Matrimonial Losses – Sexually Transmitted Debt

Matrimonial Losses – Sexually Transmitted Debt

Matrimonial debt accrued during a marriage is shared by both husband and wife in most cases at the end of a marriage.

In a well-known case the Family Court stated that ‘marriage is for most couples an economic partnership’ and both parties ‘should share in the economic fruits of the marriage…, although not necessarily equally’. In other words, in the absence of proven waste, financial debt incurred by parties or either of them in the course of a marriage should be shared by the parties jointly.

The judge emphasised that to punish one party in a property case for loss of monies was an exception rather than the rule. The judge set down the following two exceptions to the general rule that marriage is an economic partnership and financial debts should be shared equally:

  1. One of the parties embarked on a course of conduct designed to reduce or minimise the value or worth of matrimonial assets; or
  2. Where one of the parties had acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimised their value.

In order for one party to prove economic misconduct by the other party so as to alleviate themselves of being saddled with the debt, the innocent party would need to produce evidence to prove that one party has embarked upon a course of conduct that has negatively impacted the value of matrimonial assets.

An example of evidence would be gambling on the share market, the races, not paying off a debt or, spending money on drugs. These examples show the intention of the party, the action by the party and the fact that the pool is diminished. Alternatively, you need produce evidence that the other party has acted recklessly, negligently or wantonly with the matrimonial assets which would also involve showing intention, action and loss to the pool.

For both exceptions, the most significant factors are that the action was performed unilaterally by the debtor party and that the innocent party did not enjoy the benefit of the debt. In other words, the debtor party must have incurred the debt without the other party being aware of it or without the assistance of the innocent party and where the innocent party derived no use of benefit of the debt.

An example of a shared debt is demonstrated in the case of Hoyer, whereby the husband listed a Civic Compliance debt for toll roads of $19,410 being a debt incurred during the relationship that he was not aware of until separation. The Court found that during the relationship a number of fines and penalties were incurred on the vehicle registered to the husband, and that it was unlikely the wife was driving at the times those fines and penalties were incurred. Surprisingly, the Court found that the Civic Compliance debt was a debt of the relationship for the following reasons:

  1. It was accepted by both parties that the husband was working throughout the relationship and that he applied his income to joint expenses of the relationship; and
  2. The majority of the fines were incurred during the course of the husband’s work.

The Kowaliw guidelines provide a steep hill to climb for an innocent party to prove economic misconduct against their debtor spouse in enlivening the discretionary jurisdiction of the Court.