A recurring question in family law is whether a loan obtained from a litigation funder must be disclosed to the other party in property proceedings. The answer lies in the broader principle of full and frank disclosure, which is fundamental to the resolution of such matters.
In property proceedings, each party is required to disclose all material facts relevant to the financial circumstances of the case. This duty is not diminished by mere compliance with court rules or practice directions; it reflects a foundational obligation to ensure transparency in proceedings. As observed in In the Marriage of Briese (1985) 10 Fam LR 642, a proper understanding of each party’s financial position lies at the heart of property disputes.
The duty of disclosure is enshrined in Rule 6.06 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 and section 71B of the Family Law Act 1975 (Cth). Accordingly, if a party has obtained financial assistance in the form of a litigation funding loan, that liability must be disclosed. This includes disclosing to the other party that a loan has been obtained from a litigation funder, together with the amount advanced. Such disclosure must also be reflected in the financial statement, affidavit material, and any balance sheet filed with the Court. For the avoidance of doubt, there is no requirement to disclose any material or documents that are protected by legal professional privilege.
Such disclosure is essential to ensure the Court can properly assess the effect of any proposed orders, particularly given the funded party’s repayment obligations. Absent disclosure, there is a risk that the Court may make orders that fail to account for the existence or impact of the funding agreement.
Ultimately, it is for the Court to determine how such a liability should be treated in accordance with section 79(5)(e) of the Family Law Act 1975. The contractual obligations of a funded party are clearly relevant to the Court’s assessment and to the practical implementation of any final orders.
Stephanie Azzi is an AMDRAS Accredited Mediator, Family Dispute Resolution Practitioner, and Collaborative Lawyer with extensive experience across parenting and property matters. She holds Masters qualifications in Applied Law (Family Law) and Family Dispute Resolution Practice, and currently works as an In-House Family Lawyer at JustFund while also practising as an FDRP and Parenting Coordinator at Myra Aris & Co. Known for her compassionate, resolution-focused approach, Stephanie helps clients navigate separation with empathy and practical guidance.
