For litigants involved in property proceedings in the Family Court, it can come as a shock to discover that parties may attempt to hide assets overseas with the aim of keeping those assets out of reach of their former partner.
The Family Law Act 1975 defines property as, “in relation to the parties of a marriage or either of them” as “property to which those parties are, or that party is, as the case may be, entitled.
The Court examines the financial contributions of each partner to the relationship as well as the non-financial contributions of each, the asset pool at separation, and the future needs of each partner post separation. Finally, the Court must decide whether the conclusions it reaches about financial matters will accord a just and equitable result for both parties.
As it examines the asset pool as at the date of trial, the Court demands that there is full and frank disclosure by each party. The duty of disclosure should not be taken lightly. Such disclosure must include all assets owned and controlled by the parties, not just those held within Australia.
Specifically, under s31 (2) of the Act, the Court “may be exercised in relation to persons or things outside Australia and the Territories”. It should not therefore be assumed that assets held in a foreign jurisdiction will not be taken into account and valued as part of the pool available for division, depending on the extent of such assets or resources, and depending also on the location of the parties.
Mostly, the matter will be decided by an Australian court, which should only refuse to exercise jurisdiction if Australia is a “clearly inappropriate forum”, determined by whether continuation of the proceedings would be oppressive.
Each party is required to provide a sworn Financial Statement to the Court with their financial circumstances, one which is totally honest. If it is discovered that one party has failed to fully disclose assets, penalties will apply.
Any document which is disclosed by either party must be available to the other party for inspection, a useful tool if there is a suspicion that assets are being hidden. An Order can also be sought that the former partner gives an undertaking to the Court that they have made full and frank disclosure. Any untruthfulness at this stage could result in a prison sentence, although this is a worst-case scenario.
Lawyers acting for a party who suspects that assets are being hidden will commonly rely on issuing subpoenas to various entities which may have played a part in the person’s asset accumulation. These could include banks, employers, business partners or accountants. Interrogatories – written questions formally put to one party by the other which must be answered – are also useful.
A wise litigant who suspects malfeasance regarding property should request that their family lawyer engage the services of a forensic accountant, a skilled professional who is familiar with assets being held in offshore companies, incorporated trusts and in tax haven countries.
It should be born in mind that if assets have seemingly been successfully hidden, and this was not discovered during settlement, the Court is able to re-open the case and re-decide it.
Nicholes Family Lawyers are familiar with all aspects of property division. If it proves necessary to do so, we will confer with our clients about issuing subpoenas and possibly employing a forensic accountant. Our aim is always to ensure that our clients finally reach a property settlement which is just and equitable, and fair to all parties.