of property division, drawing a distinction between principles of justification and principles of quantification. It then examines, through a comparison between home-sharers, childless couples and parents, what the relevance ought to be of the homemaker contribution for property division under these different circumstances. It is argued that the homemaker contribution is not about housework and childcare but about ensuring that a spouse is not disadvantaged by role specialisation during the course of a marriage.
The article next explores what the homemaker contribution meant when the Family Law Act was first enacted, why the law took the form it did and how this yielded both a principle of justification and reasonably coherent principles of quantification. The article goes on to examine the wrong turnings which have since been taken, with courts purporting to place a value on homemaker contributions in the abstract without any basis of quantification or point of comparison. These wrong turnings are explored through comparing the two different approaches which have emerged to the quantification of the homemaker contribution in the context of pre-marital property, inheritances, damages awards and property acquired after separation. The first approach is the 'nexus approach'. This looks for a relationship between the claimed contribution and the property and financial circumstances of the parties at the time of the hearing, and determines the outcome based upon the extent of that nexus. The other approach involves treating all contributions as being matters to weigh in the balance in the exercise of the Court's discretion. This I will call the 'balancing approach'. It involves consideration of a much greater range of factors than is the case for the nexus approach. I argue that the balancing approach cannot be justified as a valid interpretation of the intention of Parliament in enacting s 79 and that it is incapable of yielding any coherent principles of quantification.
Finally, the article offers a new interpretation of the role which the homemaker contribution should play in the division of property on relationship breakdown, and explains how this can yield coherent principles of quantification. For many years, there have been arguments that the homemaker contribution is systematically undervalued,[13] although these arguments have tended to be based on questionable generalisations from the cases involving 'business assets' of substantial value. The interpretation of the role of the homemaker contribution offered in this article is sympathetic to feminist concerns about the need for adequate recognition of the homemaker contribution, but at the same time it offers a new approach which seeks to look at the issue in a different way from asking whether unwaged domestic work is 'undervalued'. This new approach involves two distinct considerations of the homemaker contribution in the overall framework of decision-making under s 79. The first is to consider how homemaker contributions should be rewarded. The second is to consider how they should be compensated.
Section 79 of the Family Law Act gives to courts exercising jurisdiction under that Act a very wide discretion to alter the interests of the parties to a marriage in their respective property as an outcome of marriage breakdown.[14] In exercising its discretion, the court must take into account a range of factors which are laid down in that section and in s 75(2). In all, there are 22 different factors for the court to consider. The Act does not state whether any factors listed in s 79(4) or s 75(2) should be given greater priority than other factors.[15]
The width of the jurisdiction of the Court under s 79 of the Family Law Act arises from two factors. First, the Court has jurisdiction over all the property of the parties whatever the origin of that property and the timing of its acquisition. This includes not only property acquired before the relationship began or received subsequently by inheritance, but also property acquired after the separation.[16] Secondly, there are few limitations of principle or purpose on the face of the Act which constrain the interpretation of the factors listed in s 75(2). In their original context in s 75(2), those factors are limited by their context in the award of spousal maintenance, which requires the applicant to demonstrate a threshold of financial need. In the context of the s 79 discretion, however, no such limitation applies. Nor is the power to adjust the shares of the parties constrained by a goal of meeting the future needs of the parties or the children. Nor is the application of the s 75(2) factors collectively governed by any other principle such as the need to compensate a spouse for the economic effects of the role division in the marriage.[17] The Act gives a myriad of factors to consider, but no indication of the desirable outcome to be achieved as a consequence of that consideration.[18]
There is no other family property legislation in the Western world which is both so expansive in its scope and yet so vague about its purposes. Despite the inadequacies of the Act, it ought to be possible for the Family Court to develop a body of principle which offers a clear conceptual framework based upon a readily ascertainable rationale for the alteration of property interests between couples who formerly were married. The Full Court has indicated that it should lay down principles and guidelines, in order to avoid 'the appearance or actuality of a wilderness of single instances and at least the appearance of arbitrary and capricious adjudication'.[19]
In developing a principled approach to property division, there is a need to distinguish between principles of justification and principles of quantification. A principle of justification is one which either explains the rationale for an alteration of property interests or offers a reason for departing from a set norm. The familiar notion that marriage is a socioeconomic partnership is one such principle of justification.[20]
A principle of quantification is one that explains how the result, dividing the property of the parties, has been reached. Again, there are numerous principles of quantification in family property law. One is that a lottery win should be treated as being a contribution made by both the parties if it is acquired in the course of their cohabitation as a couple.[21] Another is that responsibility for losses ought to be shared, unless one party has acted deliberately, recklessly or negligently in diminishing the assets.[22]
Principles of quantification are necessary to avoid palm tree justice, and to ensure that the outcome is based upon a process of legal reasoning as opposed to arbitrary and capricious decision-making. In a discretionary jurisdiction, principles of quantification do not inexorably translate into specific percentages or even narrow ranges. However, they are important in providing an explanation for how the discretionary decision was reached, while principles of justification explain why the result has been reached. Principles of justification are thus the primary principles. Principles of quantification are secondary. They presuppose that property alteration is justified and they should be logically consequential upon, and the outworking of, those justifications.
Having principles of justification, together with principles of quantification, is the antithesis of a result-driven jurisprudence in which the Court appears to work from an intuitive sense of a fair result back to a justification of the outcome. Result-driven approaches to property division raise serious questions about the legitimacy of the process, for our legal system depends for its legitimacy on law rather than power. The Parliament has not given the courts the power to make any decision about property division on the authority of s 79. The Court must make a decision which involves a process of legal reasoning. As the Full Court has itself said, the task under s 79 must be 'seen to be a disciplined exercise against the background of principles, concepts and guidance provided by the Full Court'.[23]
And there lies the problem. For the homemaker contribution lacks now either a well-developed principle of justification which is consistently applied across the range of cases, or clear principles of quantification. The result is a serious level of confusion in the case law, with decisions seemingly being made as a result of anything but a disciplined exercise. Nor can one find in Full Court decisions a consistent body of 'principles, concepts and guidance'. It is necessary then, to go back to first principles, and to examine what it is about living together and having an intimate relationship which justifies the alteration of property interests. That significant property sharing consequences should flow from cohabitation and intimacy seems to be taken for granted. The Full Court of the Family Court has even indicated that expressions of practical care for the welfare of one's future husband or wife during years of close friendship preceding marriage are relevant to consider in the property division. This includes making coffee and attending social functions.[24] Furthermore, the Domestic Relationships Act 1994 in the ACT[25] allows for the court to alter the property rights of people in personal relationships who do not live together if certain criteria are met.[26] Without a coherent theory of family property law in Australia the next step could be damages for dating.
The assumption that property alteration should be a consequence of intimacy in the context of cohabitation (marital or otherwise) has gone remarkably unexamined in Australia. Even where property alteration is justified, as it very often is, the awards made sometimes seem to bear no relationship to any obvious principle of justification. So what are the proprietary consequences of love, and where does the homemaker contribution fit in as a justification for property alteration? Asking the question another way, what exactly is it about living together in an intimate relationship which may make it unjust to leave private law property rights intact?
There are five possible justifications for property alteration either alone or in combination, all of which represent valid justifications for property division in marriage, but not all of which necessarily apply to de facto couples. These are intention, contribution, reliance, partnership and need.[27] Intention issues arise when the parties' clear enough intentions with regard to the ownership of the property are not reflected in the legal title. Contribution issues arise where the ownership of the property does not reflect fairly the contributions made by the other party which have a nexus with the acquisition, maintenance or improvement of the property. Reliance issues arise from such factors as the sacrifices that (mostly) women make by adjusting their workforce participation to care for the home and family on an assumption about the stability and permanence of the relationship.[28] Partnership as a justification approaches the issue of property alteration in terms of the commitment to equality and to sharing implicit in the notion of marriage as a joining of lives.[29] Need as a justification flows from the commitment of lifelong mutual support which has traditionally been inherent in the marital relationship.[30] This justification is different from reliance because it assumes no causal link between the marriage and the reason for the need. With modern no-fault approaches to relationship breakdown, this is the justification for property alteration which is most in need of careful re-examination.
The relevance of the homemaker contribution to these justifications for property alteration may be illuminated by considering the case of two young people who live together in a house, and then considering what difference intimacy, marriage and parenthood ought to make.
Kim and Alex are a young couple who meet in their mid-20s. In each of the following scenarios, Kim and Alex live together for a period of five years and then move into separate households. Kim and Alex may be male or female, and a same-sex or opposite sex couple. Until they become parents, Kim and Alex both work full-time, and they both contribute equally to the outgoings of the household. Kim, who is a very talented and successful financier, earns a great deal more than Alex, who is a social worker.
If Kim and Alex were just friends who shared a house, then we would probably be inclined to say that their cohabitation ought to have no wealth-transferring consequences. If Kim (or, for example, Kim's parents) owned the house, whether subject to a mortgage or otherwise, then Alex's place as a home-sharer would most likely be a contractual one with a set rental being payable. Five years is a reasonable length of time, of course, but it does not change the fundamentals of the situation. Kim and Alex are autonomous and self-sufficient adults, individuals who live in community together for a period of time. They owe limited obligations to one another. Occasionally, there may be a case for restitutionary principles to be applied, but such circumstances would be rare and only likely to arise in the absence of a rental arrangement or where the unequal contributions of the parties to the household expenses raise issues of unjust enrichment.
In a home sharing arrangement, which is very common among students and other young people, there is home-making but no emotional commitment, intimacy or partnership of lives, nor any vulnerability or need for which the other home-sharer has accepted responsibility, or ought to take responsibility. Consequently, none of the justifications for property sharing arise.
The position may be different where relatives (for example, two sisters) share a house together on something other than a contractual basis. Here there is greater scope for the invocation of equitable principles. Even still, a restitutionary approach based on financial contributions,[31] or detrimental reliance on a common intention,[32] ought to be all that is required or justifiable.
So what difference should it make to the property division if, after a year or so in the house together, they develop a bond of intimacy and begin to share a bedroom as well as a kitchen? It may be difficult to discern at what point their relationship could be described as a de facto relationship, since relationships develop over time. In the lives of many couples, there is not a binary divide between the state of being single and the state of being in a de facto relationship. There may well be markers of transition over a period of time. Furthermore, we should not impose upon their relationship assumptions based upon a normative understanding of marriage or other lifelong partnership which they have not adopted for themselves. Kim and Alex belong to a generation that lives life in the present tense to a greater extent than previous generations.[33]
Whether or not there is a time when we can say clearly that their relationship commenced, there may come a time by which it is clear that they should be considered a de facto couple. Once this becomes clear enough, then their intimacy may well matter for a range of legal reasons. For example, if Alex is sick, treating them as a family means recognising the obligations which arise from emotional commitment to one another. This means that there would be a policy justification in treating Kim as entitled to the same entitlements to sick leave and compassionate leave as would be the case with other close caring relationships which are recognised by employers in such situations. Their intimacy also provides a policy justification for treating them as a 'family' for health insurance and other such purposes, since their intimacy is likely to involve them in being a single economic unit to a greater extent than if they were merely house-sharers. Indeed, it is likely that any rental arrangement which previously existed when they were only home-sharers would give way to some more informal basis for cost-sharing. Governments may also choose to recognise their intimacy as a justification for treating them as in a quasi-conjugal relationship when calculating means-tested welfare benefits.
However it is not clear why, if their relationship breaks down after five years, the consequences for property alteration are any greater than if they were home-sharers who did not have a contractual relationship. Why exactly should sexual intimacy have wealth-transferring consequences when home-sharing does not? Certainly, there may be a greater degree of pooling of resources than if they were home-sharers, but that is still an issue about financial contributions, and normal restitutionary principles can be applied within a statutory framework. There may also be sharing intentions, such as a commitment to partnership, which are not reflected in the legal title to the property. Principles derived from the law of equitable estoppel may be brought into play here, examining the consequences of one person's detrimental reliance on their common intention or the other's representation.
Beyond this, it is difficult to see what difference intimacy makes in the modern world of committed childless relationships which are based upon a high degree of personal autonomy, and emotional but not financial interdependence in a context where both parties to the relationship are in the full-time workforce and pursuing their own careers. Intimacy for a period of time which comes to an end does not require that Kim pay Alex for the choice to become a social worker other than through the taxation system. In the same way, Alex should not have to share with Kim property owned prior to the inception of their relationship or acquired during the relationship by inheritance. There is simply no policy justification for requiring such a wealth transfer. Nor, where both parties retain their workforce participation, do issues of reliance, dependency or vulnerability as a consequence of the relationship arise. It is also not at all clear why one person should be responsible for the other's support on the breakdown of the relationship if the need which has arisen has no connection to that relationship.
Arguably, the homemaker contribution is also an irrelevancy, for this is not a role-divided relationship, so there is no reliance, dependency or lost opportunity cost associated with the allocation of housework responsibilities. This is not to suggest that housework has no economic value if purchased in the marketplace. Of course it has. But that seems scarcely relevant if in fact it was not purchased in the marketplace with the cost borne disproportionately by one or other party. All sorts of things which people do for themselves, each other or their children could be purchased in the marketplace by other service-providers. Indeed, it is difficult to think of a household activity or relational interaction which has not been commodified in some form or another, however inadequate such substitutes might sometimes be.
There are very practical reasons why we should not understand the homemaker contribution in terms of the division of housework responsibilities. If we say that property alteration should depend at least in part on the allocation of household responsibilities in a relationship even though no financial gains to one or detriments to the other have flowed from that allocation of responsibilities, then we invite courts to engage in an examination of the minutiae of people's lives over an extended period of time based mainly on their conflicting recollections of such minutiae. Do we really want to be concerned with whether Kim vacuumed or dusted more than Alex, or whether Alex cleaned the bathroom more frequently than Kim, or any other mundane details of domesticity, if no actual financial consequences can be attributed to the allocation of roles?
If the courts were to get involved in adjudicating on issues about who did more of the vacuuming, cleaning, cooking, gardening and other domestic tasks in a two-career household, as well as the less tangible and physical tasks involved in making relationships work and keeping households running, the evidential problems would be considerable and the costs of gathering it prohibitive. There is no point paying lawyers thousands of dollars to argue about Ajax. And it is difficult to see how it could have any logical bearing on how the property of the parties is divided on separation if there is no nexus to financial gains or sacrifices.
To say this is not at all to suggest that the division of household tasks between Kim and Alex is unimportant, or that their genders are unimportant.[34] However, if they are both participating full-time in the workforce, then allocation of household responsibilities has no discernible economic consequences. It is a relational issue, not a financial one.[35]
So what difference does marriage make to the division of the property? Is there any difference between a childless, two-career married couple and a childless, two-career cohabiting couple in a five year relationship?
Well yes, there is. Although it is fashionable in legal circles to think of marriage and cohabitation as being functionally equivalent for the purposes of property division,[36] the sociological evidence is in the other direction. The work of Janeen Baxter and colleagues in Australia demonstrates a significant difference between marriage and heterosexual cohabitation in terms of role division and specialisation irrespective of the presence of children.[37] Married men work longer hours than those in cohabiting relationships after controlling for age, education and the presence of children, and married women engage in fewer hours of paid work than cohabiting women. Conversely, married women spend approximately six hours per week more time in housework than women in de facto relationships, while cohabiting men do a substantially greater proportion of indoor household tasks than married men. Controlling again for age, education and the presence of children, there was almost no difference between the hours that single and cohabiting women worked.
Legal marriage, then, does appear to be quite strongly associated with role differentiation, and marriage and cohabitation are not, in this respect, functionally equivalent. This is significant for property division, for even in a childless marriage, one spouse may have already altered his or her patterns of workforce participation in reliance upon the security of the relationship, thereby investing to a greater extent than the other in looking after the household.
Furthermore, the justifications for property alteration based upon intention and partnership both lead to the conclusion that the default rule should be one of equal division of the acquests of the marital relationship, irrespective of legal title or their proportionate financial contributions. This is arguably consistent with their intentions as expressed in their commitment to marriage. Certainly, research conducted in the 1970s in a number of jurisdictions demonstrated that the great majority of married couples think of their property as jointly owned. For example, research conducted on behalf of the Law Commission for England and Wales found that 91 per cent of husbands and 94 per cent of wives thought that the matrimonial home and contents should be treated in law as jointly owned.[38] Similar results have been found in Scotland,[39] Alberta[40] and the United States.[41]
These attitudes do not seem to be replicated in cohabiting relationships, although further research on these issues is needed. In Australia, Glezer, for example, reported in 1991 that only 66 per cent of cohabitees bought things jointly and only 46 per cent had a joint bank account. There were also significant differences between cohabitees who had previously been married and those who had not, with less sharing occurring in post-divorce cohabitation. 51 per cent of men and 43 per cent of women who had been in cohabiting relationships considered that cohabitation involves less commitment than marriage.[42] On this evidence, the case for having the same default rules of property sharing for married and cohabiting couples without children is weak.
Laws in the states and territories which apply a marriage paradigm to childless cohabiting relationships[43] are therefore difficult to justify as a matter of principle.[44] The default rule for childless non-marital relationships ought to be the maintenance of separate property entitlements subject to such adjustments as are required by restitutionary principles on the basis of financial or in-kind contributions. Such an approach could leave open a case to be made that there was in fact role specialisation within the relationship which justifies taking a partnership approach to the division of the acquests of the relationship. A partnership approach would justify sharing of those acquests irrespective of proportionate financial contributions, as it does in marriages.
What difference then does parenthood make? Usually, but not always, it has major implications for the financial position on separation of the primary caregiver of those children and therefore may justify profound wealth-transferring consequences. This does not depend at all on marital status. Family property law in Australia currently depends upon marital status, with married couples being governed by the Family Law Act and de facto couples by state law. The real differentiation in principles ought to be between parents and non-parents.
If Kim and Alex have a child, or they provide the primary care together for the child of either Alex or Kim, then their lives are entwined for the long term by their status as parents. The justification for property alteration is very much greater. We are entitled to treat theirs as a socioeconomic partnership with wealth-transferring consequences whether or not this was their intention, and whether or not they made a commitment to partnership, because parenthood has effected a change in their relationship which requires limitations to be placed upon their assertion of individualised financial autonomy.
For most couples, looking after children requires a certain amount of specialisation in the relationship, with men focusing on paid work and women being orientated towards the care of the children, at least in the early years of the children's lives. There is argument among sociologists about whether these contributions are approximately equal to one another in terms of time commitment.[45] What is beyond question is that this orientation towards child-rearing has long-term economic implications for women, primarily as a consequence of interrupted workforce participation.[46] It is in parenthood, then, rather than in childless relationships, that the homemaker contribution is of such great importance. It justifies in principle treating the mother's efforts as being equal to the father's, although the father may make a much larger financial contribution over the life of the relationship. It also justifies addressing the economic impact of withdrawal from workforce participation which is a major financial consequence of giving priority to the needs of home and family.
The partnership of parenthood continues to some extent after separation. The parents have shared responsibilities to a child and therefore the parent who does not have primary care responsibility has certain financial obligations to the primary caregiver which survive the dissolution of their relationship. The primary caregiver's financial need is a justification for property or income transfers from the other parent if he or she has the capacity to pay, and of course, they must also share fairly the continuing costs of raising their child. If Alex is the primary caregiver to the child of their relationship after separation, then Kim has a responsibility to support Alex, not because of a responsibility to support Alex's choice to be a social worker but because they have chosen together to become parents and by agreement, acquiescence or judicial decision, Alex is the primary caregiver. Separation therefore changes the financial partnership of parents whereas it ends the partnership of childless couples.
The analysis of Alex and Kim's relationship looks at what relevance cohabitation and marriage ought to have to the division of property in terms of justifying the sharing of property which stands in the name of one or other of the partners. It challenges the popular notion that just because a couple live together, that justifies significant wealth transfers from one to another. It is parenthood, not marriage or cohabitation per se, which justifies significant wealth transfers between people following the breakdown of intimate relationships.
What then are the implications of this analysis for understanding the meaning which the homemaker contribution ought to have in terms of the division of property?
The analysis of why Kim and Alex's relationship justifies property division suggests that we have misunderstood the homemaker contribution if we think of it in terms of household tasks. The justification for examining the homemaker contribution in property division is not in the household work that has been performed but the sacrifices made and the opportunities forgone which have an economic impact. This impact arises from role differentiation and specialisation within the marital partnership. The performance of household tasks does not itself have a financial impact which ought to be compensated by property transfers.
While some feminists might well want the other partner to pay for household services where there has not been a reasonable degree of equality in dividing up household tasks, the difficulties and costs of such a curial inquiry would far outweigh any benefits which might accrue to women. People in intimate relationships confer benefits on one another in all sorts of different ways, not merely in contributing to running the household but also in doing all sorts of other things for one another. It would be abhorrent if the law of property division required people retrospectively to count scores in such matters.
This point about the meaning of the homemaker contribution is significant because the practice of family property law often involves a focus on what people have done in the marriage, as if what is important in family property division is to compare the parties' efforts in their respective roles. Perhaps this is inevitable as long as the High Court decision in Mallet v Mallet[47] survives. Nonetheless, this cataloguing of contributions is forensically very expensive. It often leads to affidavits which are as lengthy as they are dull, and correspondingly lengthy judgments concerned primarily with factual evaluation. Such exploration of the detail of the way in which one or both parties have cared for the home and the family or contributed in other ways ought to be irrelevant to the assessment of the homemaker contribution if its significance is properly understood. The reinterpretation of the homemaker contribution as being about tasks, at least to the extent that judges feel constrained to allow extensive cross-examination about domestic trivia, adds significant costs to the process of litigation.
Whenever people share accommodation for a period of time, whether they are brothers, sisters, friends or fellow students, issues about the division of common household duties arise. That division may be more or less fair, more or less egalitarian, more or less gendered. It matters not. In no country in the world does title to property rest upon who did which household tasks on a day-to-day basis in a home-sharing arrangement.[48]
For the same reasons it is difficult to see what relevance the division of household tasks has to the property division of a two-career childless couple. Where there are no children and neither party has significantly sacrificed workforce participation or career opportunities for the other, then justice can be done in property division in individual cases without reference to the homemaker contribution.
For the reasons given, there is a strong case for a default rule of equality in the division of the property acquired in the course of a childless marriage, as opposed to a childless cohabiting relationship, but there will rarely be justification for altering legal title beyond this.[49] Where the relationship has not itself had any financial impact on the circumstances of a childless married couple, the justification for any alteration of legal title beyond the equal division of the acquests gained during the relationship by the efforts of the parties needs to be clearly explained. This has implications for how the law deals with pre-marriage property, inheritances, damages awards and assets acquired after separation. As will be seen, such clear explanations are rather lacking in the modern law of family property in Australia.
In the most wealthy families, some of the work of caring for a house and garden may well be performed by paid staff such as cleaners and gardeners. The work of child care may even be assisted by a nanny or au pair. The above analysis explains why it is that this does not seem to affect the evaluation of the homemaker contribution in the Family Court's jurisprudence. For example, Nygh J held in Aroney and Aroney[50] that having even extensive domestic assistance and doing little physical work around the house does not disqualify one from being a homemaker.
This is hard to understand if the purpose of evaluating the homemaker contribution is to value the unwaged domestic work that women do in caring for homes and children, since it makes the extent of the actual performance of those tasks irrelevant. Yet this is perfectly understandable if the focus of attention is on the fact that the wife has withdrawn from workforce participation rather than that she has cleaned the bathroom. It matters not the extent of her contribution as a homemaker and parent. What matters is that this was the role she played within the marriage, and it ought to be assumed that this reflected their choices and decisions as a couple.
The extent of the homemaker contribution is irrelevant if it is the role differentiation which is of economic significance. This is consistent with the Family Court's jurisprudence, for in the case law it does not appear that a parent of four children makes any greater contribution than the parent of one. Of course, a mother of four children may cumulatively spend rather more years outside the workforce or engaging in part-time work than a mother of one. But it is the withdrawal from workforce participation, and the impact that has on earning capacity which is the significant issue, not the quantity of homemaking contributions.
The quality of contributions, like their quantity, is irrelevant, for what matters financially is the role division in the marriage not the role performance. It is not important financially whether Alex was a particularly able primary caregiver to the child of the marriage, or whether he or she was a wonderful homemaker in the years that they were together. What matters is that a court should respect their choices of role division and treat them as partners in combining their efforts for the marriage partnership.
Of course, Wilson J thought otherwise in Mallet v Mallet.[51] In an oft-quoted passage, he said:[52]
The contribution must be assessed, not in any merely token way, but in terms of its true worth to the building up of the assets. However, equality will be the measure, other things being equal, only if the quality of the respective contributions of husband and wife, each judged by reference to their own sphere, are equal. The quality of the contribution made by a wife as homemaker or parent may vary enormously, from the inadequate to the adequate to the exceptionally good. She may be an admirable housewife in every way or she may fulfil little more than the minimum requirements. Similarly, the contribution of the breadwinner may vary enormously and deserves to be evaluated in comparison with that of the other party. It follows that it cannot be said of every case where the parties reside together that equal value must be attributed to the contribution of each. That will be appropriate only to the extent that the respective contributions of the parties are each made to an equivalent degree.
Wilson J did not explain how being less than admirable as a housewife could have an impact on the assessment of the couple's respective contributions in building up the assets. The quality of a person's vacuuming, cooking or dusting over the course of a marriage is not really ascertainable through curial inquiry. Even if it were, it is difficult to see how it could be of relevance to the parties' socioeconomic partnership unless those deficiencies had resulted in the necessity for additional expenditure on employing others to fulfil certain domestic functions. Nor is it clear what relevance to the inquiry on the division of the couple's assets there would be from an evaluation of a spouse's qualities as a breadwinner. He or she may be a very conscientious and able employee, and that might be reflected in promotions. Or he or she may have been less than conscientious, or not particularly able, which may have been reflected in a lack of career advancement. Neither is to the point. The assets which the Court is called upon to divide represent, in part or in their entirety, what that person in fact earned. If he or she wasted assets, that is another matter distinct from the question of whether within the limits of his or her ability, character and circumstances, he or she could have earned more than was in fact the case.
Treating marriage as a partnership means that the value of the homemaker contribution is derived entirely from comparison with the earnings of the other party to the relationship rather than from its intrinsic merits or value in the marketplace. This means in turn that the contribution as a homemaker and parent of a woman in a relationship with few assets is worth many times less than the contribution of a woman in a relationship where there is significant wealth, even though the former woman’s contributions may have been more extensive, and her life in general much more arduous. This is another reason why we measure neither the extent of the homemaker contribution nor its quality, for the ultimate assessment of the homemaker contribution in dollar terms is dependent on the extent of their combined financial success as a couple.
It follows that arguments about 'undervaluing' the homemaker contribution are, in one sense, rather strange. The courts often place a very great value on the homemaker contribution, but that value is derived from the partner's earnings, not the economic value of the household services.
Equal division of the fruits of the marriage partnership gives to women's efforts an equal value to men's, but that alone is insufficient. The homemaker contribution may be adequately rewarded but inadequately compensated. This is for the reasons given by Fogarty J in Waters and Jurek:[53]
In most marriages, there is a division of roles, duties and responsibilities between the parties. As part of their union, the parties choose to live in a way which will advance their interests — as individuals and as a partnership...
When the marriage ends, especially where that marriage has been a long one, one cannot separate the parties as individuals from the people they became in the context of the marriage relationship, and the allocation of roles, duties and responsibilities which it entailed. In some cases, an adjustment is called for because it would be unjust for the roles and activities of a party, which were recognized until separation, and which largely determined or influenced the personal development of that party and the arrangements between the parties, to suddenly count for little, while those of the other party, which were of equal significance during the marriage, to now have a far greater financial impact outside the home—in circumstances where it was the joint decision of the parties that that be the way in which they would conduct their affairs, and where that decision was made in the expectation of the relationship continuing.
Thus, the impact of the decision to focus on the needs of the home and family at the expense of full-time workforce participation may have financial ramifications for women which long outlive the termination of the relationship. Heather Joshi summarises the opportunity costs involved in withdrawing from workforce participation to care for young children:[54]
An illustrative mother takes a break from paid work altogether while children are under 5, and works part-time while they are at school. Earnings are forgone for three reasons: absence from the labour market; reduced hours of work; and lower rates of pay per hour. There are, in turn, three factors lowering rates of pay: loss of experience or seniority; lower rates in part-time jobs than full-time jobs, and occupational downgrading on labour market re-entry. The last two factors often coincide, as it has been rare for part-time work to be offered at anything other than the lowest grades, and yet it is often the only form of employment feasible for mothers with no access to childcare outside school hours. Lost seniority, lost experience and lost training opportunities have a permanent though diminishing effect on a mother's earning potential.
A law that provided for the equal division of the assets acquired in the course of the marriage without any further adjustment to compensate for the homemaker contribution would not lead to gender equity at all in cases where the assets acquired were relatively modest. Conversely, where the marriage partnership is very successful in a financial sense, then an approach of equal sharing of the fruits of that partnership may suffice not only to reward the homemaker contribution but to compensate for it.
This use of the homemaker contribution to justify compensatory property transfers is entirely undeveloped in the Family Court's jurisprudence. The homemaker contribution is understood as being about the past rather than the future, with the forward looking dimensions of the s 79 exercise being governed by the s 75(2) factors. Yet, as I will argue, it is not at all inconsistent with the provisions that Parliament has enacted to consider the homemaker contribution as an aspect of the s 75(2) exercise without double-counting.
On analysis, then, the homemaker contribution is less relevant for what homemakers do than for what they do not do instead. It is when a person withdraws from, diminishes or restructures workforce participation in order to concentrate efforts on looking after the home and family that the property implications arise. Almost invariably, it is women who do this, and usually, the reason for so doing is to care for children.
However, it is not a sufficient recognition of the homemaker contribution in all cases that it should be rewarded by treating that contribution as being of an equivalent value to the income earned by the primary wage-earner. That is a necessary, but not sufficient recognition of the homemaking role. In the s 75(2) stage of the process, the homemaker contribution needs to be assessed again in terms of compensation rather than reward. In this sense, s 79(4)(c) has relevance to a consideration of the present and future circumstances of the parties.
So if that is the meaning and significance of the homemaker contribution for property division in theory, what exactly did the legislature mean by the homemaker contribution back in 1975? Why was it included in the scheme of s 79 and what principles of justification and quantification emerge from the scheme of the legislation?
In considering this issue, it is necessary to consider the overall scheme of the statute in the light of the discernible intentions of Parliament when the Family Law Act was passed. If one looks only at each individual clause, then s 79, read together with s 75(2), could support a vast array of different approaches to property division. To look only at the individual clauses is like listening only to the individual notes of music and not discerning the tune. One must see the connections between the provisions and discern the philosophy which underlies the overall scheme.
When the Family Law Act was drafted, the requirement to assess contributions meant that the Court was asked to apportion responsibility in a holistic way for the asset pool which stood to be divided on the marriage breakdown. The task given to the Court was to divide the fruits of the marriage partnership according to an assessment of the parties' contributions to those financial fruits.
Why did the Family Law Act take the curious form it did? At the time that the Family Law Act was being drafted, the prevailing approach involved the application of the law of resulting and constructive trusts. The House of Lords reasoned in Pettitt v Pettitt[55] and Gissing v Gissing[56] that a common intention to share ownership of the property could be implied from the conduct of the parties in making contributions to the property. Decisions of the Court of Appeal subsequently developed the notion of an indirect contribution. It was held that one could contribute 'indirectly' to the acquisition of property by bearing certain expenses which relieved the other spouse to pay the mortgage instalments.[57] In this way the contributions were 'referable' to the purchase price of the property. The doctrine was less than clear as an exposition of equitable principle. However, it was commonly understood as an extension of the law of resulting trusts.[58]
The problem with the indirect contribution approach was that there was no place for women to make a contribution referable to the purchase price of the property by caring for the home and family. Lord Denning MR sought to argue that the court could impose a constructive trust in the interests of fairness and justice taking into account a range of contributions, including caring for the household and children.[59] However, his views did not attract support, and after his retirement, the English courts re-established their own version of orthodoxy in a way which privileged financial contributions.[60]
It is in the light of this that the structure of s 79 of the Family Law Act makes sense. When s 79 was originally enacted, there were just two clauses associated with the assessment of contributions. The basic concept expressed in clause (a) was then broadly the same as today.[61] Clause (b) referred to direct or indirect contributions (other than financial contributions) to the acquisition, maintenance or improvement of property including as a homemaker and parent. This drafting reflected the views of Lord Denning MR.[62] In 1983, the Family Law Amendment Act altered s 79 to remove the artificiality of the requirement to assess homemaker contributions as referable to particular property. The reference to contributions as a homemaker and parent was deleted from subsection (b) of the Act and made a separate factor of its own (the present subsection (c)).
It is probable that there were other influences on the drafting of s 79 as well. While the notion that a contribution as a homemaker and parent could be an indirect contribution to the acquisition, maintenance or improvement of property was a concept derived from the developing law of trusts, statutes in other jurisdictions also referred to the homemaker contribution. Section 25(2)(f) of the Matrimonial Causes Act 1973 (Eng) c 18 in England and Wales directed courts to consider the contributions of each of the parties to the welfare of the family, 'including any contribution by looking after the home or caring for the family'. In the United States, Alternative B of the influential Uniform Marriage and Divorce Act, approved by the National Conference of Commissioners on Uniform State Laws, required judges to consider a number of factors, including 'the contribution of each spouse to acquisition of the marital property, including contribution of a spouse as homemaker.'[63] Nonetheless, the unique form that the original homemaker contribution clause took in s 79(4)(b) of the Family Law Act is best explained by the notion of indirect contributions in the law of trusts.
The assessment of contributions was only part of the process of dividing the property under s 79. The contribution sections do not stand alone in the Act. The legislature offered plenty of other principles within s 79(4) and s 75(2) for the Court to forge a jurisprudence which promotes gender equality. However, one of the problems in family property jurisprudence has been that as a matter of judicial interpretation rather than legislative enactment, the focus has been placed very largely on contributions with adjustments to the prima facie property division occurring as a result of considering the s 75(2) factors. This gave to the s 75(2) factors a marginal status in the jurisprudence of family property law, and they tended to be treated collectively as if each of these factors represented the same underlying rationale for property division.
Whatever the uncertainty in the detail of s 79 of the Family Law Act, the basic scheme of the section was clear enough. One must assess the parties' contributions to the asset pool taking account of homemaker contributions, and then consider a range of other factors which might affect the capacity of the parties to support themselves in the future. The purpose of assessing the homemaker contribution was to recognise its significance in the overall socioeconomic partnership, ensuring that women were not disadvantaged by their role specialisation. Parliament recognised that women's most substantial contribution to the marriage partnership may not be in terms of earnings from paid work. It was to be valued nonetheless as an indirect contribution to the acquisition, maintenance and improvement of property in the way understood by the family lawyers of the time.
The relationship between homemaker contributions and the acquisition, improvement and maintenance of property was well expressed by Sir Jocelyn Simon, President of the Probate, Divorce and Admiralty Division of the High Court in England, who explained in a speech that the cock can feather its nest because it does not have to spend most of its time sitting on it.[64] The homemaker contribution was therefore understood as having a relationship to the earnings of the other spouse because it freed that person to concentrate on earning activities. This was indeed the rationale offered as early as 1977 by Evatt CJ in her judgment in Rolfe and Rolfe:[65]
The purpose of s. 79(4)(b), in my opinion, is to ensure just and equitable treatment of a wife who has not earned income during the marriage, but who has contributed as a homemaker and parent to the property. A husband and father is free to earn income, purchase property and pay off the mortgage so long as his wife assumes the responsibility for the home and the children. Because of that responsibility she may earn no income or have only small earnings, but provided she makes her contribution to the home and to the family the Act clearly intends that her contribution should be recognized not in a token way but in a substantial way. While the parties reside together, the one earning and the other fulfilling responsibilities in the home, there is no reason to attach greater value to the contribution of one than to that of the other. This is the way they arrange their affairs and the contribution of each should be given equal value.
This passage focuses attention on the pure role-divided relationship, but the general principle applies equally readily to any situation where a couple has specialised within the marital partnership.
Another fundamental methodological principle can be discerned from the form of the legislation in 1975, and that is the principle of judicial restraint in altering property interests. Australia did not embrace the notion of community property. Australia is a separate property regime.[66] In a separate property regime, marriage itself has no effect upon the ownership of the property of each spouse. Legal and equitable title prevail. Therefore, prior to the exercise of the Court's discretion under s 79, a spouse has no legal right, even of an inchoate kind, in property which belongs in law or in equity to the other spouse.[67] The property belonging to the parties to the marriage is not 'their' property. It is 'his' or 'hers' or 'theirs' depending on the state of legal and equitable entitlements. This is clear from the language of s 79(1).
The 1975 legislation contained a principle of judicial restraint in altering legal and equitable titles. Section 79(2) does not say that the Court should divide the property as it considers to be just and equitable. Rather, it states that the Court should not make any order for property division unless it considers it to be just and equitable.[68] Those are two entirely different propositions. The first suggests a very broad discretionary power governed only by the need to consider the factors set out in s 79(4). The second implies a starting point of respecting separate property entitlements subject to the need to alter the parties' interests in their property to the extent that it is just and equitable to do so. As Nygh J said in Aroney and Aroney,[69] s 79 is not concerned with the division of property but the alteration of existing rights. That means that on the breakdown of a marriage, the question of the shares to be allotted to each spouse is not at large.
The principle of judicial restraint, which remains in the Act unaltered from its form in 1975, is nowadays given little attention by the Family Court for the simple reason that it is consistently misread. To the extent that s 79(2) is referred to at all, it is usually understood now as the guiding principle of property division[70] rather than as a restraint upon the Court's otherwise very wide discretion. It is not usually necessary to refer to that principle of restraint, but it is appropriate to do so in relation to assets which do not represent the fruits of the marriage partnership, such as pre-marriage property or inheritances, for here the justification for property alteration ought to be very clearly articulated.
It is clear from this analysis that the homemaker contribution was understood in 1975 as requiring that the Court should recognise the significance of role differentiation and specialisation within the marriage partnership. This led to a basic principle of quantification, that one spouse should not be disadvantaged in the property division by taking on a role which has less financial rewards. The question which the Court was asked to determine under s 79 was a limited one: how to allocate proportionate responsibility for the pool of assets which represents the fruit of the marriage partnership, recognising the couple's different roles.
There is nothing in the Family Law Act to suggest that the homemaker contribution could be evaluated by means other than one of comparison with the corresponding efforts of the other party in the context of a role-divided marriage. And, as will be seen, the 1983 amendments to the Act did not in any way affect this fundamental proposition concerning the place of homemaker contributions in the jurisprudence of s 79.
It follows from this that the clear conceptual framework of family property division established in the years after 1975 did not require the Court to rake over the intimate details of domesticity in allocating property. Nor was there any place for wide-ranging inquiries into the conduct of the parties in their marital relationship except insofar as that conduct had financial consequences. To do otherwise would have been utterly incongruous in an enactment which had as its major reform purpose the elimination of judicial inquiries into fault in the marital relationship. Nor was there any place for assessing the merits of each spouse as human beings and marriage partners in a way unrelated, tangibly, to the evaluation of their socioeconomic partnership as husband and wife.
Quantifying the homemaker contribution in comparison with the efforts of the other spouse during the marriage partnership has never caused much difficulty to the Family Court, and in spite of the intervention of the High Court in Mallet v Mallet,[71] the principles are reasonably clear. For a while, controversy reigned about whether the wife's contribution should be equated with the husband's in cases where an entrepreneurial spouse had amassed significant business assets. That debate has now been confined to cases involving very great wealth, where there is a reluctance still among many judges to equate the homemaker contribution with that of the entrepreneur. These cases, rare as they are, offer some useful insights into the question of how the homemaker contribution should be valued.
The approach of the Family Court to the task of assessing the contributions of the parties to the asset pool required a clear conceptual differentiation between property acquired during the course of the marriage by the efforts of the parties, and property acquired other than by their joint efforts. In assessing the parties' contributions to property acquired during the course of the relationship, the Family Court early on developed clear principles of quantification. At least where the marriage had lasted more than for a short time, this approach dictated that the 'contributions' of the parties during the course of the marriage should be treated as being essentially equal whatever their respective roles. In Wardman and Hudson,[72] for example, the Full Court indicated that where property has been acquired jointly over a significant period of time then a proper starting point is that the property ought to be treated as jointly owned and ought in ordinary circumstances to be divided equally between them. A similar view was expressed in Potthoff and Potthoff.[73]
The High Court's decision in Mallet v Mallet[74] overruled this body of law to the extent that it had created a presumption that the contributions of the parties during the course of the marriage should be assessed as equal. However, Mallet did not preclude the Family Court from reaching a conclusion of equality in appropriate cases. After a while, the Family Court articulated the idea that while it was forbidden to have a starting point of equality there was no reason why equality of contribution during the course of the marriage should not be a conclusion in most cases. Principles of quantification were thereby restored. In In the Marriage of McLay,[75] the Full Court rejected the notion that this was inconsistent with the principles of Mallet.
There were exceptions to the general principle that contributions by the efforts of the parties during the course of the marriage should be treated as equal. In cases where wealth was accumulated through success in business, a different norm of quantification prevailed. Typically, the homemaker spouse was awarded about 30 per cent of the business assets.[76] These cases were almost invariably ones where the wealth was considerable (taking account of the purchasing power of the dollar at the date of decision). They were also the focus of much attention by scholars who argued, rightly in this respect, that there was a gender bias inherent in the approach of the Family Court to the assessment of contributions.[77]
The Full Court's decision in Ferraro and Ferraro in 1993[78] represented a major reconsideration of this line of authority. In this case, the Full Court reiterated the basic principle that the efforts of the parties during the course of the marriage should be treated as equal, but then went on to say that in evaluating the respective roles of the husband and wife, the Court could take account of performances with special features or involving special skills.[79]
The doctrine of special contributions, as it has come to be known, is controversial.[80] It finds no expression in the language of s 79 itself. However, it is best understood as the residual echo of Mallet within the jurisprudence of Australian family property law. The Family Court could not, consistently with Mallet, say that in all cases the contributions of the parties during the marriage should be considered as equal. The doctrine of special contribution is therefore a necessary exception to the usual practice of the Court in quantifying the homemaker contribution as being equal to the efforts of the other spouse in earning income during the course of the marriage.
The doctrine of special contributions is also defensible as a matter of principle. Even given a conceptual framework that treats marriage as a partnership in which the husband and wife may well have different roles, there are limits to the argument that the husband and wife should be deemed to have contributed equally to the financial success of the partnership by their efforts during the course of the marriage. It is a natural conclusion in the great majority of cases, perhaps almost all, but it cannot be applied as a rule in all cases under the existing legislation as interpreted by the High Court.
The difficulty arises where, on any realistic assessment, the assets which exist at the end of the marriage, albeit acquired during the course of it, disproportionately reflect the special talent of one of the parties. Would the brilliant painter have made so much money if he did not have his wife as his muse and inspiration?[81] Perhaps. Or perhaps not. But we can scarcely argue the proposition that they were equally responsible for his success. Would the highly successful entrepreneur have made such a large fortune without the loving support of a partner during their happier times? Perhaps not. But single people make fortunes too.
If the Court is going to assess contributions as the Act, interpreted by Mallet, requires then it has to make room for special talent, for it cannot sensibly maintain the proposition that luck and effort explain financial success or failure in all cases. The cases to which this kind of reasoning is most applicable are cases of special talent, not special effort. Where a fortune is acquired through the hard work of a breadwinning spouse, it is often the case that the entrepreneur's effort is matched by the hard work of the other spouse. Indeed when one party to a marriage spends most of his or her waking hours in activities associated with paid employment, it requires all the more of the other party to the marriage in dealing with the issues of home and family. The special talent cases cause difficulties in assessing contributions because it is more difficult to see the nexus between the marriage partnership and the assets.
This is also the conclusion that the Court of Appeal in England has reached. Retreating from its flirtation with the notion of special contributions in Cowan v Cowan,[82] the Court of Appeal in Lambert v Lambert[83] indicated that the doctrine should be confined to exceptional cases. Thorpe LJ suggested that such an exceptional case 'might more readily be found in the generating force behind the fortune rather than in the mere product itself.'[84] He gave as examples the creative artist, the superstar footballer and the inventive genius. Perhaps wisely, he did not suggest English cricketers as an example.
What about the future of the doctrine in Australia? The survival of the doctrine of special contributions has certainly been questioned by Nicholson CJ and Buckley J in Figgins and Figgins[85] but it is not clear from their judgment how they plan to reconcile the abolition of the doctrine with Mallet.
The doctrine of special contributions thus operates currently as an exception to the principle that contributions by the efforts of the parties during the course of the marriage should be given an equal value. This might be objectionable on a number of grounds, but it does not seem to be a valid objection that the homemaker contribution is thereby undervalued. The issue can best be understood in terms of returns upon the marital investment. The homemaker contribution could be said to be undervalued if its worth was not recognised at all by the law, or if it were given a value which, on any objective criteria, could be deemed inadequate. Neither is true of the homemaker contribution in the case of very wealthy families. The wife who has invested in the husband's earning capacity by taking on the homemaker role receives a considerable return on her investment even if her share of the assets on divorce is 'only' a few million dollars. There is also no issue of the homemaker contribution being under-compensated, for the rewards of investing in her husband's earning capacity more than compensates for the diminishing of her own. In such cases, the award is typically at a level which obviates the necessity for her ever to work again.
Defensible as the doctrine of special contributions is in terms of the current law as interpreted by the High Court, it sits uneasily with a societal commitment to gender equality. The solution, in the absence of a High Court decision to this effect, is to enact a principle that all the property acquired other than by gift or inheritance during the course of the marriage as well as during any period of cohabitation prior to marriage, should be divided equally.[86] This does not preclude the operation of other principles which would adjust the shares in favour of women whose contribution to the marriage partnership has involved a reduction in the extent of their workforce participation, or who otherwise have the ongoing care of children. It would merely be one principle of quantification, from which other principles of property alteration follow. However, the compelling arguments for statutory reform have not been assisted by arguments from the Court that the present system is essentially fine as it is.[87] A principle of equal division of the fruits of the marriage partnership might be perceived to work an injustice in a very small number of cases, such as cases involving extraordinary creative talent which results in financial success, but the benefits in reducing the considerable costs of litigation about the detail of contributions,[88] and the resulting level of certainty, would far outweigh these detriments. The equality principle is optimal in utilitarian terms, even if it undervalues genius.
A further reason for reform is that the doctrine of special contributions makes it difficult to develop any coherent principles of quantification. Once the need to recognise exceptional performance in acquiring the assets is acknowledged, then the extent to which the property division should favour the spouse who has been so conspicuously successful in acquiring wealth becomes only a matter of degree. However long the judgments, ultimately these cases are decided under palm trees.
Homemaker contributions can readily be quantified if they are compared with the complementary efforts of the other partner by giving to those contributions equal weight irrespective of the roles the partners have undertaken. In a great many marriages, this is all that is required in the assessment of contributions. Couples who begin with modest assets and build up assets over a period of time through their efforts and investments should be treated as having contributed equally to the fruits of their socioeconomic partnership, and, with the exception of the rare cases invoking successfully the notion of special contribution or skill, they are.[89]
How then, can one assess the homemaker contribution when few of the assets actually represent the fruit of the marriage partnership, or perhaps none at all? Can the homemaker contribution yield any claim in relation to assets acquired other than by the efforts of the parties during the course of the marriage? Two irreconcilable approaches have emerged.
In the early years of interpretation of the Family Law Act the Court established principles by which a homemaker contribution could justify a share of the property brought into the marriage, or acquired by inheritance, or even acquired after separation. While the Court did not adopt any formal distinction between marital property and other property[90] (for it all came under the Court's jurisdiction whatever the source), a clear differentiation was made between assets acquired through the efforts of the parties in a role-divided marriage and assets acquired otherwise than through the efforts of the parties in the course of their cohabitation. A jurisprudence was developed which explained, at least in general terms, how contributions made during the course of the marriage could have a nexus to assets acquired other than through the efforts of the parties during the marriage.
It is important to be clear about what is meant here by the word 'nexus'. It means that there must be some logical connection between the contribution claimed and the financial circumstances of the parties so as to justify apportioning some of that property on the basis of contribution. This is fully consistent with the scheme established by Parliament in 1975. Homemaker contributions, on the nexus approach, are not considered in the abstract as a matter of rewarding virtue. They are considered because in broad terms they have some connection with the financial circumstances of the parties, or either of them, as those circumstances exist at the time of hearing. If there is no nexus, then that property is still available for distribution based upon the s 75(2) factors, but not because the other spouse has made a contribution which needs to be recognised.
In relation to assets brought into the marriage (known as 'initial contributions') the Court developed what came to be known as the erosion principle.[91] The principle was established clearly in Lee Steere and Lee Steere[92] that the significance of initial contributions would diminish the longer the marriage lasted. The Full Court explained that these initial contributions were not eroded merely by the passage of time, but by the offsetting contribution of the other spouse during the course of the marriage.[93]
In a short marriage, the Court would not award to one spouse a share of property brought into the marriage by the other unless some connection could be established between the marital contribution and the value of the pre-marriage assets. In Quinn and Quinn,[94] for example, the wife brought a significant amount of property into the marriage. She had two children from an earlier marriage. They cohabited for just under two years. Chief Justice Evatt wrote that 'because the marriage was of such short duration, the asset in question to a large extent could be seen not as an asset accumulated from the efforts of the parties during the marriage but still largely an asset brought into the marriage by the wife.'[95] Quinn demonstrates this clear differentiation between property acquired through the efforts of the parties and property acquired otherwise than through those efforts.
In other cases, however, where the marriage lasted a rather longer time, and particularly where there was a significant homemaker contribution through the care of children, the courts did find that the initial contribution had eroded to some extent. In Lee Steere and Lee Steere,[96] for example, the wife's contribution over an 8-year marriage in which there were three children gave her a 20 per cent share of the farm which her husband had brought into the marriage by way of contribution with a further adjustment of nearly 5 per cent taking account of s 75(2) factors.
It was a weakness of the Court's treatment of the erosion principle that the principles of justice which underly it were not fully developed. The Court named a principle, but did not develop its jurisprudence. As a consequence, by the 1990s, a range of different, and sometimes conflicting explanations were being offered for the principle in Full Court judgments.[97]
The rationale for the erosion principle became particularly murky as a consequence of the Full Court decision in Bremner and Bremner.[98] The case is instructive for demonstrating how a principled approach to the quantification of the homemaker contribution in relation to a premarriage asset could be developed. In this case, the parties married in 1969 and separated in 1991. There were two children of the marriage. At the commencement of the marriage, the husband was the registered owner of a four acre block of unimproved land which had been acquired by him some nine years earlier for approximately £125. This was called the 'Marsden land'. At the time of the hearing some 25 years after the marriage, the land remained unimproved. Nor was the increase in value of the property the result of a windfall gain such as beneficial rezoning.[99] It was valued at $220,000 out of total assets of the parties of nearly $360,000, and thus represented 61 per cent of the value of the assets at the date of the hearing. The trial judge assessed the parties' contributions as equal and made no adjustment for s 75(2) factors. The property was divided equally between the parties, and this result was affirmed on appeal. It followed that this very valuable contribution of an asset owned prior to marriage had eroded to the point of carrying no weight in the assessment of contributions.
Despite the problems in articulating the rationale for the erosion principle generally, an explanation may be offered by application of the basic principle that marriage is a partnership, and this would also offer a methodology for the quantification of contributions in cases such as Bremner. Such a quantification would depend upon the nature of the property and the extent to which the resources acquired through the efforts of the parties during the course of the marriage have gone towards the maintenance or improvement of the premarital property through such expenditure as paying rates, insurance premiums, repairs and other contributions to the continuing ownership of the property. In Bremner, for example, principles of quantification based upon the idea of marriage as a partnership would examine the contributions of the marital partnership to the maintenance of that property. The land rates, the water rates and occasionally the cost of clearing weeds, were paid for from the family income. This money may be treated as a joint contribution to the maintenance of the land since payment of rates is necessary to ensure an unencumbered title. If the rates were not paid for a sufficient length of time, then the unpaid debt would become a charge on the land which could ultimately be enforced by sale.
The longer the marriage, the greater this kind of contribution necessarily will be. Calculating the extent of Mrs Bremner's contribution to the maintenance of Mr Bremner's unencumbered title could be done in a number of ways. A simple way is to work out the percentage which the rates and other outgoings in any given year bear to the overall value of the land, accumulating that contribution over 22 years and dividing it in two. Another, more complex way of calculating the extent of the erosion is to take the actual figures expended each year on rates and the provision element of water rates, and to estimate the capital sum which would have accrued if that money had instead been invested in a manner which is as safe as an investment in land. This sum could then be divided in half to calculate the wife's share of the investment.[100]
These principles of quantification could not have justified the conclusion that their contributions were equal — far from it. However, they do support Fogarty J's contention in Money and Money,[101] that 'an initial substantial contribution by one party may be “eroded” to a greater or lesser extent by the later contributions of the other party even though those later contributions do not necessarily at any particular point outstrip those of the other party.’
In the Court's initial development of principle, the erosion principle, or at least the explanation underlying it, equally had its application to inheritances. It all depended at what stage of the relationship the inheritance was acquired, and what contributions had offset it since.[102] On this principle, an inheritance received at the start of a very long marriage will have diminished in significance over time, but this is less likely to be the case in a shorter relationship. Furthermore, an inheritance received late in the marriage is treated quite differently from one acquired earlier in the marriage. The time of acquisition matters enormously. As the Full Court said in Bonnici and Bonnici:[103]
The other party cannot be regarded as contributing significantly to an inheritance received very late in the relationship and certainly not after it has terminated, except in very unusual circumstances.[104]
In assessing the way in which the homemaker contribution has application to damages awards, a similar notion of marriage as a partnership has been applied. The damages award, or at least that part of it which can be attributed to the compensation of pain and suffering and loss of amenity, is normally seen as a contribution by the injured spouse. Components of the damages award which compensate loss of earnings at a time when the couple were still cohabiting could be seen as a contribution to the family finances in the same way as salary which is offset in the usual way by the contributions of the other spouse.[105] The contribution of the spouse who was not injured in caring for the injured spouse may also be seen as a contribution which goes some way towards offsetting the significance of the damages award as a contribution by the injured spouse alone.[106]
The case-law developed on post-separation assets also looked at the nexus which could be discerned between the homemaker contribution and the assets in question. The issue has arisen in relation to lottery wins. In Mackie and Mackie,[107] the husband won a substantial lottery prize after separation. It was treated as a windfall for the husband, and the wife was not entitled to a share. This case was cited with apparent approval by the Full Court in Zyk and Zyk.[108] It stated that Mackie was a case where the lottery win 'was property of one of the parties to which the other party could not have made any contribution except, perhaps, through post separation para. (c) contributions. Otherwise its relevance would be confined to s 75(2) factors.'
The reference to post-separation para (c) factors reflects the fact that, as we have seen with Kim and Alex, divorce changes the financial relationship between parents but it does not extinguish it. Parenthood entwines people's lives together in a way that marriage alone does not. Parenting goes on after divorce, and this has financial implications. The fact that the parties have separated does not mean that contributions to the welfare of the family cease. The family continues, but in different households, and with two poles of orientation rather than one.[109]
The Full Court decision in Jacobson and Jacobson[110] illustrates the principles for assessing contributions to the welfare of the family after separation. It affirmed that where one party saves money or accumulates assets solely from post-separation efforts, these will be credited to him or her in circumstances where the other party has made no contribution, direct or indirect, towards the accumulation of those post-separation assets. However, a homemaker contribution may indeed be an indirect contribution. In this case, nearly four years had elapsed from the time of separation to the trial. In this period, the husband had acquired two properties, to which, he argued, the wife had made no contribution. The wife meanwhile, had had the onerous responsibility of caring for a teenage boy (D) who was intellectually disabled. This was treated as a contribution to the husband's post-separation earnings because the wife's care for the child after separation left the husband 'free to pursue his income-earning activities to the fullest extent.' Furthermore, she had made a substantial contribution to the husband's earning capacity during the marriage by caring for the home and five children, and this was reflected in the husband's post-separation earnings.[111]
Assets acquired after separation may of course be relevant in the assessment of s 75(2) factors irrespective of any nexus between the homemaker contribution during the course of the marriage, and the post-separation assets.[112]
In recent years, this body of case law has been challenged by a new approach to the assessment of the contributions of the parties which is gaining the ascendancy in the Full Court. This approach involves the Court in abandoning the requirement of a nexus between the homemaker contribution and assets acquired other than through the joint efforts of the parties. The judge is meant simply to consider all the different kinds of contributions, giving such weight to each as he or she considers appropriate, and placing them in the balancing scales with one another.
This change in approach can be traced, in an intellectual sense, to three factors. First, the Court has interpreted a minor amendment to the Act in 1983 as allowing homemaker contributions to be assessed in the abstract without any point of comparison. Secondly, it has decided that it has a role in assessing the 'quality' of contributions. Thirdly, some judges have taken the view that no conceptual distinction should be made in the Court's reasoning between assets acquired by the joint efforts of the parties and assets acquired other than through the efforts of the parties. The source of the assets is merely a factor to consider in the overall exercise of discretion.
Significantly, all of these new interpretations find their origin in a concern not to undervalue the homemaker contribution, but none of them are capable of leading to any coherent principles about how to value the homemaker contribution.
In adopting this approach, a subtle change has occurred in the fundamental question being asked in family property law. Instead of asking what are the parties' contributions to the property and financial circumstances of each (understood in terms of seeing marriage as a socioeconomic partnership), the Court now tends to ask about the parties' contributions to the marriage without this inquiry being tied into the question of responsibility for the property and the financial circumstances of the parties.
The first wrong turning was when the Court decided that the homemaker contribution could be assessed in the abstract. Assessing the homemaker contribution in the abstract occurs when it is not being evaluated by reference to any comparator such as the income-earning efforts of the other spouse, nor any objective measure such as the value of various household and childcare services in the marketplace, offset against the reciprocal benefits received in the marital partnership.
One of the consequences of this approach is to expand the boundaries of relevance exponentially. If the question is what contribution the parties have made to the welfare of the family without any need for a nexus of any kind to the property or financial circumstances of the parties, then everything is relevant and nothing can be excluded. Since the welfare of the parties to the marriage is not limited to the time of the marriage the field of relevance is even greater.
The origin of this new approach can be traced back to the decision of the Full Court in Shaw and Shaw in 1989, which was a case about assets brought into the marriage.[113] In this case, the husband brought significant wealth into the marriage but it was largely dissipated during the course of the 12-year marriage through luxurious living. At the end of the marriage, less than $2 million remained. The Full Court took the view that it should place a value on the wife's contribution even though there was no gain in wealth to which she could be deemed to have contributed. The wife, who had nursed her husband through a serious illness, was awarded 10–12 per cent of the husband's remaining property by way of contribution and a similar amount on the basis of s 75(2) considerations. There seemed to be no reason to be too precise. 10–12 per cent (contributions) plus 10–12 per cent (s 75(2) factors) was held to amount to a total of 25 per cent of the husband's remaining assets.
This case established that a spouse can make a homemaker contribution which entitles her to a share of assets brought into the marriage by the other even though the effect of their marriage partnership has been mainly to spend, rather than acquire wealth. The Full Court attributed this conclusion to the effect of the 1983 amendments to the Family Law Act. It considered that the amendment which created the homemaker contribution as a factor in its own right made it
clear that a spouse's contribution to the welfare of the family or in the capacity of homemaker or parent may be recognised by an order under s 79 in relation to some property even though such contribution has no connection whatsoever with that property, or any other property of the parties or either of them (whether in relation to its acquisition, conservation or improvement or otherwise).[114]
However, the Explanatory Memorandum on which their Honours relied does not in fact support this view. It stated that the relevant clause amends s 79 to 'remove the possibility of an interpretation of the sub-section requiring that there be a nexus between a spouse's contribution and a specific item of property in s 79 proceedings' (italics added).115
The interpretation adopted by the Court in Shaw would have meant that Parliament intended a major revolution in the whole way in which the Family Court reasoned about the homemaker contribution in family property cases. On this view, Parliament must be taken to have intended that the assessment of homemaker contributions should be made without any reference point for evaluation, being given whatever value the Court chooses to give it, for whatever reasons the Court sees fit. If such an extraordinary change had been intended or even contemplated, it might be expected that someone would have noticed.
Yet it appears that no-one did. Indeed, no-one seems to have thought this amendment was even worthy of comment. The focus was on other changes made by the same clause in which the amendment was made. The particular provision is not mentioned at all in the Second Reading Speech.[115] Nor was it deemed worthy of mention in the annual reports of the Family Law Council, which reported on the Council's consideration of draft versions of the Bill. In Mallet v Mallet, Gibbs CJ did not consider that the 1983 amendment would have made any difference to the result if it had been in force in time to govern the decision in that case.[116]
Thus it cannot be contended that Parliament intended to remove any nexus whatsoever between homemaker contributions and the asset pool which represented the fruit of the parties' marriage partnership. Nor can it be said that this was necessarily its effect since there is no difficulty in placing upon the amended language an interpretation consistent with the nexus approach.[117] The interpretation which fits the contemporary evidence is that the amendment was intended to reflect the case law as it had already developed, and which recognised that women's contributions as a homemaker or parent, although not quantifiable in monetary terms, represented a substantial contribution to the financial partnership of the couple through freeing up the other spouse to concentrate on income-generating activities. This had been spelt out clearly by the Full Court in cases such as Rolfe and Rolfe[118] and Wardman and Hudson.[119] It was an evolutionary step not a revolutionary one, and in the context of the case law on s 79 as it had developed until this point, it was unexceptionable. The homemaker contribution was still to be given a value by comparison with the efforts of the other spouse in earning income.
This is reflected in the decision of Nygh J in Parker and Parker,[120] decided within weeks of the proclamation of the Family Law Amendment Act in 1983. He explained that the amendment seemed designed to overcome the very rational objection of counsel in Wardman and Hudson[121] that the wife's contribution as homemaker and parent could only be relevant if it related to the acquisition, conservation or improvement of the property in question. This argument was rejected by the Full Court in that case, which affirmed that the phrase in s 79(4)(b) was 'clearly directed to the ordinary circumstance where a wife remains in the home looking after the home and the children thus freeing the husband from those obligations and enabling him to earn in a more direct fashion and thus involve himself more directly in the acquisition, conservation or improvement of the property in question.'[122] Justice Nygh affirmed in Parker that the purpose of the amendment was to make explicit in the Act what had previously been seen as implicit in s 79(4)(b) prior to its amendment and which was reflected in the principles laid down in such cases as Wardman and Hudson.[123]
It follows that after 1983, the fundamental goal of the contribution stage remained the same as it was before 1983, namely, to attribute credit for the asset pool which represented the fruit of the couple's joint efforts, understood in the sense that marriage is a partnership. Those contributions had to be assessed in a holistic way. But the task remained focused upon the question of how to quantify the respective contributions of the parties to the asset pool, and to the extent that judges referred to 'contributions to the marriage', they were referring to contributions to the marriage partnership which had a bearing on the proper division of the financial assets which represented the financial fruits of their life together.
The second stage in the development of the balancing approach, and the second wrong turning, has been for the Court to decide that it has a role in assessing the quality of the contributions of the parties 'to the marriage'. This of course, was Wilson J's rather curious reasoning in Mallet v Mallet.[124] Other members of the High Court expressed themselves in different terms in discussing whether the homemaker contribution could be equated with the efforts of the other spouse in earnings during the course of the marriage. Chief Justice Gibbs noted only that Parliament had not deemed that homemaker contributions and financial contributions generally should be regarded as equal,[125] before discussing the wider issues of a presumption of equality of outcome rather than merely equality of contribution. Justice Mason referred to the 'efforts' of the parties, not the 'quality' of their performance, in their respective roles. He thought that a conclusion of equality of contribution would not be appropriate where a party's 'ability and energy has enabled the establishment or conduct of an extensive business enterprise to which the other party has made no financial contribution and where that other party's role does not extend beyond that of homemaker and parent.'[126] This example suggests that it is the size of the asset pool and its relation to the energy and ability of the party which matters, not the intrinsic quality of the contributions. A poor artist or musician might do work of outstanding quality without outstanding financial reward. In any event, Mason J's reasoning was to some extent based on the pre-1983 amendment understanding that the wife had to show an indirect contribution to specific assets. Justice Dawson took a similar approach to Mason J.[127] Justice Deane's comments were supportive of a partnership approach in assessing the respective efforts of the parties during the course of the marriage.[128]
The Family Court was thus not bound by Wilson J's judgment alone, and for a while, it paid little more than lip-service to Wilson J's idea that it should assess the quality of contributions. Justice Nygh was typically robust. In the course of giving judgment at trial level in Shewring and Shewring, he wrote:[129]
I am aware very much of the remarks made by Wilson J in Mallet v Mallet... and, in fact, on the basis of that remark it has been suggested from time to time that the court must assess in some way or another the quality of contribution made by a party, for instance as breadwinner on the one hand and as homemaker on the other, on a scale which presumably ranks from the perfect to a total failure. I myself cannot accept that anything like that was ever in Sir Ronald's mind. It is not, I think, the function of this court. It has never done so and I trust will never do so in the future, to assess the quality of each party on a scoring board which, so far as breadwinners are concerned, would give top marks to the Holmes à Court's of this world and bottom mark to the unemployed roustabout and, I suppose, in the homemaker and parenting stakes would give top marks to those ladies who in the age of the great dictators would have received the glorious motherhood medal, and bottom marks to those ladies, who it is alleged spend most of their time in the tennis club and the coffee klatsch and waste their precious time in idle pleasure. I take the view based upon the traditional marriage vows that the parties take one another for better and for worse.
This passage was quoted with approval by the Full Court of the Family Court in Ferraro and Ferraro,[130] but the Full Court went on to say that it could assess the quality of people's contributions in an abstract sense when it is looking at special factors outside the norm. In setting out the concept of special factors which might justify treating one party's efforts during the course of the marriage as greater than the other's, the Full Court was careful to express the principle in ways which could equally apply to either gender. However, this may have led to a fundamental reinterpretation of the meaning of the homemaker contribution. The Full Court stated in evaluating the respective roles of the husband and wife[131]
there are cases where the performance of those roles has what may be described as 'special' features about it either adding to or detracting from what may be described as the norm. For example, in relation to the homemaker role the evidence may demonstrate the carrying out of responsibilities well beyond the norm as, for example, where the homemaker has the responsibility for the home and children entirely or almost entirely without assistance from the other party for long periods or cases such as the care of a handicapped or special needs child. On the other hand, in the breadwinner role the facts may demonstrate an outstanding application of time and energy to producing income and the application of what some of the cases have referred to as 'special skills'.
Such contributions as caring for children under certain conditions may, of course, be related to the financial outcomes of the marriage partnership. The mother who has the sole care of the children while her husband is travelling overseas with the Australian cricket team plays a very important part in allowing him to earn and to build his career. So too the mother who carries almost all the responsibility for caring