What happens if a party breaches their duty of timely full and frank disclosure in negotiating Binding Financial Agreements / Family Law Court Proceedings?

The parties to any Binding Financial Agreement or Family Law Court Proceedings must make full and frank disclosure of their financial circumstances.

Binding Financial Agreements

Consequences of Non-Disclosure

If a party can show that the other party to the Binding Financial Agreement has not provided full and frank disclosure of their true financial position, the Binding Financial Agreement may not be enforceable.

At the very minimum the Binding Financial Agreement would be subject to a valid legal challenge in Court where the non-disclosing party would bear the onus of proof of showing the the non-disclosure was not material.

This is especially the case where the Binding Financial Agreement (in light of the true financial position of the parties) is not "fair + equitable".

Family Law Court Proceedings

Consequences of Non-Disclosure

If the non-disclosure is clear to the Court, or disclosure is made in a confusing manner with little or no effort made to respond to requests for clarification: the most likely result will be the Court making Property Orders unfavourable to the non-disclosing / non-cooperating par­ty.

If the non-disclosure is discovered after Court pro­ceed­ings have completed there may be valid grounds for the Court to set aside the original Prop­er­ty Orders and make new orders to replace them based on the true finan­cial position.

The Court may use its discretion to order that all or part of the legal costs incurred by the innocent party in both the original and subsequent Court proceedings are payable by the non-disclosing party, and in some cases the Court may order the non-disclosing party in contempt of Court.

Delay caused by Late Disclosure

In the marriage of Briese, Smithers J. at para. [2] described the ongoing duty of full and frank disclosure^ [emphasis added] in Family Law Court Proceedings as:

"… A positive obligation to set out at an early stage their financial position in a clear and comprehensive manner. The Regulations, and now the Rules, are not intended as a vehicle to mask the true position, or as an aid to confusion, complexity or uncertainty. They are not intended as the outer limits of the obligation of financial disclosure, but as providing avenues towards disclosure.
The need for each party to understand the financial position of the other party is at the very heart of cases concerning property and maintenance.
Unless each party adopts a positive approach in this regard delays will ensue with the consequent escalation of legal, accounting and other expenses, always assuming that a party has the strength to continue the struggle for information and understanding."

Consequences of Late Disclosure / Evasive Conduct

In the marriage of Briese, Smithers J. at para. [6] provided an example of the cost consequences in Family Law Court Proceedings where a party eventually provides full and frank disclosure, but only after unduly prolonging the proceedings + being evasive as to their financial circumstances [emphasis added]:

In the unreported decision of Nygh J. in Marinko (29 October 1982) the learned Judge made an order for costs against the husband, in part because of his conduct of the proceedings.
He found that the husband had unduly prolonged the proceedings and further that he had been evasive as to his financial circumstances.
At p. 3 of his reasons for decision his Honour said:
"It is quite clear that under reg. 97, there is an obligation on the parties to make a full and fair disclosure of all their financial assets; it is also expected of the parties that they shall co-operate with the conduct of the proceedings in order to bring them to an early and prompt conclusion with a minimum of expense.
This obligation is incumbent upon the Court under sec. 97(3) of the Act, and by inference, it lies upon the parties and their legal advisers to co-operate in that goal.
It is, therefore, not an answer to say that the wife did not succeed fully, or that the evidence which she finally obtained out of the husband was not all helpful, or essential to her case.''

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.

Important Notice:

This FAQ is intended for general interest + information only.

It is not legal advice, nor should it be relied upon or used as such.

We recommend you always consult a lawyer for legal advice specifically tailored to your needs & circumstances.