A common issue that arises in property matters and one that causes the greatest of angst to most people are circumstances which involve one party using joint funds or property for their personal use and or benefit.
The full Court of the Family Court of Australia has identified three categories where it is appropriate to add back monies/and or assets that have been used by one of the parties. However this is not a finite list and there will be other circumstances where add backs will be appropriate. It is a matter of determining whether such an add back is necessary to do justice and equity to the parties overall.
It is important to bear in mind however that the Court will not generally add back monies spent on post separation living expenses, such as clothes, medical treatments and household utilities expenses, where they are considered as reasonable living expenses.
Then you would be entitled to argue that these funds should be added back to the asset pool. Section 117 of the Family Law Act makes it clear that each party to proceedings under the Family Law Act shall bear their own costs unless the Court orders otherwise.
Allowing one party to dip into matrimonial monies and use this money for the sole purpose of paying legal fees is contrary to the intentions and principles of section 117 of the Family Law Act.
However if your ex can show the money that he/she used to pay their legal fees was from post -separation earnings that is a different matter and ordinarily, this money would not be added back to the asset pool. The main factor which will be considered is the source of the funds.
In this instance, a premature distribution of the asset has been made by one party without the knowledge and consent of the other and would justify the Court to add back this asset, even though it no longer exists, in fairness to the other party, who would have had a legitimate claim to this property but for the conduct of the other. The matrimonial money spent on a holiday has benefited only one party and as such it would be unjust to not add it back notionally.
A general guideline in property matters under the Family Law Act is that losses incurred by the parties to the marriage or de facto relationship should be shared by them (although not necessarily equally). However there are some exceptions to this and they are as follows:
a. Where one party embarks upon conduct that is intended to reduce or minimise the value or worth of the asset pool or
b. Where one party has acted recklessly, negligently or wastefully with the matrimonial assets and the effect has been to reduce or minimise the value of the overall assets.
For example in the case of Kowaliw (1981) FLC 91-092 the husband had lost money by permitting a prospective purchaser to occupy the matrimonial home free of rent or contribution for approximately a year. In the end the prospective purchaser did not in fact purchase the property.
This action was considered reckless and the husband should be solely responsible for the consequent financial loss.
Where one party deliberately damages or destroys property and in effect reduces the value of the asset pool, then this is a matter that must be taken into account in property matters.
Section 75(2)(o) of the Family Law Act - empowers the Court to take into account any "fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account". As such where a party believes that there has been waste, destruction or deliberate minimisation of the assets, then these matters can certainly be raised and will be considered. At the end of the day, the Court will make the ultimate decision whether conduct by one party is deemed to have disadvantaged the other party financially post- separation. If the court does find that a party has wasted assets, then that party may receive a lesser portion of the property pool or may even be given full responsibility for debts that arose from that party’s actions.
7 November 2011
M.A Dip Ed LLB (UNSW)
Principal Solicitor - Cominos Lawyers
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Pamela Cominos is the Principal Family Lawyer at Cominos Lawyers, Sydney who specialise in all aspects of Family Law.Pamela holds a Masters of Arts degree together with a Bachelor of Laws Degree from University of New South Wales.