My ex won't provide financial disclosure - what can I do?

A property settlement depends on having a reasonably accurate picture of the financial position.

That can be difficult where one person does not provide documents, provides only part of the information requested or repeatedly says that particular assets or transactions are "none of your business".

The answer is not necessarily to assume that something is being hidden. There may be poor records, misunderstanding about what needs to be provided or disagreement about what is relevant.

But financial disclosure is not optional.

If relevant information is not being provided, there are steps that can be taken to identify what is missing, request it properly and if necessary obtain information through the Court process.

What is financial disclosure?

Financial disclosure is the process of providing relevant information and documents about your financial circumstances.

The Family Law Act 1975 (Cth) requires parties to financial and property disputes to give full and frank disclosure of relevant financial information and documents in a timely manner.

The obligation applies to both married and de facto parties.

It does not only arise once someone files a Court application.

Disclosure should be addressed from the outset of a property dispute. The Court's pre-action procedures require parties preparing for financial or property proceedings to exchange relevant financial information and documents so that the issues can be properly understood and where possible resolved without litigation.

The obligation also continues as circumstances change.

What information might need to be disclosed?

What is required depends on the particular matter.

A straightforward property settlement may involve information about:

• bank accounts;
• real estate;
• mortgages and other loans;
• income and taxation;
• superannuation;
• shares and investments;
• vehicles and other significant property; and
• credit cards and other liabilities.

More complex matters may also require information about:

• businesses and companies;
• family trusts and other trusts;
• partnerships;
• self-managed superannuation funds;
• loans involving family members or associated entities;
• overseas property or financial interests;
• significant transfers of money;
• property sold or transferred before or after separation;
• financial resources; and
• other interests that may affect the parties' financial position.

The obligation is not limited to property held jointly.

Property or financial interests held in one person's name can still be relevant.

Equally, an interest associated with a company or trust requires proper analysis. It should not simply be assumed that every asset owned by an entity is personally owned by one of the parties.

Does someone have to provide every financial document you ask for?

No.

Disclosure is broad but it is still directed to information and documents that are relevant to the issues.

The objective is not to demand every document that might conceivably exist.

A request should have a proper purpose.

For example, asking for bank statements may be appropriate where they are needed to establish account balances, trace significant transactions or understand how sale proceeds were used.

A request for years of unrelated transactions without an identified reason may be disproportionate.

What if the other person says the information is private?

Financial information is obviously personal.

That does not mean it can be withheld merely because one person would prefer not to provide it.

The disclosure process exists because a property settlement cannot reliably be negotiated or determined if one party has information about the financial position that the other does not.

There are also restrictions on the use of disclosed documents. Documents obtained through the disclosure process are generally to be used for the purpose of resolving or determining the relevant dispute rather than for unrelated purposes.

What should you do if disclosure is incomplete?

The first step is usually to identify exactly what is missing.

A vague allegation that someone is "hiding assets" is often less useful than a specific request such as:

• statements for an identified account are missing;
• the tax returns refer to a company for which no financial statements have been provided;
• a trust appears in previous records but no current trust information has been disclosed;
• proceeds from the sale of an asset cannot be identified;
• a liability appears on a balance sheet but no loan agreement or supporting records have been provided; or
• there are significant transfers for which there is no explanation.

A solicitor can help organise the requests so that they are clear, proportionate and connected to an identifiable issue.

This can also help distinguish between genuinely missing disclosure and documents that are unlikely to materially assist the property settlement.

What if the other person says they cannot obtain the document?

That may sometimes be genuine.

Documents can be old, records can be incomplete and a party may no longer physically hold material that is relevant.

However, the fact that a document is not sitting in someone's filing cabinet does not always end the issue.

The disclosure duty extends to documents that are or have been in a person's possession or under their control.

During the pre-action process, where a party cannot produce a document for inspection, it can also be reasonable in appropriate circumstances to ask them to provide authority for a third party such as an accountant to provide it.

Once proceedings have commenced, additional formal procedures are available.

What can happen after Court proceedings start?

If disclosure remains incomplete after proceedings commence, the Federal Circuit and Family Court of Australia has a range of procedures available.

Depending on the circumstances, these may include:

• requesting a formal list of documents;
• requesting identified documents referred to in filed material or correspondence;
• seeking an order requiring disclosure of particular documents or classes of documents;
• requiring an affidavit explaining whether particular documents exist or what happened to them;
• asking specific questions;
• issuing subpoenas to appropriate third parties; and
• obtaining information about superannuation through the mechanisms available in property proceedings.

A subpoena may sometimes be used to obtain documents from a bank, accountant or another third party.

However, a subpoena is not a licence to search indiscriminately for something that might exist. It must have a legitimate forensic purpose and properly identify the material sought.

Can you find out whether your ex has other superannuation?

There is a specific process available once property proceedings are before the Federal Circuit and Family Court of Australia.

A party or their legal representative can request superannuation information held by the Commissioner of Taxation about the other party through the Court.

That information can assist in identifying superannuation interests that may not otherwise have been disclosed.

It is important to distinguish identifying a fund from obtaining its current value. Further information from the relevant superannuation fund may still be required.

What about companies, businesses and trusts?

These matters can require more detailed disclosure.

The Rules expressly contemplate financial information concerning companies, trusts and other entities in which a party has an interest or over which they exercise relevant control.

The necessary documents might include financial statements, taxation material, business activity statements, trust deeds, company records and information about transactions involving associated entities.

That does not mean every company or trust connected with a family member automatically forms part of the property available for division.

The legal interest, control, history, financial benefit and surrounding evidence need to be considered.

Where the structure is complex, the role of an accountant or forensic accountant may become important.

What if money has been transferred or property has disappeared?

A reduction in the apparent asset pool does not automatically prove wrongdoing.

People continue to live, spend money, operate businesses and meet expenses after separation.

There can also be legitimate sales, transfers and restructuring.

However, significant transactions should be understood.

The disclosure rules specifically address certain disposals of property that may affect, defeat or deplete a claim, including relevant transactions during the 12 months before separation and transactions after final separation.

Questions may therefore arise about:

• where sale proceeds went;
• whether money was transferred to another person or entity;
• whether a loan is genuine;
• whether a large withdrawal had an identifiable purpose;
• whether property was sold for proper value; or
• whether one party continues to receive the benefit of property apparently held elsewhere.

The focus should be on evidence rather than suspicion.

Does incomplete disclosure mean someone is hiding assets?

Not necessarily.

Incomplete disclosure can arise for many reasons.

There is an important difference between:

• a document not having been provided;
• an inadequate explanation;
• inconsistent financial records;
• a failure to comply with a disclosure obligation; and
• deliberate concealment of property.

Those issues should not be collapsed into one allegation.

A Court can draw conclusions from established non-disclosure and may adopt a robust approach where the true financial position has been obscured.

But a finding that undisclosed property exists still requires a proper factual basis.

Can the Court give you more because the other person failed to disclose?

Potentially, non-disclosure can affect the outcome but there is no automatic percentage adjustment.

The Family Law Act 1975 (Cth) expressly identifies a range of possible consequences for failing to comply with the duty of disclosure.

Depending on the circumstances, the Court may:

• take the failure into account when determining the property settlement;
• make disclosure orders;
• make costs orders;
• prevent a party relying on a document that was not disclosed;
• stay or dismiss part of a case;
• impose sanctions for breach of Court orders; or
• in serious circumstances, deal with a failure as contempt.

The particular consequence depends on what occurred and its effect on the case.

Recent decisions continue to demonstrate that non-disclosure is relevant but it does not operate as a mechanical penalty.

What if you discover an undisclosed asset after the property settlement is finalised?

That may be significant.

For property orders made under the Family Law Act 1975 (Cth), suppression of evidence including failure to disclose relevant information can in some circumstances provide a basis for asking the Court to set aside or vary an earlier property order where the statutory requirements are satisfied.

That does not mean every document discovered later will reopen a settlement.

The nature of the information, whether it should have been disclosed and whether the non-disclosure resulted in a miscarriage of justice are important.

This is one reason why proper disclosure before finalising a property settlement matters.

What if you are worried property will be sold or transferred?

If there is a genuine and immediate concern that property may be sold, transferred, dissipated or moved beyond reach, legal advice should be obtained promptly.

In an appropriate case, protective orders may be available.

The evidence is important. A concern that someone might deal with property is different from evidence showing a real risk that this is occurring or is likely to occur.

Urgent applications can also create significant cost and procedural consequences, so the proposed response should be proportionate to the risk.

Do you have to go to Court to obtain disclosure?

Not usually.

Many disclosure problems can be resolved before proceedings through a structured exchange of information and documents.

Often the problem is not that a person will never provide disclosure. It is that the requests have not been clearly identified, the parties disagree about what is relevant or communication has broken down.

Legal correspondence can sometimes resolve those problems without proceedings.

Where relevant information continues to be withheld and the parties cannot sensibly negotiate without it, Court proceedings may become necessary.

A practical place to start

If you believe disclosure is incomplete, it can help to begin with what you actually know.

Consider:

• What assets and liabilities do you already know about?
• Which documents have been provided?
• Which documents are missing?
• Are there accounts, companies or trusts that appear in older records but not the current disclosure?
• Have significant assets been sold?
• Are there large or unexplained transactions?
• Are there liabilities that have not been supported by documents?
• Does the disclosed income appear consistent with the person's financial position?
• Are there overseas interests or financial structures that need to be understood?
• Is there evidence of a particular undisclosed asset or only a general suspicion?

From there, the appropriate disclosure requests can usually be identified much more precisely.