Has your ex wasted money? What you need to know about wastage in family law

Most couples don’t make every financial decision perfectly every time. But if you believe your partner or ex-partner has squandered assets, it can be an important issue in a property settlement.

Unfortunately, this behaviour is common enough that there is a legal term for it – ‘wastage’. But the good news is that you have rights, and the legal system is here to help. Here we’ll talk about what wastage looks like, the law and recent legal changes, major cases and your next steps if you think your ex has been doing this.

What’s wastage in family law?

‘Wastage’ in family law is when one person intentionally, recklessly or negligently spends or dissipates money or assets that might otherwise have been shared between you. This could have happened throughout your marriage, or you might have only discovered it after you had already separated.

Maybe you discovered a bunch of major gambling debts during your marriage. Perhaps your ex funded an affair out of your shared bank accounts. Or possibly you’ve spotted some other shady withdrawals since your separation. Naturally, this can cause you to feel hurt, frustrated and angry. 

Prior to 2025, there was no legislative acknowledgement of this behaviour. While it was recognised in case law, there was no formal law to govern it. But the Family Law Amendment Act 2024 changed that by introducing the concept of wastage (which includes reckless or intentional wastage). 

Now, when the courts assess the current and future circumstances of each party in property settlements, they must also consider the effect that any intentional or reckless material wastage by one partner had on individual or shared property or financial resources.

Common examples of wastage

But what does wastage actually look like in practice? Common examples include:

• Major gambling losses, whether they occurred before or after separation
• Accumulating debts for non-essential purposes
• Draining bank accounts or making substantial, unexplained withdrawals
• Extravagant or unexplained spending, for example on luxury goods or lavish gifts to new partners
• Selling assets to family or friends below market value
• Deliberate or reckless mismanagement or withdrawal from superannuation
• Deliberate destruction or neglect of a property that reduces its value
• Using matrimonial funds to fund an affair
• Reckless or speculative business decisions that destroy asset value

What isn’t considered wastage?

It’s important to draw a distinction between material wastage in family law and a reasonable use of funds – even if the spending is generous. The key difference is proving ill intent, recklessness or negligence. 

The following examples are not typically considered wastage:

• Reasonable day-to-day living expenses, even if they’re relatively large
• Reasonable spending
• Business losses that don’t have the required element of recklessness 
• Financial losses, accumulated debts or bad investments if made in good faith
• Spending or losses based on shared decisions
• Legal costs

Case law example

Kowaliw & Kowaliw [1981] was previously the case that was relied on to demonstrate the difference between what can and cannot be considered wastage in family law. In that case, the court found that economically reckless behaviour that results in reduced asset value and accumulated debt can shift the responsibility of the loss to the liable party. 

After separation, the husband allowed a prospective buyer to live in the former family home rent-free for 12 months without a lease or certainty of purchase and without consulting the ex-wife. During that time, he also failed to pay mortgage repayments, rates and maintenance levies. The court found that the husband acted recklessly by letting a potential buyer live in the home without completing the purchase first and so was solely responsible for paying the loan repayments, rates and maintenance levies from when he vacated the home to the date of the sale. 

However, the wife also tried to argue that financial debts accrued when the company the husband held an interest in suffered losses and was wound up were also his sole responsibility. The court rejected this, considering them a shared loss because the husband did not act with the intent of reducing the couple’s assets. 

How does wastage affect your property settlement?

In the past, the court might have ‘fixed’ wastage by adding these losses as ‘add-backs’ to the balance sheet of assets and liabilities. But recent updates to the law have signalled an end to the inclusion of add-backs in cases where the property or assets no longer exist. This means that instead of notionally adding the wasted/lost value back into the shared asset pool before dividing it, the courts may take the wastage into consideration when assessing contributions and circumstances of each party. And that also means that the courts now have greater flexibility in how they deal with this wastage, which can have a significant impact on the outcome of a property settlement.

How do you prove wastage?

Wastage can be difficult to prove in court. It’s far better to try to prevent it from happening, though of course that isn’t always possible. If you do suspect that your partner has wasted your shared assets, completing the following steps will give you the best chance of proving wastage:

• Act as soon as possible – the quicker you act, the better chance you have of gathering evidence before the other party covers their tracks
• Gather evidence in the form of bank statements, purchase receipts, transfer registers, gambling records, etc
• Consult an expert – specialised professionals such as forensic accountants can help you to find missing funds or transfer records
• Force disclosure – your lawyer can advise you on how to encourage or require full disclosure from the other party
• Demonstrate the wastage – find evidence to show the court how the behaviour of the other party directly reduced the asset pool
• Look for evidence of recklessness, negligence or ill intent – the timing of transactions can be important here, as well as establishing patterns of behaviour

What can you do if you think your partner is wasting assets?

If it’s happening now (pre-settlement):

• Act fast to protect your assets – apply for an injunction to stop the behaviour, if possible
• Document everything and consult a lawyer as soon as possible

If it’s already happened:

• Apply for an order under Section 106B of the Family Law Act to undo or limit a transaction
• Seek expert guidance from a family law expert
• Raise the matter in your property settlement proceedings

Talk to a family lawyer about your situation

Wastage is incredibly frustrating – but there are actions you can take to prevent it from happening or to have it considered in your legal proceedings.

If you suspect your current or former partner is engaging in wastage, our family lawyers can help you to understand your options and act fast to protect your assets.

We operate with sensitivity and efficiency. Get in touch today for a confidential conversation to discuss your best next steps.