Each party to a binding financial agreement must make full disclosure of all material matters. This is necessary to ensure that each party is giving fully informed consent to the agreement. Any information which may have a bearing on a party’s decision whether or not to enter the agreement, must be disclosed.
Making full financial disclosure is also necessary to enable the solicitor’s to give full and meaningful advice to each party, as required by the Family Law Act.
Should full disclosure not be made, the agreement may be set aside on the basis that it was obtained by fraud, resulting from the non-disclosure of material information.
All relevant information must be disclosed. This includes:-
- identifying the asset pool;
- placing values on the asset pool;
- any other material information which would impact on the parties decision as to whether to enter into the Agreement.
In Barker & Barker (2007), the wife convinced the court to set aside consent property orders. When making consent orders, each party has a similar obligation to make full and frank disclosure of all material matters. The value of the family farm had been identified as $1.65 million. However, before the consent orders were finalised the husband had received an offer to purchase the farm for $2.3 million, and shortly after the consent orders were finalised, he sold the farm for $2.65 million ($1 million higher than the amount disclosed in the consent orders). The offer for $2.3 million was not disclosed to the wife.
Importantly, the offer was made before the consent orders where finalised. The court considered that the offer of $2.3 million was relevant information, which should have been disclosed to the wife. This information would likely have impacted the wife’s decision to agree to the terms of the settlement.
There is a line in the sand, and a party is not required to disclose every minute detail or trivial information. Rather, the information which must be disclosed, is information which would likely impact on the other person’s consent to the terms of the property settlement.
In Livesay & Jenkins (1985) the court confirmed that not every case of failing to make frank and full disclosure will justify orders being set aside. Disclosure of a relatively minor matter, or matters which would not have made any substantial difference one way or the other, are not enough to have a court set aside consent orders or a financial agreement.