Duty to Provide Full and Frank Disclosure
Financial disclosure is a term that you will often hear used by lawyers and/or by the Court where parties are trying to resolve a financial settlement.
It refers to both parties’ duty to disclose to the other all information relevant to an issue in the case. This includes information recorded in a paper document or stored by some other means such as a computer storage device and also includes documents that the other parties may not know about. This duty starts before the case starts and continues until the case is finalised. A party must continue to provide such information as circumstances change or more documents are created or come into their possession, power or control.
What specific documents are required to be disclosed? All sources of earnings, interest, income, property (vested or contingent interests) and other financial resources. This applies whether the property, financial resources and earnings are owned by or come to the party directly, or go to some other person or beneficiary (for example, the party’s child or de facto partner) or are held in corporations, trusts, company or other such structures.
If a party is involved in Court proceedings and fails to provide full and frank disclosure, the Court may:
- Refuse to allow the party to use that information or document as evidence in their case;
- Stay or dismiss all or part of their case;
- Order costs against the party.
Financial disclosure can be a daunting concept. A party should seek legal advice from an experienced family lawyer as to their rights and obligations.
In The Family Court Of Australia
Rule 13.01 of the Family Law Rules 2004 provides that each party is obligated to provide full and frank financial disclosure of all information relevant to their property matter, to the other party, in a timely manner. This includes disclosure from the time the matter commenced until the matter has been finalised. Full and frank financial disclosure includes disclosure of the following:
- Financial circumstances;
- Production of documents;
- Answering specific questions in certain circumstances.
Rule 12.01 of the Family Law Rules 2004 provides that in a property matter each party must at least 2 days prior to the first Court event exchange with the other party a copy of the following documents:
- A copy of the parties 3 most recent taxation returns and assessments;
- Documents relevant to any superannuation interest held by the party, including a superannuation information form or a trust deed if the party holds a self-managed superannuation fund;
- For a corporation, financial statements including balance sheets, profit and loss statements, depreciation schedules, taxation returns and a company constitution;
- For a trust, financial statements including balance sheets, profit and loss statements, depreciation schedules, taxation returns and a trust deed; and
- For a Partnership, financial statements including balance sheets, profit and loss statements, depreciation schedules, taxation returns and a partnership agreement.
Rule 13.04 of the Family Law Rules 2004 provides that each party must further provide disclosure of the following:
- The parties income;
- Any vested or contingent interest in property;
- Any vested or contingent interest in property owned by a legal entity that is fully or partially owned or controlled by a party;
- Any income earned by a legal entity fully or partially owned or controlled by a party, including income that is paid or assigned to any other party, person or legal entity;
- Financial resources including a trust;
- Whether any party has disposed of assets following separation.
In The Federal Circuit Court Of Australia
Rule 24.03 of the Federal Circuit Court Rules 2001 provides that each party must make in the Financial statement or Affidavit full and frank disclosure of their financial circumstances, including:
- Any vested or contingent interest in property (including real or personal property, superannuation and legal and equitable interests);
- Income from all sources, including any benefit received in connection with the parties employment or business interests;
- Financial resources including disclosure of a trust, company or partnership including taxation returns, profit and loss statements and balance sheets.
WHERE TO NEXT?
Taking the next step and contacting a family lawyer can be scary. Our lawyers will make you feel comfortable so you can talk about your situation. But first, ask yourself, Do I really need a lawyer?