WELLER & WELLER

In *Weller & Weller*, the Supreme Court of New South Wales was asked to determine whether a party had breached their duty of care to the other party by failing to disclose material information during settlement negotiations. The dispute arose from a property settlement between the parties, where one party alleged that the other had deliberately withheld crucial information regarding the value of certain assets, thereby inducing them to agree to an unfavourable settlement.

The central legal issue before the Court was the scope of the duty of disclosure owed between parties engaged in settlement negotiations, particularly in the context of family law property disputes. The Court was required to consider whether this duty extended to proactively disclosing all material information relevant to the valuation of assets, or if it was confined to responding truthfully to direct requests for information. Furthermore, the Court had to assess whether a failure to disclose, if established, constituted a breach of duty that could vitiate the settlement agreement.

Obradovic J reasoned that parties in settlement negotiations, especially in family law matters where there is an inherent fiduciary-like relationship, owe a duty to act with utmost good faith and to disclose all material information relevant to the resolution of their dispute. This duty is not merely to answer truthfully when asked, but to proactively provide information that might influence the other party's decision-making. The Court found that the failure to disclose the existence of a significant asset, which was known to one party and unknown to the other, constituted a material non-disclosure and a breach of the duty of good faith. This breach was deemed sufficiently serious to warrant setting aside the settlement agreement, as it had fundamentally undermined the integrity of the negotiation process and the resulting agreement.