Question
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12 June 2015

Marriage is a gamble - let's be honest

Family Law
Federal

Asked

Dear Mentor

In family law proceedings what would the court's view be of a husband charged or convicted over fraudulently withdrawing money from his wife's bank account in order to support a gambling habit?

Not realising her husband was responsible, the wife reported a series of unauthorised ATM withdrawals from her bank account to the police. Subsequent video footage revealed it was the husband making withdrawals - in a trickle fashion. She denies ever giving him her PIN number. He has allegedly confessed to her and other family members that it was him.

The property settlement occurs a year after divorce, but within the limitation period. The wife owns the matrimonial house, which is in her name only. The husband, for the majority of the period, has been paid in cash by his employer and has no payslips.

Your thoughts would be greatly appreciated.

Answered

Criminal behaviour is not strictly speaking of relevance to property settlement, which concerns itself with the fair and equitable distribution of the asset pool.

There are a number of issues with allegations of fraudulently withdrawing/spending money. The first is how much is it and how much is it in terms of the overall asset pool. Is it worth fighting over? The allegation of the fraudulent withdrawals could be a factor the court takes into consideration under section 75(2)(o) Family Law Act as any other fact or circumstance. But that doesn’t mean there will be an 'add back' of the amount.

There are a number of cases about gambling and waste. They include Kowaliw and Kowaliw (1981) FLC ¶91-092, D & D [2003] FMCAfam 74, L & L [2005] FamCA 335, Polonius & York [2010] FamCAFC 228, Polito & Polito [2009] FMCAfam 511. These cases were however decided before Stanford.

Stanford (2012) FLC93-495 put add backs into question because technically the parties cannot have a legal or equitable interest in money already spent. It’s safely agreed however that, even if a wasted amount can’t actually be 'added back', it can be considered under 75(2) and 79(4) contributions. 

Some recent cases dealing with the issue of add backs are Watson & Ling (2013) FLC ¶93-527 and Bevan & Bevan (2013) FLC ¶93-545.

The criminal proceedings might establish the extent of the waste.

A practical course in negotiating settlement may be to quantify the alleged wastage/theft and put it to the other side to determine if they will accept that those funds should be included in the asset pool. If there is no chance of that happening then issue proceedings arguing wastage/add back and in the alternative the 75(2)(o) factor.

Regards Mentor