Playing ‘hide and seek’ with marital assets is becoming more of a norm between parties in property settlements. It is one of the most common issues in dispute with one party claiming against the other of having secret bank accounts, hidden properties, cars and undisclosed shares in business amongst other things. This is more often done in an attempt to try to reduce the asset pool available for division between the parties pursuant to section 79 of the Family Law Act 1975.
In Oriolo and Oriolo (1985) FLC 91-653 the Full Family Court confirmed the obligation on each party to make ‘full and frank’ disclosure about their financial affairs and that such obligation is fundamental to the whole operation of the Family Law Act 1975, citing with approval the judgment of Smithers J in Briese and Briese (1986) FLC 91-713.
This duty to make disclosure is pursuant to rule 6.06 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 and starts with the pre-action procedures for a case and continues until the case is finalised.
It is difficult to perceive hidden assets, especially if the other party is not aware of it, was ‘shut out’ and for most part was not managing the financial affairs of the parties.
Longton Legal have expertise to assist you in these circumstances to unveil your partners hidden assets and may go through the following process depending on your circumstances:
Obtain instructions from you, ask you a number of questions to help you recall any conversations you had with your partner regarding purchase of any unfamiliar item, investment plans, offshore accounts, business trips including sighting of any documents and/or mails from unfamiliar bank or entities and details of any lifestyle changes in your partner post separation.
Conduct various searches such as ASIC search to ascertain any shareholdings and directorship in any entity, AFSA search to ascertain any bankruptcy, Title search to ascertain ownership in any real estate and investment property, PPSR search to ascertain security interest in any personal property, National Property Ownership search to ascertain ownership in any property nationally and Property leasehold search to ascertain leasing interest in any property.
Examine Bank account statements, Pay slips, Tax Returns, Balance Sheet, Profit and Loss Statement, BAS, Depreciation schedule, loan applications, court file in respect to your partner’s previous property settlement and travel documents.
If proceedings have commenced, issue Subpoena to relevant organisations for production of financial documents and issue Notice to Produce to your partner to produce financial documents.
Engage Forensic Accountant to examine the financial documents in order to ascertain any unusual dealing or suspicious activities which may reveal any undisclosed asset.
Engage private investigators to carry out Brokerage account search to locate any stocks, bonds or securities, Bank account search to locate all bank accounts and Public Assistance search to find any payments or benefits received from Centrelink or any government departments.
In Weir & Weir  FamCA 69; (1993) FLC 92-338, the Full 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 asset”. The court further propounded that there is no requirement to place a value or amount on the assets that were not disclosed.
In Yang & Gian and Ors  FamCA 934, Justice Aldridge held at 143 “where there has been deliberate non-disclosure the court should not be unduly cautious about making findings in favour of the innocent party. It may well be appropriate to err on the side of generosity”.
In the recent case of Raisner & Kells  FedCFamC2F 265, Judge Cope held that:
In respect to the Four Businesses
The only business registered to the de facto husband’s name at the time of trial was Company G which he operated as a sole trader. Business searches conducted by the de facto wife show that the de facto husband previously had four registered business names, Company H, Company f, Company J and Company G. The asset pool formulated by the de facto wife includes a number of “unknown” values being the value of four businesses she alleges are in reality the property of the de facto husband although they are registered in the name of his current wife. She points to the failure of the de facto husband to disclose the transfer of those assets to his current wife until under cross examination and his failure to disclose generally.
His Honour was asked to consider whether the de facto husband’s current wife’s ownership of those assets was a sham. His Honour relied on Adamson & Korac (No 2)  FedCFamC1F 638, which provided a helpful exploration of the relevant law undertaken by Campton J at .
A “sham” transaction is defined as follows:
a mere façade, behind which activities may be carried on which were not to be really directed to the stated purposes but to other ends (Scott v Commissioner of Taxation (No 2) (1996) 40 ALJR 265, 279 per Windeyer J);
is something that intended to be mistaken for something else or that is not really what it purports to be (Hadjiloucas v Crean  1 WLR 1006, 1019);
steps which take the form of a legally effective transaction but which the parties intend should not have the apparent, or any, legal consequences (Sharment Pty Ltd v Official Trustee in Bankruptcy  FCA 179; (1988) 18 FCR 449, per Shephard);
an agreement or series of agreements which are deliberately framed with the object of deceiving third parties as to the true nature and effect of the legal relations between the parties (Equuscorp Pty Ltd v Glengallan Investments Pty Ltd  HCA 55; (2004) 218 CLR 471, 486).
Once established, a finding of sham permits the Court to ignore what might be described as the “primary material regarding the transaction” and enables it to look through the artifice created by the scheme to uncover the reality of the ownership of the enterprise. The declaration as to a sham is serious in that it is akin to fraud. An allegation of sham ought not to be made in the absence of sufficient evidentiary foundation. To establish her claim, the wife will be required at final hearing to discharge the onus identified in s140 (2) of the Evidence Act. That section directs the Court to consider the seriousness of an allegation made, the inherent unlikelihood of an occurrence of a given description, and the gravity of the consequences flowing from a particular finding when considering whether a fact has been proved to the Court’s reasonable satisfaction. Such reasonable satisfaction should not be produced by inexact proofs, indefinite testimony or indirect inferences (see Briginshaw v Briginshaw  HCA 34; (1938) 60 CLR 336 at 361-2).
Judge Cope in Raisner & Kells held that “I do not believe that the de facto husband’s current wife decided that she was suddenly going to be an owner of business names previously registered in the de facto husband’s name without discussion with him and without having any experience in managing a services business, or businesses. I am satisfied that these businesses are assets that are properly the property of the de facto husband, that he has an equitable interest in and is the true owner of those businesses, and that the purported ownership by his current wife is sham. There is no evidence before the court as to the value of the businesses such that I propose to address it through my considerations as to future needs and make a further adjustment of 15% in the de facto wife’s favour”.
If you have concerns about your partner hiding assets and/or treatment of hidden assets in Family Law, please feel free to contact Longton Legal, who have expertise in dealing with such matters.
*Disclaimer: This is intended as general information only and not to be construed as legal advice. The above information is subject to changes over time. You should always seek professional advice before taking any course of action.*
Nakil Navinesh Prasad
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