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Failure to disclosure in consent financial settlements may mean your settlement is not binding after all

The Family Law Act 1975 requires parties to a property settlement to provide “full and frank” financial disclosure including all information and documents relevant to an issue in the case and relevant to their financial circumstances. If full disclosure is not provided what you believed to be a final settlement may not be “final” after all even if both parties to the relationship agreed to it.

In the recent decision of the Full Court of the Family Court of Australia, Hicks & Trustee of the Bankrupt Estate of Hicks (2021) FLC ¶94-006 the Court considered a matter where the husband and wife entered into consent property orders in 2011. Neither of the parties disclosed a substantial liability of the Husband to a third party in their application to the Court. The Husband became bankrupt the following year and the Trustee in bankruptcy (on appeal) successfully obtained orders from the court to set aside the parties settlement under section 79A of the Family Law Act on the basis that there had been a miscarriage of justice given the debt had not been disclosed. Fresh orders were made providing for a payment to the bankruptcy Trustee of about $650,000.

The Wife appealed on the basis that there was insufficient evidence to justify the order requiring payment to the Trustee and arguing that the Orders effectively required her to pay the Husband’s debt. The Wife was unsuccessful as the Court found that the orders were open to the primary Judge even in the circumstances where there was a lack of evidence acknowledging the principle that a party should not be able to take advantage of their own non-disclosure. The Full Court found that the effect of the order requiring payment to the Trustee was that the Husband was solely responsibility for his own debts met from his entitlements and the Wife entitled to the remaining assets.

This decision is a reminder of the importance of disclosure in property settlement matters. Failure to disclose may result in your orders being set aside by the Court.

At Doolan Callaghan Family Lawyers our experienced Family Lawyers can provide you with advice to ensure that you meet your obligations as to disclosure so that your settlement agreement is resolved on a final basis.

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