Failure to disclose in a property settlement matter can have very serious consequences.
The duty of disclosure requires that parties provide full and frank disclosure of all information and documents that are relevant to the case.
To learn more about the duty of disclosure in financial cases, including what documents you are required to provide and the consequences of non-disclosure, read the following articles:
- Duty of Disclosure
- Beware: Failure to Disclose may derail your consent order
- I want to reopen my property settlement due to non-disclosure
Case Study: Husband’s failure to disclose resulted in Wife receiving the entire known pool
In Zhuo & Ji (No 4) [2025] FedCFamC1F 22, the Wife filed an application for property settlement which proceeded to an undefended Hearing due to material and ongoing non-compliance by the Husband with court orders for him to provide disclosure.
There were two children of the relationship aged 7 and 3 at the time of the Hearing.
During the court proceedings, a liquidator was appointed for various entities owned by the Husband, which were placed into voluntary liquidation by him, and ultimately the liquidator was ordered to wind up the insolvent companies. The liquidator was joined to the proceedings and orders were made to affect sale of numerous properties. The liquidator was also later ordered to act as receiver and manage of the assets and undertakings of various trusts in the control of the Husband.
The Wife sought various addbacks to the property pool in excess of $6M being assets she asserted were disposed of/not accounted for by the Husband. Some of the transactions were undertaken by the Husband in breach of court orders.
The Wife’s case was that due to the Husband’s conduct during the proceedings, namely his failure to disclose and his dissipation of the property pool, it was appropriate that orders be made for her to receive 100% of the asset pool, including the net proceeds of a property, a vehicle, and a cash payment of $6.48M being the amount equivalent to the value of notional property she claimed should be added back, after dissipation by the Husband. She also sought payment of $189,000 plus interest for spousal maintenance payments that were in arrears.
The Husband articulated no specific claim to the property pool after his response was dismissed in July 2023, due to non-disclosure and non-compliance with court orders by him.
At the Undefended Hearing, the Husband’s parents filed an urgent application seeking leave to intervene in the proceedings. The mother alleged that the parents had loaned the husband $4.9M between 2013 and 2022 and that their joinder was necessary to seek repayment. The parents were ultimately joined as second and third respondents. The parents sought orders that there be a declaration that they had lent the Husband $810,000 together with orders for sale of properties with the net proceeds to be paid to them.
The Hearing proceeded over a number of days.
Disclosure
At the undefended hearing, the Court noted the extensive history of non-disclosure and breaches of court orders by the Husband.
Non-disclosure by the Husband about his involvement in and the financial dealings and position of the companies was an important aspect of the wife’s case given she possessed very limited knowledge of the Husband’s business ventures and operations of the companies. The Husband had power and control over all the corporate and trustee assets, and it was held that he did so for his own benefit.
It was largely undisputed by the Husband that he had failed to discharge his duty of disclosure and that he had failed to comply with court orders, and the court made findings to this effect.
The Court accepted submissions by the Wife that the Husband engaged in conduct which demonstrated ongoing breaches of injunctions made by the Court to protect its processes and maintain the pool of assets, including the sale of various properties and resigning as director, appointing a new director, and transferring all his shares in a company to that person. He also failed to cooperate with the liquidator of the entities.
The Court held that the Husband’s conduct supported a finding that there were non-disclosed assets, which likely have a significant value and in these circumstances the Court is well justified in making an order beyond the known assets in favour of the Wife.
Alleged loan by parents
There was no dispute by the Wife that the Husband’s parents had provided some funds to the Husband between 2013 and 2022.
The court found that there was unsufficient evidence to determine the quantum of any alleged loan or whether the payments were loans rather than gifts.
The Court therefore found that the money paid by the Husband’s parents to the Husband was not a loan and was not to be included on the balance sheet.
Addbacks
The Court noted that addbacks are the exception to the rule but may be appropriate where there has been a premature distribution or waste of matrimonial assets.
The Court held that the husband has likely dissipated funds and not disclosed where certain surplus funds were applied, such that most of the notional property asserted by the Wife should be added back.
The Court was satisfied that the findings made about the Husband’s failure to disclose and failures to adhere to court orders were sufficient to characterise many of the amounts proposed as addbacks as relevantly exceptional.
The Court made orders for addbacks of $5.8M for property dissipated by the Husband.
Pool
With the addbacks of $5.8M included as notional property in the property pool, the Court found the property pool to be $7.4M.
Contributions, Future Needs & Just & Equitable order
The Court assessed the contributions of the parties as equal.
The Court assessed future needs in favour of the Wife given she had not worked since 2022 following the birth of the parties second child and she remained the primary carer for each of the children. The Court also took into account the husband’s numerous undisclosed dealings and the likely financial resources these generated for his benefit.
The Court indicated it was inappropriate to express an overall assessment of contributions and future needs as a percentage in circumstances where the property pool was greater than the known assets on the balance sheet.
The Court found that the scale of the Husband’s non-disclosure and egregious breaches of court orders justified a substantial adjustment in the Wife’s favour.
The Court ordered that the Wife receive the entirety of all known assets AND made orders for a further cash payment to the Wife of $5.8M being the total of the property added back. There was an additional order for the Husband to pay spousal maintenance arrears of $199,000 plus interest.
What have we learned?
A failure to disclose may result in:
- Addbacks of any unaccounted for funds;
- The court making negative inferences in relation to that party hiding further assets;
- The court ordering that the other party receive the entire known property pool.
Failure to disclose by other party? Contact us
If you are concerned that your former partner has disposed of assets in the property pool and there is a failure to disclose of the disposal, or if you are concerned that the other party is not disclosing assets in the property pool, contact us to book an appointment with one of our experienced Family Lawyers, to discuss your rights, and a strategy to preserve the remaining assets.
Prevention is always better than cure if you are concerned the other party may be unilaterally disposing of matrimonial assets, without your knowledge or consent.
