Financial Separation: Understanding Full and Frank Disclosure and Its Importance

Family Law: 28 January 2025

Author: Giselle Roman - Our People

If you're navigating a family law matter, you’re likely to hear the term “full and frank disclosure”. You may be wondering, what does it mean, and why do I have to do it?

In legal disputes, especially in family law, disclosure is a crucial process which involves the exchange of documents that are relevant to the case.

Where assets are being divided in financial family law matters this process aims to ensure that both parties have a clear and accurate understanding of the financial situation, which is essential for making informed decision as to the property division and achieving a fair resolution.

In particular, the documents being exchanged assist in corroborating the parties’ income, expenses, and the value of certain assets and liabilities of the relationship. The documents can also provide critical information about superannuation balances, investments, and the financial resources of the parties in order to reduce the issues in dispute.

What Documents Must Be Provided?

Under the Family Law Rules the duty of disclosure applies to each document that is, or has been, in that party’s care, possession or control and is relevant to an issue in the proceedings (See Rule 6.03).

Specifically in property/financial matters, parties are required to provide comprehensive disclosure of their financial circumstances. Rule 6.06(3) of the Family Law Rules provides a non-exhaustive list which states that full and frank disclosure must be made in relation to a party’s income, earnings, property interests, financial resources, interest in any trust, any disposal of property and any liabilities or debts.

The relevant documents that must be provided in most cases include:-

Taxation Documents:

• The last three years of tax returns.
• The last three years of taxation assessments.

Employment Documents:

• A current Employment Contract.
• Recent Payslips.
• Bank Statements:
• Statements for all personal, joint and business accounts for the last 12 months.
• Statement for all credit card, mortgages and loans (ie. Personal loans) for the last 12 months.

Superannuation:

• A current superannuation statement to any and all active superannuation accounts.
• The trust deed and the last three years of financial statements for any self-managed superannuation funds.

Business Activity Statements:

• If the party has an Australian Business Number (ABN), the last four business activity statements.

 Partnerships, Trusts, or Companies:

• For any private partnerships, trusts, or companies in which the party holds an interest, copies of the last three years of financial statements and the last four business activity statements.
• Financial Statements, Balance sheets and Profit and Loss Statements for the last 3 years.
• Family Trust Deeds

Other Documents

• Loan documents and/or agreements;
• Investment Statements and Records (for stocks, bonds or shares).

Additional documents or documents over an extended period can be required as part of the exchange depending on your specific situation.  

When Must You Make Disclosure?

The obligation to make full and frank disclosure is ongoing. It starts in the pre-Court stages of a matter, will continue throughout any Court proceedings that are on foot and will last until the case is finalised. It must also be provided in a timely manner.

Where you are a party to a proceeding relating to property matters, certain documents must be exchanged prior to the first Court date. These documents are listed in Rule 6.06(8) and include:

1. A copy of the party's 3 most recent taxation returns;
2. A copy of the party's 3 most recent taxation assessments;
3. If the first party is a member of a superannuation plan:
   1. the completed superannuation information form for any superannuation interest of the party (unless it has already been filed or exchanged); and
   2. for a self-managed superannuation fund--the trust deed and a copy of the 3 most recent financial statements for the fund;
4. If the party has an Australian Business Number--a copy of the last 4 business activity statements lodged;

If there is a partnership, trust or company (other than a public company) in which the party has an interest--a copy of the 3 most recent financial statements and the last 4 business activity statements lodged by the partnership, trust or company.

If there are any new documents or changes in your financial situation during your matter, it is important to know that you must inform the other party.

Consequences of Failing to Make Full and Frank Disclosure

The legal system places significant importance on transparency to ensure fairness in property settlements and to encourage the resolution of property matters. It therefore takes the party’s obligation to make full and frank disclosure seriously.

If your matter is in court, you will need to file an undertaking regarding your disclosure. This is a declaration that you understand your duty to provide full and frank disclosure and have complied with it to the best of your knowledge.

If you do not comply with your obligations to make full and frank disclosure, it can lead to:

Being Unable to Use the Document: If you do not disclose a document as required by the Court Rules, you may be prevented from using the document in evidence at a hearing or trial without consent of the other party or leave of the Court.

Contempt of Court: Deliberately withholding documents or misleading the court can lead to contempt of Court charges, which can result in fines, legal cost orders, or in extreme cases, imprisonment.

Financial Penalties and Costs: The Court may order you to pay the other party's legal costs.

Adverse Inferences: The Court may draw negative conclusions against a party if it believes that they have concealed or failed to produce certain financial documents.

Reopening of Settlements or Orders: If hidden assets or financial details become known after a settlement or court order, the matter could be reopened.

Delays and Increased Complexity: Non-disclosure can lead to delays in the legal process. This can prolong the case, increase stress, and lead to additional costs (or costs being awarded against you).

How to Ensure Compliance with Disclosure Obligations

To avoid serious consequences, it is essential to comply with your disclosure obligations by:

• Providing all required documents accurately and on time.
• Being open and transparent about all financial aspects, including assets, liabilities, income, and expenses.
• Not withholding any information, even if it may negatively impact your case.
• Seeking legal advice early to ensure you understand your obligations and stay compliant throughout the process.

If you're uncertain about what you need to disclose, or if you have any questions regarding the family law process, consult with one of our experienced Family Lawyers.