Information & Articles

Premature distributions, waste and addbacks

In considering what order, if any, should be made in property settlement matters between a separating couple (whether married or de facto), we need to consider the asset pool, the parties’ contributions (financial and non-financial), future needs factors and ensure the overall outcome is just and equitable in the circumstances of the case. Assets , liabilities, superannuation and any “add backs” which form part of the asset pool are all considered.

In practice, it is not that uncommon for there to have been a premature distribution of assets, particularly in cases where there is a lengthy period of time between separation and final hearing or orders being made by consent between the parties, or complaints made by a party that assets have been “wasted” by the other, or that assets should be “added back” to the pool for one reason or another.

There are three categories in which the Court is generally willing to notionally add-back property to the balance sheet, although these categories are not exclusive:

  1. Premature distribution of funds: If one party has spent monies post separation or disposed of any assets that existed at separation, the value of those assets (or some of the value depending on the purpose for which the monies were utilised) may be added back.
  2. Legal fees: The general rule in family law matters is that each party bear their own costs. If a party used joint funds to pay their legal fees, there is a strong argument that those funds should be added back to the property pool. This makes the evidence of the source of funds for payment of legal fees crucial for all clients.
  3. Wastage: where one party has “embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets” or has “acted recklessly, negligently or wantonly with matrimonial assets” with the effect of reducing their value.

Blanchfield Nicholls Director Tijana Petkovic presented at the Legalwise Advanced Family Law Conference on 15 March 2023 on the topic of ‘Premature distributions, waste and addbacks’ Find her paper here for more information.