The duty of disclosure requires all those in family law to provide all information relevant to the family law proceedings. In family law financial cases this means that those involved are required to provide ongoing relevant information such as bank statements, tax returns and financial reports. However, it is not uncommon for some to be reluctant in disclosing relevant information. Afterall, if you disclose an asset then that asset may form part of the family law proceedings. So, it becomes difficult for those who are trying to get accurate and up to date information on those assets.
A common scenario in family law is where one spouse runs a company and the other is a co-director and shareholder. The other spouse does not take an active role in the company and knows very little about how the company is going. An added complication is also found when the other spouse on separation resigns as director.
In these situations, family law may not necessarily be the most efficient route in obtaining the relevant information.
Obtaining Documents in Family Law
The process commonly adopted in family law is to contact the other side with a list of documents you are requesting that are relevant to the proceedings. Frequently accountants will be contacted and asked to complete tax returns, financial reports and BAS statements. These documents will then be reviewed before being provided to those in the proceedings.
If the other side refuses to provide the relevant documentation the matter may then proceed to Court. Once in the Court system subpoenas can be issued for documents located at the accountant’s office or in the possession of the other side.
This route presents some issues as follows:
- Filing in Court is a costly process which may be prohibitive to some;
- The subpoena process is not necessarily quick and easy, especially if someone objects to the subpoena; and
- A subpoena can only require the production of documents that are in someone’s possession. If the financial documents have not been completed in several years, the relevant information may still not be made available by the issuing of a subpoena.
Obtaining Documents through the Corporations Act
The Corporations Act 2001 (Cth) (“the Corporations Act”) provides certain rights to directors and shareholders, especially in relation to the production and provision of relevant financial documents.
Section 198F of the Corporations Act states:
“(1) A director of a company may inspect the books of the company (other than its financial records) at all reasonable times for the purposes of a legal proceeding…”
And
“(2) A person who has ceased to be a director of a company may inspect the books of the company (including its financial records) at all reasonable times for the purposes of a legal proceeding … This right continues for 7 years after the person ceased to be a director of the company.”
This means that if an individual is a director, they have a right to contact the accountant and review the company books, and even if they have resigned as a director within the last 7 years, they can still inspect the company books.
If an individual is a shareholder but not a director their rights are more limited, nevertheless they have a right to documents or resolutions in relation to shares as per section 246G, to a copy of the constitution of the company as per section 139, and some other specific documents under certain sections.
Shareholders and directors may also ask the company to prepare a financial report and directors’ report for the financial year, if there is not already one prepared as per Chapter 2M.
In practice, utilising the rights available under the Corporations Act may be more effective and fast acting. Enforcing the obligations may be as simple as contacting the accountant for the company or may be proceeding to the Supreme Court to gain access.
Litigants in family law proceedings may also seek to cross-vest the jurisdiction of Family or Federal Circuit Court to utilise some of the powers of the Corporations Act, while proceedings are on foot.
Conclusion
Those in family law proceedings may think there is just one method to obtain the relevant information required. However, at all stages we must consider the desired outcome and then consider the most appropriate avenue to get to that outcome. This may mean using law other than family law.
This is not legal advice.
Photo by Samuel Zeller on Unsplash
