Disclosure – “But What if I’m Only a Discretionary Beneficiary?”
8
February 2021
In a property division under the Family Law Act each spouse has a duty to make ‘full and frank disclosure’ of all documents relevant to the case within their “possession or control”.
A recent case has considered whether a husband failed to disclose Trust documents when he was only a beneficiary to a discretionary trust.
Facts:
- The husband was a discretionary beneficiary of a Trust established by his father. Apart from mentioning his interest in the discretionary trust, the husband produced no documents in relation to it. His case was that he had asked for the information, but that it had been refused. It was undisputed that the husband and his father had fallen out. The wife did not issue a subpoena to the trustee to produce the documents.
- The trial Judge held that the husband was obliged under the Family Law Rules to disclose the Trust documents as they were in his legal possession and control, as he was a beneficiary and his brother was the appointer of the Trust.
- The Judge considered the husband’s interest as a beneficiary in the Trust (of an indeterminate value) as a ‘financial resource’ of the husband’s. Taking into consideration other ‘future need’ factors, he awarded the wife a 10% adjustment.
- The husband appealed arguing, that the trial Judge incorrectly concluded that he had access to undisclosed assets.
Appeal decision:
- As the husband was only a beneficiary of the Trust he only had the right to access financial documents to ascertain that the Trust was properly administered but had no obligation to produce discretionary trust documents. It could not be said that he had control of the Trust to warrant the disclosure.
- Whilst the Judge could find that the benefit that the husband received from the Trust was unquantified, the Judge was not entitled to find that the husband had failed in his obligation to disclose.
Court Order:
- That the property order be set aside and the matter remitted for re-hearing.
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