Did husband’s failure to disclose cause a miscarriage of justice? Which case won?
Assets divided following break-up of marriage
A couple moved in together in 1992 and married in 1997, but ultimately separated and were divorced in 2005. In July 2005, they reached an agreement on how to divide their property and jointly applied for consent orders, which were made by the Family Court.
The consent orders provided that the wife would receive payment of $185,000 and title to one property (property V), while the husband would receive title to two properties (property D and property T) and shares in an unprofitable business.
Division of assets based on estimate values given by parties
Notations to the consent orders recorded that the husband also expected to obtain a 50% shareholding in another company (company E) with a total share value of $200,000. The husband disclosed that this company had made a profit of $50,408 in 2004 and that there was no expectation of a significant increase in income over the next few years.
The husband and wife did not obtain professional valuations in relation to the various assets, instead agreeing to accept estimate values. For the purpose of the property division, the parties agreed to values for each of the properties at $280,000 for property V, $205,000 for property T and $550,000 for property D.
Full and frank disclosure required under Australian law
Under family law legislation in Australia, separating couples who enter into a property settlement must give “full and frank disclosure” to each other and to the court. (Please see Disclosure requirements in family law – what am I meant to provide?)
When full disclosure is not provided and that results in a miscarriage of justice for one of the parties, the court has the power to vary and/or set aside earlier consent orders.
Dispute over non-disclosure of information
Several years after the property settlement, the ex-wife became aware of information that she had not known at the time she signed the consent orders. She brought proceedings in the Family Court, alleging that a miscarriage of justice had occurred because her ex-husband had failed to give full disclosure about the true value of various assets.
Specifically, she alleged, amongst other things, that at the time of signing the consent orders the husband had not disclosed to her that:
- He had recently represented to a bank that the estimated value of the property D was $700,000 (not $550,000).
- The negotiations he was undertaking at the time for the purchase of 50% of the shares in company E valued his shares at more than $500,000 (not $200,000).
- Company E had recorded earnings of $757,144 and a net profit of $623,000 for the part financial year to 31 January 2005 (a significant improvement in the disclosed net profit for the financial year to 30 June 2004 of $50,408).
It was for the court to determine whether the consent orders should now be varied, and an additional amount paid to the ex-wife.