Gambling and waste in Property Settlements

When determining a property settlement between parties, after a separation, the Court can look at all the relevant facts of the matter to determine what is just and equitable.  Those facts can cover a myriad of situations one of which is wastage by a party to the marriage or relationship.  By wastage I mean one of the party’s actions has caused a financial loss to the matrimonial asset pool.  The court in one matter described waste as coming from a party’s reckless, negligent or wanton actions. (Kowaliw’s Case)  Examples of wastage could be gambling by one party, the sale of assets that existed at separation with the funds unreasonably expended, such as on overseas holidays or the giving away of assets of some value with claims they were of little or no value.

The question is if the asset or money no longer exists because of this waste, should the value by ‘notionally’, that is as if it still existed, added back into the asset pool.  This would allow the split to still take place on a fair basis with a subsequent reduction in the part to go to the responsible party to reflect the part wasted.  Essentially the notional asset or money, would go to that party.  This has been a fairly controversial area of Family Law in the past and remains so although it is widely held to be a genuine reason for adding back the value to the asset pool.  The issue usually is centred around whether it was wasteful or not.  Court authorities say if the expenditure was to meet reasonable incurred living expenses or necessary outgoings then there would be no need to add the monies back.

I have had many cases where a party is concerned about their partner’s reckless habits when it comes to things such as investments or bad or failed business ventures and the suggestion is that the prime decision maker should bear the loss.  The bad news here is the rule that came from a Full court judgement said “marriage is an economic partnership” and in the absence of proven waste, losses “should be shared equally”.  If you want to make sure your get your fair share of the asset pool, give us a call at Johnston Tobin Solicitors to discuss your situation.

This article was written by: Mark