Duty of Disclosure: Dealing With Delinquent Litigants
Parties to a property dispute are required to provide full and frank disclosures of their financial circumstances. They are bound by this obligation both before, and after, proceedings have commenced. Where a party has failed to comply with their obligation to disclose their financial circumstances, the court will not be “unduly cautious” about making findings in favour of the innocent party.
Surridge & Surridge  FamCAFC 10 is the latest Full Court decision in a long line of authorities where the court has not been “unduly cautious” in making findings in favour of the compliant party. In Surridge, the appellant wife appealed against property orders on the basis of a number of appealable errors. These errors ultimately produced a set of orders that were manifestly unfair to the wife.
In essence, the wife’s appeal was based upon:
• the husband’s abject failure to comply with his duty to provide full and frank financial disclosure; and
• the trial judge’s failure to make property orders that reflected the husband’s improprieties and lack of
credibility, despite having made the relevant factual findings.
Duty of Disclosure Family Law: Some Examples of Non-Compliance
At trial, the husband alleged that he had owed a debt to his parents amounting to $192,000. The wife denied this allegation. Her claim was that the debt in question was not a debt. And the Full Court agreed with her. The alleged debt did not appear to require any payment on behalf of the husband. Nor had there been any compelling evidence that a demand for payment had been made. The prospect of a demand being made in the future was also unlikely. These findings were predicated upon the conflicting evidence of both the husband and the husband’s father. Neither party seemed to have any satisfactory explanation with respect to how, when and by what means the funds in question were delivered to the husband by the husband’s parents. Accordingly, the Full Court held that the trial judge had erred in including the debt as part of the pool of assets given that there was no evidentiary basis for doing so.
The Full Court also found error in the trial judge’s apparently contradictory finding that: “[t]he loan will remain in the pool but the husband will indemnify the wife. It is appropriate that the husband retain sole liability for this loan.” With the greatest respect, this particular finding of the trial judge did not make any sense. The parties’ entitlements under a property order represent a proportion of the net value of the matrimonial assets. This meant that net value of the assets decreased by $192,000. And since the wife received 62.5% of the matrimonial assets, her entitlement was $120,000 less than what it would have been where it not for the so-called loan. So, leaving the “debt” in the pool of matrimonial property resulted in the wife bearing 62.5% of so-called liability. That outcome contradicts the trial judge’s finding that the husband would husband indemnify the wife with respect to the loan.
The trial judge made a further finding that a debt owed by the husband amounting to $36,000 should be taken into account in determining the net value of matrimonial assets. The Full Court found that there was no evidentiary basis for this finding. Any conflict between the wife’s evidence and the husband’s evidence was to be resolved in favour of the wife. This finding was based on the husband’s apparent lack of credibility. The factors taken into account in determining that the husband lacked credibility consisted in:
• the fact that he had significantly departed from his written evidence during the course of cross-examination
• being deliberately vague and unhelpful during cross examination;
• a lack of any corroborating evidence to support many of the husband’s claims;
• concessions that certain aspects of the his written evidence was false;
• his failure to call witnesses who, it would seem, could corroborate his evidence;
• numerous deliberate attempts to mislead both the wife and the court during the course of the proceedings.
In light of these findings, the trial judge had erred in finding that the $36,000 loan should be included in the pool of matrimonial assets – particularly where there had been no corroborating evidence.
The trial judge had also failed to add-back substantial sums that the husband had inexplicably disposed of. These sums included:
• withdrawals amounting to $886,000;
• trust distributions amounting to $2,000,000; and
• repayment of loan funds from the sale of the husband’s parent’s home, amounting to $98,000.
For these reasons, the Full Court re-exercised its discretion in making just and equitable orders under s 79 of the Family Law Act. In doing so, the wife’s ultimate entitlements represented 73.7% in favour of the wife.
Duty of Disclosure Family Law: A Presumption in Favour of the Innocent Party?
In light of Surridge, and the decisions that precede it, it would appear as though an evidentiary presumption arises in circumstances where one party lacks credibility has also failed to provide adequate disclosures. That presumption might consist in the following: where there is a factual dispute between the parties, that dispute may be resolved in favour of the innocent party. Or at least that appears to be the general tenor of the Full Court’s remarks in Surridge:
- “The Full Court has said that a party’s “obfuscation and evasion” should not be permitted to lead to orders that are
unjust or inequitable.  As a result of the husband’s deliberate conduct his Honour “should not [have been] unduly cautious about making findings in favour of [the wife]”.”