The importance of disclosure in family law cases
19th June, 2015
In financial remedy proceedings during a divorce, one of the key requirements of the parties is to disclose details of their financial position.
This should be full and frank disclosure, so that the Court can objectively decide (or, where the parties have reached an agreement, approve) the outcome of a case.
That said, it is not uncommon for one spouse to attempt to hide or dissipate assets, which can be very distressing for the other spouse, particularly one who is financially dependant.
Whilst the Court would not take kindly to a party who does fail to disclose an asset, the recent case of D v D  EWHC 1393 (Fam) has set out guidance on the requirements of a successful non-disclosure claim.
In this case, the husband ran a successful debt recovery business, which was jointly owned by the wife. The nature of the business was that income was drawn from success fees, each time the business successfully recovered a debt. This was a long marriage with assets available for distribution held to be £5.5 million. However, the wife was concerned by a further £1.53 million in success fees that were outstanding (i.e. not yet received by the business) at the time of the proceedings.
The wife argued that the Court should draw adverse inferences from the fact that the husband had the opportunity to realise payments in excess of the success fees that were available for distribution. She also put forward that he had twice paid for his grandchildren’s school fees by remitting funds to the jurisdiction which were untraceable to him.
Whilst the Court commented upon the fact that the husband had indeed wrongfully tried to avoid tax in the way in which he had paid school fees, it was unable to accept the wife’s non-disclosure claim as she had no evidence of a specific undisclosed asset.
The Court went on to summarise that for a non-disclosure claim to be successful, the applicant must:
- Have direct evidence of a specific asset which the alleged non-discloser has failed to reveal;
- Be able to show that the alleged non-discloser has failed to comply with Court Orders or answer questions, from which the Court may draw adverse inferences; or
- Have evidence of a lifestyle wholly inconsistent with the disclosed financial resources.
It remains the case that parties must disclose full details of their financial position. However, D v D is a stark reminder that suspicions of hidden assets alone will be insufficient to succeed in a claim for non-disclosure.
The issue of non-disclosure in family proceedings is an important topic at the moment with the joint cases of Sharland v Sharland and Gohil v Gohil being heard by the Supreme Court this month. Both cases involve one party brining historic proceedings back to Court, alleging that there had been non-disclosure.
We eagerly await the Supreme Court’s clarity on the issue of setting aside orders in family proceedings due to non-disclosure.
This is a tricky area and something that can be highly emotive for parties to financial remedy proceedings. We would therefore recommend that you seek advice from a specialist family solicitor to assist you in dealing with circumstances where assets may be hidden on the breakdown of a marriage.
For further information and advice please contact Lorraine Saunders on 01244 405573 or send an email to [email protected]
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