A spouse's duty to explain withdrawals of money belonging to community property

In proceedings for the settlement of community property of spouses (SJM) under Czech law, it is not unusual for one spouse to be unable to identify the so-called diversions from community property made by the other spouse, because he or she lacks the necessary information. This happens, for example, where only one spouse has access to a bank account holding, or that held, funds belonging to community property. The other spouse is then logically unable to find out the current balance and cannot obtain a bank statement to identify any withdrawals. For that reason, this spouse cannot identify the other spouse's diversions from community property or assert them in the settlement proceedings. A spouse without access to such a bank account has no choice but to ask the court to obtain the bank statements. The courts have therefore often faced the question of whether bank statements should be provided to the other spouse for this purpose in community property settlement proceedings.

Today, however, the case law on this question is essentially uniform. The Czech Supreme Court addressed the provision of bank statements to the other spouse in community property settlement proceedings in its judgment file no. 22 Cdo 1027/2018 of 24 May 2018:

"The court of appeal commented only on the motion to request the history of the defendant's account. It stated that the decisive factor is the state of the assets on the day community property ceased to exist, but it overlooked the fact that movements on the account before that day, the statement of which the defendant sought, may be a source of information that may point to the claimant's assets in the company. In the new proceedings, the court of appeal will therefore also deal with this objection. Moreover, the court of appeal's statement (without any reasoning) that so-called account movements before or after the date community property ceased to exist are not relevant in proceedings for its settlement is not correct. […] In the new proceedings, the court of appeal will also re-examine the objection in which the defendant suggests that community property also included money which the defendant had previously withdrawn from his current account without her knowledge and consent." 1)

According to the Supreme Court judgment cited above, obtaining bank statements is one of the key pieces of evidence in community property settlement proceedings. If one spouse is unable to obtain bank statements for the purposes of the proceedings, Section 129 of the Czech Code of Civil Procedure may apply. Under Section 129(2) of the Code of Civil Procedure, the presiding judge may order whoever holds a document needed as evidence to produce it, or may obtain it from another authority. The Supreme Court has also addressed a spouse's duty to produce evidence that the other spouse is objectively unable to produce, stating:

"If it is proven that, during the existence of community property, investments were made in the separate property of one of the spouses, but the other spouse, owing to a lack of information, finds himself or herself unable to prove the origin of the funds spent, the investing spouse's duty to explain arises; that spouse must, at the court's request, state and, where appropriate, prove the origin of the funds spent on the separate property." 2)

Once the spouse has been provided with a statement of the bank account holding funds that belonged to community property, he or she will be able to identify the specific sums that the other spouse diverted from community property. Obtaining the bank statement is also crucial because, if a spouse did in fact withdraw funds belonging to community property from the account, it is that spouse who bears the burden of allegation and proof as to how those funds were used, as follows from the settled case law of the Supreme Court:

"In that decision, the Supreme Court further stressed that the spouse who withdraws funds from an account with a financial institution bears the burden of allegation and proof as to how those funds were used. If the sums obtained in this way were used for himself or in a way that does not meet the needs of the family and is not consistent with the institution of community property, or if the defendant did not spend that sum and had it at his disposal on the day community property ceased to exist, it must be settled as part of community property.

The other spouse, who seeks the settlement of those funds, does not bear the burden of proving the allegation that the sum in question had not been spent by the day community property ceased to exist. His or her duty of allegation and proof in this respect is limited to proving that such a sum was acquired during the marriage and withdrawn by the other spouse from the account with a financial institution, or to expressing agreement or disagreement when it is established how the funds so withdrawn were used. […]

If a party withdrew money from the account without the other party's consent during the marriage and spent it on himself, the amount withdrawn must be included in the parties' community property and settled (cf. the judgment of the Supreme Court of the Czech Republic of 17 January 2001, file no. 22 Cdo 2433/99)." 3)

The conclusions of settled case law cited above make it clear that if one spouse proves that a certain sum was acquired during the existence of community property and was withdrawn by the other spouse, the duty to explain passes to the other spouse, who must prove how the funds were used. If that spouse fails to do so, the funds must be settled to the detriment of the spouse who used them contrary to the law. For the other spouse to be able to prove these facts in the community property settlement proceedings, however, he or she must have the statements of the bank accounts concerned, and on this point the settled case law of the Supreme Court is currently uniform.
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1 Judgment of the Supreme Court file no. 22 Cdo 1027/2018 of 24 May 2018.
2 Judgment of the Supreme Court file no. 22 Cdo 1433/2015 of 21 April 2015.
3 Judgment of the Supreme Court file no. 22 Cdo 3128/2013 of 30 October 2013.

Dividing assets after a divorce? Our family law team handles community property settlement proceedings.