Add-back in financial remedy proceedings usually involve re-attributing some or all of the money to the party who is responsible for reducing the assets available for distribution on divorce. Claims for add-backs are more likely to succeed when a party recklessly or wantonly spends or dissipates money that otherwise would have formed part of the matrimonial pot.
The spending must be reckless or wanton in nature. It is insufficient to argue that funds should be added back because one party has spent more on living and housing costs. The party seeking an add-back must demonstrate to the court that there has been financial misconduct in the other party’s behaviour and spending. Examples of reckless or wanton spending are:
- drug or alcohol misuse
- excessive purchases
- cosmetic surgery
- Gifts or transfers to other family members or new partners
The above list is not exhaustive but presents the typical situations where a party might seek a claim for those dissipated funds to be added back.
So what if the reckless spending took place after separation? This does not necessarily mean that those funds cannot be taken into account, but is less clear-cut than if the expenditure was during the marriage and relationship. The argument for add-back is likely to be weakened if:
- the reckless spending took place a long time ago and the parties have moved on from it, or
- the marriage continued in spite of it
In cases where there is little or no money, despite one party’s reckless spending, if there is genuinely no money there, then the needs of the parties will usually take priority over any add-back argument.
Add-back arguments can be difficult to run and will depend on the facts of the case. There are many cases historically where parties have been successful in having funds added back, equally there are many cases where those arguments have not been successful, despite very similar facts being presented to the court.
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