What if you believe your former partner has taken, hidden or improperly spent money before your family law property settlement?

It is one of the most common concerns raised in family law matters. A party notices unusual withdrawals, missing funds, unexplained transfers or spending that simply does not seem to make sense. In some cases, people suspect that money has been deliberately hidden before separation. In others, they believe assets have been wasted, transferred to family members or used for purposes completely unrelated to the relationship.

But suspicion alone is not enough.

A recent decision of the Federal Circuit and Family Court of Australia, involving allegations that more than $217,000 had been “misappropriated” from the business operated by the parties, highlights both the importance of proper financial disclosure and the difficulties involved in actually proving suspicious transactions.

Importantly, the case demonstrates that even where transactions appear unusual or questionable, the Court still requires clear evidence before it will conclude that money has been improperly taken or hidden.

What Happened in This Case?

The case involved a lengthy relationship during which the parties operated a successful business and accumulated substantial assets.

During the family law proceedings, the husband alleged that a number of business transactions had been carried out improperly and that substantial funds had effectively been removed from the business.

To support those allegations, the husband relied heavily on a forensic accounting report which identified numerous suspicious transactions and expressed concerns that funds may have been “misappropriated”.

However, there was a significant problem with the evidence.

Although the forensic accountant could identify transactions that appeared unusual, she could not establish who had actually carried them out.

That issue ultimately became critical to the outcome of the case.

Why Did the Court Reject the Allegations?

The Court accepted that the forensic accountant was appropriately qualified and experienced. However, the Court ultimately rejected the husband’s claim that the wife had improperly taken the funds.

Importantly, the Court did not simply dismiss the allegations because the transactions appeared ordinary. Rather, the problem was that the available evidence was insufficient to reliably establish what had actually occurred.

The Court found there was inadequate evidence to determine:

• who had carried out the transactions,
• whether the transactions had been authorised,
• whether the husband knew about them,
• or whether the funds had already been accounted for elsewhere within the business records.

A particularly important issue was that the relevant accounts had been accessed through shared administrator profiles, making it difficult to attribute the transactions to any one individual.

The Court noted:

“The only evidence going to the issue of misappropriation was the report.”

That alone was not enough.

The Court also observed that many of the allegedly misappropriated funds had ultimately ended up in joint accounts or on credit cards used by one or both parties.

In those circumstances, the Court was not prepared to conclude that the money had been improperly taken by the wife.

What Evidence Do You Need to Prove Hidden Money?

One of the important lessons arising from this case is that proving hidden or misappropriated money can be extremely difficult.

In many family law matters, parties strongly suspect that money has been hidden, transferred or improperly spent. However, courts generally require more than suspicion or unusual-looking transactions.

The Court will usually want to understand:

• where the money went,
• who controlled the accounts,
• whether the transactions were authorised,
• whether both parties benefited from the expenditure,
• and whether the conduct was genuinely improper.

That is why proper financial disclosure is so important in family law proceedings.

Careful examination of bank statements, company accounts, loan documents, trust records and transaction histories can often reveal patterns of spending or transfers that require further investigation. In more complex matters, forensic accountants may also be engaged to analyse financial records and identify suspicious conduct.

As this case demonstrates, however, identifying suspicious transactions is only part of the process. The evidence must still be sufficient to prove what actually happened and who was responsible.

Does Hidden or Spent Money Still Matter?

Yes.

Importantly, a recent Full Court decision changed the way courts deal with so-called “add backs” in family law property settlements.

The Full Court confirmed that property which no longer exists generally cannot simply be “added back” into the balance sheet as though it still physically exists.

However, that does not mean hidden or wasted money is ignored.

The Court can still take into account suspicious financial conduct, hidden assets, gambling losses, excessive spending and other forms of wastage when determining what overall division of property is fair between the parties.

In other words, proving what actually happened to the money may still be critically important, even though the Court’s approach to “add backs” has changed.

Why Financial Disclosure Matters in Family Law Cases

One of the clearest lessons from this case is the importance of obtaining proper financial disclosure as early as possible.

In many matters, potentially important issues only emerge after detailed analysis of bank statements, business records, accounting material and patterns of spending or transfers.

This can be particularly important where:

• one party controlled the finances,
• businesses or trusts are involved,
• or there are concerns that assets may have been hidden or dissipated.

Careful financial investigation remains critically important in family law property settlement disputes.

Concerned About Hidden Assets or Suspicious Transactions?

At Websters Lawyers, we regularly assist clients in family law property settlement matters involving hidden assets, suspicious withdrawals, disputed transactions, businesses, trusts and complex financial disclosure issues.

We understand that concerns about missing money can be extremely stressful and emotionally confronting. If you believe your former partner may have hidden, transferred or improperly spent money, it is important to obtain legal advice early so that proper disclosure and investigation steps can be taken.

We offer a free initial telephone consultation to discuss your situation and provide practical advice about your options.

Call 8231 1363 to speak with one of our family law lawyers.

McNaulty & McNaulty [2026] FedCFamC1A 80