To disclose or not to disclose, where is the question?

To disclose or not to disclose, where is the question?
Chapter 13 of Family Law Rules 2004 deals with the duty of disclosure. Pursuant to Rule 13.01, parties in family law negotiations are obliged to make full and frank disclosure of their financial circumstances in a timely manner. The duty of disclosure is an ongoing duty. Parties must disclose all relevant documents and continue to provide updated disclosure throughout the course of the proceedings. As and when documents become available, they must be disclosed to the other party. What is a document? Parties are required to disclose any document that:
  • Is or has been in their possession or control; and
  • Is relevant to an issue in the case.
A “document” is not just a paper file. It includes anything on which there is writing or marks, figures, symbols or perforations which have a meaning for a person qualified to interpret them. A document can be a map, plan, drawing or photograph. It also extends to anything from which sounds, images or writings can be reproduced such as electronic records, USB sticks, hard drives and files stored on a computer or in the “cloud”. If the document is relevant to an issue in dispute, or will assist the Court in determining an issue in dispute, it must be disclosed. This includes documents which do not assist or are adverse to the party’s case. The duty does not apply to documents where a valid claim of privilege applies, or if a copy has already been disclosed and there is no changes to the additional copy which would affect the case. Specific documents which must be disclosed At least 2 days before the first court date in a property case, Rule 12.02 requires parties to exchange copies of the following:
  • 3 most recent tax returns;
  • Documents showing their superannuation interests (including a trust deed and 3 most recent financial statements for a self-managed superannuation fund);
  • For any corporation:
    • Financial statements for the 3 most recent financial years;
    • The most recent annual return;
  • For any trust:
    • Financial statements for the 3 most recent financial years;
    • Trust deed;
  • For any partnership:
    • Financial statements for the 3 most recent financial years;
    • Partnership agreement;
  • Any Business Activity Statements for the 12 months ending immediately before the first court date;
  • Unless the value is agreed - A market appraisal or valuation of any property which the party has an interest.
Further, Rule 13.04 emphasis the broad nature of what information and documents will be relevant in a financial case. Parties must disclose:
  • Their earnings (either directly, or via a third party or entity);
  • Any vested or contingent interest in property (including an interest owned by a legal entity that is fully or partially owned or controlled by them);
  • Their other financial resources;
  • Any trust which they (or any family member, or entity which they are an officeholder or have a controlling interest or benefit) are an appointor, trustee, beneficiary or have the control of;
  • Any disposal of property (whether by sale, transfer, assignment or gift) from 12 months prior to separation which may affect, defeat or deplete a claim; and
  • Their liabilities and contingent liabilities.
There are also other provisions of the Rules which set out which documents must be disclosed at various points throughout the proceedings. The Rules also set out the procedure for managing disclosure. Consequence of non-disclosure The importance of complying with disclosure obligations cannot be emphasised enough. The consequences of non-compliance are set out in Rule 13.14. In some cases the party may:
  • Not be permitted to rely upon the document at court;
  • Be guilty of contempt;
  • Be ordered to pay the other party’s costs;
  • Have the court stay or dismiss part or all of their case.
Ultimately, parties who fail to provide full and frank disclosure risk having the court make adverse findings against them which will affect the overall outcome. In Kannis, the Court said, “…Whether the non-disclosure is wilful or accidental, or is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied that the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated. In those circumstances, it may be appropriate to err on the side of generosity to the party who might otherwise be seem to be disadvantaged by the lack of complete candour...”