An ‘Add back’ is where a court adds back into the matrimonial pot money which one party has used or spent and which has reduced the matrimonial assets. However, following the case of Vaughan v Vaughan  the court will only do this where it regards the spending as ‘reckless and wanton’ expenditure.
In Vaughan the husband had suffered a serious depressive illness, lost his job as a pilot and squandered a large amount of money after the parties separated, which included £80,000 on gambling. The decision of the Court of Appeal was that this money should be added back into the matrimonial pot before division.
By contrast, the ‘wanton dissipation of assets’ was considered earlier this year in the case of MAP v MFP  and this has provided some fresh guidance on this issue.
In this case the parties had been married for 40 years during which time the husband had built a very successful business. In the latter years of the marriage the husband became addicted to cocaine and suffered from depression. He spent a lot of money on rehabilitation treatments, but had often relapsed. The wife asked the court to ‘add back’ into the pot the large sums of money which she said the husband had spent recklessly and wantonly on cocaine, prostitutes, alcohol and therapy after their separation.
Interestingly the Judge declined to add back c£230k the husband spent on drugs therapy on the basis that the husband had an addiction and he was trying to address this – he was considered ill and in need of treatment. Perhaps most controversially, the court also declined to add back the c£250k the husband had allegedly spent on drugs and prostitutes. The reason being that the Judge took the view that this was part of the husband’s ‘personality flaw’ and was not motivated by a wish to reduce the wife’s financial claims. The Judge commented…
‘…It may have been morally culpable. Overall, it was irresponsible. But I find that this was not deliberate or wanton dissipation. It would be wrong to add it back’
At first glance, the distinction between the two cases appears somewhat puzzling. Unlike the Judge in Vaughan who found the husband’s behaviour to be overwhelmingly irresponsible, the judge in MAP was persuaded that the husband’s spending was not only as a result of his addiction which had manifested itself during the marriage, but also that it represented an element of his personality. In the words of the Judge ‘the wife had to take her spouse as she found him’.
What can we learn from this recent case? In short, running an add back argument continues to be undeniably difficult. It is only likely to succeed in exceptional cases. There needs to be clear financial misconduct and the conduct will need to be gross and obvious. Motivation will be key. If the expenditure is linked to addiction of other character flaws then the court may well take the view that it forms part of the ups and downs of marriage. The court will not allow a party to ‘cherry pick’ aspects of their spouse’s personality. Frustratingly for the non-spending spouse, it leaves a smaller pot available to meet needs. Immediately after separation it is vital to get advice to look at ensuring what remains is not spent in a reckless and self-serving way as absent something exceptional it is likely to be ignored in the final reckoning.