One of the most important parts of family law (and one of the most tedious and time-consuming parts) is the obligation to financial disclosure.
In property proceedings and in the pre-action procedures followed by parties to any division of assets pursuant to the Family Law Act 1975 (Cth), there is a duty owed by the parties to financial disclosure.
Rule 13.04 of the Family Law Rules 2004 (Cth) states as follows:
A party to a financial case must make full and frank disclosure of the party’s financial circumstances.
The duty to disclose is imperative. The entire basis of property division is predicated on the good faith and honesty with which parties to a family law proceeding are expected to adhere. In fact, the duty is so important that failure to comply with this duty may result in findings of contempt of Court and the Family Court of Australia and Federal Circuit Court of Australia have power to punish this failure with fines or other punishments that it sees fit (See Chapter 13 Family Law Rules).
Big Money Cases
In some rare cases the duty of financial disclosure may become irrelevant. These cases are often referred to in the authorities as “Big money cases”.
How does the Court treat financial disclosure in a division of a property pool so vast that it would be irrelevant what money the parties specifically hold, suffice to say they hold enough to meet property division orders?
In the case of Carmel-Fevia & Fevia  FamCA 502 (“Carmel-Fevia”) the court dealt with an application by the estranged wife of Mr Fevia. The Wife sought a valuation of a property pool estimated to be worth, on the husband’s estimates, some $268 million.
Justice Cronin referred to relevant case law including English authority and cited the oft quoted passage of Thyssen-Bornemisza v Thyssen-Bornemisza (No 2)  FLR 1069, where it was said:
When the average marriage breaks up there is just not enough money for both parties to the marriage to continue their lives on the same scale as they were before. It is a sterile exercise to try and get a quart out of a pint pot. In this litigation the court is faced with a very different exercise. To use the same analogy it might be said that its task here is to extract a full barrel from a vat. There is no doubt here that there is ample wealth available in the hands of the husband to make a provision for the wife to continue to live in the most luxurious style beyond the imagination of most ordinary mortals.
In Carmel-Fevia, the Court found that the costs of any valuation of an asset pool so large would be exorbitant in the circumstances. It is noted the Wife estimated the costs of forensic accounting to be in the vicinity of $75,000.00. It was the Husband’s estimates any forensic exercise would be in the vicinity of $1 million.
In those circumstances Justice Cronin adjourned and was not minded to make orders until such time as the Wife further articulated what documents she sought.
This is a unique example where the duty of disclosure may be minimised or complied with, without the need to produce all documents and lists required by Rule 13.04 of the Family Law Rules 2004 (Cth).
Failure To Disclose
In ordinary cases, the failure to disclose can be severe.
Most property pools are far smaller and involve the division of a few hundred thousand dollars of realisable assets. In those circumstances, how does the Family Court of Australia or the Federal Circuit Court of Australia deal with wilful disobedience and purposeful non-disclosure?
In Gould & Gould  FamCA 609 (22 June 2007) the Court relied on precedent to highlight the failure of non-disclosure allows a trial judge to not be “unduly cautious” with respect to a property pool. The case effectively noted that in family law the failure to disclose, when it becomes apparent, allows a trial judge the right to introduce that non-disclosed amount into the property pool and divide property accordingly:
To do otherwise might be thought to provide a charter for fraud in proceedings of this nature
In other authority, such as in Weir & Weir, where the property pool is unascertainable because of obfuscation or evasion by one of the parties, then it is within the Court’s power to take a “robust view” of the property pool and divide accordingly; That is, the Court may take a view that the pool is far larger than it actually is and attribute assets on the basis of that enlarged size.
There is no excuse in the case law for the failure to disclose. In Kannis and Kannis FamCA 1150, a case involving non-disclosure which has often been applied in other cases of this nature, the Court stated:
Whether the non-disclosure is willful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied 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 be otherwise be seen to be disadvantaged by the lack of complete candour.
In that case, a Next Friend (person providing instructions to solicitors on behalf of the party to the proceedings because of a disability) did not disclose certain assets.
Regardless of the fact it was not the party to the proceedings who failed to disclose, the Court reiterated the importance of disclosure and divided property accordingly.
Moral Of The Story
Do not stash cash!
Nothing but overly generous disclosure will be accepted by the Family Court of Australia and the Federal Circuit Court of Australia. Provided the documents requested are relevant to the proceedings before the Court and provided the documents requested allow a party to apply to the Court to have these documents produced then a party must disclose these documents if they wish to avoid punishment (including costs orders, fines and contempt charges).