To disclose, or not to disclose – that is the question (or whatever Shakespeare said)
A financial settlement with a former partner can be one of the most emotional financial decisions you will make in your lifetime. The decision to resolve the matter however cannot be made fairly, without both parties being truthful about their financial circumstances and the property they hold.
What is the duty of disclosure?
The duty of disclosure requires all parties to a family law settlement to provide to each other all information relevant to their financial circumstances. This is known as “full and frank disclosure” and is set out in the Family Court’s pre-action procedures and the Family Law Rules. Full and frank disclosure requires each party to disclose all sources of earnings, interest, income, property and other financial resources and applies to all paper and electronic documentation or information in their possession or control.
When does it apply?
Parties to a property matter have a duty to make full and frank disclosure at the beginning of their matter and the duty continues until the matter is finalised. Parties are required to provide timely and updated disclosure as additional documents come to hand.
What needs to be provided?
The information that will need to be provided depends on the specific facts of each individual case, however, the court will presume that each party is able to contact their bank to obtain bank statements or their accountant to obtain tax information as it relates to them.
To assist you or your client collate the relevant information, full and frank disclosure may consist of the following:
1. Bank statements for all accounts that are held either jointly or solely;
2. Income Tax Returns and Notices of Assessment;
3. Any interest in a corporation, company, trust or partnership – tax returns, financial statements, constitutions, trust deeds and partnership agreements as well as any amendments; Valuations or appraisal for any asset owned;
4. Records or statements of any stocks or shares owned;
5. Any records of a financial resources which may include an interest in a deceased estate, trust, personal injury or other general claim;
6. Earnings or income such as payslips, Centrelink statements and group certificates;
7. Statements for any superannuation funds and, in the event of a self-managed super fund, the trust deed and financial statements;
8. Any property purchased or disposed of that was made in the year prior to separation or following separation; and
9. Any financial contributions made at the commencement of the relationship, inheritances, gifts or compensation received during cohabitation, and any documents in relation to your current state of health, illness, condition or injury.
What happens if disclosure is not provided?
If a party fails to disclose information or documents that are relevant to the matter, it may have an adverse effect on their case.
The other party may be able to issue a subpoena to obtain information they believe is not being provided and if the information is unearthed, it could affect a parties credibility in court. In addition, lawyers have a duty to the court above their clients and may take appropriate action if their client refuses to make disclosure of a fact or document relevant to their case which may include ceasing to act for their client.
Judges take the position that if a party does not make full and frank disclosure, then they are likely hiding assets. If this is found to be the case, the Court may:
- Stay or dismiss all or part of the case;
- Order costs against you;
- Set aside any final Order or agreement reached; or
- Fine you or imprison you.
We recommend that all efforts are made to collate these documents early on to avoid any additional delays, acrimony or unnecessary legal costs in a property settlement.
If you require family law advice, please contact us on (07) 3009 8444 or [email protected] to arrange an initial consultation.