When Consent is not Consent in Property Settlement
Parties have an obligation to provide full and frank financial disclosure in any family law property settlement. The requirement is no less significant when the property settlement is formalised with an Application for Consent Order rather than through formal Family Court proceedings.
In the recent case of Pearce & Pearce  FamCAFC 14, a husband appealed the decision of a trial judge to overturn a consent order made between the parties nearly 10 years prior and award the wife almost $2 million more than what the parties had originally agreed.
However, the Full Court of the Family Court dismissed the appeal, allowing the consent order to be set aside.
The consent order was set aside because the Court was satisfied that there had been a miscarriage of justice by reason of the husband failing to disclose relevant information to the wife. There were two main failings by the husband, namely:
- The parties had agreed that the value of a particular property was $550,000, although the husband had made a representation to his bank at the time that he considered the property to be worth $700,000.
- The husband disclosed that a 50% interest in a business he had recently acquired was worth $200,000 (which is what he would pay for the shares) and that he only expected any income from the business to meet the repayments of a loan. However, the husband did not disclose negotiations that had concluded with respect to the relevant share sale agreement for this business interest, whereby the husband’s interest would actually be worth over $500,000 due to contributions the husband had made towards the development of the business.
Significantly, the problem was not with the difference in value of the property and the shareholdings, per se. Rather, the problem was “the failure to afford the wife the same opportunity afforded to the husband to explore and seek advice with respect to what the non-disclosed documents and information revealed”. That is to say, had the wife been given proper financial disclosure, she may have made further enquiries that may have ultimately led her to negotiate a different financial settlement.
Providing full and frank financial disclosure is critically important for any family law property settlement. Failure to do so, whether to intentionally conceal the financial circumstances of a party or simply to “short cut” the process and save time or legal costs, puts any such settlement at risk of being set aside.