Negative Contributions

The most concise statement of principles regarding negative contributions is that of Baker J in the case of Kowaliw & Kowaliw [1981] FamCa 70 (Kowaliw). Baker J found that a financial loss incurred by the parties during their marriage should ordinarily be shared between the parties, “although not necessarily equally”[1], except:   

1.    Where one of the parties embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets; or

2.    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.

Consequently, ever since Kowaliw, the Full Court has held that “add-backs” instituted under the provisions of Section 79 of the Family Law Act 1975 (Cth) (The Act) have been the exception and not the rule.

To determine whether a party’s conduct satisfies the legal definition of wastage as per Kowaliw, the other party must show that the conduct was reckless, negligent or wanton and/or reduced or minimised the value of their assets. An example of such behaviour is gambling. However, if the amount of funds spent per week is deemed to be a reasonable amount for recreational gambling, then it is unlikely that such conduct will satisfy the legal definition of wastage. In De Angelis & De Angelis (1993) FLC 93-133, the Full Court said:

“Gambling is for some people a form of entertainment and that a party can be no more criticised for spending money on it than the other party can be criticized for spending money on…other forms of entertainment.”

Accordingly, the bar is set quite high to prove waste. The onus of proof is on the Applicant on the balance of probabilities (D and D [2005] Fam CA 356 at 160).

If wastage is shown, the Court can adjust the property pool by adding back the funds wasted or make an adjustment under Section 75(2)(o) of the Act. It is a discretionary step and one that is only triggered once the Court is satisfied with the evidence. However, even then, the Court is not bound to take a strictly accounting-based approach.

The information contained in this article is intended to be of a general nature only and should not be relied upon as legal advice. Any legal matters should be discussed specifically with one of our lawyers.

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[1] Kowaliw & Kowaliw [1981] FLC 91-092 at 76,643 – 76,644.