My Ex Has Stolen/Wasted Our Savings – What Can I Do?

My Ex Has Stolen/Wasted Our Savings – What Can I Do?

“My partner has stolen funds from our offset/savings account! It’s not fair! What can I do?”

This is a very common worry that many people going through a separation face – often, it is made by the party who isn’t usually involved in the finances when they discover the theft well after the fact.

When my clients express this concern to me, I am generally able to reassure them that, if there is sufficient equity remaining in the existing assets, that the Court is empowered to either ‘add-back’ or adjust against the party who has stolen the joint assets, so that there is usually nothing to worry about.

The situation becomes far more complicated if the funds stolen represent the majority of the parties’ assets. In those cases, we need to urgently apply to the Court for an injunction against the dissipation of the funds and for Orders for the proceeds to be held in Trust pending the determination of the matter.

3 Categories of Add-Backs

In the Full Court of the Family Court decision of Trevi [2018] FamCAFC 173, it was confirmed that there are three categories of ‘add-backs’ recognised by the Courts under the Family Law Act:

1. Payment of Legal costs from marital funds
   • In the case of DJM v JLM [1998] FamCA 97, the trial Judge was held to be in error in failing to account for legal costs paid by the husband from the parties’ joint funds, from being part of the asset pool for division;
2. Premature distribution of assets by one party; and
   • In the case of Townsend (1994) 18 Fam LR 505, the Could held that it would be ‘unjust in the extreme’ to disregard the Husband’s conduct in distributing to himself a valuable asset in the marriage, to which the Wife had a legitimate interest. The Court held that ‘the correct way in which to deal with the husband’s receipt of those moneys is to bring them into the pool of assets on a notional basis and make a distribution accordingly’.
3. Intentional or reckless wastage or dissipation by one party.
   • In the case of Kowaliw [1981] FamCA 70 – the losses of assets where (a) one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or (b) 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, are to be accounted for as against that party who has occasioned the loss.

Recent Re-confirmation of Add-Backs and Adjustments

The Full Court of the Family Court in Vass [2015] FamCAFC 51 again confirmed the Family Court’s jurisdiction to do just that, saying, ‘There is no error committed per se in adjusting the party’s actual property interests by calculation involving notionally adding back into the pool sums which have been dissipated by the parties. We reject any suggestion that the decision of Bevan [2013] FamCAFC 116 or more particularly, the decision of the High Court in Stanford [2012] HCA 52 is authority for any necessary contrary solution’.

Exceptions to the Rule

However, as always, there are exceptions. The Full Court in Pates [2018] FamCAFC 171 said that the question of add-backs is ultimately discretionary and, further, they should be the exception rather than the rule because parties are ‘not expected to assume a state of suspended economic animation once their relationship ends’. In this case, some of the parties’ expenditure was ignored as reasonably incurred living expenses, some added-back and some taken into account as an adjustment.

Take Home

The issue of add-backs, adjustments, reasonable living expenses, intention/reckless wastage/dissipation of parties’ funds are a very complicated subset of Family Law Property disputes.

Critical in the success of the argument is that your lawyer clearly identifies, documents and presents the case for the add-backs or adjustments in the Court documents. It is crucial that your lawyer is aware of the nuances of the legal precedents and principles in this area.

JosephDavid Lawyers are Accredited Specialists in Family Law Property matters and we have successfully argued for add-backs and significant adjustments on our clients’ behalf.

We invite you to read through our many glowing 5-star Google reviews to satisfy yourself that when you engage our firm, your case is in very safe hands.

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