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Wastage in family law

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The overarching purpose of the Federal Circuit and Family Court of Australia (“the Court”) is to facilitate the just resolution of disputes as quickly, inexpensively and efficiently as possible while ensuring the safety of families and children.

The Family Law Act 1975 (Cth) (“the Act”) sets out the rules and guidelines for the division of property and assets when a marriage or de facto relationship ends. This includes the treatment of any property that may have been disposed of or “wasted” during the course of the relationship.

WHAT IS WASTAGE IN FAMILY LAW?

The term wastage refers to when a party to a relationship intentionally, recklessly or negligently reduces the net property pool available for distribution between the parties during the relationship or after separation.

The Federal Circuit and Family Court of Australia deals with wasted or disposed of issues under section 75(2)(o) of the Act, which states that “any fact or circumstance which, in the opinion of the Court, the justice of the case requires to be taken into account”.

One of the leading cases in this area is the case of Kowaliw. In this case, the court was asked to consider whether a husband’s waste of the matrimonial assets during the marriage should be considered when dividing the property. The court held that waste is a relevant consideration when dividing property and that a party’s waste of the matrimonial assets can impact property division.

Some examples of wastage acts include:

  • Spending money on non-essential items, such as luxury vacations, gambling, or prostitution; or
  • Selling or transferring marital assets without proper reason or consent from the other party; or
  • The destruction or neglect of property, such as neglecting home maintenance or not properly caring for a business; or
  • Incurring debt or non-essential purposes, such as taking out loans for gambling or making unwise investments; or
  • Disposing of assets in a way that deliberately reduces their value, such as selling a property for less than market value.
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Understanding Wastage in Family Law

In this informative video, Senior Associate Sophie Goossens dives into the concept of “wastage” in family law proceedings. She explains what it means and how it can impact property settlement matters. If you suspect there is wastage of matrimonial assets, Sophie offers practical advice on what you can do to address the situation. Whether you’re going through a divorce or just want to be informed, this video provides valuable insights into an important aspect of family law.

If you suspect that your former spouse or partner has wasted matrimonial assets, there are a few steps that you may take to address this issue. For example, you may wish to seek that the Court makes an injunction order that requires a party to refrain from doing a specific act, such as disposing of assets or incurring debt. Another option is to seek that the Court makes a section 106B order that enables the court to set aside a transaction if that transaction may defeat an existing or anticipated property settlement order.

It’s important to note that not all wastage is considered equal, and the court will consider the circumstances surrounding the waste, such as the timing, purpose, and extent of the waste, when deciding how to divide the property. Additionally, the amount or asset that has been wasted by one party may be added back to net property pool to ensure that there is a “just and equitable” division of the property pool.

If you have any questions or need legal advice with respect to wastage and how they may impact your property settlement, please reach out to us for a confidential consultation.

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