Part 1 – Disclosure in property matters
Parties involved in a family law property dispute cannot commence proceedings in Court unless they have previously made “a genuine effort to resolve their dispute” out of Court. [1] If a party commences proceedings in Court without attempting to resolve the dispute first, he/she may face penalties imposed by the Court.[2] The vast majority of family law property disputes require, however, that parties make an appropriate attempt to resolve their dispute, to make offers in writing and to provide notice to the other party of the party’s intention to commence proceedings.[3] A precursor to negotiate is that “all cards be on the table” as it were. Parties are required by the relevant Rules to exchange documentation and information between them relating to their dispute.
If you have separated and done some “googling”, spoken to a family lawyer or you are in the middle of negotiations you may have heard the term ‘disclosure’ which is the process by which parties exchange financial information and documentation between them.
In family law property matters, both parties have a duty of ‘full and frank disclosure’. Parties are required to be honest and transparent about their financial position, which includes their income, assets, liabilities, and financial situation. This is important so that everyone knows what is in the property pool and what the factors are to be considered in a property settlement.
Disclosure is a complex area of law, and it is important that you seek legal advice in relation to your situation.
What is the duty of disclosure?
The duty of disclosure is ‘a duty to the court and to each other party to give full and frank disclosure of all information relevant to the proceeding’ (Rule 6.01, Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)).
The duty of disclosure also applies to parties complying with the pre-action procedures.
What is financial disclosure?
Financial disclosure must be of the party’s total direct and indirect financial circumstances. Rule 6.06, Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) sets out the documents required including details about the financial position of the parties including tax, income, assets, debt and superannuation. It also includes financial resources such as interests held in a company or trust fund.
Usually, a party will request financial disclosure and the request will be mutual – that is you make a request and also provide your financial documentation.
Disclosure as a first step
Exchanging financial disclosure is usually the first step in a family law property matter so that everyone knows what is in the property pool. After the parties are satisfied with the disclosure provided, they are in a better position to negotiate because everything is on the table.
What do I do if I have been asked to provide my financial documents?
If you have been asked to provide your financial documents, it is a good idea to inform yourself and obtain egal advice about what you must exchange with the other party and what you do not need to exchange.
For example, you do not have to comply with a request which is in reality simply a “fishing expedition” including irrelevant documentation which you do not need to provide.
You only need to produce documents which are in your possession or control. You do not have to
to create documents to comply with a request.
What happens if a party does not provide their financial disclosure?
If a party will not willingly provide their financial disclosure and comply with their duty, you would be entitled to commence court proceedings and apply for the Court to issue subpoenas addressed to the other party to provide such documentation.
There are serious consequences for failing to disclose information or breaching an undertaking. Rule 6.17, Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) sets out the consequences for non-compliance.
The Court may:
- Refuse to allow you to use that information or document as evidence in your case;
- Stay or dismiss all or part of your case;
- Order costs against you; and/or
- Fine you or imprison you on being found guilty of contempt of court for not, or disclosing the document or for breaching your undertaking.
If I provide all of my documents, do I have to do everything else?
It is important to note that the duty of disclosure is ongoing until your matter has been finalised. This means that you may need to provide/ be requested to provide additional or updating information throughout the matter.
It is important to keep records and detailed accounts in case any of your finances are called into question.
Undertakings
The requirement to exchange all relevant documentation between parties in a dispute is considered so important that parties are sometimes required to give a formal undertaking or promise to the Court during proceedings to the best of the party’s knowledge and ability, the party has complied with, and will continue to comply with, the duty of disclosure and acknowledging that a breach of the undertaking may be a contempt of court.[4]
Where can I find more information?
You can find more information on the Federal Circuit Court and Family Court of Australia website: https://www.fcfcoa.gov.au/fl/pubs/duty-disclosure .
How can we help?
If you or a loved one would like legal advice in relation to a family law property settlement or a family law matter, please contact our Family Law Team to arrange an appointment with one of our experienced family law solicitors.
Phone the Family Law Team on +61 2 6206 1300, email us: mtennant-breust@elringtons.com.au or fill in our Family Law Free 15 minute initial consultation booking form
[1] Schedule 1, Part 1 Paragraph 1 of Federal Circuit and Family Court of Australia (Family Law) Rules 2021
[2] There are obvious exceptions in some cases, for example, if the matter requires urgent intervention by a court.
[3] These are known as “pre action procedures” – Schedule 1 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021
[4] Rule 6.02 Undertaking by party – Federal Circuit and Family Court of Australia (Family Law) Rules 2021
