“I don’t think they are telling me everything.”
It is a concern family lawyers hear regularly when couples separate. Where one spouse has historically managed the family finances, owns a business or has complex investments, the other may have only a limited picture of the assets available. Alternatively, their lifestyle may not seem to match their stated income. These concerns can make it tempting to investigate matters yourself. However, both spouses have disclosure obligations, and suspected non-disclosure should be addressed through the proper legal channels.
What do I have to disclose?
The first step is to establish the financial picture: what assets each spouse owns individually and what they own jointly. Both spouses owe the court, not just each other, a duty of full and frank disclosure. This continues throughout the proceedings, from completing Form E (the financial statement used for disclosure) until the matter is concluded by a court order, including an agreement recorded in a consent order and approved by the court.
Form E requires a detailed picture of each spouse’s financial circumstances, including:
- Income from all sources
- Property and other assets
- Bank accounts, savings and investments
- Business interests
- Trusts and inheritance
- Pensions
- Debts and liabilities
- Financial needs
Any changes to financial circumstances must be brought to the other party’s attention, as well as to the court.
Parties are often concerned that disclosing an asset means they must share it but disclosing an asset does not determine how it will ultimately be treated in the settlement. Whether an asset is matrimonial or non-matrimonial for example, (because it was acquired before the marriage or inherited), is a separate question from the duty to disclose it. It must still be disclosed, even if you consider that it should not be shared as part of the settlement.
What if my spouse does not tell the truth?
Avoid taking matters into your own hands! Suspecting that your spouse is hiding assets does not entitle you to access private emails, password protected accounts, computers or documents without permission. If you unexpectedly come across something that causes concern, the safest course is usually to stop rather than search for more material. Make a note of what you already know or have legitimately seen, and take legal advice about how to raise it through the disclosure process.
Non-disclosure can include failing to reveal bank accounts, investments or shares, concealing income or dividends, withholding important business information (including a potential sale), or giving incomplete answers to requests for further information. Concerns may also arise where assets have been dissipated or transferred to a third party ahead of proceedings to defeat a spouse’s claim. However, gaps or inconsistencies do not necessarily establish material non-disclosure, and an innocent mistake is not the same as fraud.
If you suspect non-disclosure, raise it promptly rather than waiting until the final hearing. The appropriate response will depend on the evidence, the stage of proceedings and the likely benefit of pursuing enquiries relative to the cost.
Ways to tackle non-disclosure:
1. Questionnaire and disclosure orders. Gaps or inconsistencies can be explored through a questionnaire and requests for supporting documents. Where necessary, the court can order a party to provide specific information or documents by a deadline.
2. Third-party disclosure. In appropriate cases, the court can order banks, accountants or other third parties to disclose specified documents where this is necessary to dispose fairly of the proceedings or save costs.
3. Adverse inferences. If a party fails to provide full disclosure, the court may draw conclusions about their financial resources from the available evidence. For example, it may conclude that they have access to income or assets beyond those disclosed.
4. Setting aside a financial order. Where an order has already been made, material non-disclosure may provide grounds to set it aside. A financial order is not necessarily safe simply because both parties agreed to it. Case law shows us that if an agreement was reached against the background of material non-disclosure, there may be grounds to ask the court to revisit it.
5. Committal. Breaching a disclosure order can, in some cases, lead to contempt proceedings, with potential sanctions including a fine or imprisonment.
6. Costs consequences. Although the general rule in financial remedy proceedings is that each party bears their own costs, litigation misconduct can justify a costs order. Failing to comply with disclosure obligations or court orders may therefore result in a party being ordered to pay some or all the other party’s legal costs.
Conclusion
Full and frank disclosure gives both parties a clear picture of the finances, enabling you to take informed advice and work towards a fair settlement. The obligation continues until a final financial order is made; it is not simply a matter of completing a Form E. Withholding information can increase costs, delay resolution and put a settlement at risk. If you have concerns about disclosure, seek advice early and address them through the proper legal channels.
The information on this site about legal matters is provided as a general guide only. Although we try to ensure that all of the information on this site is accurate and up to date, this cannot be guaranteed. The information on this site should not be relied upon or construed as constituting legal advice and Howes Percival LLP disclaims liability in relation to its use. You should seek appropriate legal advice before taking or refraining from taking any action.
