Chapter 13 of the Family Law Rules 2004 sets out the full obligations of the parties. The Family Court of Australia describes the Duty of Disclosure as requiring all parties to a family law dispute to provide to each other party all information relevant to an issue in the case.
There are strict rules in relation to full and frank disclosure in financial cases. Parties must disclose all sources of earnings, income, property and other financial resources. The parties are also required under the duty to disclose information about any property that is disposed of whether by sale, assignment or gift, in the year immediately before separation or since the final separation.
In the initial stages of negotiations between lawyers in relation to a Family Law Property Settlement, the parties are required to provide all financial documents to their lawyer and copies of the documents are then provided to the other party. This disclosure of financial information is essential before a lawyer can advise their client in relation to what their likely entitlements would be if the matter proceeded to Court.
Where the parties are able to come to agreement between themselves in Family Law Property Settlement matters, either with or without the assistance of other parties such as lawyers and mediators, for the agreement to be binding, the agreement can be finalised by drawing up a document called a ‘Binding Financial Agreement’ or by way of ‘Consent Orders’ being made by the Court.
Failure to provide full and frank financial disclosure can result in the Court not allowing certain information to be used as evidence, the Court staying or dismissing all or part of a case or a costs order being made against one of the parties. If the Court finds a party is guilty of contempt of Court, the party may be fined or even imprisoned.
In the recent case of Carter & Carter, heard in the Federal Circuit Court of Australia, the Wife’s legal representative argued that the Husband had failed to produce current bank statements for any of his accounts and had failed to make full and frank disclosure. The Judge acknowledged that full and frank disclosure of material facts is a fundamental requirement in all financial matters. Whilst the Husband had not produced current bank statements for his accounts, he had given sworn evidence that he had obtained up to date balances for the accounts. When the Husband was cross-examined in Court by the Wife’s legal representatives they did not challenge the reliability of the account balances provided by the Husband. The Judge was not satisfied that the Husband had failed to make full and frank disclosure of the two bank accounts as alleged by the Wife.
Parties to a Family Law Property Settlement are under a duty of full and frank disclosure. Such disclosure must be made by both parties so that the Court is fully informed of the financial positions of the parties. This process must be followed regardless of whether the parties come to agreement between themselves or if the decision is determined by the Court. It is only once both past and current financial information has been exchanged that a lawyer can advise clients on their entitlements under the law. Our experienced Family Law team can guide you through this process and advise you in relation to what financial documents are required to be disclosed.