The Court takes non-disclosure by a party very seriously. Non-disclosure by a party is a reason that the Court may decide to vary or set aside a property order.
In such a circumstance, the suppression of disclosure would need to qualify as a miscarriage of justice by the Court.
First we will explain what the duty of disclosure is, then we will explore the consequences of non-disclosure and what must be proved in order to set aside the property order.
What is the duty of disclosure
In financial matters, both parties have a duty of disclosure which requires all parties to give full and frank disclosure to the Court and to each other, all information and documents relevant to the case regarding your income (including income from a trust), income earning capacity, your interest in assets (e.g. property, shares, cars, chattels) whether vested or contingent, liabilities, superannuation, financial resources, and your financial circumstances. This includes information about any disposal of property and any interest you have in a trust.
When does it apply
The duty of full and frank disclosure arises in the pre-action stage of proceedings and continues until final orders are made and the case has finalised.
If you are a party to family law proceedings or in a family law dispute where court proceedings have not yet been commenced, the duty applies to you.
What documents do I need to provide to avoid allegations of non-disclosure?
A summary of the usual disclosure documents that you will likely be requested to provide to the other party’s lawyer, in satisfaction of your duty of disclosure, as set out in Rule 6.06(3) of the Family Law Rules, is as follows:
- Three most recent ATO tax returns and notices of assessment;
- Two recent payslips;
- statements for all bank accounts in your name or joint names with another party for the last twelve (12) months;
- A copy of your current superannuation statement;
- If you are a member of a self-managed superannuation fund, a copy of the trust deed and financial statements for the last (3) financial years;
- Mortgage statements for all property owned by you/on your behalf for the last twelve (12) months;
- Credit card statements for the last twelve (12) months;
- Personal loan statements for all loans in your name, for the last twelve (12) months;
- A copy of any loan agreements regarding loans between family/friends;
- At least one real estate appraisal for all properties in your name or which you have an interest in;
- Redbook or other valuation for all motor vehicles in your name;
- Valuation/appraisal for all other assets of significance in your name (e.g. boat/tractor/jet ski);
- Evidence of the disposal of any property in the twelve months prior to separation or since separation;
- If you have an interest in a trust:
- A copy of the trust deed;
- financial statements for the 3 most recent financial years; including balance sheets, profit and loss accounts, depreciation schedules and taxation returns;
- any business activity statements for the past 12 months.
- If you have an interest in a private company
- financial statements for the three (3) most recent financial years, including balance sheets, profit and loss accounts, depreciation schedules and taxation returns;
- a copy of the corporation’s most recent annual return that lists the directors and shareholders;
- if relevant, a copy of the corporation’s constitution;
- any business activity statements for the past 12 months.
- If you are involved in a partnership:
- The partnership agreement;
- financial statements for the three (3) most recent financial years, including balance sheets, profit and loss accounts, depreciation schedules and taxation returns;
- any business activity statements for the past 12 months.
The above is not an exhaustive list and you may have a duty to provide further disclosure documents depending on your particular financial circumstances and the assets, liabilities and superannuation that you own or have control over.
When you file an application to the court you must file a financial statement which addresses your assets, liabilities, superannuation and your financial circumstances. If the financial statement does not fully meet your duty of disclosure, an affidavit must be filed giving further particulars.
If your financial circumstances change, you must file an Amended Financial Statement within 21 days after the change of circumstances.
What if I fail to comply with my duty of disclosure?
You are required to sign an undertaking prior to the first court date, wherein you undertake to the court that you understand your duty to give full and frank disclosure of all information and documents relevant to the issues in your case in a timely manner, that you have complied with your duty of disclosure to date, and that you will continue to comply with your duty of disclosure until the conclusion of your case.
Signing an undertaking is an important and serious step in court proceedings. An undertaking is a promise to the Court which is as binding as a Court order. A breach of an undertaking is treated the same way as a breach of an order made by the court.
You must not make a statement or sign an undertaking if you know, or should reasonably know, that it is false or misleading. If you fail to disclose or file an undertaking or file a false undertaking, the Court may refuse to allow you to use that document as evidence in your case, dismiss all or part of your case, make adverse findings against you, order costs against you, fine or imprison you for contempt of court.
If final court orders have been made and you have failed to provide full and frank disclosure to the other party prior to these orders being made, you may be at risk of the other party applying to have those orders varied or set aside and new orders made having regard to the information that was not disclosed by you.
What do I need to prove to have a property order set aside for non-disclosure?
Under section 79A (or s90SN if de facto) a Court may set aside a property order if there has been a miscarriage of justice by reason of supression of evidence, including failure to disclose relevant information), or any other circumstance.
Given most matters will resolve through negotiation and the subsequent making of consent orders with respect to the division of property between the parties, the necessity of full and frank disclosure of financial matters to the court and to the other party are basic and fundamental to the process of the Court and the aims of the legislation.
This is because fundamental to a decision to agree to terms designed to bring finality to the financial relationship is knowledge of the assets, liabilities financial resources and financial positions of the parties to which the agreed terms pertain.
It follows that the failure by a party to disclose their true position with respect to the assets, liabilities and superannuation robs the other party of their informed consent to the order.
Importantly, the non-disclosure does not have to involve hidden assets, a deliberate attempt to defraud or deceive the other party or a third party being provided disclosure of certain documents that the other party has not. A failure to disclose at the heart of a section 79A / 90SM case does not need to be deliberate. Rather, full and frank disclosure in the context of the orders made by consent is essential to the consent of the parties being free and informed consent.
Consent to an order must be informed consent. If that consent is based on misleading or inadequate information then there may be a miscarriage of justice, either by reason of suppression or by reason of any other circumstance.
The Court has commonly referred to non-disclosure which might amount to a miscarriage of justice as a failure to disclose matters ‘peculiarly within the knowledge’ of that party, or omissions which knowingly engendered, or permitted a mistaken understanding on the other party.
For example:
- In Barker & Barker, there was no free and informed consent where a husband failed to disclose that an offer had been made to him to buy real property at a price significantly higher than the valuation upon which the parites acted in reaching consent.
- In Waterman & Waterman, there was no free and informed consent where there was no disclosure by the Husband to the Wife of the nature, extent or value of any assets or financial resources, prior to the terms being signed. Nor was there any values attributed to the assets, liabilities or resources in the orders themselves.
Importantly, the obligation of disclosure is not truncated or the obligations less significant, because the property pool is modest. The same obligation of disclosure applies to all parties regardless of the size of the property pool or the financial circumstances of the parties.
The obligation of disclosure is a basic duty, a positive obligation to set out at an early stage your financial position, in a clear and comprehensive manner, so as to ensure that any agreement reached is with the informed consent of both parties.
Once non-disclosure through suppression of evidence or by reason of any other circumstance has been made out, the Court needs to then be satisfied that there has been a miscarriage of justice as a result of that non-disclosure.
Examples of behaviour which amounted to a miscarriage of justice in the case of Waterman & Waterman were:
- the Wife’s lack of literacy;
- The Husband’s failure to disclose;
- the lack of prior discussions as to the property entitlements and division of the proceeds of sale;
- The Wife did not have a lawyer or legal advice in relation to her entitlements;
- the Wife attended the Husband’s solicitor’s office to sign the order and did not read the terms of the order at that time (the solicitor read them to her).
Want more information about the failure to disclose?
Check out the following articles:
- Beware: failure to disclose may derail your consent order;
- Duty of disclosure in parenting and financial matters
Are you worried about non-disclosure ? Considering an application to set aside your property orders?
Contact our experienced family law team to take advantage of our one hour, reduced rate initial consultation to have a discussion with one of our experienced family law experts, in relation to your individual circumstances.
