Show me the money: the consequences of failing to disclose assets in family law proceedings
Parties to financial family law cases have an ongoing duty to disclose the material facts relating to their financial position. This principle was stated in In the marriage of Briese, where the court said that “a person … has a positive obligation to set out at an early stage [their] financial position in a clear and comprehensive manner.” The court went on to acknowledge that “the need for each party to understand the financial position of the other party is at the very heart of cases concerning property and maintenance.”
Obligation to disclose in the Family Law Rules and Federal Circuit Court Rules
The obligation is also set out by rule 13.04 of the Family Law Rules, which says that a party to financial proceedings needs to make full and frank disclosure of their financial circumstances.
For proceedings in the Federal Circuit Court of Australia, there is a similar provision found in rule 24.03 of the Federal Circuit Court Rules, which provides that a party to financial proceedings must file a financial statement or affidavit of financial circumstances providing full and frank disclosure of that party’s financial circumstances.
What you need to disclose in relation to your finances
These rules mean that you will need to disclose any information relevant to your financial position including:
- any interest you have in any property
- any income you receive from your employment or business interests
- any interest in a trust, as an appointor, trustee or beneficiary or if you are a shareholder or director of a corporation which is the beneficiary of a trust
- any interest in a corporation
- any gift you have made or property you have disposed of since separation
- any financial resources eg interest in a deceased estate, interest in a family trust as a discretionary beneficiary, entitlement to a pension
Consequences if you do not disclose
In Weir & Weir, the Full Court of the Family Court stated:
where there is clear evidence of non-disclosure …the Court should not be unduly cautious about making findings in favour of the other party.
Non-disclosure will work against a party where it has meant that the court is not able to accurately determine that party’s income and expenditure. This occurred in Black & Kellner, where the parties’ assets could not be fully determined because of obvious non-disclosures by the husband.
The obligation to disclose arises even where the asset pool is small for example, in Waterman & Waterman, the wife appealed property orders on the basis of suppression of evidence where the husband did not make adequate financial disclosure. The court held that the duty disclose is not “truncated” just because the asset pool is “quite modest”.
Disclosure is central to financial matters which come before the Family Court and the Federal Circuit Court of Australia. It is not enough to send financial documents piecemeal to your former partner. You must provide information and, if requested, explanation about your financial position to allow an understanding of your assets and liabilities.
The obligation to disclose continues throughout the proceedings. It is important that parties take these responsibilities seriously. Failure to disclose can result in a division of assets which is unfavourable to the party who has not disclosed appropriately.
If court proceedings have been finalised and it is discovered that a party to the proceedings did not disclose their true asset position, there may be grounds for the court to set aside the previous property orders and make new orders based on the true financial position.