Wastage Claims in Property Settlements – How Spending Affects Asset Division
Family Law: 27 January 2026
Author: Krystel Ong - Our People
From June 2025, courts can formally consider “wastage” when dividing property after separation. Learn how excessive spending, gambling and asset dissipation may affect your property settlement.
When couples who have separated divide their property, the Court’s task is not limited to identifying what assets and debts exist at the date of hearing. It may also consider how those assets were dealt with during the relationship and after separation, particularly where one party has deliberately or recklessly dissipated property.
From June 2025, amendments to the Family Law Act 1975 (Cth) have now referenced wastage as a relevant factor when determining the parties’ current and future circumstances. This change has important implications for parties involved in property settlements, especially where there are allegations of excessive spending, gambling or asset dissipation.
What is "wastage" in family law?
Wastage refers to situations where one party has intentionally or recklessly reduced the value of the parties’ property or financial resources, to the detriment of the other party.
Historically, wastage was not expressly mentioned in family law legislation and was instead developed through case law. The Courts accepted that, in most relationships, both parties share the benefit of financial gains and the burden of financial losses. However, where losses arise from conduct that is deliberate, reckless or economically irresponsible by either party, the Court may intervene and make an adjustment in a final property law settlement to prevent unfairness.
Legislative changes from June 2025
The recent June 2025 amendments to the Family Law Act introduced a new list of factors the Court must consider when assessing the current and future circumstances of the parties. One of these new factors is: whether either party has intentionally or recklessly caused material wastage of property or financial resources.
This reform clarifies that wastage is no longer simply a discretionary consideration drawn from case law, and is now an express statutory factor to be considered when determining whether a property settlement is just and equitable.
Kowaliw & Kowaliw
The principles underpinning wastage claims were set out in the decision of Kowaliw & Kowaliw [1981] FamCA 70.
In that case, the Full Court recognised two key exceptions to the general rule that losses are shared:
- where a party embarks on a course of conduct designed to reduce or minimise the value of matrimonial assets; and
- where a party acts recklessly, negligently or wantonly with those assets, resulting in a significant reduction in their value.
The Court distinguished between ordinary financial risk-taking for the benefit of the family and conduct that crosses the line into economic recklessness.
In Kowaliw, the husband’s business debts were not treated as wastage, as his involvement in the business was aimed at improving the family’s financial position. However, the Court did find wastage where the husband allowed a prospective purchaser to occupy the former matrimonial home rent-free for an extended period without the wife’s knowledge or consent. That conduct was found to be economically reckless and the husband was held solely responsible for certain outgoings during that time.
Kowaliw remains highly influential and is likely to continue guiding the Court’s approach under the amended legislation.
Gambling as a form of wastage
One of the most common wastage allegations arises in cases involving excessive gambling by one party. However, these cases are not straightforward as not all gambling will amount to wastage.
The Court will closely examine the facts of each particular case, including:
- the scale of the gambling losses relative to the overall asset pool;
- whether gambling was a mutual or accepted activity during the relationship;
- whether the gambling occurred during the relationship or after separation; and
- whether the gambling was connected to illness or addiction.
The Full Court has made it clear that the mere existence of gambling losses is not enough. In the decision of Hamilton & Thomas
[2008] FamCAFC 8 the Court held that the losses must be so disproportionate that they justify an adjustment to the division of property.
By contrast, in the decision of De Angelis & De Angelis (1999) the wife’s gambling losses of over $150,000 were considered very significant in the context of the parties’ overall assets, warranting an adjustment in the husband’s favour.
A recent example of the Court applying wastage principles is in the decision of Musa & Waheed [2025] FedCFamC2F 215.
In that case, the husband incurred net gambling losses of approximately $142,845 over two separate periods. The Court rejected the husband’s explanations, including suggestions that friends used his gambling card or that losses could not be attributed to him, finding that his evidence lacked credibility.
The Court accepted that the gambling losses represented wastage of matrimonial property and took that conduct into account when assessing the wife’s future needs and overall entitlement.
How does the Court deal with wastage?
If wastage is established, parties often assume the lost funds will be “added back” into the asset pool. In reality, add-backs are uncommon and remain the exception rather than the rule.
The more typical approach, particularly following the June 2025 amendments, is for the Court to reflect wastage by:
- adjusting the percentage division of the remaining property; and/or
- making an adjustment when assessing the parties’ current and future circumstances.
This reflects the legislative intention that wastage be considered as part of the broader assessment of what is just and equitable, rather than a mere accounting exercise.
What to do if you suspect wastage
If you are concerned that your former partner is dissipating assets, obtaining early legal advice is critical. Depending on the circumstances, options may include:
- seeking injunctions to restrain the disposal of assets or further borrowing;
- applying for orders under section 106B of the Family Law Act to set aside transactions designed to defeat a property claim; and
- gathering financial evidence to support a wastage allegation.
Each case turns on its own facts and it is important that you seek independent legal advice on your particular matter.
How can we help?
Wastage claims can significantly affect the outcome of a property settlement, but they are complex and often heavily contested. Not all spending will amount to wastage and the Court will carefully assess the surrounding circumstances before making any adjustment to ensure there is a “just and equitable” division of property.
If you are concerned about excessive spending, gambling, or asset dissipation, or if you are responding to a wastage allegation, our family law team can provide clear advice and strategic guidance tailored to your situation. Please contact Krystel Ong, Senior Associate at Aitken Partners at kong@aitken.com.au or 8600 6023.