Negative Contributions to Property Pool Waste or Loss of Assets

06/04/2016

Watson and Watson received an enquiry from Jenny following separation from her Husband.  The issues involved related to time that the Husband/Father spent with the children and secondly property settlement and spousal maintenance.  

Jenny and her Husband, with our help, resolved the issues relating to the children.

Jenny and her Husband lived in a property which was owned by her Husband when they were married.  

Unbeknown to Jenny her Husband sold the former matrimonial home shortly after separation.  The net proceeds after discharge of the mortgage were essentially given away, mainly gambled away by the Husband.  

The Husband had good employment with reasonable income.  

Dennis Grant an experienced Family Law Practitioner then took steps to enable us to prove the loss of value of the asset and the waste which resulted in a significant reduction in the value of the asset (property pool).

An Application was made to the Federal Circuit Court of Australia which resulted in an award for periodic spousal maintenance to the Wife to cover the reduced assets which would otherwise have been available for property settlement.  

When a Judge is determining how to divide property (or when solicitors are attempting to negotiate a property division) the issue of the contributions made by each of the spouses or partners is central.  The Family Law Act requires the Court to take into account the direct financial contributions of each spouse or partner to the acquisition, maintenance or improvement of the property.  Also taken into account are the indirect contributions to the acquisition, maintenance and improvement of the property as well as the contributions made for the care of the family.  

In the usual case the contributions made by each spouse or partner result in an increase in the value of property.  This is not always the position.  There are certain circumstances where one party may have by his or her actions (or inactions) reduced the value of property or caused the loss of property, including assets notwithstanding their nature.

There are various terms used to describe this situation.  Sometimes the actions are referred to as such as “waste” (of assets) or it is said that one party has made a negative contribution.  In other words, what that party has done, reduced the value of assets available for distribution or has in some cases (such as gambling) resulted in a loss of the assets altogether.  

Examples of where this type of waste can occur include where:-
•    One party has spent money on gambling or extravagant discretionary expenditure.
•    Where one party has made very poor business or financial decisions which resulted in a loss to both spouses or partners.

Section 75(2)(o) allows a Court to take into account factors that it regards as relevant to the division of property, including “waste” or negative contributions.

It is difficult in most circumstances to prove negative contributions.

In the recent case Watson & Watson was able to ascertain the extent of the “waste” and to obtain an Order for periodic spousal maintenance in circumstances where the husband had effectively spent the whole of the sale proceeds of the only asset of the marriage (the former matrimonial home) on his discretionary expenditure which was gambling.  

An Application was made to the Federal Circuit Court of Australia which resulted in an award of periodic spousal maintenance to the wife in circumstances where the husband had wasted all sale proceeds on gambling.   

Richard Watson and the experienced team of Family Lawyers at Watson and Watson are experienced in all aspects of Family Law.  If you wish to obtain initial advice or a second opinion please telephone Richard Watson or his Personal Assistant Shereen Da Gloria to obtain cost effective advice and experienced legal representation for your important family law matters.
 

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