In family law property settlement proceedings, each party has a duty to the court and to each other party to give full and frank disclosure of all information relevant to the case, in a timely manner.
The Family Law Act at section 75(2)(m) also requires the court to take into consideration if either party is cohabiting with another person; the financial circumstances relating to that cohabitation when deciding what is fair when dividing property between the former spouses.
A question recently asked of the Full Court of the Family Court of Australia was does section 75(2)(m) also require each party to give full and frank financial disclosure relevant to their new partner?
The short answer is that there is no legal obligation to provide such disclosure as The Federal Circuit Court Rules 2001 (and the Family Law Rules 2004) say nothing about a disclosure obligation, which is borne by parties, being extended to or projected upon their new spouses or partners, except for the provision of information about the income of other members of the parties’ households and any expenses paid on their behalf by third parties, which the parties must disclose in their Financial Statements.
However, if there is a failure to call the new partner to give evidence about their financial circumstances, and if there is no explanation for the failure, this can enable a judge to infer that such evidence would not have assisted that party’s case and the court may make Orders benefitting the other party as a consequence of the non-disclosure and/or failure to call evidence.
In the case of Pates & Pates the husband argued that, since his new wife did not work and he supported both her and their two young children, that this was a factor which should result in an adjustment in the husband favour. Conversely, the wife argued that the husband’s “lack of transparency and disclosure” about his current wife’s financial position should cause the trial judge “considerable disquiet” and, in such circumstances, it was open to the Court to make a finding based on the decision adverse to the husband’s case. The trial judge remarked upon the husband’s failure to call relevant evidence and therefore rejected, for lack of evidence, his submission for an adjustment in his favour should be made by reason of his asserted obligation to support his current wife and their children. Furthermore, through the tender of documents in the case and the husband’s cross-examination, the wife established the husband’s current wife formerly had annual taxable income of $108,050 and she had some $490,000 on term deposit at a bank, and that the investment would probably yield interest income. The judge thereafter made findings consistent with the wife’s application.
In the absence of any specific Rule, any interlocutory order can be made expanding a general duty of disclosure under rule 14.06 of The Federal Circuit Court Rules 2001.
It is essential that you have a specialist in family law advise you when you or your partner are involved in a family law matter. Every matter is unique and the advice provided must reflect your specific circumstances. If you require any advice and/or representation for a family law matter, please contact our firm and arrange a conference with Matthew Carney, an accredited specialist in family law on (02) 4944 3322.