The Concept of Waste in Dividing Property of a Marriage

In determining how to divide the property of a marriage, the court considers many factors in making their decision of awarding assets to parties. One concept the court considers is the idea of ‘waste’. This concept is basically where one party to the marriage has reduced the marital property through a ‘negative contribution’. If a court makes this finding, it means that this individual will receive less than they otherwise would have received if they hadn’t reduced the assets in that way. This article provides some case examples of what the court considers as ‘waste’ and some issues to consider if you are going through a separation or property settlement.

Gambling

One such example of waste is gambling. In determining a party’s share of the remaining assets, the court will consider a party who squanders away the martial assets by frequenting the pokies. In the case of AB & GB (No.2) (2005) 193 FLR 387, the husband wasted $80k through gambling at clubs and hotels after having received a workers compensation payout of over $400k. The court held that the financial consequences of the husband’s losses were disastrous and it would be unjust to require the wife to share in the husband’s gambling losses. Both parties were only on modest incomes so could not afford this reckless loss of assets.

Dealing with Property

The case of Kowaliw & Kowaliw (1981) FLC 91-092 is the leading authority on this issue. In this case, the husband allowed potential purchasers of the house to live in the home rent-free for 12 months. As you can imagine, the wife was quite angry about her husband’s decision in dealing with their property, and the court agreed with her. They held that the husband ‘embarked on a course of conduct designed to reduce or minimise the effective value or worth of the matrimonial assets.’ The court considered that generally, financial loss incurred during the marriage should be shared between the parties, except where one party has committed an act designed to reduce the assets or where they ‘acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.’

Lifestyle Expenses

Another example of waste is where one party has spent the assets of the marriage on lavish lifestyle expenses. It is not enough that they enjoyed a high standard of living but the party has to show that their spouse had done so recklessly or negligently in a way that reduced their assets. For example, In Ledarn v Ledarn [2013] FamCA 858, the court found that the wife had spent a considerable amount of the matrimonial assets to purchase luxury vehicles and houses for their two children, allegedly against the husband’s wishes. The court held that they ‘could not ignore the amount of money the wife took’ and decided to reduce her entitlements because of this.

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As you can see the concept of waste can apply in a number of circumstances and is designed to provide a just and fair outcome to the parties based on their conduct with the marital property during the marriage.