Keep an eye on the bottom line

July 2014 . . . We all need to keep an eye on the bottom line; Mrs S learnt that that hard way in the Family Court.

When Mr W and Mrs S’s 20 year relationship ended, Mrs S was horrified to find that there was still $150,000 owing on their mortgage.  They had brought their home 17 years earlier, with a mortgage of $180,000.  Mrs S believed the mortgage had been repaid; she had made lump sum payments to the mortgage, which totalled $180,000.  Sometimes she gave the money directly to Mr W and sometimes she paid it directly to the Bank. It turned out that Mr W hadn’t repaid the mortgage with the money Mrs S gave him; he said he used it to fund household expenses. Mrs S thought it was more likely that Mr W had used the money to play pokies. Worse still, on 8 occasions over a 12 year period, Mr W had increased the loans with the Bank, without Mrs S’s knowledge or consent.  All the loans were secured against the home. Usually the loan applications were made in Mr W’s own name, and the Bank held him solely liable, but he had referred to Mrs S’s income in some instances. 

Mrs S applied to the Family Court for orders under the Property (Relationships) Act 1976. Mrs S sought an unequal division of relationship property because she alleged that Mr W’s misconduct was an extraordinary circumstance which meant that equal shares would be repugnant to justice.

In assessing Mrs S’s application, the Family Court Judge considered other similar cases. In one case a husband had forged a wife’s signature in support of a $15,000 loan. In another case a husband pleaded guilty to two charges of theft and seven charges of forgery. His spouse suffered from the financial consequences but also emotional trauma, shame and humiliation. In those cases the misconduct was considered serious. In a third case, a husband used the family home as security to buy another property without telling his wife.

As Mr W did not forge Mrs S’s signature, and there was nothing criminal about his behaviour this case wasn’t considered as serious. Mr W made individual, not joint loan applications and the bank considered him solely liable. Also the Judge noted that Mr W had admitted his misconduct.

The Family Court Judge also assessed the evidence available about Mr W’s gambling habit. As you might expect, it was difficult to assess what cash was spent on the pokies, from cash withdrawals, as opposed to ordinary household costs. Also, there was no evidence that Mr W’s work was affected by the gambling, or that it kept him away from home.

So Mrs S wasn’t able to establish extraordinary conduct on either of those grounds and the relationship property was divided equally between them. Mrs S appealed to the High Court, where she was similarly unsuccessful.

No doubt Mrs S was very angry that she had taken Mr W’s word, but as can be seen from this case, there needs to be significant and deliberate dishonesty before the Court will find extraordinary circumstances.   Keep an eye on your finances, always. If you have the slightest concern, seek urgent legal advice.