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28 June 2019

What is a non-financial contribution and why does it matter?

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When parties to a relationship start their lives together and through hard work, and some luck, they build up their savings and acquire property and superannuation, how are their contributions measured if the decision is made to separate and divide what they own?

Financial contributions such as having the deposit for the first home or owning a block of land to build a home on, wages to make repayment of loans, contributions to super, pay bills and buy groceries are factors to be weighed along with contributions to maintaining the home, cooking meals, home repairs and maintenance and attending to the needs of children from infancy to adulthood.

It is important to understand that contributions of the homemaker are not treated as insignificant and are likely to be accorded equal weight to the contributions of the wage earner. However contributions of the homemaker are not the same as non-financial contributions.

Non-Financial contributions, like financial contributions, must be related to the acquisition, conservation or improvement of the final pool of property to be divided.

Take for example the case where A owns a vacant block land on the outskirts of the city.   The block of land was purchased by A for $40,000 before A met and married B. Thirty years later and the suburban sprawl has reached the outskirts and council has rezoned the land as residential and suitable for subdivision. Now the land is worth $10,000,000. The total pool of property to be divided between A and B is $9,000,000.

The initial financial contribution by A is clearly a relevant contribution where the other financial contributions and contributions to the welfare of the family in the role of homemaker or parent considered to be equal.

What then are the non-financial contributions and do they matter?

The mutual support A and B provided each other over thirty years as they each worked inside and outside the home in paid and unpaid employment, as they made decisions for the benefit of the family, decisions to purchase the family home, car and fridge, and the decision to keep the land and manage finances all are part of the myriad of contributions made by the parties during the relationship which are referred to as non-financial contributions. Non-financial contributions naturally increase with time together and growing interdependence.  In a long relationship such as A and Bs, the initial contribution is just one of the contributions but not the critical one.

In Jabour and Jabour the Family Court held, on the same facts, that the initial contribution of the land did reflect a greater contribution by the husband and adjusted property settlement in the his favour however the percentage adjustment was 6%, much less than the 40% he was seeking. The husband argued that his contribution should be based on the value of the land at the date of separation and that he should receive 70% of the pool. This was rejected. The Court held that to use the final value as a contribution by the husband would ignore the non-financial contributions of the wife over 27 years of marriage and to do so would not have been just and equitable.

If we can assist with your family law matter please do not hesitate to contact our office to speak with one of our solicitors today.

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