The law – what is disclosure and why is it important?

Financial disclosure is required during Family Law property settlement matters. This allows the Court to determine the financial resources of both parties and settle the matter accordingly. The duty of disclosure applies with the pre-action procedure for a case and will continue until the case is finalised.

The Federal Circuit Court Rule (FCCR) 24.03 provides that a party required to file a financial statement or affidavit of financial circumstances must provide a full and frank disclosure of their financial circumstances. Disclosure includes direct and indirect financial circumstances and can include:

• Income
• Trust accounts
• Any interest in property
• Any gift or disposal of property

Additionally, Division 2 of the Family Law Act 1975 (Cth) (“The Act”) provides the Court with options if a person fails to comply with court orders. According to section 112AR of the Act, sentences of imprisonment should always be avoided unless the Court is satisfied that, in all the circumstances of the case, it would not be appropriate for the Court.

Stradford & Stradford [2019] FamCAFC 25 (Stradford)

The Stradford case below is a unique case highlighting a significant denial of procedural fairness in relation to financial disclosure.

Facts

Mr and Mrs Stradford were involved in property settlement proceedings. Judge Vasta, the primary judge, ordered that the husband needed to make a full and frank financial disclosure, and file and serve an affidavit to the wife outlining what disclosure had been provided. He also noted that if the husband failed to provide full and frank disclosure, he should be dealt with for contempt of those orders. The matter was adjourned to a further date for mention.

Mention

The husband filed the respective affidavits and claimed that some documents required were not in his possession or control. The wife claimed the husband had omitted information. A different judge presided over the mention hearing and adjourned the matter.

Imprisonment

The matter returned to Judge Vasta again in December 2018. His Honour did not accept the husband’s claim that he tried in good faith to provide a full and frank financial disclosure. The wife made it clear that she did not want her husband to be charged with contempt because they had children together. She said her goal was to achieve a fair property settlement.

His Honour acknowledged her concerns, but ultimately found Mr Stradford to be in contempt of his orders and sentenced the husband to prison.

Appeal

Mr Stradford appealed the decision. The wife supported the appeal and joined in seeking an order for the husband’s imprisonment to be set aside.

Outcome:

Upon appeal, the Court ruled in favour of Mr Stradford and stated that the trial judge erred in law and in fact. The Court also stated that there was a “gross miscarriage of justice” as the husband was denied procedural fairness. They found the husband’s evidence was not given proper weight and he was denied a fair opportunity to defend himself against the charge of contempt. Additionally, they noted the wife’s wishes were not taken into consideration.

The Court also emphasised that a breach of orders made in family law proceedings should be dealt with as a “contravention to the proceedings” in accordance to Rule 19.02 of the FCCR. If contempt was found, every aspect of contempt must be proven to the criminal standard i.e. beyond a reasonable doubt.

The Court also highlighted that a judge should not sentence a person to imprisonment unless they are satisfied that, in all the circumstances of the case, there are no alternative punishments available. Ensuring compliance to orders made should be prioritised over punishment. The Court noted that imprisonment should be the “last resort”. The husband was also granted a costs certificate in respect to the costs incurred in relation to the appeal.

Financial disclosure is a required process once a matter is in Court and there are consequences if a person is non-compliant. It is important to provide full financial disclosure in Family Law matters to enable the justice system to run smoothly.

If you are considering applying for divorce and property proceedings contact one of our experienced family law solicitors on (02) 9920 1787 to discuss how we may assist you to achieve a favourable outcome. Our principal is named as leading Family and Matrimonial Lawyer of the Year by Acquisition International in their 2019 leading Adviser Awards. Pannu Lawyers are conveniently located in Blacktown and practice extensively in Family Law, Criminal Law, Commercial Law and Conveyancing.

This article is for educational purposes only and must not be relied as legal advice.