Mediation or Family Court when the Millions Go Missing?

Phenomenal wealth always sparks phenomenal interest.  As a family lawyer, what I found interesting about the Bezos separation and divorce is the apparent speed with which Jeff and McKenzie went about resolving their differences.  They have evidently filed a parenting plan as well as doing a deal about their extraordinary wealth.   It may be because of their extraordinary wealth that there was less at stake in terms of who got what.  Also, McKenzie’s stated intention to donate her wealth to charity means that the usual drive to secure as much as possible from the divorce was not a feature for her.

Enormous wealth is not typical for most families who find themselves in the Australian family law system.  For very wealthy families, missing money, even considerable sums, may not make much of a difference to their lives.  For our clients, on the other hand, if their former partner has squirrelled away funds, transferred assets, divested themselves of shares, sold assets to friends, given cash to their new partner or swapped roles and entitlement in the family trust – all in anticipation of separation, unpicking that trail of deceit can make a difference to the bottom line.

What does a client do to unravel the thread of deceit?  Mediation is the quickest way to try and get a final settlement.  The difficulty with mediation is that there is little that can be done to compel the person hiding wealth to reveal it.  There are few “teeth” available to your lawyer ahead of a mediation to compel the other party to reveal where they have hidden the money.  Preliminary financial discovery undertaken for mediation can produce information which may hint at secreted funds. People can play the game of drip-feeding financial documents.  This costs time and money.  An incomplete or inaccurate picture of the assets in contention can lead to ill-conceived offers being made by the less financial party – who just wants it over.

Whilst I am a huge proponent of alternate dispute resolution, in some cases clients need the tools that only Court can provide to get at the bottom line.   They need either enforceable orders for discovery of relevant and complete financial documents or subpoenas to compel third parties to produce the evidence.  Sometimes the lawyer has to conduct third party discovery to ensure that those who are holding onto relevant information are compelled to produce it.  Sometimes you need to question those third parties in Court to get at the truth.  A delay in getting to Court just may enable those deck chairs on the Titanic to be moved and elude your client even if the matter eventually makes it to Court.

To assist, clients may need the help of a forensic accountant who is skilled at following the money and work out what the client’s ex did with it and where it went.  Whilst this can be expensive, if it is established that the other party disposed of assets or transferred wealth etc, then s106B of the Family Law Act can be pressed into service (in the right circumstances) to set aside those transactions.

Third parties can be joined to Court proceedings and orders made compelling the reversal of transactions.  An argument about the wastage of assets by one party can be mounted if the evidence supports it and the Court agrees to notionally take those assets into account, even if they no longer exist and cannot be clawed back into the pool of assets.

As with everything in a dispute in Court, clients need to be fairly certain that there is a net gain to each step they take to reveal where the money went.  Care and judgment must be exercised, and you need to base your decisions on more than just a hunch.

If I had a case where I thought there was “missing” tens of thousands, I would not hesitate to consider tracing those funds and finding out what became of the money.  I’d be mindful of the dollar spend and assess at each spending stage whether any gold was being revealed.  If the range was in the thousands, I may think twice about encouraging my client to spend money in Court, on experts, tracking down that which is unlikely to produce a result to their bottom line.  It is always going to be a question about what we know, what we don’t know and what the client has to spend to find out.


Caroline Counsel

Principal Caroline Counsel Family Lawyers: Better Families, Brighter Futures

Accredited Family Law Specialist, Mediator, Family Dispute Resolution Practitioner, Arbitrator

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