Under Rule 6.01 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021, in all property settlement matters, both parties have a duty to provide full and frank disclosure. However, what does the term “disclosure” really mean? And what are your obligations to provide full and frank disclosure in your financial matter?
What is full and frank disclosure in financial cases?
Disclosure is a process of exchanging financial documents with the other party that are relevant to your financial circumstances. The type of documents that are required to be disclosed are broad and are set out in the Rules. The documents to disclose will vary depending on the circumstances of each case and the assets and liabilities etc at play. However, each party is generally required to exchange documents evidencing all sources of income, superannuation entitlements, liabilities and any property or financial interests, including property and financial resources which are held in corporations, trusts or other similar structures. This is just some examples.
When is disclosure exchanged?
Disclosure is generally exchanged at the commencement of the property matter. However, it is important to remember that your duty of disclosure is ongoing. Therefore, you are required to continually provide disclosure documents that are in your possession, power or control throughout the duration of your matter. This is particularly important in circumstances where your financial circumstances have changed or as more information becomes available. In essence, your obligation to exchange disclosure does not cease until your matter has finished (either final agreement is reached and recorded, or final Orders are made by the Court).
What is the purpose of full and frank disclosure in financial cases?
When negotiating a property settlement matter, one of the first steps is to identify the property of each party and what assets are available for distribution. Disclosure and the provision of such documents assists each party with this step. In our experience, the resolution of property matters is often expedited in circumstances where both parties adhere to their duty of disclosure in the initial stages of the matter. This is because the process of disclosure allows the parties to narrow the issues that are in dispute, particularly with respect to the value of the property pool.
In the event that full and frank disclosure is not exchanged, then each party cannot be sure of the existence or value of the assets and liabilities between the parties. Ultimately, this can affect the understanding of the property pool and may result in a division of assets which is unfavourable to one party, or negotiations becoming protracted and costs increasing.
In some circumstances, a lack of disclosure can cause a matter to proceed to Court. In worst cases, a lack of disclosure can lead to an application to set aside Orders or a Binding Financial Agreement. Therefore, it is important that you comply with your duty of disclosure, so that meaningful negotiations can take place in a timely and cost-effective manner without resort to costly litigation.
Consequences of non-disclosure
It is important that each party takes their responsibility to provide full and frank disclosure seriously, as failure to comply with this duty can result in serious consequences. As mentioned above, in instances where one party refuses to provide full and frank disclosure, then the matter may proceed to Court. In the event that the matter proceeds to Court, it is most likely that the Court will make Orders for the non-complying party to produce their disclosure documents within a certain time frame. In some circumstances, the Court can also order the non-complying party to pay costs to the other party for causing undue delay to the proceedings.
If it is discovered that a party to the proceedings has failed to disclose their true financial position after final Orders have been made or a financial agreement has been entered into, then as we mention above, the other party can make an application to the Court to set aside the Orders and for new Orders to be made based on the true financial position of each party. The same can apply to a Binding Financial Agreement.
Seek legal advice
If you have recently separated from your partner or if you are experiencing a dispute in relation to property settlement, contact us today to make an appointment with Shannon Daykin, an Accredited Family Law Specialist, so that you can get advice about your situation, your options and your obligations.
Shannon was named as one of Brisbane’s Leading Family & Divorce Lawyers (Recommended) and Leading Parenting & Children’s Matters Lawyers (Leading) 2022, Brisbane, in the prestigious Doyle’s Family Law Guide, and listed in previous Guides. We offer a reduced fixed fee initial consultation, which can be conducted in person, by phone or by video conference.
We give you expert legal advice on the most appropriate and cost-effective course of action for you and your family. Contact us on (07) 3852 5490 to make an appointment for an initial consultation.
