In negotiating a family law property settlement, the law requires that each party must make a full and frank disclosure of their financial position. This is known as the “duty of disclosure”.
Duty of disclosure requires all parties to a family law property settlement to provide to each other party all information relevant to an issue in the case. This includes information recorded in a paper document or stored by some other means such as a computer storage device and also includes documents that the other party may not know about. This duty starts with the pre-action procedure before the case starts and continues until the case is finalised. Each party must continue to provide such information as circumstances change or more documents are created or come into that party’s possession, power or control.
Full and frank disclosure requires disclosing all sources of earnings, interest, income, property and other financial resources. This applies whether the property, financial resources and earnings are owned by or come to the party directly, or go to some other person or beneficiary (for example, the party’s child or de facto partner) or are held in corporations, trusts, company or other such structures.
Information about any property disposal whether by sale, transfer, assignment or gift, that was made in the year immediately before the separation of the parties or since the final separation and that may affect, defeat or deplete a claim, is also required to be disclosed.
Pursuant to Rule 13.04 of the Family Law Rules 2004, a party to a financial case must make full and frank disclosure of the party’s financial circumstances, including:
(a) the party’s earnings, including income that is paid or assigned to another party, person or legal entity;
(b) any vested or contingent interest in property;
(c) any vested or contingent interest in property owned by a legal entity that is fully or partially owned or controlled by a party;
(d) any income earned by a legal entity fully or partially owned or controlled by a party, including income that is paid or assigned to any other party, person or legal entity;
(e) the party’s other financial resources;
(f) any trust:
(i) of which the party is the appointor or trustee;
(ii) of which the party, the party’s child, spouse or de facto is an eligible beneficiary as to capital or income;
(iii) of which a corporation is an eligible beneficiary as to capital/income if the party, or the party’s child, spouse or de facto is a shareholder or director of the corporation;
(iv) over which the party has any direct or indirect power or control;
(v) of which the party has the direct or indirect power to remove or appoint a trustee;
(vi) of which the party has the power (whether subject to the concurrence of another person or not) to amend the terms;
(vii) of which the party has the power to disapprove a proposed amendment of the terms or the appointment or removal of a trustee; or
(viii) over which a corporation has power mentioned in sub-paragraphs (iv) to (vii), if the party, party’s child, spouse or de facto is a director or shareholder of the corporation;
(g) any disposal of property made by the party, a legal entity mentioned in paragraph (c), a corporation or trust mentioned in paragraph (f) that may affect or defeat a claim:
(i) in the 12 months immediately before the separation of the parties; or
(ii) since the final separation of the parties; and
(h) liabilities and contingent liabilities.
The documents that the Court would consider appropriate to include in the list of documents and exchange include:
(a) in a maintenance case:
(i) a copy of the party’s taxation return for the most recent financial year;
(ii) the party’s bank records for the 12 months ending on the date when the maintenance application was filed;
(iii) if the party receives wage or salary payments–the party’s 3 most recent pay slips;
(iv) if the party owns or controls a business–the business activity statements for the business for the previous 12 months; and
(v) any other document relevant to determining the income, expenses, assets, liabilities and financial resources of the party; and
(b) in a property settlement case:
(i) a copy of the party’s 3 most recent taxation returns and assessments;
(ii) documents about any superannuation interest of the party.
(iii) for a corporation in relation to which a party has a duty of disclosure under rule 13.04:
(A) a copy of financial statements for the 3 most recent financial years, including balance sheets, profit and loss accounts, depreciation schedules and taxation returns;
(B) a copy of the corporation’s most recent annual return that lists the directors and shareholders; and
(C) a copy of the corporation’s constitution and any amendments;
(iv) for a trust in relation to which a party has a duty of disclosure under rule 13.04:
(A) a copy of financial statements for the 3 most recent financial years, including balance sheets, profit and loss accounts, depreciation schedules, taxation returns; and
(B) a copy of the trust deed, including any amendments;
(v) for a partnership in relation to which a party has a duty of disclosure under rule 13.04:
(A) a copy of financial statements for the 3 most recent financial years, including balance sheets, profit and loss accounts, depreciation schedules,taxation returns; and
(B) a copy of the partnership agreement, including any amendments;
(vi) for a person or entity mentioned in sub-paragraph (i), (iii), (iv) or (v)–any business activity statements for the previous 12 months; and
(vii) unless the value is agreed, a market appraisal of the value of any item of property in which a party has an interest.
Failure to comply with the duty may result in the Court excluding evidence that is not disclosed or imposing a consequence, including punishment for contempt of court.
Property overseas is included as an asset and must be declared along with any other property in Australia. Any non-disclosure of property, whether it be in Australia or overseas will result in the risk of an unfavourable result to the non-disclosing party.
At Prime Lawyers, we have family law and divorce lawyers who can assist you in the calculation of your assets and in pressing for full disclosure to be made by the other party, including using the Court’s power of coercion. We pride ourselves on our commitment to helping clients resolve their matter by way of settlement, however, have the tenacity and expertise to press on through rigorous Court proceedings to ensure that our clients obtain a just and equitable result.
If you require assistance with a property settlement or in proceedings regarding the division of property, our experts at Prime Lawyers – Family Law Division can help. Contact us to make an appointment with a divorce lawyer at your nearest Prime Lawyers office.
We have offices in Sydney, Parramatta, Chatswood, Sutherland and Wollongong.