Financial Disclosure in Family Law.
So, what exactly is a Duty of Disclosure and why might it apply to me?
I have worked with many couples during the course of my legal career where, although separation has been amicable, when it has come to the financial settlement professional support has been an absolute necessity to ensure that there are no nasty surprises along the way.
And the golden rule that I always advise is that all parties must provide a full and frank disclosure about their finances. It’s the law and it’s simply not in your interest to ‘hide’ any information. The information has to be up to date and relevant from the outset of the case right up until it is completed, as we all know, things to do change and the time for settlement can vary.
So what should this disclosure include? It can be anything including your wages or earnings, including from any business interests, any interests in property, any interests in companies and businesses, trusts. Even the disposal, whether it be the transfer, sale, assignment or gift of a business or trust must be disclosed in full.
The Rules concerning this legislation state that there must be an exchange of documents outlining a party’s financial interests at least two days before the first court date. The documents to be exchanged should include:
business activity statements
trust statements; and/or
appraisals of any property owned
any other financial resources you have access to and could include things like frequent flyer points.
The court requires parties to file the prescribed Financial Statement court form which allows for the disclosure of all assets and liabilities of the parties. Any additional information that has not been provided for in the Financial Statement form can be provided by way of affidavit, which essentially is a statement of truth that can later be used as evidence.
What might happen if you or your partner don’t comply?
There are quite severe consequences for failing to comply, not least that any documents not disclosed will not be allowed to be produced in court which could impact your argument. But essentially non-disclosure can amount to contempt of court and the party who does not disclose may be ordered to pay costs, plus the court can dismiss all or part of a party’s case where the required disclosure has not been provided – two drastic situations that you do not want to happen!
It’s not just your lawyer trying to tick all the boxes - we have seen this happen in cases including Black & Kellner . In this case the husband did not disclose his finances fully and had made false statements in relation to his financial status. The judge in this case stated that non-disclosure will negatively affect a party where that party’s income and expenditure have not been able to be determined by the court. Not only was his appeal not allowed, the husband was ordered to pay the wife’s costs of the appeal.
In 2017 in the Family Law Court of Appeal, the wife in the matter of Trang & Kingsley , failed to account for her use of $250,000 both before and after separation. The court also noted concerns that she may not have disclosed the identity and value of property interests she may have had overseas. As the court found that she had not made full and frank disclosure, the identified pool of money remained with the husband and the wife was not awarded any of that property.