What is Financial Disclosure in the Family Court?
Relationship breakdowns are difficult for everyone involved – both emotionally and financially. The Australian Family Law system provides a framework to ensure that persons going through a separation or divorce and seeking to divide up the assets of the relationship can achieve a fair and just property settlement. The duty of financial disclosure is an essential part of this framework. It ensures that all assets capable of forming part of the pool of property to be distributed between the parties have been identified, and in turn that each party can receive their due. Done well, financial disclosure can also speed up the litigation process and reduce costs.
What is the duty of disclosure?
In family law matters, both parties to the dispute are required to give full and frank (i.e. complete and honest) disclosure of all information and documents relevant to the proceedings. This includes information and material that may be known or possessed by one party but not the other. Disclosure has to be given to both the Court as well as to the other party, and is done so that a full picture of the relationship, the issues in question, and relevant considerations can be developed.
When and for how long does the duty of disclosure apply?
The duty is imposed upon the parties to the dispute from the pre-action stage – that is, before court proceedings begin. Importantly, the duty to disclose is continuing. This means that where new information or new circumstances relevant to the dispute arise at any point prior to the finalisation of the case, the parties must disclose those facts in a timely manner.
What must be disclosed in financial matters?
In family law proceedings involving financial (as opposed to parenting) disputes, the parties must provide information and documents demonstrating their respective financial circumstances – that is, their assets, liabilities, income earning capacity and personal expenditure. This includes any hard-copy or digital documents showing the person’s earnings and other financial interests and debts. Because the requirement is to disclose all valuable property which the person possesses or controls, it may not be enough that a party provides their bank records or payslips. A party will also be required to provide, for example:
- Copies of tax returns and assessments;
- Centrelink statements;
- Bank statements for all bank accounts held by the party individually and/or jointly with another person;
- Recent payslips;
- Superannuation statements;
- Credit card statements;
- Mortgage statements;
- Copies of loan agreements and loan statements;
- Details and appraisals/valuations of property owned by the party, including:
- real estate
- motor vehicles
- furniture and other household contents
- Interests in any partnership, business or trust
- Life insurance policies
- Other significant personal property
In addition, if a party has sold or given away any property in the year prior to separation or since separation, they have a duty to disclose this. This requirement works to prevent one party from covertly putting certain assets out of reach of the other and unfairly keeping that wealth for themselves in a situation where the other party may have some entitlement to those assets in the property settlement.
See here for information on the disclosure requirements in parenting cases.
What form does disclosure take?
A party can discharge their duty of disclosure in several ways. Ordinarily, it will be a matter of the parties exchanging documents: each party provides a schedule of documents and material that they agree to give electronic or physical access to when requested.
In property settlement proceedings, both parties must also go through the process of filing a financial statement in the Family Court or Federal Circuit Court. A financial statement is a document which outlines the financial circumstances of the party, containing details of the person’s earnings and other financial interests and debts (as set out above). It is an affidavit (i.e. a sworn document) by which a party affirms and acknowledges their duty of full and frank disclosure and that the contents of the statement is accurate, to the best of their knowledge. If the matter goes to trial, the parties will also be required to make a formal undertaking along these lines.
Sometimes there may be a problem with disclosure, such as an omission or error in the financial statement, including one that becomes apparent or arises after the financial statement has been filed. In that event, the party will need to file another affidavit providing further details and/or an amended financial statement. This is so that the property settlement can proceed on the basis of the most up-to-date and accurate information about the parties’ finances.
What are the consequences of non-disclosure or inadequate disclosure?
Financial disclosure in the Family Court is a serious matter. Failure to give full and frank disclosure may lead to a party being penalised in various ways, and may even result in a finding of criminal liability. It may compromise a party’s case and prospects of a good outcome. For instance, the court may form an unfavourable view of the party in terms of their credibility, or see fit to suspend or dismiss the proceedings altogether. Non-disclosure or inadequate/incomplete disclosure may also hurt the non-compliant party financially, as where the court makes a costs order against them (compelling them to pay the other party’s legal costs) or imposes a fine or term of imprisonment for contempt of court (the criminal offence of interfering with or undermining the authority of the court).
- In financial matters before the Family Court, financial disclosure operates to ensure efficient and equitable outcomes.
- The standard that must be observed is “full and frank” disclosure of one’s financial position.
- The parties must produce documents and information evidencing their assets and liabilities.
- Failure to disclose or inadequate disclosure may adversely impact the outcome of proceedings.
If you have questions or concerns regarding your financial disclosure obligations in a family law dispute, our specialist lawyers are available to help. Contact us on today for a free chat about your situation.
Book a free 15 minute call
Contact us for an obligation-free, 100% confidential chat.
Need help with your separation?
Our separation packages make the process easier and more affordable.