Why is full financial disclosure essential in separation and relationship property agreements?

What is disclosure?

As part of signing a relationship property agreement setting out the division of relationship property following separation, your lawyers would ask for “full disclosure” of your financial position. This includes all assets and liabilities in your joint names with your spouse / partner, as well as those in your sole name. As part of this process, you would be requested to provide bank statements, financial statements, Kiwisaver statements, valuation reports, and other supporting documents related to your assets and liabilities. These documents will need to be shared with your ex-partner and their lawyer as part of the negotiation process, and your ex-partner will also be required to provide the same information to you.

But what if my ex-partner and I agreed to waive disclosure?  

It is a strict, legal requirement under the Property (Relationships) Act 1976 for each party to have independent legal advice before signing a relationship property agreement. This legal advice is not a simple checkbox exercise either, as both parties’ lawyers are required to certify that they have  explained to their clients the effect and implications of the agreement.

Without full disclosure of all assets and liabilities that both parties own, it will be virtually impossible for your lawyers to accurately determine the relationship property pool, assess its value, or offer legal advice on how to equalise the division of relationship property or whether clients have any further claims under the Property (Relationships) Act 1976. As such, without full disclosure, your lawyers will not be in a position to certify that they have properly explained the effects and implications of the agreement to you.

What can I do if my ex-partner refuses to provide disclosure?

You can apply to the court for an order compelling them to disclose the required documents and financial information.

What are the consequences if I do not provide full disclosure?

If you refuse to provide full and necessary disclosure, your lawyer may not be able to certify the agreement. Without this certification, the agreement will not be legally binding or enforceable.

There are also risks if an agreement was signed by both parties and certified by both their lawyers if it later transpires that there has been material non-disclosure when negotiating the terms of the agreement. If this non-disclosure results in the terms of the agreement being seriously unjust, then section 21J of the Property (Relationships) Act 1976 allows for the Court to set aside an agreement.

For these reasons, it is crucial to ensure that the disclosure process is handled correctly from the outset. Failing to do so could expose you to the risk of the agreement being challenged or overturned in the future.

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