In Family Law matters, each party is legally required to provide “full and frank” financial disclosure. In basic terms, this means that you must disclose complete and truthful details of your past and present financial circumstances to the other party. The duty to provide financial disclosure also extends to your future financial circumstances. This includes where you are a beneficiary to a deceased Estate.
What does financial disclosure involve?
Financial disclosure involves exchanging financial documents with the other party. This process assists the parties to identify the asset pool which is available for division. Without this crucial step, navigating your way through a property settlement can be extremely difficult, time consuming and expensive.
In the Family Court, this rule is governed by Chapter 13 of the Family Law Rules 2004. In the Federal Circuit Court, it is outlined in Part 24 of the Federal Circuit Court Rules 2001.
The above Rules set out which financial documents must be exchanged, and when. It is important to note that the duty of disclosure, in accordance with Rule 13.07 of the Family Law Rules, extends to each document that “is or has been in the possession, or under the control, of the party disclosing the document”.
Do I need to provide financial disclosure if the other party hasn't?
Yes. Your obligation to provide financial disclosure is not dependent on the other party doing so. You have to comply with your legal obligations even if the other party refuses to do so.
It is your job to put your case, and all of your evidence, before the Court. The Court will not do it for you. Therefore, if the other party refuses to provide financial disclosure, you must take all necessary steps to obtain as much information as possible from other sources. This may require subpoenas (a Court Order compelling the production of information/documents/evidence to the Court) to relevant third parties.
What happens if I do not disclose my financial circumstances?
There are a variety of consequences which may flow from a failure to provide full and frank financial disclosure. These includes the following:
- The Judge may strike out a party’s Application. This means that it is removed from the Court List. This usually occurs where there are specific Orders for financial disclosure and a party has deliberately failed to comply.
- The Judge may order costs against the party who has failed to provide financial disclosure.
- The Judge may draw inferences and make findings against the party who has failed to provide financial disclosure.
- The Court may set aside a Property Order. Section 79A of the Family Law Act 1975 sets out the circumstances in which the Court can set aside an Order in relation to property. This includes the power to set aside an Order where the Court is satisfied that there has been a “miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance”.
In a recent Family Law Final Hearing in which I acted for the Applicant Wife, the Judge was satisfied that the Respondent Husband had failed to properly disclose how he had dealt with a significant amount of joint funds post-separation.
In the Reasons for Judgment, the Judge said, “It is unfortunate that the Husband seemed to speak in generalities even when pressed. He was unable to quantify expenses with any real precision, even though he knew that the application of these funds was a significant matter of concern to the Wife and she had been asking for explanations. The Husband’s foolhardy stance places the Court in a difficult position. The Husband has failed to provide specific evidence of the expenditure of the parties’ funds”.
Her Honour went on to reference the case of Weir & Weir  16 Fam LR 154 where the Full Court of the Family Court said:
“Once it has been established that there has been a deliberate non-disclosure the Court should not be unduly cautious about making findings in favour of the innocent party.
The Court’s jurisdiction to make an order going beyond the identified property arises once there is sufficient evidence to support a finding that a party has not made full disclosure of his or her assets.”
In this case, in which I acted for the “innocent party” as they call them in Weir & Weir, the Judge awarded my client 70% of the matrimonial asset pool, not including superannuation. There was an extra 10% adjustment to my client, specifically because of the other party’s deliberate non-disclosure.
Her Honour stated:
“I would have assessed the outcome as being 60/40 per cent division in favour of the wife…however, the husband’s retention of funds as discussed is a significant matter, particularly as it would have increased the asset pool available for division. Accordingly, in my view, the appropriate outcome is a 70/30 per cent division of the non-superannuation assets.”
In these circumstances, it is extremely important to document your requests for financial disclosure in writing.