Work out what each person has contributed to the acquisition, conservation and improvement of the property pool. Contributions are relevant in relation to all property the parties have owned at cohabitation, during the relationship and since separation, including assets that are no longer owned. Contributions must be one (1) or more of the following types of contributions:
Direct Financial Contributions
A direct financial contribution is a payment made by a spouse directly towards the purchase, conservation and/or improvement of an asset.
The equity owned in a house at the start of the relationship.
Using one’s own income to make mortgage repayments.
Using an inheritance to pay off the home loan, as savings or to purchase other assets.
Indirect Financial Contributions
An indirect financial contribution is a payment made towards expenses so that the other party’s income can be instead applied to a direct financial contribution.
A spouse paying living expenses with their wage so that the other spouse can use their wage to make mortgage repayments.
A spouse paying for a holiday while the other spouse accumulates their income as savings in a bank account.
A parent of a spouse allowing the couple to live in their home rent-free so that the couple can use their income to make mortgage repayments on their own property.
Direct Non-Financial Contribution
A direct non-financial contribution is work done by one (1) of the parties to maintain or improve an asset without making a payment towards it.
- Doing renovation works to a property.
- Looking after the maintenance of a home’s exterior.
- Maintaining and operating a stock trading account.
Indirect Non-Financial Contribution
An indirect non-financial contribution is work done by one (1) of the parties that is not done directly to an asset and is not of a financial nature, but that still contributes to the acquisition, conservation or improvement of an asset.
- Caring for children to enable the other party to attend work to earn an income.
- Caring for children so that the other party can do renovations or repairs and maintenance to the home.
- Doing the housework to support the other party to attend work and earn an income.
Contributions to the Welfare of the Family
Contributions to the welfare of the family are not required to be towards the “acquisition, conservation or improvement” of the property pool, as are the previous categories of contributions. Contributions to the welfare of the family are considered valuable on their own merits and are given weight accordingly.
Therefore, the work that one (1) party does as homemaker and parent may have the effect of offsetting significant direct financial contributions of the other party. Therefore, a breadwinner on a high income and a stay-at-home parent of three (3) children may be considered to have made equal contributions to the property pool despite the differences in their roles.
Timing of Contributions
Contributions to the property pool are relevant during three (3) specific periods:
1 | At the commencement of the relationship
Contributions at the commencement of the relationship are likely to be direct financial contributions that are readily quantifiable. The contributions of each party at the start of the relationship (at the commencement of cohabitation) are weighed against each other, so if both parties have brought assets of a similar value to the relationship, they are assessed as having made equal contributions at this stage.
Where one (1) party brings a greater share of assets, this party is likely to be entitled to a greater share of the assets on a contributions-basis, unless these initial contributions are entirely offset by the contributions of the other party throughout the relationship and before the Property Division.
Generally, in a short relationship, where one (1) party has made greater initial contributions, there has been less time for the other party to make enough contributions throughout the relationship to offset the initial contribution. Therefore, the contributions are likely to be weighed in favour of the party with the greater initial contributions.
Generally, in a long relationship (ten years+), as there has been more time during the relationship for the party who has not brought assets to the relationship to make other types of contributions (particularly as homemaker and parent), the party with the greater initial contributions is likely to have less weight given to their initial contributions.
2 | During the relationship
Throughout a relationship there is usually a myriad of contributions made by each party to the property pool and welfare of the family as part of the fabric of family life. These might involve accumulating property, paying the costs of living, keeping a home and raising children. The longer the relationship, the more likely that each party will be assessed to have made more-or-less equal contributions.
3 | After separation
As living arrangements change at the time of separation, so do the types of contributions made by each party. One (1) party may make all home loan repayments and have the primary care of the children, but they are no longer supported by the other party as they were during the relationship. Therefore, where one (1) party takes on the majority of contributions after separation, this can shift the assessment of contributions in their favour. Where the period between separation and Property Division is short, this discrepancy does not have a large, if any, impact. Where the period between separation and Property Division is long (several years or more), an imbalance in post-separation contributions can have a significant impact on the ultimate contributions-based division of assets.
Legal Principles that have Developed in Relation to Contributions
Over many years of the Courts considering, weighing and assessing the contributions of parties to a former relationship, several principles have developed in relation to particular circumstances:
- The longer the relationship, the more likely that the contributions of the parties will be assessed as equal, unless there has been a considerable lump sum contributions (such as an inheritance) made by one (1) party.
- The shorter the relationship, the more likely that the contributions of the parties will be assessed in the same proportions as at the commencement of the relationship.
- There is no extra loading for contributions for special skills, such as the contribution of significant funds during the relationship by virtue of one (1) party being a highly successful property developer, surgeon, etc. Extra weight is not given to a party’s contributions simply because their salary is higher than the other party.
- There is no extra loading for “Super Mum” contributions, where a parent (usually the female partner) works full time and completes most of the parenting and household duties on daily basis over many years, while the other parent works full time but does not bear the same load of parenting and household duties.
- Contributions are not approached as a mathematical calculation. Instead, the myriad of contributions of each party are weighed, with real weight given to the role of homemaker and parent. So where one (1) party is the breadwinner and the other the homemaker, the contributions made in their daily lives are considered equivalent (despite the fact that the breadwinner may earn more than it would cost to pay for the household work).
- There is rarely a deduction for “negative contributions”. Losses incurred in the course of the relationship are to be shared between the parties (although not necessarily equally) unless there has been a course of conduct designed to minimise the value of assets or when one (1) of the parties has acted recklessly or negligently with the assets so as to minimise their value (eg. intentionally running down the value of a business or financial losses incurred as a result of gambling).
- Windfalls made in the course of a relationship are shared in the proportions of all the other contributions made by the parties during the relationship. The windfall is not necessary the contribution of the party who took the action that resulted in the windfall (eg. buying a lottery ticket).