Financial Disclosure and the Importance of Being Honest

A recent decision of the Family Court has shone the spotlight on an issue that occurs regularly when couples separate and divorce where one feels that the other has not been honest during financial disclosure and instead are hiding their true wealth or assets.

In what may seem a contradiction, the judge’s comments also confirm how rare successful applications to set aside orders are and how important a willingness to compromise is if years of expensive litigation are to be avoided.

Disclosing Finances

In the vast majority of family cases, most couples will know or have a general understanding of their family’s financial resources and obligations, whether those are good or bad. They are then able to make fully informed decisions about the division of those when they separate. Family lawyers and the Family Court will ask the couple to provide this information and check or clarify certain aspects of it to ensure that, firstly, everything is taken into account and nothing missed and, secondly, to ensure that any financial settlement is fair and reasonable in the eyes of the Law.

In some cases, however, difficulties arise. Sometimes, couples do not see the need to provide or seek financial disclosure. In such circumstances, whilst they may be able to go ahead with a financial agreement, they will do so at their own risk understanding that if information comes to light later they will not be able to re-open it.

What happens if someone isn’t being honest?

Where one spouse has withheld information, whether deliberately or perhaps even by accident, the situation can be different. The criteria set by the court that allow settlements and orders to be reopened are long established and are strict. The recent case therefore is unusual in the that the order dealing with the division of the couple’s resources has been set aside twice, albeit in circumstances that would seem to be entirely justified. On the first occasion some six years after the original order was made in 2010, the wife was awarded an additional sum of £6,420,000 because her former husband had not disclosed his interest in two valuable trusts. Now that order has been set aside because the Court has now found that the husband knew that the value of a shareholding must have increased but did not disclose it at the time that order was made.

The Judge has urged the parties to negotiate and come to a compromise, reminding them that the costs that they have incurred have been significant and may well run to further £2,500,000.

These are all significant sums of money – far more than loose change or an ancient premium bond in an old handbag – but not to take notice of the need to give full disclosure and the consequences of not doing so, might be considered by some to be an accident but by the Court is likely to be viewed as carelessness and result in agreements and orders being set aside and costs penalties.

If you would like to find out more about disclosing finances during divorce proceedings then please get in touch by calling 01332 364436 or emailing a.rose@timms-law.com

Adrian Rose
February 2020