Wife obtains further property following earlier Settlement due to Husband’s Failure to Disclose Financial Position

27/01/2015

Karen approached Watson & Watson Family Lawyers Sydney for advice a long time after a property settlement with Court Consent Orders with her former husband, Peter.  Karen was very concerned that property which she was aware of, had not been included in any financial disclosure by Peter at the time of settlement.  This property was “family owned”, Peter denied that it was his property. 

Upon initial instructions Richard Watson undertook significant investigations to establish the position in relation to the assets and liabilities and compared that with the disclosure and documentation, this was undertaken as an initial approach without any approach to Peter or his solicitor.  From those enquiries Richard Watson was of the opinion that Peter had not disclosed his full financial position.  Karen had obtained advice which was said to be independent advice from a solicitor nominated by Peter.  There were many considerations and whether, if proper disclosure had been given, the outcome would have been different.  After further consideration it appeared that on the basis of the husband’s failure to disclose his proper financial position and the circumstances of the settlement, the wife would be entitled to have the Consent Orders set aside and for the matter to be reheard.  There were other consequences such as tax consequences of the proceeding. 

Karen and Peter were married in 1995 and have three children.  They were together until 2010 when they separated after deciding that the marriage was not working.  Peter left the family home and rented an apartment and Karen remained in the home.  Karen had been a homemaker throughout the marriage and left all the financial decisions to Peter.

Peter had built up a successful construction business and operated that business through a number of companies and Trusts.  Karen did not work in the business but was a Director and Shareholder of some of the companies.  Peter would ask Karen to sign documents and she would sign these documents when she was asked.  Karen thought that she might have signed the Guarantee in respect of company debt.

Karen and Peter had been living very well over the years but Peter told her that the companies were in trouble.  Karen was very worried about her financial position.  Peter told Karen that they might lose everything if she did not co-operate and settle.  Karen wanted to settle with Peter quickly so that she could stay in the home and have some money to live on.

Karen settled on the basis that Peter wanted to settle and on the information that Peter had given Karen.  Karen had seen a solicitor and had signed Consent Orders for an allocation of property.  Karen and Peter made an application to the Family Court of Australia for the approval of those Consent Orders. The Court made those Consent Orders fundamentally relying upon the information in the application. 

It should have been clear to the two solicitors that Karen discussed the matter with that there was some real issue.  Following Karen approaching Watson & Watson and with the further investigation, it became apparent that Peter had not given proper and full financial disclosure and that Karen was not sufficiently aware of the true extent of the assets that were available for distribution between them.

Following the Consent Orders, Karen was struggling financially and Peter’s standard of living and his spending had not changed and he was living well above what one would expect based on his financial disclosure.

Dennis Grant undertook the further investigation for Karen in relation to the matter.  There was significant protest from Peter and his lawyers with assertions that Karen would not achieve any further benefit.

Richard Watson and Dennis Grant advised that it would be possible for Karen to make an application to the Family Court under section 79(A) of the Family Law Act 1975 to have the property settlement set aside:-

  • There had been a miscarriage of justice by reason of fraud, duress and suppression of evidence (non disclosure of financial matter).
  • Circumstances that arose after the making of the Order made it impractical for the Order to be carried out.
  • A person defaulted in carrying out an obligation imposed on the person.
  • The circumstances that arise relate to the care, welfare and development of a child. 

Dennis Grant considered the appropriate settlement in light of the anticipated assets that we could establish, were matrimonial property.  Following a demand from the husband there was great protest, however, the husband retained solicitors and negotiated a settlement which achieved a very significant percentage increase in assets received and money paid by Peter to Karen.  Those negotiations resulted in the Family Court of Australia setting aside the original property settlement Orders that had been made and approved new Orders that gave Karen significant more and provided better financial security for Karen and the children.

As a result of the enquiry and investigations and advice Karen received a better outcome. 

If the dispute had not been resolved by negotiation, Karen would have made an Application to set aside the Orders and for the matter to be reheard.  Fortunately, this was not necessary however it was open to Karen as the husband had failed to provide proper disclosure which had formed the basis of the Consent Orders some years earlier.

It is critical that proper disclosure be provided at the time of the proceedings and/or negotiations as Orders or even Consent Orders based on false premise, will be susceptible to be set aside.

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