What happens if the bank account has been cleaned out?

By Damien Bowen | 17 March 2017

A question a family lawyer is often asked is: what happens if my partner empties the joint account and spends the money? Does he or she have to give it back, or is it taken into account in some way?

When a couple separates, emotions are often highly charged and behaviour can be unpredictable. What happens if she spends their money on a new car, or he spends it on a holiday with his new girlfriend?

First, a distinction can be made between money used to buy an asset like a new car versus money spent on a holiday. In the case of a car, it is an asset which can be included in the pool of matrimonial assets for division between the parties. It doesn’t matter whether it was purchased after separation. It was purchased with money which was there before separation. So, in that case the money has not evaporated

However, if the money is spent on holiday with the new girlfriend, it’s gone. It’s not available for division between the parties. What does a judge do? Can the cost of the holiday be “added back” to the pool of assets? Unfortunately, there is no certain answer to that.

Up until 2012, a Family Court judge may have notionally “added back” to the matrimonial pool of assets the money spent on the holiday with a new girlfriend; treated it as an early distribution of assets and take the money from the share the husband would otherwise have received.

In 2012, the High Court in the case of Stanford, and later in 2013, the Full Court of the Family Court in the case of Bevan, dealt with the issue of “add-backs”. Instead of ruling that add-backs should always be applied, what the Court said was that where the money had been spent, where an asset or property no longer exists, the judge must “take it into account” in arriving at a just and equitable outcome for both parties.

A Family Court judge is given a wide discretion to take all the facts and circumstances of a case into account in arriving at a just and equitable outcome for both parties. This stipulation that a judge “take it into account” introduces a level of uncertainty and unpredictability which generally did not previously exist.

The law changes constantly. Sometimes the changes bring certainty and sometimes uncertainty. It is an unfortunate fact of life that the consequences of one party’s bad or unreasonable conduct cannot always be fairly recompensed in a settlement or Court judgment.

What can we learn from this? More than anything, if you are considering separating, or if separation has occurred, get prompt advice from a competent family lawyer.