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Post-separation expenses

Post-separation expenses

The treatment of post-separation expenses and, particularly, expenses that one or other party considers have been incurred unreasonably since separation, has occupied a lot of court time in recent years.

In Chorn and Hopkins [2004] FamCA 633, the full-court said (quoting an earlier decision of Marker) “It is well settled that save in exceptional circumstances a trial Judge should deal with the property as at the date of the hearing and make adjustments taking into account the various matters set out under s.79” and “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”.

In Omacini [2005], 33 Fam LR 134, the full-court identified three categories that justify notional add-backs (where money that existed previously may be notionally added back to assets available at hearing with the effect that some past expenditure or loss or missing asset forms part of the share of a party) as:

  1. legal fees;
  2. premature distribution of matrimonial assets; or
  3. where one party has embarked on a course of conduct designed to reduce value or has acted “recklessly, negligently or wantonly” so that value is reduced.

In Bevan [2013] FamCAFC 116, the majority of the full-court (by way of obiter dicta – more of a comment than something necessary in reaching a decision):

“We observe that ‘notional property’, which is sometimes ‘added back’ to a list of assets to account for the unilateral disposal of assets, is unlikely to constitute ‘property of the parties to the marriage or either of them’, and thus is not amenable to alteration under s 79. It is important to deal with such disposals carefully, recognising the assets no longer exist, but that the disposal of them forms part of the history of the marriage – and potentially an important part. As the question does not arise here, we need say nothing more on this topic, save to note that s 79(4) and in particular s 75(2)(o) gives ample scope to ensure a just and equitable outcome when dealing with the unilateral disposal of property.”

As a result of the above, the treatment of unreasonable post-separation expenditure is in a state of flux. It might be reasonable, however, to say that adjustments where post-separation expenditure has been reckless, negligent or wanton are still reasonably probable and that such adjustments are now more likely to occur via adjustment under section 75(2)(o) (any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account) than as a direct mathematical add-back.