Every so often, we will receive instructions from a client who is convinced that their former partner or husband/wife is hiding assets. The first question that we ask when a client tells us that is to ask them how they know. Slightly confronting, but it gets straight to the nitty-gritty.
The Federal Circuit and Family Court (Family Law) Rules impose strict requirements on parties in family law proceedings to give a full and frank disclosure of their financial circumstances. Every lawyer who practices in the field is aware of the obligations under the rules and does their best to ensure that their clients comply with their disclosure obligations.
The categories of parties to family law proceedings who have the wherewithal to “hide” assets is not large. PAYG employees don’t – it is simply a matter of comparing pay records from the employer with deposits to the bank account that the pay goes into to look for a match. If there isn’t a match, then the other side has some explaining to do.
The class of people who can attempt to hide where all their money is going is pretty small. They are usually self-employed, running a business with multiple employees, through a series of entities, such as proprietary companies, trusts, or partnerships, who draw income out of those entities in a variety of different ways.
In searching for undisclosed income, one of the important steps for a solicitor to take is to closely compare the annual financial accounts for each entity with the annual income tax returns and also to cross check against the bank statements for the same entities. A further cross-check against the income tax return or the party and his/her disclosed bank statements is also useful.
A very useful source of information about the assets and income of a party any finance applications they have completed during the period being investigated. Generally, people applying for finance want to present the best possible picture of their own financial position to potential lenders and will often state their income and/or asset position to be much better than they appear in their court documents.
One other tool available to a party who is convinced that their former partner has hidden assets is good old-fashioned patience. Section 79A of the Family Law Act provides:
“(1) Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:
- there has been a miscarriage of justice by reason for fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance….
the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.”
The relief available under section 79A means that if a party wants to hide assets, they will need to keep them hidden for a long time after the case is over. If the other party becomes aware of the assets and is able to show that they were in existence at the time of the hearing, but not disclosed, they can apply to have the property settlement orders set aside and ask the court to make fresh orders in their place.
Written by
Stephen Rugendyke
Special Counsel
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