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FAMILY LAW ARTICLES

ABUSIVE RELATIONSHIPS AND FINANCIAL DISCLOSURE

A healthy shared financial life

A healthy relationship usually involves each partner understanding each other’s general attitude towards money and being clear about your financial goals — both short and long term. Knowing these things can help build a strong foundation for a healthy relationship — with each other and with money.

Unfortunately, of course not all relationships work like that and in fact often family law issues and matters can often involve one person being secretive or even controlling about money or even worst hiding of assets, including from the outset or during a relationship.

There is nothing worse for people to realise when a relationship ends, that one of the first casualties of the break-up is trust.  And a lack of trust in each other is made much worse when it later becomes clear one partner has hidden assets from the other, and to avoid them becoming part of the property settlement that finalises the split.

Our Sydney family lawyers often hear clients in family law matters remark that when looking back over things, they have come to realise the relationship was actually finished at the exact time when they work out an asset was hidden from them. The experience is often felt as a complete betrayal. This would appear to make a lot of sense given transparency is such an important key with healthy relationships. Whilst all separating couples inevitably have disagreements about money and finances, one of the indicators of financial abuse in a relationship is when one half of the couple hides details about assets from their partner. In a financially healthy relationship, couples:

  • Both have access to financial statements and information.
  • Negotiate joint financial goals.
  • Make joint financial decisions, regardless of whether one of them earns more money, or manages the day-to-day administration of the couple’s finances.
  • Both have access to knowledge about their money and finances, and no need to hide this information from the other.

The absence of these elements is a good indicator that a relationship involves financial abuse. In many such situations, the abused party will remain in the relationship – even when they become aware of their partner’s deception regarding their finances. Often this is because they do not feel they understand the details of the financial arrangements and may feel it’s either too difficult to come to terms with what is actually going on and/or that they will be left in a precarious financial position and in difficult times, or even destitute, should they end the relationship. Of course, this is exactly what an abuser wants – to maintain power and control over their partner by controlling access to the couple’s finances and information about them.

Separation and transparency

Unfortunately, this kind of abuse is regularly revealed when couples separate and begin to negotiate a property settlement between them. This is because there is a duty of disclosure for every party to a property settlement in a family law matter, which we will detail further in this article. Full and frank disclosure is required.

From the moment that a separating couple begin to discuss a parenting or property settlement (this includes even before legal proceedings are ever issued (if at all), the family law rules and procedures in family law matters place an ongoing duty of disclosure on both parties, meaning that they must provide each other with all the information and documents relevant to their case. This duty continues until the case has ended.

Party’s to finan­cial fam­i­ly law cas­es have an ongo­ing duty to dis­close the mate­r­i­al facts relat­ing to their finan­cial posi­tion. This prin­ci­ple was stat­ed in a legal case called In the mar­riage of Briese, where the court said that

“a person … has a positive obligation to set out at an early stage [their] financial position in a clear and comprehensive manner.”

The court went on to acknowl­edge that:

“…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.”

You can request documents from your former partner provided they are relevant to the issues involved in the property settlement. These might include tax returns; bank statements; pay slips; superannuation statements; Centrelink documents; child support assessments; certificates of title; mortgages; land appraisals or valuations; leases; loan applications or agreements; insurance policies; share certificates; trust deeds; and business, partnership or company documents.

It is not all uncommon even at the early stages of either you or your family lawyer seeking disclosure  from the former partner, that financial deception is often discovered, for instance when one of our Sydney family lawyers undertake routine searches throughout Australia on publicly available information such as with Land and Property Information and the corporate regulator, ASIC.

In other case’s a former partner may simply refuse to provide any documents at all, which often is a huge red flag.  A problem often arises in those circumstances given the former partner may be covering up large transfers of moneys from accounts held only in their name only.

Court proceedings

In either of the above kinds of scenarios, it is not unusual that the only way to uncover hidden assets or to obtain disclosure is to have one of our Sydney lawyers issue family law proceedings.

Once family law proceedings are issued in court a further duty of disclosure requires each party complete what is called a Financial Statement that details each of their assets, liabilities and financial resources, whether held solely, jointly with any other person, a third party (such as a new partner), a company or a trust.

Note that the duty includes details of any sale or gifting of any assets made in the year immediately prior to separation, or since separation. Just because you have gone separate ways, it doesn’t mean the duty to disclose ends until the property settlement has finalised.

The takeaway point here is that the duty of disclosure is integral to the functioning of the courts so you should ensure that you understand your responsibilities surrounding disclosure.  In fact in all cases you must sign an undertaking confirming that you understand your obligations to disclose all relevant information, that any breach of your duty may result in contempt of court, and that you have complied with your duty of disclosure. This undertaking must be filed with the court no later than 28 days prior to appearing before a judge.

It is also important to remember that disclosure is an ongoing process not a once off event.

No fishing

The duty of disclosure doesn’t mean parties in family law litigation are obliged to hand over absolutely everything. Some documents are privileged against disclosure: for example, information given in confidential consultation with lawyers, for the purposes of legal advice or a former partners personnel employment file.

Parties also only have a duty to disclose documents and information “directly relevant” to the case.

Parties’ are unable to embark on what is called a “fishing expedition,” by trying to obtain all documents relating to a case, in the vague hope of uncovering something useful. Having said that it is not unusual to subpoena banks where there has been a long relationship and seek documents that may exist from over 20 years ago to date, provided they are relevant, and provided the bank still has kept historical records.

Next steps if you believe your former partner is being uncooperative

Once you have received a copy of your former partner’s financial statement, it’s up to you and your family lawyer to thoroughly examine the statement for inconsistencies or illogical entries. As a side note, people are often cross-examined at length on their statement during court proceedings.

This process may lead to your family lawyer giving notice to your former partner’s family lawyer that you require a particular document that they are obliged to disclose and have not or one mentioned in the Financial Statement or an affidavit (required if your former partner’s financial circumstances change) for inspection.

Abusive Relationships And Financial Disclosure

It is important to know that your Ivy Law Group Sydney family lawyer is obliged to advise clients of their duty to make full and frank disclosure and of the possible consequences of breaching that duty.

Still, and despite your former partner being warned through your family lawyer to theirs about the obligation to disclose, your former partner may still try to run the gauntlet with disclosure.

There are various options within the family court rules and procedures to deal with these kind of situations

In the face of non-disclosure, our Ivy Law Group Sydney family lawyers are may advise you to consider:

  • Writing to the “non-disclosing” party what actions may be taken if the failure to disclose continues;
  • Commencing Court proceedings in order to take advantage of the various tools available once in Court;
  • Seeking specific orders about disclosure as early as possible in the Court proceedings;
  • Seeking a matter is relisted for further directions if the failure to provide disclosure will hinder a future Court event;
  • Seeking that the “non-disclosing” party’s case is dismissed or that their evidence is not received by the Court; and
  • Seeking costs, potentially even on an indemnity basis in particularly serious cases.
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Methods of evidence gathering

While understanding the duty to disclose and how to handle non-disclosure is crucial to managing family law cases, your Ivy Law Group Sydney family lawyer will advise you to be prepared to gather evidence by alternate means if disclosure is not forthcoming. Our Sydney family lawyers may recommend the following methods of evidence gathering, noting the Rules governing them, be considered:

  1. Subpoena

The Family Law Rules introduce a simpler method for obtaining documents from non-parties, for example a bank. This saves the costly and tedious process of obtaining and serving a subpoena. The new process involves completing a particular form and serving it on the non-party – and on any other person that may be affected by disclosure (using the bank example, this could be a joint account holder), as well as the other party in the case.

The documents requested must be “relevant to an issue in the case”, so this is not open to fishing expeditions. Moreover, the non-party, the other party, or any person affected, can object to the form. If this happens, the party requesting the documents can apply to the Court for an order. Once faced with a Court order, the non-party is legally compelled to produce the documents.

  1. Notice to produce

These are Notices issued by one party to another setting out documents sought by that other party to produce documents at a court hearing when those documents are called on by the party issuing the Notice. Their usefulness can be limited by time constraints at Court, but when used appropriately can be highly effective.

  1. Notice to admit

These are Notices issued by one party to another asking the other party to admit a fact is true or a document is genuine. These Notices carry potentially enormous consequences, as silence is taken to be acquiescence.

  1. Request for answers to specific questions

There is a process by which you can make a singular request of your ex-partner by serving them with a notice in writing in the form of Answers to Specific Questions, a maximum of 20 questions on issues directly relevant to the property settlement. Your former partner can be cross examined on these answers later on in court, and any inconsistency between the answers in writing and those given in court can result in an adverse inference being made against them.

  1. List or affidavit of documents

Another step if you remain unsatisfied about your former spouse’s transparency in relation to financial assets is known as ‘discovery on oath’, where you can seek an order that your former partner files an Affidavit of Documents, asking them to discover all documents at issue in their possession, custody or control, and if they are not in possession of them, to explain why.  A failure to properly complete the list or affidavit can mean that a document will not be received into evidence at a later stage.

  1. Undertakings

If you genuinely believe your former partner is hiding information about an asset/s, the Court requires the parties to give a written undertaking to the court that they have a given full and frank disclosure under the court rules. Some penalties may apply for a failure to disclose and for the filing of a false undertaking. These penalties can affect your case or may require you to pay a fine for contempt of court.

Penalties for failing to disclose

A failure by a party to fully and frankly disclose by producing requested documents may result in:

  •   Legal cost orders
  •   penalties
  •   adverse findings on credit
  •   refusal by the Court to accept non-disclosed documents into evidence
  •   a significant shift in entitlements in the other party’s favour
  •   contempt of court charges or even dismissal of the case

More importantly also if the hidden asset is later identified by you and that is after court orders are made finalising your property division with your former partner, this may provide you with an opportunity to return to court to overturn the original property division orders and have the hidden asset included in your property settlement.

Forensic accounting

In some cases – particularly in relationships where the assets involved in a property settlement are high in value or involving complex corporate or accounting and tax management issues – one or both parties may want to engage a forensic accountant to discover whether their former partner has been hiding assets and how. This is a costly course of action that should only be undertaken after seeking legal advice from one of our expert Ivy Law Group lawyers in our law firm in Sydney on whether you really have reasonable grounds to justify your belief that assets have been concealed.

The importance of expert legal advice

Again, a partner who hides or conceals assets from their spouse is engaging in abusive behaviour that can inflict long-lasting psychological and emotional damage on the abused partner. And yet it’s the very nature of the abuse – withholding information and preventing control of, or access to, finances in the union – which often makes it close to impossible for the other partner to leave the abusive relationship.

If any of these issues resonate with you, contact one of our Sydney Family Lawyers at Ivy Law Group today on 1800 431 602 or  info@ivylawgroup.com.au for a confidential discussion about your situation. Our experienced Sydney Family law legal team is here to support you in discussing all issues relating to an abusive relationship, putting your interests at the very centre of the decision-making process to achieve the most beneficial outcome.

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