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Disclosure in Family Law Cases – Getting It Right Family Law Residential 2013

Alison Ross Partner HopgoodGanim Sydney Williams Barrister-at-Law

INTRODUCTION

[1] Lying at the heart of the administration of justice, and the determination by the Family Law Courts of

cases to achieve an outcome which is “just and equitable” (or, in parenting matters, an outcome which is

in a child’s best interests), is a party’s compliance with a duty of disclosure.

[2] There is nothing new in that statement; nor have there been any radical alterations to the Family Law

Rules 2004 (Cth) (the Rules). Rather, it is too often the case that in emotionally charged matrimonial

proceedings a party’s duty to make full and frank disclosure can become blurred or lost. As this paper

will attempt to demonstrate, the duty is onerous in its terms, has its temporal limits (particularly with

third parties or cases involving wills and trusts or overseas elements), and provokes ethical

considerations for the lawyers acting for a party who is not so frank in the discharge of that duty.

LAWYERS’ RESPONSIBILITIES

[3] Various obligations are cast upon a lawyer acting for a party to proceedings in the family law

jurisdiction. This paper does not attempt to define all of those duties, but emphasises the responsibility

a lawyer assumes in a party’s compliance with their disclosure obligations. That responsibility is made

plain by rule 1.08 of the Rules where it is specified that a party has a responsibility to promote and

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achieve the main purpose of the Rules by, inter alia, complying with the duty of disclosure (rule

1.08(1)(b)), and a responsibility is burdened upon a lawyer for a party to comply, as far as possible, with

the party’s responsibilities to promote and achieve the main purpose of the Rules: see rule 1.08(2).

[4] Consequently, a legal practitioner’s ethical duties necessarily come into focus in the discharge of that

responsibility.

[5] It remains long established that a legal practitioner’s primary duty is to the Court, and which is

paramount to the duty owed to a client: see Giannarelli v Wraith (1988) 165 CLR 543; also, Rondell v

Worsley [1969] 1 AC 191 at 227. The rules of professional conduct in Queensland (and each other

Australian State and Territory) now entrench that principle: see Australian Solicitors Conduct Rules

2012; Barristers Rules 2007 (Qld).

[6] At times, the discharge of that duty may take some courage on the lawyer’s part, insofar as the

performance of that duty may be to the disadvantage of the client, or require the legal practitioner to act

in a manner contrary to the client’s instructions: see Giannarelli v Wraith (supra) per Mason CJ.

[7] A long-standing or warm relationship to a particular client, or a desire to see that client succeed in

litigation, cannot, under any circumstance, erode that duty to the Court. Occasions arise where legal

practitioners have, for whatever reason, arguably lost sight of that principle: see, for example, Lambert

v Jackson & Anor [2010] FamCA 357 per Watts J at [189] – [201] and [2011] FamCA 275 (costs

judgment).

[8] As that authority under reference demonstrates, such conduct will not be tolerated and will promptly

result in a practitioner being referred for disciplinary proceedings: see, also, Kyle v Legal Practitioner’s

Complaints Committee [1999] WASCA 115 per Ipp J.

[9] It is necessary that a legal practitioner acting for a party to proceedings advise the party of the duty to

make full and frank disclosure, the ongoing nature of that duty, and the possible consequences of any

breach of same. Occasions may arise where a client refuses to accept that advice and, if desirous of not

disclosing a fact or document that is relevant to the case, or which is otherwise required to be disclosed

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by the Rules, the legal practitioner is obliged to take appropriate action, and which may include the

cessation of their continuing to act for that party.

THE DUTY OF FULL AND FRANK DISCLOSURE

[10] Chapter 13 of the Rules governs a party’s disclosure obligations in the Family Court of Australia and

includes, inter alia, the mechanisms for disclosure, the class of documents which are exempt from

disclosure (rule 13.12) as well as service of specific questions (Part 13.3).

[11] Hence, Chapter 13 effectively categorises three classes of disclosure, namely: a duty of disclosure with

respect to financial cases (Division 13.1.2); a duty of disclosure of documents in “all cases” (Division

13.2.1) and the ability in certain cases to serve a request to answer specific questions (Part 13.3).

[12] Similar provisions are contained in the Federal Circuit Court Rules 2001 in relation to proceedings in

that Court.

Overarching Duty

[13] Whilst some distinction is drawn between the disclosure obligations accruing in a financial case as

opposed to a parenting case, as we have addressed below, there is an overarching duty of disclosure in

all cases that disclosure be made of each document that is or has been in the possession, or under the

control, of the party disclosing the document and is relevant to an issue in the case: see rule 13.07.

[14] In Oriolo and Oriolo (1985) FLC 91-653, the Full Court confirmed the clear obligation on parties to

make full and frank disclosure of all relevant financial circumstances, citing with approval the judgment

of Smithers J in Briese and Briese (1986) FLC 91-713 as follows:

“in financial proceedings between spouses each party must make a full and frank disclosure of all

material facts. … full and frank disclosure was required as a matter of principle in light of the fact that

it was the duty of the Court, taking into account a number of designated criteria, to make a decision

which basically involved the exercise of discretion. This is quite different from common law litigation

between strangers, in which such a general duty does not exist, and obligations would only exist in so

far as statute or Court rules required.

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In my view it is fundamental to the whole operation of the Family Law Act in financial cases, that there

is an obligation of the nature to which I have referred.”

[15] There are, however, limited class of documents which are exempt from the breadth of that disclosure

obligation, as specified in rule 13.12 and which include:

a document for which there is a claim for privilege from disclosure; or

a document a copy of which is already disclosed, if the copy contains no change, obliteration or

other mark or feature that is likely to affect the outcome of the case.

[16] It is plain that rule 13.12 preserves a party’s common law right to exempt from disclosure documents

which are the subject to a valid claim for privilege.

[17] The duty to make disclosure starts with the pre-action procedure for a case and continues until the case

is finalised, whether by a judgment or compromise: see rule 13.01(2). It is important that parties to

litigation, who are likely to be unfamiliar with their duty to disclose, be reminded that the duty to make

full and frank disclosure is a continuing obligation.

[18] The obligation of disclosure under the Rules (or the Federal Circuit Court Rules as the case may be) is

quite unique. The administration of justice in those Courts depends upon the making of full and frank

disclosure between spouses of their financial affairs. The duty is “unique” in the sense that it may be

contrasted to common law or civil litigation between strangers and where the obligation to make

disclosure only arises by the relevant Rules of Court or statute.

[19] Regardless of whether the proceedings concern property or parenting matters, a party is obliged by rule

13.15 to declare their awareness of the duty to the court, and to each other party, to give full and frank

disclosure of all information relevant to the issues in a case, in a timely manner, and to proffer an

undertaking that, to the best of that party’s knowledge and ability, compliance has, and will be, achieved

of that duty: see rule 13.15. That undertaking must be filed at least 28 days before the first day before

the Judge: see rule 13.16.

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Financial Cases

[20] Division 13.1.2 of the Rules regulates the duty of disclosure required by parties to a financial case in the

Family Court of Australia. The term “full and frank disclosure” is defined by rule 13.04(1) as:

“Full and frank disclosure

(1) A party to a financial case must make full and frank disclosure of the party's financial circumstances, including:

(a) the party's earnings, including income that is paid or assigned to another party, person or legal entity;

(b) any vested or contingent interest in property;

(c) any vested or contingent interest in property owned by a legal entity that is fully or partially owned or controlled by a party;

(d) any income earned by a legal entity fully or partially owned or controlled by a party, including income that is paid or assigned to any other party, person or legal entity;

(e) the party's other financial resources;

(f) any trust:

(i) of which the party is the appointor or trustee;

(ii) of which the party, the party's child, spouse or de facto spouse is an eligible beneficiary as to capital or income;

(iii) of which a corporation is an eligible beneficiary as to capital or income if the party, or the party's child, spouse or de facto spouse is a shareholder or director of the corporation;

(iv) over which the party has any direct or indirect power or control;

(v) of which the party has the direct or indirect power to remove or appoint a trustee;

(vi) of which the party has the power (whether subject to the concurrence of another person or not) to amend the terms;

(vii) of which the party has the power to disapprove a proposed amendment of the terms or the appointment or removal of a trustee; or

(viii) over which a corporation has a power mentioned in any of subparagraphs (iv) to (vii), if the party, the party's child, spouse or de facto spouse is a director or shareholder of the corporation;

(g) any disposal of property (whether by sale, transfer, assignment or gift) made by the party, a legal entity mentioned in paragraph (c), a corporation or a trust mentioned in paragraph (f) that may affect, defeat or deplete a claim:

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(i) in the 12 months immediately before the separation of the parties; or

(ii) since the final separation of the parties; and

(h) liabilities and contingent liabilities.

(2) Paragraph (1) (g) does not apply to a disposal of property made with the consent or knowledge of the other party or in the ordinary course of business.

(3) In this rule:

"legal entity" means a corporation (other than a public company), trust, partnership, joint venture business or other commercial activity.”

[21] In the Federal Circuit Court of Australia, the relevant provision is contained in rule 24.03 of the Federal

Circuit Court Rules, which is in substantially similar terms.

[22] A party starting, or filing a response or reply to, a financial case must file a Financial Statement at the

same time and, if that does not fully meet the duty of disclosure, the party is obliged by rule 13.5(2) to

file an affidavit providing further particulars.

[23] A Financial Statement (or affidavit if particulars are provided therein) is required to be amended within

21 days after a significant change of circumstances from the information originally set out therein: see

rule 13.06. Hence, the continuing nature of the duty.

[24] There are additional obligations cast upon parties to a property case, and in particular requiring the

exchange of specified documents at least 2 days before the first court date (see rule 12.02) and

facilitating the exchange of certain documents (as ordered) in addition to other documents mentioned in

rule 12.02 which have not been exchanged, within 28 days after a case assessment conference (see rule

12.05).

[25] There is an intimate connection between the operation of rules 13.04 (full and frank disclosure) and

12.02 (property case – exchange of documents before first court date). In particular, rule 13.04 provides

the broad obligation to make full and frank disclosure of that party’s financial circumstances. Rule

12.02 thereafter mandates the specific documents which fall under the umbrella of the disclosure

required by rule 13.04.

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[26] The Rules in the Federal Circuit Court of Australia reflect similar obligations upon a party’s obligation

to make full and frank disclosure. While there are rules for disclosure, however, the Federal Circuit

Court is intended to operate as informally as possible and there are therefore limitations on a party’s

right to seek disclosure and, for example, issue interrogatories in proceedings before that Court.

[27] Section 45(1) of the Federal Circuit Court of Australia Act 1999 (Cth) provides that:

“Interrogatories and discovery are not allowed in relation to proceedings in the Federal Circuit Court of

Australia unless the Federal Circuit Court of Australia or a Judge declares that it is appropriate, in the

interests of the administration of justice, to allow the interrogatories or discovery.”

[28] Section 45(2) then provides that, in determining whether or not to make such a declaration, the Court

must have regard to:

Whether allowing the interrogatories or discovery would be likely to contribute to the fair and

expeditious conduct of the proceedings; and

Such other matters as the Court may consider relevant.

[29] It has been held that section 45 of the Federal Circuit Court of Australia Act creates a “rebuttable

presumption” that discovery and interrogatories will not be permitted in the Federal Circuit Court,

consistent with Parliament’s direction that the Court should act informally and use streamlined

procedures (see, for example, NAQR and Ors v. Minister for Immigration (No.1) [2002] FMCA 271). It

has further been held that, if a declaration is made to permit discovery or interrogatories, reference

should be made to the relevant rules on discovery or interrogatories in the Family Court, or the Federal

Court, as the case may be.

[30] In the later decision of Abrahams v. Qantas Airways Ltd (No.2) [2007] FMCA 639, Lucev FM (as his

Honour then was) set out a range of factors that the Court should consider on an application for an order

for discovery in the Federal Circuit Court. His Honour said that:

“In summary, it appears that in order to obtain an order for discovery in this Court the Court must

determine on the available evidence that it is in the interests of the administration of justice to do so,

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and in making that determination must have regard to whether allowing discovery would be likely to

contribute to the fair and expeditious conduct of the proceedings, and such other matters as the Court

considers relevant. These other matters might include:

(a) The relevance of any documents sought to be discovered;

(b) The volume of documents sought to be discovered;

(c) Whether there is a Court book containing relevant documents and the extent to which relevant

documents are included in the book;

(d) Whether discovery would narrow the issues;

(e) Whether both parties seek discovery;

(f) Whether there is consent to discovery;

(g) Whether discovery is ‘of benefit’ in the litigation; and

(h) The effect of discovery on litigants, especially, vulnerable litigants.”

[31] His Honour further held in a later decision of Sherwood Overseas Co Pty Ltd v. Jaymac International

Pty Ltd (No.2) [2008] FMCA 690 that:

Discovery is confined to what is in issue on the pleadings;

The documents sought must relate to the issue/s and may be relevant if they advance a party’s case or

damage the other party’s case. Alternatively, if they can lead to a course of inquiry having that effect

(that is, it throws light on the case);

A document deemed relevant is one which helps explain the controversy between the parties.

[32] Rule 14.02(1) of the Federal Circuit Court Rules confirms that a declaration may be made under section

45(1) of the correspondence Act to allow discovery, either on the application of a party or on the

Court’s own motion. The Federal Circuit Court Rules further provide, at rule 14.02(2), that, if such a

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declaration is made, the Court may make an order for disclosure generally, in relation to particular

classes of documents or particular issues or by a specified date. In that instance, disclosure is generally

by way of an affidavit of documents filed in accordance with rule 14.03.

[33] In practice, it is common in family law proceedings for at least some level of discovery to be ordered in

Federal Circuit Court proceedings, particularly insofar as they pertain to financial issues. Family law

practitioners would be well acquainted with directions issuing from Judges of the Federal Circuit Court

requiring the exchange of “Annexure A” or “Annexure 1” documents, comprising items such as bank

statements, income tax returns and financial statements and orders for disclosure are often the subject of

agreement between the parties with a view to identifying or narrowing the issues before the Court.

[34] Further, there are a range of other provisions contained in the Federal Circuit Court of Australia which

bear consideration including:

Rule 14.06 enables the Court to make an order requiring a party to file an affidavit about whether a

particular document has been in the possession of a party or what has become of such a document if it

is no longer in the possession, power or control of that party.

Rule 14.10 provides that, if a document or affidavit filed by a party refers to another document,

another party may request the party in writing for a copy of that document or to produce it for

inspection. If such a request is made, the party requested must, within 4 days of the request:

(a) provide a copy of the document or appoint a time within 7 days where it is available for

inspection;

(b) make a claim for privilege, identifying the grounds for that claim; or

(c) state that the document is not in that person’s possession, custody or power and provide any

knowledge about the whereabouts of the document.

In relation to family law proceedings, Chapter 2 of the Rules provides additional Rules for disclosure

in Federal Circuit Court proceedings, including:

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(a) Rule 24.02 requires the filing and service of a financial statement in proceedings in relation to

financial matters, including a requirement that it include a superannuation information form if the

party filing the financial statement has a superannuation interest;

(b) Rule 24.04 provides that, unless the Court otherwise orders, a party required to file a financial

statement must serve on each other party who has an address for service in the proceedings a

range of documents including the party’s 3 most recent taxation returns and assessments, a

completed superannuation information form, copies of the last 4 business activity statements

lodged if the person has an ABN and, if there is a partnership, trust or company in which the party

holds an interest, copies of the 3 most recent financial statements and the last 4 business activity

statements lodged by the partnership, trust or company. Those documents must be served within

14 days after the first court date. A similar provision for proceedings for maintenance is contained

at rule 24.05 of the Federal Circuit Court Rules.

(c) If there is a change in the circumstances of a party who has filed a financial statement, the party

must amend the statement or affidavit as soon as practicable by filing an affidavit setting out the

amendment (if it can be set out clearly in 3 pages or less) or, otherwise filing an amended financial

statement.

[35] In circumstances where, in proceedings in either the Family Court of Australia or the Federal Circuit

Court of Australia, it is a common requirement that parties to proceedings disclose information

pertaining to companies or trusts in which they hold an interest, considerations arise when dealing with,

inter alia, cases involving trusts, corporations or overseas elements, as we will deal with below.

SANCTIONS

[36] Rule 13.14 of the Rules provides:

“Rule 13.14 If a party does not disclose a document as required under these Rules:

(a) the party:

(i) must not offer the document, or present evidence of its contents, at a hearing or trial without the other party’s consent or the court’s permission;

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(ii) may be guilty of contempt for not disclosing the document; and

(iii) may be ordered to pay costs; and

(b) the court may stay or dismiss all or part of the party’s case.”

[37] Rule 14.09 of the Federal Circuit Court Rules similarly provides that:

“14.09 Documents not disclosed or produced

Unless the Court gives leave, a party is not entitled to put a document or a copy of a document in evidence or give, or cause to be given, evidence of the contents of a document:

(a) if:

(i) the party has filed an affidavit of documents; and

(ii) the document was, when the party made the affidavit, in the possession, custody or control of the party or had been, in the possession, custody or control of the party; and

(iii) the document was not referred to in the affidavit or in any other affidavit of documents filed by the party under an order of the Court; or

(b) if the party has been served with a subpoena to produce and does not produce the document.”

[38] Rule 13.14 of the Rules is concerned, by its terms, with the failure to disclosure “a document”. What

happens, however, when a party deliberately engages in non-disclosure, not of a document, but of a

property or similar interest and, by extension, fails to make “full and frank disclosure” as required by

rule 13.04?

[39] It is often recited that cases involving deliberate non-disclosure by a party present considerable

difficulty for the other party to the litigation to establish the fact of deliberate non-disclosure, let alone

establishing the quantum thereof: see Weir v Weir [1992] FamCA 69 at [32]; Black and Kellner (1992)

FLC 92-287; Chang and Su (2002) FLC 93-117; Kannis and Kannis (2003) FLC 93-135.

[40] Once a finding of deliberate non-disclosure is made, the Court “should not be unduly cautious about

making findings in favour of the innocent party. To do otherwise might be thought to provide a charter

for fraud in proceedings of this nature”: Weir and Weir (supra) at para [33].

[41] On such a finding being made, the Court has jurisdiction to make an order going beyond the identified

property: ibid, para [35].

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[42] Once that finding is made:

the court can, if the evidence permits, ascribe a value for that non-disclosed interest or asset; or

make an adjustment in favour of the other party taking into account the effect of the non-disclosure,

under section 75(2)(o) of the Family Law Act 1975 (Cth).

[43] A trial judge has a discretion as to the approach to be adopted in cases involving findings of non-

disclosure and may include the “adding back” to the pool of a sum representative of the value ascribed

to the non-disclosed interest or asset, in which case it may not warrant an additional adjustment in the

other party’s favour under section 75(2)(o) of the Act: see the approach of Forrest J in Romano & June,

unreported, [2013] FamCA (on appeal).

[44] Alternatively, it is open to a trial judge to add back a sum representative of that non-disclosed interest or

asset, and to also make an adjustment in the other party’s favour under section 75(2)(o) in consequence

thereof: see Lambert v Jackson [2010] FamCA 357 per Watts J.

[45] In either case, it is plain that a court will make necessary findings to ensure that, despite the non-

disclosure, the outcome to the other party remains “just and equitable”.

[46] Further, it must be noted that the consequences for a party engaging in deliberate non-disclosure is not

confined solely to the assessment of the property “pool”, or to the assessment of contributions. That

conduct is a relevant consideration to any application for costs pursuant to section 117 of the Act.

DISCLOSURE OF TRUST DOCUMENTS

[47] Questions of disclosure against a party who is a beneficiary of a discretionary trust, or a director of a

corporate trustee, necessarily forces analysis of the terms of rule 13.07 being the “duty of disclosure –

documents”. Rule 13.07 states:

“13.07 The duty of disclosure applies to each document that:

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(a) is or has been in the possession, or under the control, of the party disclosing the document; and

(b) is relevant to an issue in the case.”

[48] The question of disclosure of trust documents arose for consideration by O’Reilly J in Schweitzer &

Schweitzer [2012] FamCA 445.

[49] In Schweitzer & Schweitzer (supra) the wife sought orders for the husband to disclose documents in

relation to two trusts, namely:

copies of financial statements and tax returns for the Schweitzer Investment Trust and the

Schweitzer Family Trust for the most recent financial years, including balance sheets, profit and

loss accounts and depreciation schedules;

bank statements for the Schweitzer Investment Trust and the Schweitzer Family Trust for the

previous two years; and

copies of minutes or resolutions of the corporate trustees of the Schweitzer Investment Trust and

the Schweitzer Family Trust relating to trust distributions for the preceding three financial years.

[50] Each trust was a discretionary trust of which the husband was a beneficiary. The appointor of each trust

was the husband’s father, and the husband was a director of the corporate trustee of each trust. The

wife’s application for disclosure was premised on the fact that as a director of the corporate trustees, the

husband was entitled to the financial records of the companies (section 290 of the Corporations Act

2001 (Cth)), and as a beneficiary of the trust he was entitled to access of the financial documents in

order to ascertain whether the trusts were being properly administered. For the purposes of determining

the application, O’Reilly J assumed that the documents were relevant to an issue in the case.

[51] Her Honour determined (at paragraph [15] of her judgment) that, for the purpose of rule 13.07(a) of the

Rules, the documents sought by the wife were not, and could not be, “in the possession” of nor “under

the control” of the husband in his personal capacity, and were not “in the possession” of nor “under the

control” of the husband in his capacity as a director of the corporate entities who are the trustees of the

two trusts and neither in his capacity as a beneficiary.

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[52] Relevantly, the finding was made that the fiduciary relationship which exists between the director of a

corporation and the corporation, or the trustee and the beneficiaries of the trust, is such that whilst there

is a right of access to documents by the trustee or director of a corporation (see section 290(1) of the

Corporations Act 2001 (Cth)), access to and the use of such documents can only be exercised for trust

or corporate purposes (see para [20] of the judgment). The right to inspection or access only arose in

consequence of that fiduciary relationship, and her Honour held that it is not legally correct to assert that

the enforceable right to inspect or obtain copies of documents arose in a personal capacity.

[53] After a careful analysis of authorities and the relevant rules of Court or legislation under which those

authorities were decided, O’Reilly J determined that within the meaning of rule 13.07(a) of the Rules,

“possession” means not mere physical possession (custody) but “possession” within the accepted

meaning of “the legal right to possession”: ibid, at para [45]. Her Honour determined that the fiduciary

obligation which pertains to directors of corporations and trustees is such that there is no right to

“possession”, or “control”, in any personal capacity, and the right of access only arose to documents

strictly for the purposes of the corporation or the trust: ibid, at para [47]. Again, insofar as the

standpoint of a beneficiary who has the right to require the due administration of the trust, the

beneficiary is entitled to access of the financial documents of the trustee but only for the purpose of

obtaining that there is due administration: para [50].

[54] Her Honour concluded (at para [58]):

“Any documents of the corporate trustees to which the husband has access, he has access as a fiduciary

such that, relevantly, such documents are not in his possession or under his control. The disclosure

sought, thus, could be sought only against the two corporate trustees, either by way of their joinder, for

declaratory or other relief, if the wife be so advised, or short of that, for non-party disclosure relief.”

[55] O’Reilly J refused the disclosure relief the wife had sought.

[56] From an evidentiary perspective, it is therefore the case that careful consideration needs to be given

when acting for a party from whom disclosure is sought as to the category of document liable to be

disclosed and, when acting for a party seeking such disclosure, the appropriate method to achieve that

outcome or whether the joinder of other third parties is warranted.

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CASES INVOLVING OVERSEAS LAW

[57] Certain evidentiary preparations are required in cases involving overseas law when that overseas law

prevents the disclosure of documents to which a party, in proceedings under the Family Law Act and

Rules, is obliged to disclose in Australian Court proceedings.

[58] Necessarily, the evidence to be adduced to support a party’s contentions on matters of foreign law, and

the extent to which such foreign law may restrain a party discharging the duty of disclosure under the

Rules, will have to be assessed on a case by case basis. There is, however, a general principle of law in

Australia that the party who seeks to assert that foreign law differs from domestic law carries a burden

of proof. It would therefore be necessary for that party to lead evidence with respect to the laws in that

foreign country which preclude those disclosures being lawfully made or, alternatively, the sanction in

that overseas country to which a party might be exposed if that disclosure was made.

[59] In Cross on Evidence (8th Australian ed) the author expresses the proposition in the following terms (at

[41005]):

“The existence, the nature and the scope of the rules and principles of the law of a foreign jurisdiction

are issues of fact to be decided by the Judge on which evidence is receivable; on the other hand, the

effect of the application of those rules and principles, as so ascertained, to the particular facts and

circumstances of the case before the court is a question of law for the court of the forum, on which

evidence is not receivable. Where the relevant rules and principles of foreign law are so framed as to

confer discretions on the courts which administer them, the evidence is receivable as to the manner in

which those discretions are exercised, with reference to any pattern or course of decision. The general

rule is that foreign law must be proved by an expert witness who will, in a disputed or complicated

case, give evidence on oath in the ordinary way. In simple routine cases it is not uncommon for the

evidence to by affidavit.”

[60] Whilst sections 174, 175 and 176 of the Evidence Act 1995 (Cth) provide a mechanism by which a

statute, proclamation, treaty or act of state of a foreign country may be adduced in a proceeding, there

are limitations on the utility of that mechanism and it would likely require, in any event, the calling of

evidence to prove the document in a manner specified in those provisions. It is likely, therefore, to be

the safest course with respect to the proof of a foreign law that a duly qualified expert be engaged. That

person might sensibly be a lawyer practising in the relevant jurisdiction. Necessarily, that person will

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be required to depose to their qualifications and to the relevant law, and it is desirable that the relevant

foreign code or statute be produced so that the Australian court may itself consider the proper meaning

to be given to the legislation, particularly in the event there are competing views of experts on the

interpretation of that foreign law.

[61] The potential implications when dealing with a case involving foreign law when that law restricts the

disclosure of particular matters, extends not only to the production of documents which might offend

that law, but also to a witness giving of oral evidence of those matters and which might then expose the

witness to sanction in a foreign court. Questions will arise whether that or a particular witness can be

compelled to give that evidence if objection is taken: see section 128 of the Evidence Act 1995 (Cth).

This paper does not deal with those implications, which will vary from case to case, but we make that

observation as a reminder of the implications of potential breaches of foreign law.

[62] Where a party stands behind a foreign law as preventing that party from fulfilling their disclosure

obligations in matrimonial proceedings in an Australian court, it is necessary for the party to

demonstrate to the Court’s satisfaction that the party has provided to the Court all of the information

that they may lawfully provide as permitted by that foreign country.

[63] When dealing with foreign law which precludes the disclosure of documents which are otherwise liable

to disclosure in Australian proceedings, careful preparations are necessary. For instance, if a

shareholder register of an overseas country is unable to be obtained because foreign law precludes its

production to the public, or precludes its disclosure generally, then when acting for a party against

whom it is asserted that they have a beneficial interest in or the control of such an entity, if access can

be obtained of a public record which establishes the identity of its shareholding or control, it should be

produced; if it is unable to be produced by reason of foreign law, expert opinion should be led on that

preclusion, and it should be demonstrated that attempts have been made, albeit unsuccessfully, for the

production of that document.

[64] By way of emphasis, however, it must be said that careful preparations will be required in each case to

attempt to persuade the Court of a party’s discharge, to the extent possible if constrained by foreign law,

to make the full and frank disclosure demanded by rule 13.04 of the Rules. Necessarily, those

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evidentiary preparations and investigations will vary from one case to the next, and we do not advance

the above considerations as anything more than matters to be considered at an early stage in the

preparation for trial.

[65] Remember, “brief early and brief often”.

WILLS AND OTHER TESTAMENTARY DOCUMENTS

[66] In circumstances where one party perceives that the other party to litigation is likely to receive an

inheritance in the future, it is not an uncommon scenario that a request is made (or a subpoena issued)

by one party for the production of any wills of, for example, parents of the other party.

[67] Such requests are often received, or subpoenas issued sought to be set aside, and it must be remembered

that the circumstances within which the Court may be prepared to consider a prospective inheritance are

limited and, therefore, the obligation to disclose information about a prospective inheritance must also

be limited by a consideration as to whether or not the information can have any relevance to the

determination of the proceedings.

[68] There have been a number of cases dealing with such scenarios, which have included a consideration of

the circumstances in which a parent, for example, or other relative may be required to produce copies of

wills or other testamentary documents noting that it will be in rare circumstances that a will of a party’s

parent is likely to be seen as within that party’s power, possession or control. Accordingly, while not

strictly related to a party’s disclosure obligations (unless the document is in that party’s power,

possession or control), the question of production of wills commonly arises in conjunction with other

issues of disclosure.

[69] One of the first decisions dealing with such a scenario was that of White and Tulloch (1995) FLC 92-

640. In that case, the husband served a subpoena directed to the wife’s mother requesting production

and inspection of her current will, copies of prior wills which contained any benefit to the wife and

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information pertaining to the financial circumstances of the wife’s mother including certificates of title

of her interests in real estate and information such as details of bank accounts.

[70] At first instance, the trial Judge dismissed an application by the wife’s mother that she be excused from

production of the documents specified in the subpoena and an order was made that the parties have

leave to inspect the documents so produced by the wife’s mother.

[71] On appeal, however, the wife’s mother was successful in seeking orders that she be excused from

producing some of the documents required under the subpoena. The effect of the orders was such that

the wife’s mother was only required to produce copies of her current will.

[72] The wife and her mother argued that any expectation that the wife may have under the mother’s will

was irrelevant, whereas the husband submitted that it was relevant as a financial resource or under

section 75(2)(o) of the Act. While, on appeal, the Full Court accepted that an expectancy of receipt of

an inheritance could not be regarded as a financial resource, there was a basis for admissibility under

section 75(2)(o) of the Act.

[73] In relation to the question of the disclosure of the wills, the Full Court held that the “initial relevance in

the particular case needs to be established” however “once it is it becomes a question of weight and

degree”. In determining whether or not there was an obligation to disclose, the Full Court held that:

There is no absolute rule – the ultimate criterion is whether the evidence is or may be relevant;

An expectancy of inheritance will not be relevant in many section 79 proceedings – relevance must

depend upon the nature of the claims being put forward and the facts of the particular case;

While the mother was required to produce not only her current will but her revoked wills, it would

ordinarily be very difficult to understand the relevance of a revoked will but the suggestion here was

that the mother may have changed her will in light of the proceedings and that may need to be

investigated;

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It is ultimately a question of fact and degree – in a case where the testator had already made a will

favourable to the party but no longer had testamentary capacity and there was evidence of his or her

likely impending death where there may be a significant estate, and where there was a connection to

section 75(2) factors, it would be shutting one’s eyes to treat the will as irrelevant; on the other hand,

the bald assertion that one of the parties has an elderly relative who has property that may benefit a

party is so speculative that it would be inappropriate to contemplate it as relevant in a section 79

determination, it being too remote to affect the justice and equity of the case in any worthwhile way.

[74] In this case, the Full Court was not persuaded that production of the mother’s revoked wills could have

a sufficient connection to the proceedings to justify their production. Further, the detailed information

sought by the husband in relation to the mother’s financial position could not be shown to be

sufficiently relevant to justify the mother, a third party, to produce them for inspection.

[75] A similar approach was taken by the Court in a later decision of Scott and Scott (2003) FLC 93-170. In

that case, the husband issued a subpoena to the wife’s parents seeking copies of “all current and past

wills, codicils, testamentary dispositions and other documents evidencing dispositions made by” the

parents. Prior to the issue of this subpoena, the husband had issued an earlier subpoena in identical

terms and an order was made removing the words “and past” in relation to any past wills or

testamentary documents. Despite that, the husband issued a further subpoena to the wife’s parents who

then made an oral application to set aside the requirement to produce “past wills” and other documents.

[76] The husband submitted that a trust controlled by the wife’s parents had only been disclosed after the

terms of the first subpoena had been considered. He therefore sought to distinguish the earlier subpoena

from the subpoena in question on the basis of the existence of the trust. The Court found that this was

not an issue as it was clear that the trust was controlled by the wife’s parents and therefore “it is the

current will that is relevant so far as that matter is concerned unless it is contended that that will is

invalid”.

[77] More recently, the Court considered these issues in the context of the issue of a subpoena by the

husband for production of a wide range of documents pertaining to a trust in which the wife held an

interest in the case of Read & Chang and Anor [2010] FamCA 876. The evidence was that the trust was

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valued at in excess of $630 million and was to be distributed amongst seven beneficiaries of which the

wife was one. The husband sought production from the trustees of the trust for documents including

memorandum of wishes or preference and letters of wishes or similar documents. The wife had already

received significant distributions from the trust which were being paid annually in increasing amounts.

[78] The trial Judge summarised the issues as follows:

“The husband wishes to be able to better appreciate and therefore better inform the Court what the

future is likely to hold for the wife in respect of discretionary distributions and on winding up. The wife

knows no more than he does. However, the Trustees admit to holding a document or documents

provided by the instigator and source of capital of the trust [the wife’s grandfather] for the Trustee’s

guidance in administration of the trust. Such documents, each known as a “memorandum of wishes” or

“wish letter”, said to not be binding on the Trustees, may have influenced and may in future influence

them in making distributions and in deciding what part of the fund is preserved until winding up of the

trust. As I shall demonstrate later, there is at least a tendency to lean toward the view that this type of

expression of wishes is to some extent binding on the Trustees. The Trustees acknowledge that they

should consider it and have in the past admitted they have been influenced by it, but argue they are not

bound by it.”

[79] The trustees sought to set aside the paragraphs of the subpoena on the basis that:

(a) the memorandum of wishes was a confidential document;

(b) the subpoena constitutes a fishing expedition and casts its net too wide because the potential for

relevance of any memorandum of wishes could only be speculative. The trustees argued that, for

the same reasons other courts have refused to permit trust beneficiaries to gain access to a

memorandum of wishes, the Family Court in the section 79 proceedings should refuse access to

the husband.

[80] The trial Judge considered the terms of White and Tulloch (supra) and considered, further, that:

“If a memorandum of wishes is a document which gives the wife rights to ensure the Trustees exercise

their discretion in accordance with it, it is so relevantly similar to the trust deed itself and so similar in a

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relevant way to an unrevoked will of a deceased testator it would be relevant in these proceedings. One

would expect to discern from it, if it is disclosed, whether the Trustees are likely to continue to make

distributions to the wife before final distribution, whether there are likely to be funds available for

distribution on its winding up and whether some of these will pass to the wife.”

[81] The trial Judge also considered the trustees’ argument that the document was confidential. His Honour

considered that there are exceptions to confidentiality and that the circumstances of this case were such

that production should be required. His Honour required, however, that the husband provide an

undertaking to maintain the contents of the documents confidential prior to him being granted leave to

inspect the documents produced by the trustees.

[82] A further consideration of the requirement to produce documents pertaining to a party’s parents’

financial affairs was undertaken by Kent J in MacDowell and Williams and Others [2012] FamCA 479.

By way of subpoena, the husband sought certain documents from the wife’s parents, both in their

personal capacity and in their capacity as the directors of various corporate entities. The subpoena

sought both the wife’s parents’ current and any revoked wills and any relevant testamentary documents

as well as a range of financial documents from entities of which the wife’s parents were directors or

shareholders.

[83] The wife’s parents objected to production of the documents on two main grounds:

That the documents sought from them in their personal capacity were not relevant given that both of

them still retained testamentary capacity;

That the documents sought from them as directors of the entities subpoenaed were not relevant

because neither the husband nor the wife had any interest in the entity and because the wife’s only link

to the companies was a beneficiary of a discretionary trust of which one of the entities was the

corporate trustee and the financial statements of that trust had already been disclosed.

[84] In relation to the documents sought pertaining to a trust of which the wife was a beneficiary, as referred

to above, various documents had already been disclosed by agreement however further documents were

sought by the husband. There was no objection to the production of those documents. However, with

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respect to the balance of the documents sought under subpoena from various entities, the husband also

submitted that those documents were necessary for the husband to understand the pattern of past

distributions, the understanding between the wife, her parents and her siblings and the management and

ownership of the various entities. It was submitted that those were matters relevant to the composition

of the pool, and the ascertainment of the wife’s financial resources.

[85] The wife’s parents submitted that the documents sought (other than as agreed to be produced) were not

relevant including because, in respect of the trust of which the wife was a beneficiary, she was a

discretionary beneficiary only and the parents had already decided to use part of the funds for their own

purposes. It was further submitted that neither the husband nor the wife had ever been involved in the

wife’s parents’ investment business, nor had they ever discussed the business with the parties.

[86] His Honour held that the evidence was that the wife did not control any of the entities from which

documents were sought by the husband. The husband’s position was summarised by the Court as an

invitation to the Court to infer that, because the companies bore the wife’s name or a version of the

wife’s name, that the parents intended that she would take control of the companies in the near future.

His Honour was not prepared to accept that submission.

[87] Kent J found that the wife had no interest in any of the corporate entities attempted to be subpoenaed,

had no control over any of the entities and there was no evidence that there had been a pattern of

distributions from the trust in favour of the wife (she had only received $28,000.00 over a 10 year

period). Accordingly, his Honour concluded that there was no satisfactory justification for the

husband’s attempt to subpoena the documents sought from the corporate entities, except for those which

the wife’s parents conceded that they would provide.

[88] In relation to the testamentary documents sought from the wife’s parents, the husband submitted that the

wife was likely to benefit from her parents’ estate which the husband asserted was in excess of $20

million. It was conceded by the husband that the wife’s parents continued to have testamentary

capacity. His Honour concluded that there was no reason to suppose that the wife was likely to receive

any inheritances in the near future, or that any present testamentary directions made by her parents

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would not change prior to their death. Accordingly, there was no basis why the wife’s parents should be

required to produce the documents to the Court.

DISCLOSURE IN PARENTING CASES

[89] The question of disclosure in parenting proceedings is one that is commonly overlooked. However, it

must be remembered that Part 13.2 of the Family Law Rules relates to “all cases” determined by the

Family Court of Australia, including parenting proceedings.

[90] Part 13.2 includes, at its heart, rule 13.07 which confirms that the duty of disclosure applies to each

document that is, or has been, in the possession, or under the control, of the party disclosing the

document and which is relevant to an issue in the case. Despite this general duty of disclosure,

disclosure still seems to be the exception rather than the norm in parenting matters with many parties

overlooking any obligation on the parties to disclose documents relevant to the proceedings.

[91] In circumstances where the enquiry of the Court is a consideration of what is in the best interests of the

child or children of the parties’ relationship, the question of disclosure must, it is submitted, be

considered even more carefully to ensure that the Court is apprised of all relevant documents in relation

to the matter. Practitioners should, therefore, be even more vigilant to ensure that all relevant

documents are disclosed and that clients are requested to make disclosure of documents falling within

rule 13.07 of the Rules.

[92] The necessity for practitioners to be vigilant is reinforced by rule 15.55 of the Rules. While contained

in the provisions of the Rules dealing with expert reports rather than being contained in Chapter 13 of

the Rules, the rule still deals with the question of disclosure.

[93] In particular, rule 15.55 provides that:

“15.55(1) A party who has obtained an expert’s report for a parenting case, whether before or after the

start of the case, must give each other party a copy of the report:

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(a) If the report is obtained before the case starts – at least 2 days before the first court event; or

(b) If the report is obtained after the case starts – within 7 days after the party receives the report.

15.55(2) The party who discloses an expert’s report must disclose any supplementary report and any

notice amending the report under subrule 15.59(5).

15.55(3) If an expert’s report has been disclosed under this rule, any party may seek to tender the report

as evidence.

15.55(4) Legal professional privilege does not apply in relation to an expert’s report that must be

disclosed under this rule.”

[94] The terms of rule 15.55 are absolute – unlike obligations of disclosure in other cases (such as financial

cases where there is no general requirement to disclose an expert’s report), rule 15.55 sets out a

mandatory obligation to disclose regardless of any argument that the document may be privileged.

[95] Section 102A of the Family Law Act should also be considered in conjunction with rule 15.55 of the

Rules insofar as it places a restriction on parties in having a child examined relating to the abuse of, or

risk of abuse of, a child. Section 102A(1) provides that, if a child is examined without the leave of the

court, the evidence resulting from the examination which relates to the abuse of, or risk of abuse of, the

child is not admissible in the proceedings.

[96] There are exceptions where a person causes a child to be examined for the purpose of deciding whether

to bring proceedings or to make an allegation in proceedings. In those circumstances, section 102A(1)

does not apply. However, practitioners must remain alert to the requirement of rule 15.55 of the Rules

which would require the mandatory disclosure of any report generated from the examination.

[97] Having regard to these requirements, practitioners should remain alert to the fact that disclosure remains

a requirement of parties to litigation, regardless of the nature of the litigation. The obligation of

disclosure and all other obligations upon practitioners under professional conduct rules and the Rules

generally continue to apply. Indeed, it is the writers’ submission that the duty should be seen as more

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important having regard to the nature of the enquiry being undertaken by the Court and the obligation

imposed upon the Court to make orders in the child’s best interests.

Disclosure in family law cases – when your client doesn’t get it right

INTRODUCTION

[98] We have touched upon briefly above some of the consequences of non-disclosure, including the

implications for a legal practitioner who is implicated in a client’s non-disclosure. What is plain from

the authorities is that the Court will treat seriously any involvement by a practitioner in a party’s non-

disclosure.

[99] Accordingly, when acting for a client who does not fully comply with their obligations as to disclosure,

a legal practitioner must consider not only the implications to their client but also to themselves. As we

have highlighted above, at times, the discharge of a legal practitioner’s duty may take some courage on

their party – it may be to the disadvantage of the client, or require the legal practitioner to act in a

manner contrary to the client’s instructions – however the overriding nature of the legal practitioner’s

duty to the Court is such that that duty must take precedence over any duty to the client.

THE DUTY OF LEGAL PRACTITIONERS

[100] As we have referred to above, the legal practitioners’ duty to the Court will ultimately override their

duty to their client.

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[101] In addition, legal practitioners have a range of responsibilities and obligations both under the Rules but

also professional conduct rules such as the Australian Solicitors Conduct Rules 2012 and the Barristers

Rules.

[102] Under the Family Law Rules, lawyers have a range of responsibilities, including a responsibility to

promote the main purpose of the Rules. Under rule 1.08(1)(b), one specific responsibility is to comply

with the duty of disclosure.

[103] Before litigation has commenced, in proceedings to which the Family Law Rules relate, the pre-action

procedures set out in Schedule 1 to the Family Law Rules deals with lawyers’ obligations, including the

duty to advise clients of their duty to make full and frank disclosure and the possible consequences of

breaching that duty.

[104] While, in the pre-action procedures, it is recognised that those procedures cannot override a lawyer’s

duty to their client, paragraph 6 of the pre-action procedures set out lawyers’ obligations in the

following manner:

“(1) Lawyers must, as early as practicable: …

(b) advise clients of their duty to make full and frank disclosure, and of the possible

consequences of breaching that duty; …

(g) advise clients about the factors that may affect the court in considering costs orders;

…

(2) The court recognises that the pre-action procedures cannot override a lawyer's duty to his or

her client.

(3) It is accepted that it is sometimes impossible to comply with a procedure because a client may

refuse to take advice, however, a lawyer has a duty as an officer of the court and must not

mislead the court.

(4) If a client wishes not to disclose a fact or document that is relevant to the case, a lawyer has an

obligation to take the appropriate action, that is, to cease to act for the client.”

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[105] It can therefore be seen that the lawyers’ responsibilities commence from the very earliest stages of a

matter, including throughout the process of pre-litigation negotiations or discussions between the

parties.

[106] Additionally to the obligations upon lawyers as set out in the Family Law Rules relating to disclosure,

the Australian Solicitors Conduct Rules and the Barristers Rules similarly set out provisions regarding a

practitioners’ obligation to be frank in their dealings with the Court. In the case of the Australian

Solicitors Conduct Rules, the obligations are expressed as follows:

“19 Frankness in court

19.1 A solicitor must not deceive or knowingly or recklessly mislead the court.

19.2 A solicitor must take all necessary steps to correct any misleading statement made by the

solicitor to a court as soon as possible after the solicitor becomes aware that the statement was

misleading.

19.3 A solicitor will not have made a misleading statement to a court simply by failing to correct an

error in a statement made to the court by the opponent or any other person.

19.4 A solicitor seeking any interlocutory relief in an ex parte application must disclose to the court

all factual or legal matters which:

19.4.1 are within the solicitor’s knowledge;

19.4.2 are not protected by legal professional privilege; and

19.4.3 the solicitor has reasonable grounds to believe would support an argument against

granting the relief or limiting its terms adversely to the client.

19.5 A solicitor who has knowledge of matters which are within Rule 19.4 must:

19.5.1 seek instructions for the waiver of legal professional privilege, if the matters are

protected by that privilege, so as to permit the solicitor to disclose those matters under

Rule 19.4; and

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19.5.2 if the client does not waive the privilege as sought by the solicitor:

(i) must inform the client of the client’s responsibility to authorise such

disclosure and the possible consequences of not doing so; and

(ii) must inform the court that the solicitor cannot assure the court that all

matters which should be disclosed have been disclosed to the court.”

[107] Rule 20 also provides as follows:

“20.1 A solicitor who, as a result of information provided by the client or a witness called on behalf

of the client, learns during a hearing or after judgment or the decision is reserved and while it remains

pending, that the client or a witness called on behalf of the client:

…

20.1.2 has falsified or procured another person to falsify in any way a document which has been

tendered; or

20.1.3 has suppressed or procured another person to suppress material evidence upon a topic where

there was a positive duty to make disclosure to the court;

Must –

20.1.4 advise the client that the court should be informed of the lie, falsification or suppression and

request authority so to inform the court; and

20.1.5 refuse to take any further party in the case unless the client authorises the solicitor to inform

the court of the lie, falsification or suppression and must promptly inform the court of the lie,

falsification or suppression upon the client authorising the solicitor to do so but otherwise may not

inform the court of the life, falsification or suppression.

[108] In addition to those rules of conduct and of the Court, practitioners should bear in mind the Best

Practice Guidelines for Lawyers doing Family Law Work which include:

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The lawyer should advise the client that failure to make full and frank financial disclosure may lead to

subsequent litigation seeking to set aside the order made.

Clients should be told that, before a hearing of trial in the Family Court, they will be required to give a

written undertaking to the court that they have fulfilled the client’s duty to give full and frank

disclosure and breach of that undertaking may mean the client is guilty of contempt of court.

CONSEQUENCES OF NON-DISCLOSURE – CLIENTS

[109] As we have highlighted above, consequences of a finding of non-disclosure by a party may include

findings that indeterminate undisclosed amounts are held by the non-disclosing party, and less

favourable alteration of interests against the non-disclosing party.

[110] The rationale for finding against parties who fail to comply with their disclosure obligation was

summarised by the Full Court in Giunti & Giunti (1986) FLC 91-759 as follows:

“It is obviously desirable as a general principle that the court should first of all identify the pool of

assets available and evaluate it. If each party complies with his or her obligation to make a full and

substantive disclosure … there is no problem … However if, as here, one party fails to fulfil that

obligation, is it open to that party then to rely on the absence of satisfactory evidence to prevent the

making of an order against him or her which otherwise justice and equity would require? It would be

simple, if that were the case, to evade the jurisdiction of this court, not by outright refusal which would

attract sanctions but by obfuscation and evasion.”

[111] The manner in which the Court will proceed has been summarised in a number of other ways. For

example, in Weir & Weir (supra), the Court referred to the line of cases leading up to the Full Court

decision in Black & Kellner (1992) FLC 92-287 that it is the duty of a party to make a full disclosure of

their financial affairs and, further, that:

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“It seems to us that once it has been established that there has been a deliberate non-disclosure … then

the Court should not be unduly cautious about making findings in favour of the innocent party. To do

otherwise might be thought to provide a charter for fraud in proceedings of this nature.”

[112] While the Court noted concern about an order being made which goes beyond the identified property

pool, the Court held that “the Court’s jurisdiction to make an order going beyond the identified property

arises once there is sufficient evidence to support a finding that the party has not made a full disclosure

of his or her assets.” The Court referred to the difficulty of the order to be made before stating that:

“we are troubled by the proposition … that if a party is either cunning enough or vague enough to cover

his or her tracks sufficiently to prevent a Court making a finding as to the amount that has not been

disclosed, then the other party fails. We do not believe this to be the law …”

[113] In Chang and Su [2002] FamCA 156, the trial Judge had had great difficulty in assessing the financial

position of the parties and what had led to the current financial position. Her Honour stated that:

“To set out those in this case is an impossible task. First, I say that because I could have no confidence

whatever that the husband has presented his true financial position in this case … IN the result, I am

satisfied that the husband has not made a full and proper disclosure of his financial position and I could

make no finding as to the extent of his assets now.”

[114] Her Honour went on to say:

“it is the obligation of parties to make a full and proper disclosure of the financial circumstances, either

as to assets, liabilities, or income. … where there has been non-disclosure by one party, the court

should not be ‘unduly cautious’ about making findings in favour of the other party.”

[115] The trial Judge considered that, because of the findings of non-disclosure by the husband, the asset pool

was unascertainable. Therefore, all that she could fall back on was that the order be just and equitable.

The trial Judge found that the husband was likely to remain a person of substantial means, and

proceeded to determine the division of property by transferring unencumbered property in New South

Wales to the wife and transferring the interests of a business in Taiwan to the husband.

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[116] On appeal by the husband, the Full Court considered that, in the circumstances, the trial Judge had done

all that she could do and his appeal was dismissed.

[117] In addition to the risks associated with findings that the Court may make, the client bears a number of

substantial risks including:

Costs

[118] Family lawyers would be well aware of the general rule that each party should bear their own costs.

However, in considering what order for costs should be made, the Court is required to have regard to a

number of factors summarised in section 117 of the Act including the conduct of the parties in relation

to the proceedings including their conduct in relation to discovery.

[119] A costs order against the non-disclosing party is therefore a likelihood particularly if coupled with an

argument by one party identifying the additional cost that the other party’s non-disclosure has put them

to in relation to the conduct of the proceedings.

[120] A further question that arises after a finding of non-disclosure has been made is the appropriate basis

upon which such a costs order should be made. In Wong & Wei (No.2) [2009] FamCA 1177, the wife

claimed indemnity costs from the husband for failure to disclose documents. The Court noted, however,

that not every case in which a party has failed to make full disclosure will ground an entitlement to

costs, let alone indemnity or solicitor/own client costs; the “discretion which the Court has as to costs is

to be exercised judicially, upon proper grounds. The Court will not light depart from the standard

practice in the awarding of costs.”

[121] In that case, the husband was required to pay the wife’s costs on a solicitor/own client basis due not

only to his failure to provide financial disclosure but on the basis of his deliberate game playing.

[122] Factors that will likely influence the Court will include:

Whether the proceedings have been unduly lengthened as a result of the non-disclosure.

The additional costs to which the other party is put as a result of the non-disclosure.

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The financial circumstances of the parties generally and the nature of the case put by the non-

disclosing party.

Whether there are any other factors which justify the Court in departing from the general rule as to

costs.

Undefended hearing

[123] One sanction open to the Court in the event that it is in a position to make a finding of non-disclosure

before a final trial is to proceed with the other party’s application on the basis that it is undefended.

[124] In Tate & Tate (2000) FLC 93-047, the husband had failed to comply with procedural orders including

inspection and valuation orders despite more than 25 court appearances and 4 years of litigation. The

trial Judge therefore struck out the husband’s response and ordered that the proceedings proceed on an

undefended basis. The trial Judge’s determination as upheld on appeal.

Ramifications after the event

[125] If non-disclosure comes to light after orders have been made or a binding financial agreement entered

into, then the Court may vary or set aside the orders or agreement, as the case may be if it considers

appropriate.

[126] While the Court has emphasised that it is not every non-disclosure that will justify a Court in setting

aside an order or agreement, if the non-disclosure has, for example, in the case of an order, led to the

Court making an order which is substantially different from the order which it would have made if

disclosure had occurred, a case for setting aside can possibly be made out.

[127] There are numerous instances, which are beyond the scope of this paper, in which the Court has

considered not only the circumstances in which orders should be set aside or agreements set aside under

section 79A or section 90K of the Act.

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CONSEQUENCES OF NON-DISCLOSURE – LAWYERS

[128] Practitioners should not assume that responsibility for non-disclosure will be sheeted home only to their

client.

[129] As we have referred to above, if a practitioner is found to have participated in a party’s non-disclosure,

there is a risk that the Court may not only refer that party for disciplinary action but may also make an

order that a solicitor meet all or part of the other party’s costs.

[130] Such a case was a 1940 House of Lords decision in Myers v. Elman [1940] AC 282. In that case, the

supervising partner in a law firm was found liable to pay costs personally as a result of inadequate

discovery. The solicitors only discovered parts of an entry book rather than assessing the whole book to

determine what was relevant. The solicitors did not adequately enquire of their client or properly

consider the affidavit. The clerk and supervising partner were both found guilty of misconduct and

costs were ordered against them.

[131] In doing so, the Court referred to the client’s obligation as to disclosure but noted that a client “cannot

be expected to realise the whole scope of that obligation without the aid and advice of his solicitor”.

The Court referred to the “peculiar duty” of the lawyer in those circumstances to carefully investigate

the position and see that any orders for discovery are complied with.

[132] Lord Wright stated that:

“A client left to himself could not know what is relevant, nor is he likely to realise that it is his

obligation to disclose every relevant document which would establish, or go far to establish, against

him his opponent’s case. The solicitor cannot simply allow the client to make whatever affidavit of

documents he thinks fit, nor can he escape the responsibility of careful investigation or supervision. If

the client will not give him the information he is entitled to require, or if he insists on swearing an

affidavit which the solicitor knows to be imperfect, or which he has every reason to think is imperfect,

then the solicitor’s proper course is to withdraw from the case. He does not discharge his duty in such a

case by requesting the client to make a proper affidavit and then filing whatever affidavit the client

thinks fit to swear to.”

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[133] In addition to costs, practitioners obviously face the prospect of disciplinary proceedings. Such a case

was one of Guss and Law Institute of Victoria [2006] FSCA 88. A solicitor was found to have

deliberately failing to discover a document. The Tribunal found that the failure was intention and not a

matter of mere ignorance, inadvertence or carelessness and stated that:

“It is difficult to overstate the importance to the administration of justice of the paramount duty of a

legal practitioner not to mislead the Court. Where there is any conflict, or risk of conflict, between that

duty and what the practitioner perceived to be his/her duty to the client, the duty to the Court must

always prevail. Nowhere is the risk of conflict more likely to arise than in relation to the obligation to

make discovery. Discovery is, of course, the obligation of the client, but the client inevitably depends

upon the adv ice of the legal practitioner as to what is, and what is not, discoverable and as to the

availability of any claim for privilege.”

[134] What is clear is that practitioners cannot simply hide behind a client’s instructions. A practitioner faced

with knowledge of the client not disclosing relevant information should cease to act for the client.

[135] These obligations are reinforced by the Best Practice Guidelines for Lawyers doing Family Law Work.

Those guidelines reinforce the prospect that their duty to the Court may conflict with instructions from

the client and that the lawyer may in some circumstances have to cease to act for a client if, for example,

a client is unwilling to make disclosure of relevant facts or documents. Those guidelines further make

clear that, if the client declines to provide appropriate disclosure, the lawyer is bound by both a duty of

confidentiality to the client and a duty not to mislead the court. If non-disclosure may result in the

lawyer misleading the court, the lawyer should cease to act for the client.”

[136] In practice, one of the difficulties is that hindsight is 20/20. However, the lawyers’ responsibilities and

obligations are of such a nature that lawyers should not be prepared to accept any risk associated with

their client failing to make proper disclosure. Lawyers’ advice should be clear and, in the event that

they believe that a client is not making proper disclosure, the lawyer will need to consider their position

carefully to ensure that they are not placed in a position where their duty to the court is compromised.