Buy­ing food, drinks and women”; an assess­ment of par­ties’ con­duct as it relates to fam­i­ly law

Par­ties who have been in a de fac­to rela­tion­ship (het­ero­sex­u­al or same sex) or mar­riage and have sep­a­rat­ed some­times ask if his or her (or the oth­er par­ty’s) con­duct has any impact on their finan­cial set­tle­ment. Com­mon ques­tions include:

  1. Will I get more if my partner/​spouse has cheat­ed on me?”

  2. Will I get more if my partner/​spouse is the one who decid­ed to leave?”

  3. Will I get more if my partner/​spouse gambles?”

  4. Will I get more if my partner/​spouse is a heavy drinker?”

The answers to these ques­tions is usu­al­ly no. A par­ty’s con­duct nor­mal­ly has no impact on his or her finan­cial set­tle­ment. How­ev­er, in some sit­u­a­tions, con­duct can affect the final divi­sion of the prop­er­ty pool.

In 1981, Chisholm and Jessep con­clud­ed that

in deter­min­ing main­te­nance and prop­er­ty appli­ca­tions under the Fam­i­ly Law Act, it is not rel­e­vant that one spouse was respon­si­ble for the break­down of the mar­riage, or com­mit­ted what was for­mer­ly regard­ed as a mat­ri­mo­ni­al offence…… it is not the inten­tion of the Fam­i­ly Law Act to use finan­cial orders for the pur­pose of reward­ing or pun­ish­ing the behav­iour of mar­ried people……”

How­ev­er, they went on to say, the Court is required to

have regard to cer­tain types of con­duct close­ly relat­ed to finan­cial mat­ters… con­duct of a par­ty that unrea­son­ably reduces the val­ue of prop­er­ty of the par­ties or of either of them or con­duct of a par­ty which unrea­son­ably weak­ens his or her finan­cial posi­tion.”[1]

At Step 1: Poten­tial Effect on Bal­ance Sheet

Pre Stan­ford[2], in the mat­ter of Kowaliw & Kowaliw[3], the Court stat­ed that:

finan­cial loss­es incurred by par­ties or either of them in the course of a marriage…should be shared…except…where 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 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.”

How­ev­er, the posi­tion has like­ly changed post Stan­ford. The recent deci­sion of Owen[4] affirms that funds are unlike­ly to be added back to the bal­ance sheet. There are still some cas­es where the Court may adjust the par­ties’ exist­ing prop­er­ty by notion­al­ly adding back sums which have been wasted.

For exam­ple, in the mat­ter of Black­well & Tran­tor[5], the wife was able to iden­ti­fy $17,000 of the hus­band’s expen­di­ture on inter­net dat­ing and dat­ing gen­er­al­ly and the Court allowed that $17,000 to be added back.

In the mat­ter of Ash­er & Ash­er[6], the hus­band gave evi­dence that he had spent mon­ey post sep­a­ra­tion on buy­ing food, drinks, and women” and pros­ti­tu­tion, pros­ti­tu­tion, pros­ti­tu­tion”, hav­ing point­ed out to the Court that these were very expen­sive ser­vices. These lia­bil­i­ties were delet­ed from the Bal­ance Sheet.

How­ev­er, these are the excep­tion rather than the rule and spe­cif­ic evi­dence will need to be pre­sent­ed if seek­ing an add back and sub­mis­sions made on how that might be just and equi­table in the spe­cif­ic cir­cum­stances of the case. 

Step 2: Poten­tial Effect on Contributions

In the 1997 Full Court deci­sion of Ken­non & Ken­non[7] the court remarked that

where there is a course of vio­lent con­duct by one par­ty towards the oth­er dur­ing the mar­riage which is demon­strat­ed to have had a sig­nif­i­cant adverse impact upon that par­ty’s con­tri­bu­tions to the mar­riage, or…to have made his or her con­tri­bu­tions sig­nif­i­cant­ly more ardu­ous than they ought to have been, that is a fac­tor which a tri­al judge is enti­tled to take into account in assess­ing the par­ties’ respec­tive contributions.”

The impor­tant ele­ments of this prin­ci­ple are that the par­ty seek­ing an adjust­ment in their favour on the basis of con­tri­bu­tions must prove to the Court both that:

  1. there has been a course of vio­lent con­duct dur­ing the rela­tion­ship and pri­or to sep­a­ra­tion; and

  2. it has in fact had sig­nif­i­cant adverse impact on his or her con­tri­bu­tions or made his or her con­tri­bu­tions sig­nif­i­cant­ly more arduous.

The poten­tial­ly neg­a­tive con­tri­bu­tion of the offend­er in these sit­u­a­tions is not tak­en into account; only the adjust­ment made in favour of the vic­tim on the basis of his or her contribution.

Two of the judges in Ken­non[8] stat­ed that the appli­ca­tion of the prin­ci­ple was not lim­it­ed to domes­tic vio­lence. The Full Court in Spag­nar­di & Spag­nar­di[9] con­firmed that the prin­ci­ple includ­ed mis­con­duct gen­er­al­ly rather than only in rela­tion to mat­ters involv­ing domes­tic violence.

How­ev­er, this prin­ci­ple has not always been fol­lowed in sub­se­quent cas­es. The tri­al judge in Palmer & Palmer[10] con­sid­ered that he was not bound by the prin­ci­ple and declined to fol­low it. The tri­al judge in Kozovs­ka & Kozovs­ki[11] stat­ed that:

Clear­ly the adjust­ment that the Full Court con­tem­plat­ed in its deci­sion in Ken­non was not meant to be com­pen­sato­ry but more in the nature of per­haps sym­bol­ic recognition.”

There is clear dif­fi­cul­ty in quan­ti­fy­ing how this adjust­ment should be made and how a par­ty is to pro­duce evi­dence about the quan­tifi­able effect of the con­duct on their capac­i­ty to con­tribute. Cer­tain­ly if rely­ing on the prin­ci­ple, the par­ty doing so must be able to lead detailed evi­dence with respect to the con­duct and the phys­i­cal and men­tal impact on him or her as a result.

Step 3: Poten­tial Effect on Future Needs

One par­ty’s con­duct may have an impact on the future needs of the oth­er par­ty. For exam­ple, fam­i­ly vio­lence, phys­i­cal, men­tal and emo­tion­al abuse may play a sig­nif­i­cant part in a per­son­’s abil­i­ty to find employ­ment when the rela­tion­ship or mar­riage is dis­solved. The unem­ployed or under­em­ployed par­ty may receive an adjust­ment in his or her favour for future needs but must show evi­dence that the con­duct caused the impact.

Giv­en that the impact of con­duct on the Bal­ance Sheet may not be tak­en into account, the Court may con­sid­er it in this sec­tion. For instance, if it is shown that a par­ty has gam­bled funds (the total loss­es being known or unknown) or con­sumed alco­hol exces­sive­ly (the total expen­di­ture being known or unknown), this may poten­tial­ly rep­re­sent an adjust­ment in the oth­er par­ty’s favour when it comes to a final prop­er­ty set­tle­ment pur­suant to Sec­tion 75(2)(o) of the Fam­i­ly Law Act 1975 which relates to any fact or cir­cum­stances, which in the opin­ion of the Court, the jus­tice of the case requires to be tak­en into account’.

What does this mean for a party?

The hun­dreds of pages of bank state­ments and cred­it card state­ments that are exchanged in a fam­i­ly law mat­ter may hold valu­able infor­ma­tion which allows a par­ty to make a case in their favour when it comes to assess­ing contributions.

If a par­ty can pro­vide evi­dence to prove (or dis­prove, should the appli­ca­tion be made against him or her) that there has been a course of con­duct by the oth­er par­ty that has affect­ed his or her capac­i­ty to make con­tri­bu­tions (which is more than an infer­ence), it is pos­si­ble for him or her to obtain an adjust­ment for con­tri­bu­tions. How­ev­er, the adjust­ment is only grant­ed in a nar­row band’ of cas­es depend­ing on cir­cum­stances and tri­al judges may use their dis­cre­tion not to apply the prin­ci­ple at all. 

If a par­ty can pro­vide evi­dence to prove or dis­prove that the con­duct of a par­ty caused them to have increased future needs such as impact­ing on their health, future earn­ing capac­i­ty, or such oth­er mat­ter that needs to be tak­en into con­sid­er­a­tion, it is also pos­si­ble to obtain an adjust­ment for future needs factors.

The exist­ing prin­ci­ples con­cern­ing the rel­e­vance of domes­tic vio­lence and mis­con­duct has been crit­i­cised by a num­ber of tri­al judges and aca­d­e­mics, as well as some mem­bers of the legal pro­fes­sion. How­ev­er, amend­ments in this area are unlike­ly to occur quick­ly and at the time of writ­ing remain as above.

[1] Chisholm, R and Jes­sup, O. Fault and Finan­cial Adjust­ment under the Fam­i­ly Law Act [1981] UNSW Law Jour­nal 43

[2] Stan­ford v Stan­ford (2012) 247 CLR 108

[3] Kowaliw & Kowaliw [1981] FLC 91 – 092

[4] Owen & Owen [2015] FCCA 2823

[5] [2014] FCCA 1667

[6] [2016] FCCA 2072

[7] Ken­non & Ken­non [1997] Fam­CA 27; (1997) FLC 92 – 757

[8] Ibid

[9] Spag­nar­di & Spag­nar­di [2003] Fam­CA 905

[10] Palmer & Palmer [2010] FMCAfam999

[11] Kozovs­ka & Kozovs­ki [2009] FAM­CAfam 1014