By Olivia Burgess, Seasonal Clerk

For better or for worse, for richer or for poorer…but what happens when your ex-partner has spent a portion of your shared asset pool on gambling? With around 35% of Australian adults seen to partake in ‘regular gambling’ (Australian Institute of Health and Welfare, 2018-19 statistics) this is becoming an increasingly topical issue in Family Law proceedings involving the division of assets.

Wastage in Family Law proceedings is money lost in the course of the relationship by one party which gives cause to the possibly of an addback or recalculation of the division of assets to accord for the losses incurred by the other party. For example, if the Court finds that a party’s gambling has significantly impacted the value of the matrimonial pool, the Court may grant a higher percentage division to the other non-gambling party pursuant to section 75(2)(o) of the Family Law Act 1975, or by making a percentage adjustment on account of a party’s “negative” contribution as a result of the Court’s wide discretionary powers.

Gambling can be recognised as a legitimate form of entertainment by the Court. As per Kowaliw v Kowaliw (1981), financial losses incurred by either party during the marriage should be shared by them when calculating financial assets. However, an exception is often found in gambling where it is perceived by the Court that the gambling was done so recklessly, negligently or wantonly. As such, whether money spent on gambling will impact the division of assets in Family Law Proceedings depends on a range of contextual factors.

A relevant factor to consider is the proportion of the assets seen to have been wasted through gambling. In the case of Hamilton v Thomas [2008], the Wife was proven to have gambled $20,800 over 4 years of the $820,000 asset pool. This was not considered by the Court as a sufficient amount to be considered as wastage for the purposes of calculating addbacks. As such, it was found that the simple mere existence of losses from gambling is not enough.

Instead, the losses must be seen to be disproportionate to the positive contributions of the party and thus give rise for the need to adjust the division of capital upon marital breakdown.

This reasoning was used in the case of De Angelis and De Angelis (1999) FamCA 1609 in which the sum lost by the wife  through gambling of $154,220 was “very high in the context of the total value of the parties’ overall assets”. The nett asset pool in this case was approximately $530,040.

A further element to consider is the possible existence of psychological illness and the impacts this can have upon the losses incurred through gambling.  As found in the case of Crampton v Crampton (2006), the degree of wantonness necessary to cause a Court to calculate an addback in the circumstance of gambling is lost in circumstances where a diagnosable psychiatric disorder is seen to be the cause of the wasted funds.

The discussion of gambling, money wastage and the division of assets in Family Law Proceedings is a difficult one to have. We encourage anyone in need of guidance or further information get in contact with us and be connected with one of our experienced Family Law solicitors.