Spouses Behaving Badly – Financial disclosure and the dangers of contempt

Thankfully, despite some initial hurdles, most people manage to come to a financial arrangement with their ex-partner without significant drama and usually without going to Court. On the other end of the spectrum are those for whom the process of financial separation is akin to psychological warfare with clearly strategized battle plans where defeat, or compromise is not an option. You may be surprised to learn that unlike other civil jurisdictions, there are no winners when it comes to Family Law but a very high probability that both people will come away with less than they hoped for. Accredited Specialist family lawyer Simone Green explains the importance of full and frank financial disclosure and the penalties for refusal.

The Federal Circuit Court and the Family Court (‘the Family Courts’) currently have their own Rules (‘the Rules’) about the financial documents to be disclosed to the other partner in Family Law cases, although these Rules are set to merge in September 2021. The Rules clearly prescribe which documents must be exchanged before commencing a case in the Family Courts, referred to as the pre-action filing procedures.

The obligation to exchange information and documents also referred to as ‘discovery’ is however an ongoing obligation. The principle behind this is so that each party can give informed consent to any agreement reached and the Court can be satisfied on the balance of probabilities that the Orders it makes are just and equitable in all the circumstances.

There are always people who, perhaps fuelled by bitterness over the loss of a relationship, a sense of mis-placed entitlement or mere greed, try to outsmart the ex-partner and the law by hiding, gifting, selling, or moving assets offshore, to avoid having to share them with their ex-partner. This is a dangerous gamble which may have disastrous consequences.

Did you know that the Family Courts can take extraordinary measures against the perpetrator of such fraud, including a refusal of departure from Australia, imprisonment for contempt of court, transfer of other assets by way of enforcement of orders and hefty fines? Even declaring bankruptcy, as some people have done to avoid sharing assets with the ex-partner has led to the family courts adjusting superannuation (outside of the Trustee in Bankruptcy’s reach) to the ex-spouse.

While the above are extreme examples, they highlight the seriousness in which the Courts take the obligation of the candid disclosure of assets. Streeterlaw recommends getting early and specialist Family Law advice on your rights and obligations when it comes to financial settlement on separation to avoid needless and often costly mistakes. Speak to our specialist Family Law team today on (02) 8197 0105.