Disclosure obligations in Australia

The Family Law Rules 2004 (Cth) (Rules) provide that parties involved in family law proceedings in Australia for a division of marital or de facto assets have an ongoing duty of full and frank disclosure of their financial circumstances. This includes disclosure information regarding income, property, financial resources, superannuation entitlements and liabilities. This duty commences before court proceedings are initiated (pre-action procedure) and continues until the finalisation of the matter.

Practitioners often go through an initial process of requesting and exchanging financial documents which fall within the scope of the Rules in order to identify the pool of assets available for distribution between the parties. When court proceedings are initiated the Rules also require that each party complete a Financial Statement which is designed to provide a snapshot of the party’s current financial circumstances.

Consequences for non-disclosure

There can be serious implications for failing to make adequate financial disclosure. For example, the court may:

1. Make a finding or draw an inference against the non-disclosing party which may affect the size of the asset pool;
2. Strike out the non-disclosing party's application and proceed on an undefended basis;
3. Set aside the orders made;
4. Set aside a financial agreement; and/or
5. Make an adverse costs order against the non-disclosing party.

Options to identify non-disclosed interests

Options available through other agencies and departments

In addition to relying on a party to provide disclosure in compliance with the Rules, practitioners often utilise the following tools separate to the disclosure process to identify interests or verify the interests disclosed:

1. Conducting various searches with the Australian Securities and Investment Commission, including current and historical company and/or personal name extract searches;
2. Conducting property searches with relevant land and titles office departments to identify any real property that may be held by either party, whether in their personal capacity or via corporate entities, as well as to identify any mortgages or caveats registered against those properties;
3. Engaging forensic accountants to identify the connections between various entities or identify business interests that may be held by one of the parties.

Where international assets are involved, Australian practitioners may need to collaborate with practitioners in the relevant jurisdiction as to the best method to trace and value the assets.

Options available through the court process

Once court proceedings are initiated, there are various options available to practitioners to identify or confirm assets through the court process. For example, a party may:

1. Seek procedural directions or an order regarding disclosure;
2. Issue and serve subpoenas on third parties to produce documents to the court;
3. Issue a Notice to Produce to the other party;
4. Seek that the other party provide an undertaking as to disclosure;
5. Issue a Notice to Admit Facts to the other party.

Conclusion

The disclosure process is an integral step of property division in Australia. Through the identification of such interests, it may also assist practitioners in making a determination as to the appropriate forum within which property division should be considered and whether we require assistance from overseas colleagues in a family law dispute.