Wastage in family law matters

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After relationship break ups, it is often the case that one party will allege that the other has unnecessarily wasted assets during the relationship or after the relationship has ended. This issue has recently come before the Full Court of the Family Court of Australia in the matter of Charles & Charles [2017] FamCAFC 3 (12 January 2017), which was an appeal by the wife from a judgment of the Federal Circuit Court of Australia.

In this case, the wife alleged that the husband had wasted matrimonial assets in a number of ways, including:

  1. By no longer paying the mortgage associated with the house that the wife continued to reside in with the children after the husband had moved out, resulting in the mortgage debt increasing by about $8,000;
  2. By not agreeing to refinance the mortgage, which would have resulted in potential savings of approximately $20,000; and
  3. By losing approximately $50,000 in some failed investments some 5 years before their relationship ended.

The primary Judge noted that the husband’s income had decreased since separation as a result of him moving out of the former matrimonial home and into the investment property, meaning no more rental income was received from the investment property. The husband was now also paying the wife child support, further reducing his ability to make mortgage payments. The primary Judge therefore did not find that the husband’s conduct satisfied the standard required for wastage, being recklessly, negligently or wantonly causing the property pool to diminish.

Regarding the investment losses, the primary Judge considered that the husband was generally a competent investor and had participated in investments throughout the relationship, that these losses were the only investment losses during the relationship, and that the losses suffered in 2008 were during the global financial crisis. The primary Judge found that the losses were “part of the financial ups and downs of married life” (at paragraph 60(d)).

The Full Court determined that the primary Judge’s consideration of the matter was correct and did not constitute a miscarriage of justice. The wife’s appeal was therefore dismissed and she was required to pay some of the husband’s costs associated with the appeal.

Wastage is a very serious matter, particularly where the parties’ financial circumstances are no longer a joint effort after separation has occurred. It is, however, necessary to consider all aspects of the matter before proceeding with this allegation. If one party is wasting matrimonial assets, it is possible to apply to the Court to ask for them to be stopped by way of an interim application.

Please contact us if you would like further information or if you need assistance in relation to a family law issue.

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Raea Khan Circle
Director Lawyer
Raea Khan

Raea is Managing Director and Principal Lawyer for PBl Law Group. Raea assists clients with major projects, property developments, construction and strata law.

He has worked in Western Australia and Queensland assisting with expansion projects in the energy and resource sector and now predominately advises clients in Strata and Community Association matters.

He is a member of the Australian College of Strata Lawyers where majority of his work is advising developers and owners corporations with dispute related minor and major defects, strata governance and common property litigation. He is proficient at leading negotiations and meetings.

Raea has a particular interest in the commercial aspect of any dispute and always tries to weigh up the risk, reward and benefit of legal proceedings at each different stage.

Raea enjoys all forms of competitive sport, including Crossfit and actively participates in Triathlons, representing Australia as an age group athlete. He was a member of Red Head Surf Lifesaving club.

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