If you're going through a divorce, you may have come across the term wastage in Family Law. As a result, New South Lawyers' Family Law team explains why it's not about taking out the trash.

Wastage in Family Law. It's not what you think...

Wastage is an often unfortunate aspect of Family Law matters and the separation of families. In summary, wastage refers to the destruction or dissipation of assets. So as to reduce or minimise the value of the matrimonial pool.  This can occur in several ways. For example, these include selling an asset, transferring an asset into someone else’s name or reckless spending of cash funds. Ultimately, however, wastage makes for an unfair distribution of assets. This is because one spouse or partner intentionally squanders what rightfully belongs to the other as well.

Wastage: What the law says 

The Court is able to account for such issues under section 75(2)(o) of the Family Law Act 1975, which states as follows: “any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account”.  Marriage is typically an economic partnership, with couples sharing any economic wins or losses jointly. Therefore, this section only applies when one of the parties has:  1) embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or2) acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.

The test for wastage in Family Law

This "test" for wastage arose in the matter of Kowaliw v Kowaliw (1981) FCl 91-092 in which a Husband allowed a prospective purchaser of the former matrimonial property to reside in the home rent free. However, other substantive matters which have considered the principle of wastage include:  Firstly, De Angelis and De Angelis (2003) FLC 93-133. The Wife gambled away $154,000.00 of the marital funds (of which $84,000 was a joint contribution). Initially, the division of assets (45:55) favored the Husband. However, on appeal, the Full Court divided assets 50:50. And determined a payment of $42,000 should be made. This occurred due to the Wife's gambling.  Secondly, D & D [2003] FMCA Fam 74 in which the Husband purchased a vehicle under finance, after separation the Wife retained the vehicle and made significant payments upon the debt until the Husband cancelled the contract and the vehicle was repossessed. Subsequently, the vehicle sold at a price lower than the debt and the husband remained owed approximately $5,500. For this reason, the court held that cancelling the contract was "mean spirited".  And intended to deprive the children of the marriage of a vehicle important to their well-being. .

New South Lawyers’ communications are intended to provide commentary and general information and not relied upon as legal advice. Seek formal legal advice in particular transactions or on matters of interest arising from this communication.

To find out more, chat with a member of New South Lawyers' Family Law Team today.