The Elias Principle – When Lies Come Back to Bite

We are forever surprised by the prevalence of people making false representations to Centrelink, the Australian Tax Office, to the Office of State Revenue and elsewhere in order to obtain financial gain, yet later coming before the Family Court of Australia and representing something completely different.

These dubious individuals, however, may find their lies coming back to haunt them in the event of a relationship breakdown.

The Family Court of Australia addressed this issue in the case of Elias and Elias (1977). In this case, the Husband told the Court that he was the sole owner of his smash repair business, however, he had previously represented to the Commissioner for Taxation that the business belonged to himself and his wife in equal shares, in order to participate in tax minimisation. In this case, it was held that:-

“When a party has made representations of fact to third parties and has gained advantage from so doing, it is open for the Court in subsequent proceedings under section 79 of the Family Law Act to decline to accept from that party evidence which contradicts those representations.”

In other words, the Husband was not permitted by the Court to represent other than as he had done to the ATO – so the business was jointly owned and had involved joint contributions.

Understandably, the concept has since been coined ‘the Elias Principle’.

The Elias Principle has since been used to try and draw the Court’s attention to incongruous representations in a variety of cases. The Court has since determined that it should be applied as a discretionary rule which will be applicable when, examining the particular facts and circumstances of each individual case, the circumstances warrant.

The case of Jordan and Jordan [1996] Fam CA 15, the Wife represented to the Court that when she purchased her property in Vaucluse, it was valued at $1.2 million, however, at the time of the purchase, the Wife represented to the Office of State Revenue that the value of the property was only $600,000.00. By doing this the Wife gained a significant stamp duty bargain. When the case came before the Family Court, Justice Chisholm J held that “the penalty to the wife in preventing her from leading the valuation evidence might well be disproportionate to the advantage she gained from the reduced stamp duty” and permitted the Wife to lead evidence as to the true value of the property.

However, the credibility of the Wife and her Father was likely in the proverbial toilet and Chisolm J remarked that it was presumed the revenue authorities may well deal with the matter if there had been any advantage obtained and duty avoided.

In the case of Benedict v Peake [2014] FCCA 642 the Applicant (a woman) asked the Court to declare that she and the Respondent (a male) had been in a lengthy de facto relationship, however, the woman had consistently represented, for 17 years, that she was not a party to a de facto relationship and had claimed resulting benefits. Likewise she had been assessed for taxation as a single woman with a dependent child. The male was not inserted as Father on the child’s birth certificate. Subsequently, during her Family Law proceedings, she asked the Court to recognise that there was a de facto relationship the relationship.

The Court permitted (over objections from the man) the woman to assert her case to the effect that facts other than what she had represented to other Government departments should be believed, despite her ongoing deception of others.

Whilst the Court permitted the incongruous evidence to be led by the woman, she was not successful. Her evidence was not believed and her credit was impacted. It is seriously likely that she later endured criminal investigation and prosecution for the Centrelink fraud.

Centrelink fraud carries a significant likelihood of fines (usually what has been defrauded and a penalty on top) and a period of incarceration.

False representations whether made by your own client or by the other party, need to be disclosed and discussed and addressed in the early stages of each matter.

There may well be negative impacts for people at the end of running expensive cases if false representations have been made along the way.

We typically work with clients and criminal law advisors to work out the best possible result for our clients in these instances.

Please contact us in the event that you need assistance in your family law matter. It’s highly likely we’ve dealt with the issues you are facing and will have a solution for what is troubling you or something you consider is unique or embarrassing within your matter.

Thanks for reading and please feel free to make contact for yourself or for the purposes of referral of a friend or relative should the need arise.