My spouse is hiding assets from me: what can I do? The duty of disclosure in family law

IntroductionHidden assets

Every party in a family law case has a duty of disclosure to provide the Court and every other party all information relevant to an issue in the case.

This duty is from start to finish and ongoing: it commences during the pre-action phase of the case (before it goes to Court) and continues until the case has ended.

Information includes documents or information stored on a computer or on the cloud, and also includes documents that you or your spouse may not know about.  The documentation sought must be relevant to an issue in dispute in the case: you are not allowed to go on “a fishing expedition” seeking this document or that without reference to its relevance.

The duty of disclosure must be full and frank.  It requires you and your former spouse to disclose all sources of earnings, interest, income, property and other financial resources as well as liabilities and debts.  This applies whether the property, financial resources and earnings are acquired or held by you or your spouse directly, or by a third party (for example, the party’s child or new partner) or in companies or trusts or other structures.

A party has a duty to disclose information about the sale or gifting of any assets made in the year immediately prior to separation or since separation.  It is a myth that once you are separated, you no longer have to disclose your newly-acquired assets and current earnings to the other party.  The ongoing duty to disclose is clear-cut.

 

Hidden assets: non-disclosure

Unfortunately, the Family Law Courts are not known as “the liar’s courts” for nothing and the courts are often faced with allegations that one party or other has hidden or not disclosed certain assets or income from the other party.

This is especially relevant in “the big money” type cases where much can be gained or lost from disclosure or non-disclosure of significant assets which are often tied up in trusts or other the corporate entities, sometimes off-shore and in different jurisdictions which are hard to trace and recover.

What can you do in this case if you can’t rely on the other party’s disclosure being full and frank?  There are a whole raft of things you can do to keep your former spouse honest:

1.  Financial Statement:

This is a document that must be filed and served whenever a party makes, or answers, an initiating application to a financial case in the family courts. It’s a standard form that is mandatory in family law property proceedings but is a powerful document in ensuring full and frank disclosure has been made.

Whenever you are served with a Financial Statement, scrutinise the contents thoroughly and ask questions and seek further documentation from the deponent (the party swearing the document).  A party is often cross examined on their Financial Statement at trial which may well tease out damaging facts or admissions.

Court Rules also require the deponent to file an amended Financial Statement if their circumstances have changed or an affidavit (a sworn statement).

2. Inspection of documents:

If discovery of a document is made by your spouse, or a document is referred to in a Financial Statement or affidavit of your spouse, you can by upon giving notice to your spouse’s lawyer require your spouse to make the document available for inspection and produce the document, and to make copies of the document.

3.  Discovery on oath:

If you are nonetheless unsatisfied by your spouse’s disclosure on the basis of their discovery of documents by correspondence and Financial Statement, you can seek an order that they file an Affidavit of Documents seeking them to discover all documents in issue in their possession, custody or control, whether those documents are in their possession or not, and if they are not to explain why.  This is called “discovery on oath”.

4. Undertaking by party:

You can also seek an order, if you feel that your spouse is really hiding something, that your spouse give a written undertaking to the Court that they have a given full and frank disclosure under the Court Rules.

A written undertaking is like a promise to the Court and has an effect similar to that of an order which must be complied with.

A breach of an undertaking is tantamount to a breach of a Court Order which could mean your spouse will be held in contempt of Court, a very serious finding which could land your spouse in prison.

5.  Subpoenas:

Your spouse is required to discover not only documents in their possession but also documents in their control, even if they had but no longer have the documents in their question.

Sometimes, this may not be practical or efficient and so there is an alternative procedure whereby you can have the Court issue subpoenas to non-parties to case such as banks, employers, etc who would have records relating to your former spouse which they are compelled to release under subpoena.

6. Answers to Specific Questions:

If you are still not satisfied with your spouse’s disclosure, you can interrogate them about issues by serving them with a notice in writing in the form of Answers to Specific Questions.

You can only make one such request and there can be no more than 20 questions asked, so you need to choose questions that are directly relevant to the issues in dispute in your case.

Your spouse will be required to produce documents relevant to the answer if not discovered previously.  They can also be cross-examined in Court on their answers and the Court can draw adverse inferences from the answers given in writing and in the witness box if there is an inconsistency.

7.  Consequences of non-disclosure

If your spouse does not disclose sought after documents as required by the Court Rules, they may be faced with a Court Order at a later date precluding them from being able to rely on it or worse may be found to be in contempt of Court and ordered to pay be ordered to pay costs and, worst of all, their case may be stopped or dismissed by the Court.

As you can see, making sure your spouse makes full and frank disclosure can be a difficult issue even for lawyers, let alone members of the general public.  If you are separated and looking for advice and assistance, particularly regarding financial matters, call us on 8237 0559. 

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