August 21, 2018

An Explanation of Add Backs in Family Law

If you have been or are going through a relationship breakdown then you might want to know about ‘Add Backs’.

Add backs in property matters arise when one party may have wasted or spent money on such things as gambling or the purchase of gifts for third parties. The obtaining of just and equitable orders may necessitate the moneys being added back into the pool of assets.

It has been held by the Courts that ‘there seems to be no appropriate basis for notionally adding back moneys that existed at separation but which have been subsequently spent on meeting reasonably incurred necessary living expenses’.

The Courts do not expect parties to a property matter to go into a state of suspended animation. Parties are entitled to continue to provide for their own support.

It has been held that there are three categories of cases where it is appropriate for Courts to determine it appropriate to notionally add back moneys to the pool of assets:

  1. Where the parties have expended moneys on legal fees
  2. Where there has been a premature distribution of matrimonial assets
  3. In the circumstances outlined in Kowaliw and Kowaliw (1981) FLC 91-092

The case has been quoted as guide lines for use in the exercise of a discretion.

The following extract from the case is very helpful and instructive –

‘As a statement of general principle, I am firmly of the view that financial losses incurred by parties or either of them in the course of the marriage whether such losses result from a joint and several liability, should be shared by them (although not necessarily equally) except in the following circumstances:
(a) Where one of the parties has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of the 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.

Conduct of the kind referred to in paragraphs (a) and (b) having economic consequences is clearly in my view relevant under Section 75(2)(o) to applications for settlement of property instituted under the provisions of Section 79.