3 Mar 2016

When a relationship breaks down, so can the trust between the parties. One party may find themselves in a situation where:

 

a) they are suspicious that the other party is hiding assets; or

 

b) the other party simply knows more about the finances than they do.

 

 

 

The Duty of Disclosure

 

Each party to family law proceedings is under an ongoing “duty of disclosure”. This means that they must provide each other with all the information and documents relevant to their case; r 13.01 of the Family Law Rules 2004 (“the Rules”). This duty of disclosure applies to both parenting and property matters.

 

 

 

The duty of disclosure is ongoing from the time that the parties begin discussing a property settlement (even if they have not commenced proceedings in the Family Court) until the matter is finalised; r 13.01(2) of the Rules. 

 

 

 

Types of Disclosure

 

A party may be called upon to provide disclosure in the following ways:

 

a) disclosure of their financial circumstances, as per division 13.1.2 of the Rules;

 

b) production of documents, as per division 13.2.1 of the Rules; and/or

 

c) answer specific questions, as per division 13.3 of the Rules.

 

 

 

Disclosure of Financial Circumstances

 

Pursuant to division 13.05 of the Rules, each party must complete a Form 13 Financial Statement, providing details of all assets, liabilities and financial resources in that party’s:

 

a) sole name; or

 

b) in joint names with any other person.

 

 

 

A party must file an amended Form 13 Financial Statement if their financial circumstances significantly change; r 13.06 of the Rules.

 

 

 

Disclosure and Production of Documents

 

Each party can request relevant documents from the other party. Usually, the basic types of documents disclosed and produced include:

 

a) tax returns;

 

b) bank statements;

 

c) pay slips;

 

d) superannuation statements;

 

e) Centrelink documents;

 

f) Child Support Assessments;

 

g) Certificates of Title;

 

h) mortgages;

 

i) land appraisals or valuations;

 

j) leases;

 

k) loan applications or agreements;

 

l) insurance policies;

 

m) share certificates;

 

n) trust deeds; and

 

o) business, partnership or company documents.

 

 

 

A party can only disclose documents that are in their possession or control; r 13.07 of the Rules. If a party does not possess or control specific documents requested by the other party, then they should inform the other party that this is the case.

 

 

 

Failing to Disclose Documents

 

If a party refuses, neglects or otherwise fails to disclose financial documents, then the other party can apply to the Family Court for an order compelling them to make that disclosure. Failing to comply with a Court order is a serious offence for which there are a range of penalties (see below).

 

 

 

Disclosure Undertaking

 

Immediately before a Trial, the Court will require each party to sign an undertaking stating that they:

 

a) have read Parts 13.1 (Disclosure between parties) and 13.2 (Duty of disclosure – documents) of the Rules;

 

b) have understood their obligations under the duty of disclosure;

 

c) have complied with their disclosure obligation; and

 

d) acknowledge that breach of the undertaking may be contempt of Court.

 

 

 

The Court will take into account whether each party has provided full and frank disclosure when deciding the outcome of the case.

 

 

 

Penalties

 

If a party fails to comply with their ongoing disclosure obligations, then the Court may impose a penalty. For example:

 

a) preventing that party from relying on the undisclosed information or document as evidence in their case;

 

b) dismissing all or part of their case;

 

c) ordering that party to pay a portion of the other party’s costs;

 

d) issuing a fine; or

 

e) sentencing that party to imprisonment for contempt of court.

 

 

 

Forensic Accounting

 

If disclosure is insufficient, then one or both parties can engage a forensic accountant to determine whether any assets have been concealed or not “discovered”. This exercise can be expensive, so it is important that there are reasonable grounds to believe that there are hidden assets before taking this kind of action. 

 

 

 

Malpass & Mayson (2000)

 

This is an example of a case where disclosure, and attempts to hide documents, were relevant.  The parties commenced living together in July 1995, married in February 1996 and separated in February 1998.   The Husband had extensive real estate and business interests at the beginning of the relationship. The wife had household items only.  In property proceedings, the Wife said that the Husband’s assets were worth approximately $7,000,000. The Husband said that he had a deficit of approximately $640,000.

 

 

 

The Husband said that a number of his financial records were stolen. The Court rejected this evidence, and was unimpressed by the the Husband failing to call his accountant as a witness.  The Court inferred from this that the Husband may have something to hide.  In judgement the Court found that the Husband had significantly understated the income from his business interests. The Court found that the net value of the Husband’s assets was at least $2,590,894.  This is a far cry from the Husband’s assessment of his net assets at -$640,000.

 

 

 

The Court made orders for the Wife to receive assets worth $550,000 plus spousal maintenance of $350 per week for a three year period.

 

 

 

This is general information only, and does not constitute specific legal advice. If you would like further information in relation to this matter or other legal matters please contact our office on Freecall 1800 609 945 or email us now.

 

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