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Family Law Property Proceedings: Non-Disclosure May Justify Findings in Favour of the Innocent Party

Family Law Property Proceedings: Non-Disclosure of Assets

As has been stated elsewhere in this blog, non-disclosure by one party may result in factual findings favouring the other party. The Full Court’s decision in Gao & Wang [2016] FamCAFC 183 is a recent example of this particular principle being applied.

Gao was an appeal from the de facto mother against property orders wherein the father received the vast majority of the parties’ assets. The main factual finding in favour of the order being made related to the mother’s failure to account for the $1.25 million that had disappeared post-separation. This caused the primary judge to find that the mother had either gambled or hid the funds for her own benefit.

Non-Disclosure of Assets and Adverse Factual Findings

The wife’s case was advanced under three heads of argument:

  1. The trial judge’s finding that the wife either hid or spent funds on gambling was not open on the evidence;
  2. The trial judge failed to take deduct the wife’s reasonable expenses from the unaccounted funds; and
  3. The division of assets was so grossly favourable to the father that it amounted to an appealable error.

All three heads of argument were rejected and the appeal dismissed.

The first head of argument was rejected because the primary judge’s finding that the wife either disposed of, or hid, the relevant sum was open to the primary judge. That finding, the Full Court held, was “…an easy and obvious inference for her Honour to draw…” During the trial, the mother admitted that she had gambled large sums of money. Neither party”…gave any semblance of proper disclosure.”

With respect to the second head of argument, the Full Court rejected the wife’s submission that the trial judge had failed to deduct the wife’s reasonable expenses. There was no evidence of the wife’s living expenses, or those of the parties’ children, from the time of separation until the trial. Nor was there evidence to indicate that the wife’s Centrelink Benefits, rental income and gambling winnings exceeded her expenses. Moreover, the wife’s admission in relation to her extensive gambling supported the finding that the mother had income available to her.

Finally, the Full Court rejected the wife’s submission that the division of assets was so grossly favourable to the father that it amounted to an appealable error. It was held that neither party was in a position to complain about the division of assets. It is well established that parties to a property dispute are required to disclose all material facts. Neither party fulfilled this obligation. Hence, it was open to the trial judge to take a “robust approach” dividing the parties’ property accordingly.

Concluding Remarks

Gao is a timely reminder of the importance of disclosure in property proceedings. In the absence of adequate disclosure, assets that have been mysteriously disposed of are likely to result in adverse findings against the party bearing the onus of explanation. And those findings, in turn, may result in the innocent party receiving a favourable outcome. In Gao, the trial judge ordered that the husband retain 71% of the parties’ assets. This order was affirmed by the Full Court in light of the fact that the $1.25 million which mother failed to disclose amounted to approximately 80% of parties’ assets at the time of the hearing.