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War on Waste: What Happens if the Money We had has Been Wasted Since We Separated?

war on waste

Almost everyone these days seems to have their particular vice or guilty pleasure. For me, it is my daily triple shot, skinny flat white every morning at about 9 o’clock which helps me power through my day. For others, it might be Friday after-work drinks, a flutter on the pokies on a weekend or a great bottle of wine with dinner and friends on a Friday night.

While I’d like to think that within reason most of those sorts of things are fine, there does become a point in family law matters where issues about gambling, the consumption of alcohol, large amounts of discretionary spending or other steps which have the effect of reducing the asset pool, can take on a special kind of significance. Broadly these types of issues fall within the concept of “waste” and arguments about who should be responsible for the loss in value because of what has gone on.

Like most matters, it’s always a question of degree and comes down to the precise circumstances of the case.

Broadly, the Court has accepted that over a significant period of time where one party has taken steps, since separation, to deal with the assets of the relationship in a way that has significantly impacted their value, then that is something that the Court can and should have regard to in appropriate circumstances.

While it’s impossible to give an exhaustive list of how the Court is likely to treat various waste arguments, a number of examples from the decided cases are as follows:

  1. Where a party had engaged in a significant but secret drug habit that was only made apparent after separation by reference to financial documents, the Court accepted that a general allowance should be made as a future needs factor for the party that had spent significant sums on illicit drugs to not receive an otherwise greater share of the asset pool.
  2. Where a party has intentionally run down a business since separation and taken steps to close that business, this conduct was considered as unreasonable and intended to defeat the claim by the wife. The Court ultimately allowed the wife to receive a greater share of the other assets to take into account the husband’s actions.
  3. Where a husband was engaged in online poker playing and playing in poker tournaments, it was ultimately found by the court that it wasn’t waste. Even though he had withdrawn about $140,000 from bank accounts to fund at least some of that gambling, the other evidence showed that he had made successful winnings in excess of some $600,000 over a period of years. Ultimately, the Court accepted that it was not a waste issue but, instead, a financial contribution by the Husband who had successfully gambled.

These examples aside there are other scenarios that the Court will also likely be interested in arguments about waste. While I am yet to be shown a real life case, if the urban legend of the jilted former spouse selling the husband’s private yacht for $1 or sinking it in the harbour to get back at him were heard in the Family Court today I expect that the spouse that did the selling (or the sinking) is in for a fairly bad day on the back of a successful waste argument against them.

Like most matters in family law, while there are no definitive answer to what is and what isn’t waste, the Court can and does get pretty robust when it comes to dealing with the conduct of a party that is unreasonable and has the effect of reducing the value of the assets to be divided.

So if that alcohol, spending or accidental damage is within reason then it may not carry a lot of weight in the scheme of things. If, however, someone goes out of their way after separation to intentionally run down a business, fund a covert drug habit or alcohol and gambling addiction then those matters should absolutely be brought up with your family lawyer at an early stage.

Find out more about how these scenarios can impact on your property settlement.