On a marriage breakdown, if you believe that your spouse has overspent money which has resulted in fewer matrimonial assets being available as part of the divorce settlement, you could potentially make an argument to add back the funds spent (or some of them) to your spouse’s capital for redistribution. Family lawyers call this an “add back” argument.
Where the overspending happened after you separated it is capable of being taken into account. However, you will need to show that overspend was reckless or wanton.
It is harder to make an argument for add back if the spending was during the marriage while the husband and wife were still living together.
In the much publicised case of McCartney v Mills-McCartney an add back was successful where Heather Mills overspent to inflate her budget and financial requirements. In that rather acrimonious divorce, the court criticised Mills for her excessive demands, which were deemed unreasonable and far beyond what was justified.
The starting point on add back claims is to satisfy the court that the financial misconduct is conduct that it would be inequitable for the court to disregard. The following would be considered reckless or wanton:
- Large and/or unexpected or unexplained gifts or other payments to third parties, such as family members and friends.
- Lavish lifestyle expenditure with a new partner which is markedly different from what the expenditure was during the marriage.
- Unnecessary or unusual luxury purchases.
It you wish to bring an add back argument as part of your divorce case, you must take the steps below:
- Ensure any spending is considered as a whole to ensure it meets the criteria of being reckless.
- Consider the impact of an add back claim on the overall asset pot and fairness of the case.
- Make your argument for add back early on in your initial disclosure / Form E in box 4.4 detailing the misconduct.
- Raise the financial misconduct at the First Directions Appointment (i.e. your first hearing)
- At that first hearing the judge will consider your arguments on why you should be allowed to add back money that has already been spent.
- If the judge gives you permission to run a financial misconduct case, you will be asked to prepare a witness statement setting out your case in detail and your spouse will be given the opportunity to respond.
It is very important that you follow the above steps if you wish the court to consider your spouse’s overspend at any further hearings in your case. It is unlikely that a judge would allow you to raise such financial misconduct issues at any final hearing if you did not follow the correct procedure for dealing with add back cases from the outset.
Mira is a divorce lawyer at Branch Austin McCormick. She has over twenty years of experience in advising clients in relation to divorce and matrimonial financial disputes. Contact Mira or any of our family law team for expert advice on financial add back claims in divorce proceedings, we offer free initial consultations to discuss your situation and explain how we can help you throughout the divorce process.