Decisions whether to 'add back' property are made at the Court's discretion.
In general, the family court takes property of the marriage as they find it, as at the date of trial. Its view is that the parties’ lives do not end at separation and they can be expected to live reasonable.
It is not uncommon for one party in family court proceedings to allege that another person has disposed of or distributed assets, which would otherwise be included in the matrimonial asset pool available for distribution to both parties.
These situations can occur when one party unilaterally does any of the following:
- Legal Fees
- Waste gambles and loses funds
- gives away assets to friends or family members;
Legal Fees – the Family Law Act says each party should pay their own legal costs.
Waste – Where a party has intentionally acted to reduce the asset pool available for division, or acted recklessly or negligently and thereby caused a reduction in the asset pool, the wasted monies can be considered in determining the outcome; and
Spending Monies/Disposing of Asset – If one party spends monies existing at separation, or disposes of and receives money for an asset that existed at separation (thereby depleting the asset pool), the value of the asset or monies as at separation can be added back to that party..
A good example of the practical treatment of add backs was described by FM Altobelli in the case of Lisle  FMCAfam 1466.
”14. Let me deal with the first issue which was that of add-backs. The husband asserts that there should be an add-back as notional property on the wife's part, of $21,000 being money withdrawn from the parties' joint Macquarie Bank Account and used, as the evidence indeed indicated, for payment of the wife's legal fees and some personal expenditure.
The wife's counsel, Mr Watkins, quite properly conceded that it was appropriate to make that add-back and I record that it is the finding I would have made on the evidence anyway and it was a sensible concession to make and therefore I add back $21,000 as notional property attributable to the wife.
15. Now the wife asserts that there should be an add-back on the husband's part in a notional sense of $12,000 that he received from insurance claims that were used by him to pay his legal fees. The evidence confirms that this is the case and indeed there was no real submission from the husband's counsel to the contrary and I agree it is appropriate that $12,000 be added back as notional property on the husband's part.
16. The wife further submits that there should be an add back on the husband's part of $15,612 which he withdrew from the Macquarie Bank Account and used to pay the mortgage on the former matrimonial home which he occupied at all relevant times.
All of this occurred at a time when he continued to earn his normal income. The evidence was that prior to the husband using the funds in question for this purpose, $700 per fortnight out of his salary was used to pay the mortgage.
The bank statements in question indeed indicate that repayments on the mortgage averaged about $1,600 per calendar month and that these payments were made using the $15,612 in question.
17. Now, if the husband had continued to use $700 per fortnight out of his own wage, out of his own salary, to pay the mortgage, he would have paid the equivalent of $1516 per calendar month. In other words; $700 per fortnight multiplied by 26 divided by 12.
Now the wife's case is that the husband, in effect, saved $1516 per calendar month of his own post-separation earnings and used $1,600 per calendar month of joint funds drawn out of a joint liability to service a joint debt.
Now to be fair, from the husband's perspective, he says that the wife received a similar amount which he thought the wife would use to pay her share of the mortgage. But the fact is, that is not what happened. The evidence indicates that she used at least part of this money to pay for legals and that had already been determined.
18. In any event, even if what the husband said is correct, I am not satisfied that it provides a reason not to simply look at what he has done and assess whether it is an add-back. I think it is. I think the fact is that he saved $700 per fortnight whilst using joint funds to pay a joint debt.
I am satisfied that there should be an add-back but not in the sum of $15,612 because the money was half his, the debt that he paid was half his, and therefore to avoid double dipping, the add-back should be limited to $7,800.
It must be remembered in this context that he remained in occupation of the former matrimonial home. Accordingly, there will be an add-back, by way of notional property on the husband's share, of $7,800.
19. Having regard to the findings I have made about add-backs and taking into account that there is an agreed asset pool, the final property pool consisting of both superannuation and non-superannuation assets is as follows.
Firstly, there is the former matrimonial home at Property F which is jointly owned and has an agreed value of 410,000.
There is the wife's IAG shares, $725, there is the wife's motor vehicle, a Kia Sportage, $8500, there is the wife's contents, $5,000, the husband's caravan, $31,000, the add backs for the husband of $19,800, the add backs for the wife of $21,000, the contents owned by the husband, $10,000, the wife's super of $34,069, the husband's super of $73,126. That's a total gross pool combined of $613,220.
20. There are liabilities consisting of the mortgages that have a combined balance of $228,000. That means the net combined pool is $385,220 which consists of superannuation assets $107,195 and non-superannuation assets, $278,625.”