My Ex Has Wasted Money. Is This Relevant to My Property Settlement?

An issue that can arise in property settlements is where one party alleges the other has wasted money or engaged in conduct that has led to deterioration in the value of their assets to be divided.

Family Courts start from the presumption that financial losses ought to be shared between the parties (although not necessarily equally). One case known as Kowaliw provided an exception to this where the following circumstances exist:

a) “Where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets; or

b) Where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect which has reduced or minimised their value.”

Investing a business that has failed would not of itself meet those exceptions. However, where money was invested by one party in a high risk venture without any consultation with the other party beforehand, then that may well result in a party wearing all or the majority of the loss incurred.

Sometimes where a relationship is under strain and separation is contemplated, a party can act more recklessly with matrimonial property and so significant transactions undertaken by one party of the marriage are looked at more closely if they are closer to the separation date.

There have been many cases which have recognised the harmful effect of one party’s gambling addiction in Family Law property settlements. These are cases where the money lost on gambling is very significant and the extent of the gambling is well beyond what one may consider usual recreational betting.

While Courts must ascertain each party’s financial circumstances as at the date of hearing, which is usually well beyond when parties separate, the Courts are far more willing to make any cash adjustments to a property settlement due to expenditure post separation rather than before it. This is because there is more scope for only one party to benefit from money spent after separation rather than both. For example, $20,000 spent by one party on an overseas holiday following a separation is far more likely to be factored into a property settlement .

In summary, when advancing an argument of “wastage” it is important to gather as much evidence as possible as to the facts surround the alleged wastage, the time of the alleged wastage and the extent of the financial loss incurred and the degree of knowledge that the other party had at the time.