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The Law and You: Wasting matrimonial assets

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If a marriage or de-facto relationship is coming to an end, it’s not uncommon for one or both partners to waste the assets of the relationship out of spite or selfishness.

Assets can be wasted through spending on alcohol, drugs, gambling, prostitution and extravagant and unnecessary spending. Each case is different.

This Law and You column defines wastage of matrimonial assets, talks about doing so through gambling, extravagant spending, as well as poor financial or business decisions.

It also talks about what to do if your partner is wasting your matrimonial assets.

What is wastage of matrimonial assets?

‘Wastage of matrimonial assets’ is generally defined as a situation where one party acted ‘negligently, recklessly or wantonly with matrimonial assets’ to decrease their value. This is the definition determined by Justice Baker in the key case of Kowaliw. In this case, Justice Baker permitted evidence of the husband wasting matrimonial assets to be considered in determining the property split between the spouses.

What if my partner is gambling?

Gambling is a common way for partners to dissipate assets before and during separation. For instance, in the case of AB,  the husband gambled tens of thousands of dollars away. Since both spouses had limited financial means, the Court held that this spending was ‘reckless and negligent’. However, if your partner gambles a small amount of money relative to your assets, the Court will probably not consider that to be ‘reckless or negligent’.

What if my partner is spending extravagantly?

If your family is used to a high standard of living, it may be difficult to establish that your partner’s extravagant spending was ‘negligent, reckless or wanton’. However, if you can prove that such spending substantially reduced your assets, then your claim may succeed. An example of this occurred in the case of Ledarn,  where the wife bought houses and luxury cars for the children without the husband’s approval. The Court held that this spending could not be ignored, and therefore ordered the property to be split in the husband’s favour.

What if my partner is making poor financial or business decisions?

Hindsight is always 20/20. However, certain financial or business decisions are so objectively poor that the Court may hold they were made ‘recklessly or negligently’. Returning to the case of Kowaliw, the husband allowed prospective buyers of the family home to live in it rent-free for a year without the wife’s consent. The Court held that this was a reckless and negligent financial decision because it was not an established practice among home-sellers and had resulted in considerable foregone income.

What do I do if my partner is wasting matrimonial assets?

If you believe your partner or ex-partner is wasting assets, it’s important that you talk to your partner, if appropriate, and object to their spending as quickly as possible. Further, document your objection in writing (email or text). This may counter a potential defence by your ex-partner that you were complicit in or didn’t oppose their wastage.

In the case of Harper, the wife lost thousands of dollars through poorly-timed online share trades. The husband didn’t look at their bank statements, even though he was free to do so. The Judge stated that the husband ‘chose to be ignorant’, and his claim failed. So it’s important to stay on top of your assets and paperwork relating to them.

How do I prove wastage of assets?

Unfortunately, it’s difficult to prove wastage of assets. However, if your relationship is falling apart and your partner is dissipating assets that you’ve worked hard to accumulate, consulting a family lawyer is worthwhile. Furthermore, it’s crucial that you try to document and record as much of your partner’s spending as possible. This will make it easier to prove to the Court that your assets have been wasted.

If you have any concerns about talking to your partner about their wastage of matrimonial assets, or how to document and record as much of their spending as possible, talk to a family lawyer.

This expert column was prepared by Catherin Coles, an accredited specialist in family law. She has been recognised by Doyle’s Guide as one of the ACT’s leading Family Lawyers.

Catherine Coles

Contact Catherine or another specialist in Family Law at Watts McCray Lawyers Canberra to talk about wastage of matrimonial assets of other family law issues.

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