divorce process

Confidential business information in family law proceedings

Confidential business information in family law proceedings. You may be concerned to know if you have to disclose confidential business information or commercially sensitive information in family law property proceedings. Perhaps you are the owner of a business or franchise or in partnership or a joint venture with others.  Obviously, you are concerned to protect the operation and development of the business. What then is your obligation to disclose financial information to your former partner?

Each party to family law proceedings is required to make full and frank disclosure of his or her financial circumstances (Rule 13.04, Family Law Rules).   Documents that are required to be disclosed are all documents that are relevant to establishing your financial circumstances or relevant to the issues in dispute. This will include documents which evidence the business’ earnings as well as documents which show how those earnings may be affected in the future, whether as a result of business plans or otherwise.

The Family Law Rules set out a list of documents that the court would consider appropriate for a party to provide to the other party by way of financial disclosure (see Family Law Rules, Schedule 1 Pre-action procedures item 4 (Disclosure and exchange of correspondence) (5)).

Limit on use of information by other party

However, parties must not use a document disclosed by another party for a purpose other than the resolution or determination of the dispute to which the disclosure of information relates (see Family Law Rules, Schedule 1 Pre-action procedures item 4 (Disclosure and exchange of correspondence) (8)).

 Implied Undertaking by other party

Documents that are provided to the other party to the proceedings by way of financial disclosure are also taken to have been produced on the basis of an undertaking from that party receiving the documents that the documents will be used for the purpose of the case only (see Family Law Rules, Schedule 1 Pre-action procedures item 4 (Disclosure and exchange of correspondence) (9)).

Those two rules confirm what is known as the “Harman Principle” which arose in a case called Harman v Secretary of State for the Home Department ([1983] 1 AC 280) and was subsequently confirmed in the case of Hearne v Street ([2008] HCA 36) where the court pronounced:

“Where one party to litigation is compelled, either by reason of a rule of Court, or by reason of a specific Order of the Court, or otherwise…. to disclose documents or information, the party obtaining the disclosure cannot, without leave of the Court, use it for any purpose other than that for which it was given unless it is received into evidence….” (Ibid [96]).

Injunction to restrain other party disclosing documentation received

In some circumstances, it may be possible to obtain an injunction restraining the other party from disclosing documentation that that party has received from you as part of your obligation to disclose where for example, that other party has threatened to use the information other than for the purpose of the proceeding.

Confidentiality Agreement or Undertaking to Court

You could ask that the other party and their solicitors as well as any other professionals, such as valuers of the business, sign a confidentiality agreement with you. You could seek that the other party provide an Undertaking to Court not to use any documentation that you or any entity with which you are associated  provides in the proceeding, including confidential business information or commercially sensitive information, for any purpose outside the proceeding and to ensure that any other person or entity to which such documentation is provided for the purposes of the proceeding first provides an Undertaking to the Court in similar terms reasonably satisfactory to you.

Application to Court- discretion of the Court

If the other party refuses to sign a confidentiality agreement or to provide an Undertaking to Court, you should be aware that the is no certainty that the Court will  make a restraining order or any order compelling a party to sign such an agreement or provide such an Undertaking.

In proceedings before the Family Court of Australia in Milford & Doumas [2017] FamCA 339, the husband sought an order requiring that the wife sign a confidentiality agreement relating to business documents that the husband had disclosed, including those which disclosed information in relation to the financial circumstances of third parties.

The Court said that there appeared to be no dispute that the financial documents of the business provided by the husband to the wife by way of disclosure were commercially sensitive and may be detrimental to the business if disclosed to a competitor.

However, the Court said that there was no evidence that the wife had provided documents or information as asserted by the husband to her neighbour arising from the disclosure by the husband.  The wife had acknowledged that the neighbour was also a friend of both parties and that he had “discussed general commercial references with her on occasions. The wife denied the allegations made by the husband but conceded that her lawyers referred to her having sought advice from the neighbour as to sourcing appropriate real property valuers.

The Court further said that given the implied and express undertaking which already applied to the wife, it was not satisfied on the balance of probabilities that there was a proper evidentiary foundation upon which the Court could determine that it was proper to make the order sought by the husband.

The Court said that there was no evidence of a need to bring home explicitly to the wife the importance of the documents only being used for the purpose of the proceedings. The Court was not satisfied that the evidence constituted exceptional circumstances for the purpose of requiring a confidentiality agreement where in the case before it any breach of confidentiality by the wife would be detrimental to her own case.

Contact our experienced family lawyers for advice if you have concerns about disclosing confidential  business information or commercially sensitive information in your family law property matter. We have the experience to guide you through your matter and to assist in resolving your family law issues.