Add back $90,000.00 lost after separation not added back to pool of assets

28/07/2016

In a recent case in 2016 parties who had commenced living together in about 2002 and separated raised the issue as to whether an amount of $90,000.00 (which was a significant amount having regard to the other assets) should be added to the property pool. 

The $90,000.00 had been withdrawn from the Respondent’s Superannuation at the time of separation and thereafter she commenced a business.

The business failed and at the time of Hearing she had lost the whole of the $90,000 and had some outstanding business liabilities. 

The available property consisted of:

(a)      Property (real estate) agreed value $80,000.00.

(b)      Applicant’s Superannuation $50,000.00, and

(c)       The issue relating to the Respondent’s $90,000.00 Superannuation lost. 

The Family Court considered the evidence and found that the evidence did not show that the Respondent was “reckless, negligent or wanton”.  The Family Court held that the evidence did not show that success of the venture was impossible or even improbable.  The Family Court said that if the business was successful then each party would benefit.

The Family Court in this case further said that “another consideration is the small value of the pool compared with the $90,000.00 lost.  In those circumstances (ie if the $90,000 was added back) the Respondent’s share of the property available for distribution would be very small if not completely eliminated unless there was a basis for a contribution assessment and adjustment very much in her favour.

It appears that this may have significant influence in the decision.

This case indicates the need for evidence which if available to be properly presented; which may have resulted in a different outcome.

All in all this is an example where each party lost considerably.

One does not know what offers were made and other steps that were taken to attempt to have a resolution without the expensive litigation which had a very negative impact to the assets (having regard to the significant legal expenses) that were available in particular to the respondent.

Another example of add backs is legal fees paid by the parties.  As the general principle is that each party pay their own legal fees, actual legal fees paid are added back to the pool and the amount paid by the Wife is allocated to her share from the net pool and amount paid by the Husband is allocated to his share of the adjusted net pool. 

Please do not hesitate to telephone Richard Watson our experienced family lawyer if you are faced with a similar situation where “add backs” are a consideration in reaching a resolution of financial settlement and you are unsure as to your entitlements or share of the net asset pool.