Duty of Disclosure in Family Law: 4 Consequences of Failing to Comply With the Duty of Disclosure
Family law in Australia is designed to protect the interests of all parties involved in a dispute, notably regarding property settlement, financial matters, and parenting arrangements.
The duty of disclosure is central to ensuring a fair and just resolution, which requires each party to provide complete and accurate information about their financial circumstances.
Let’s take a look at the duty of disclosure in family law matters, its implications, and the consequences of failing to fulfil this obligation.
What Is the Duty of Disclosure?
The duty of disclosure is a fundamental principle in family law proceedings in Australia.
It is based on the premise that both parties must be fully informed of each other’s financial circumstances to make informed decisions and reach a fair and equitable resolution.
This disclosure extends to all aspects of a party’s financial situation, including income, assets, liabilities, expenses, and superannuation.
The Family Law Act 1975 and the Family Law Rules and Regulations impose a legal obligation on parties to provide full and frank disclosure. This duty is ongoing and commences from the outset of proceedings and continues until the finalisation of the matter.
What Is Full and Frank Disclosure?
Full and frank disclosure is the legal requirement for parties, particularly in insurance contracts, to provide complete, honest, and relevant information without withholding any material facts that could influence the contract’s terms or decisions.
Financial Disclosure Obligations
Parties involved in family law proceedings must provide financial disclosure in a prescribed and organised manner. This involves disclosing:
1. Financial Statements: Comprehensive financial statements must be prepared, outlining all income, assets, liabilities, and expenses. These statements should cover the last three years.
2. Bank Statements: Parties must provide bank statements for all accounts, including savings, transactional, and investment accounts.
3. Tax Returns: Both current and previous tax returns must be disclosed, along with supporting documents such as group certificates.
4. Property and Valuations: Detailed information about all real estate properties, businesses, investments, and valuations should be provided.
5. Superannuation: Full disclosure of superannuation account details and balances is mandatory.
Consequences of Non-Disclosure:
Failing to comply with the duty of disclosure can have serious consequences. The court takes non-disclosure very seriously, as it can hinder the proper administration of justice and lead to unfair outcomes. Some potential consequences of non-disclosure include:
1. Cost Orders: The non-disclosing party may be ordered to pay the other party’s legal costs resulting from the non-disclosure.
2. Contempt of Court: In extreme cases of intentional non-disclosure or dishonesty, the court may find a party in contempt, leading to penalties or imprisonment.
3. Varying Orders: The court may vary previous orders or agreements if the non-disclosure is discovered later.
Importance of Legal Advice
Given the complexity and significance of the duty of disclosure, seeking legal advice is crucial for both parties involved in family law matters.
Family lawyers can guide the scope of disclosure, assist in preparing accurate financial statements, and ensure compliance with the duty.
How We Can Assist in Duty of Disclosure
We received a call from Richard, who had recently gone through a challenging divorce. Seeking guidance on his obligations during the process, he inquired about the duty of disclosure.
During our first meeting, we empathetically listened to Richard’s concerns and gathered detailed information about his financial situation, assets, and liabilities.
We explained the duty of disclosure, stressing the importance of complete and accurate disclosure during family law proceedings.
With Richard’s consent, we carefully reviewed his financial records, including tax returns, bank statements, property valuations, and superannuation accounts.
To ensure Richard’s compliance with his duty of disclosure, we assisted him in preparing comprehensive financial statements that covered the required three-year period.
We organised the documents, leaving no room for error.
With our help and Richard’s willingness to cooperate, he fulfilled his duty of diligence during the divorce proceedings.
The duty of disclosure in family law matters is essential to uphold the principles of fairness, transparency, and justice.
Complying with this obligation ensures that all parties are fully aware of the financial circumstances of the other, enabling informed decisions and equitable resolutions.
Failing to disclose relevant financial information can have severe consequences, and individuals must seek legal advice and act in good faith to fulfil their duty of disclosure under Australian laws.
Director of Melbourne Family Lawyers, Hayder manages the practice and oversees the running of all of the files in the practice. Hayder has an astute eye for case strategy and running particularly complex matters in the family law system.