Many clients feel the need to let their hair down, celebrate or recover during family law proceedings and may choose to travel overseas to Bali or Las Vegas to do so. Whilst it is permitted to travel overseas (unless you have children under the age of 18 – please see our blog on s65Y) you should be aware of the consequences of extravagant spending in the context of a family law matter.
Spending extravagant amounts of money in some circumstances can be viewed by the Court as wastage and you may risk the money being notionally “added back” into the asset pool at your expense.
Section 79 of the Family Law Act 1975 allows the Court to alter interests in property as it deems appropriate. Section 75 of the Family Law Act 1975 (Cth) provides the Court with a list of matters which are to be taken into account when determining a “just and equitable” division of the asset pool of a marriage or relationship. Under section 75(2)(0) the Court may make an adjustment based “any fact or circumstances which, in the opinion of the Court, the justice of the case requires to be taken into account.” This section allows the Court a very broad discretion in terms of altering the interests in an asset pool, and add backs.
In the case of Omacini & Omacini [2005] 191 FLR 317 “wastage” was defined as follows “where one party has embarked on a course of conduct designed to reduce the value of matrimonial asset or has acted recklessly, negligently or wantonly with matrimonial assets.” If a party has wasted a significant amount of the assets the Court may notionally add back the wasted amount. There is no automatic argument to add back the funds however. Whether that step is appropriate in each case, rests on the facts of each individual matter.
The starting point in every case is that assets are valued as they exist at the date of final hearing. In Omacini the Full Court cautioned “that mere expenditure from the assets at separation would not solely justify adding back those expended assets.” Nor would expenditure on reasonably incurred living expenses. In that case the Full Court allowed an appeal from an earlier decision where the Court had ‘added back’ money spent on purchases and unsuccessful investments by the husband following separation – where he was unemployed. The Full Court ordered a retrial and rejected the ‘add-backs’.
However, the Court has also noted that parties need to be able to live their lives and move on, noting in the matter of C v C [1998] FamCA that:
“The parties are entitled to reasonably conduct their affairs post separation in a manner that is consistent with properly getting on with their lives.”
If you are concerned about you or your former partner’s spending throughout or post separation please contact our office to make a time to discuss your matter with one of our practitioners.
A general rule of thumb however, would be that if you’re planning a trip to Vegas, don’t rent a penthouse apartment and gamble a substantial amount of your asset pool on the tables in the Caesars Palace.
By Sarah Damon
The information in this blog does not constitute legal advice and cannot be relied upon by you. If you require advice specific to your situation, you must contact Caroline Counsel Family Lawyers for legal advice. The contents of this blog are relevant as at 10 September 2018. We recommend you obtain specific advice relevant to you and your family’s situation.
