Wasting Away: What Happens When Your Ex Spends Your Joint Money?

The husband allowed potential purchaser to live in the matrimonial house without paying rent. This decision was made solely by the husband with no consultation with the wife.

Baker J of the Family Court held that the husband was economically reckless in allowing this, which justified a finding that the losses should fall more heavily on the husband.

In the judgment, Baker J stated that:

[F]inancial losses incurred by parties or either of them in the course of a marriage whether such losses result from a joint or several liability, should be shared by them (although not necessarily equally) except in the following circumstances:

(a) where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or

(b) where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.

That is, the general principle is that financial losses are to be shared between spouses during a property settlement, unless one spouse had deliberately or recklessly minimised the value of the matrimonial assets (wastage).

Nabel and Nabel

This case concerned wastage through gambling. It was found that the husband lost approximately $1000 per month during the relationship through gambling. He also lost a $15,000 bonus in one week. Furthermore, upon receiving a WorkCover payout, he spent approximately $40,000 to $50,000 on poker machines. This all amounted to approximately $120,000 during the relationship and $50,000 post separation lost on gambling. The Court held that “[t]hat money could have been better spent giving the family a more comfortable existence" and that"[t]he money spent on gambling amounts to wastage.” On the basis of this finding of wastage, the court granted the wife 60% of the value of the matrimonial home.

Lawson and Lawson

In another gambling case, the wife claimed that the money lost by the husband through his playing cards amounted to wastage. The Court found that during the relationship, the husband played cards for 4-5 hours on 2-3 nights per week which, when combined with money spent on alcohol, amounted to $12,000 spent in 6 months. Overall, the wastage on gambling and drinking calculated by the court was at least $32,000. This led the judge to conclude that “the parties would be considerably better off financially had the husband not spent his income recklessly in the way he did”, resulting in a finding of wastage.

Bowers and Bowers

In this case, the wife argued that the husband wasted money on illicit substances. The husband spent $300-$900 per week on illicit substances and he conceded that he was dependent on these substances; however, the court held that this did not amount to wastage. This is because, among other reasons, “the illicit substances purchased by the husband was for both of their use and that the purchase of illicit substances was a joint expense”. Furthermore, the Court recognised that there was “long term mutual use of illicit substances”. Therefore, unlike in other cases where the money or assets were spent by one spouse recklessly or deliberately in order to minimise the value of matrimonial assets, the money here was spent together which means that there was no wastage.

Beckwith and Dass

Gambling and the purchasing of illicit drugs also arose in this case. The mother alleged that there was $18,000 of wastage by the father due to his expenditures on illicit drugs and gambling. However, the court did not find that the money had been “deliberately or wantonly wasted by him” as the mother’s evidence was insufficient in “establish[ing] that the expenditure… can be reliably traced to gambling and the purchase of illicit substances”. Therefore, wastage was not found in this case.

Polonius and York

In a different focus to the above cases, this case was concerned with the failure of the husband to file business tax returns. The judge considered the principle in Kowaliw, noting that to constitute wastage the expenditures must deliberately or recklessly diminish the value of matrimonial assets. Here, the judge held that the wastage was not deliberate or reckless, rather they agreed with the lower court in deciding that the failure to file tax returns was a result of “poor business practices”. Therefore, wastage was not found in this case.