YES! Since the commencement of the Family Law Act in 1975 (“FLA”) parties who separate have an obligation to provide what is known as “financial disclosure” to the other party.
50 years ago when the Family Court (as it then was) first started operating, financial matters were much simpler. Most people had a house with a mortgage, one or two bank accounts and one or two cars. Superannuation did not really exist and was not considered in most cases.
Over the decades, peoples financial lives have become more complicated with multiple bank accounts, corporate structures including companies and family trusts and superannuation entitlements which can be complex particularly if they are defined benefit entitlements or self-managed superannuation funds (“SMSF”).
Progressively, the Court has made it clear to the profession and to parties participating in the Court process that the Courts take the obligation for each party to make financial disclosure to the other party seriously and if there is a failure in fulfilling that obligation there will be financial consequences. The financial consequences can consist of the Court making orders for a more generous property settlement in favour of the other party (penalising the non-disclosing party for not making disclosure) or making an order for costs against the non-disclosing party.
The Court always has a very broad and unfettered discretion to adjust property interests between separated couples.
The type of documents that are required to be disclosed are comprised of all documents relevant to the parties’ financial circumstances and would include:-
- Payslips;
- Income tax returns;
- Contracts of employment;
- Bank statements (for all accounts including mortgage statements, savings accounts, cheque accounts, term deposits, credit cards, bank statements for any entity owned or controlled by a party such as a family trust, company and/or SMSF);
- Investments such as shares, cryptocurrency and bullion;
- Trust deeds;
- Financial statements of companies and trusts; and
- Superannuation statements.
The obligation to provide financial disclosure is a continuing one and does not end. until financial matters are resolved by way of Consent Orders being made or a Financial Agreement (“BFA”) being entered into.
Even if there is a change of financial circumstances after separation, that change and documents relevant to it need to be disclosed. Such a change could consist of a windfall gain such as a lottery win or an inheritance, redundancy or something similar. This is so during the negotiating process even after parties have signed documents to formalise a settlement by way of an Application for Consent Orders and Minute of Consent Orders which have been sent to Court but the Court has not yet formalised the settlement. Sometimes there can be a delay of weeks from the time documents are sent to Court and the Court actually making the Orders. If there is a change in circumstances during that period that change needs to be disclosed. If the change in financial circumstances is not disclosed the other party can make an application to set the Orders aside on the basis that they would not have proceeded with the settlement if they had known of the change in circumstances. In this situation, if the change in circumstances is sufficient enough the Court will set aside the Orders and obviously the credibility of the nondisclosing party will be adversely affected.
The duty to provide financial disclosure is absolute and ongoing until matters are formalised. There are very specific rules requiring parties to engage in Pre-Action Procedure (for more information, see Rule 4.01 and Schedule 1 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Family Law Rules). The parties duty to make disclosure is a serious obligation and there can, and most likely will be, significant financial consequences if the duty is not fulfilled.
Pearsons Lawyers
This is general advice only. Pearsons Lawyers have a team of specialist family lawyers who can provide timely and accurate advice on all matters that need to be dealt with following a separation including parenting and property matters. To arrange your free initial consultation contact Pearsons Lawyers today on 1300 699 688 and “know where you stand”.
