No place to hide: The importance of honest financial disclosure on divorce.

A recent case has been published anonymously by family judge, His Honour Judge Hess, to highlight the importance of providing full and frank financial disclosure in financial proceedings on divorce.

This case involved a husband and wife who were married for 16 years with two children. The husband had a history of being dishonest, which included misleading the wife with false financial information to trick her into moving to the UK. He had told the wife his company was being purchased for £80 million, and provided a false bank statement that showed a deposit of £8 million had been provided, when it fact the husband had never received such deposit.

Throughout the court proceedings to determine their financial settlement, the husband’s untrustworthy behaviour continued, including failing to disclose details of his financial circumstances, amending bank statements and producing documents stating he was being declared bankrupt in his home country. A document showing alleged debts of £1 million was questioned by HHJ Hess as to its authenticity. This led to three postponed preliminary court hearings) and three ineffective Financial Dispute Resolution hearings. The case was ultimately listed for a Final Hearing, initially in April 2022 and then postponed until July 2022, due to further non-disclosure from the husband.

As a result of the husband’s dishonesty throughout the proceedings, and lack of full financial disclosure, HHJ Hess was left in difficulty when trying to decide what a fair settlement for the wife would be. The normal rule is that the Court should do what it can to bring an end to matters, as there should be finality in litigation. Although this husband may have thought he was successful in hiding his true financial position, in order to defeat the wife’s financial claims, both capital and income, in this instance, HHJ Hess left the wife’s capital claim open for 10 years, which was considered a reasonable length of time to allow her the chance to receive some capital from the husband if his true financial situation came to light, but balanced with the need for litigation to have finality.

The husband’s income was also not clear, but he was assessed to have an earning capacity of around £300,000 per annum, so was ordered to pay the wife £5,000 a month for herself and the children. This was to start 9 months after the judgement (to enable him to establish his career) and was to last 10 years.

The husband did not achieve the finality of the clean break that he was hoping for, and instead, the wife has 10 years to reapply to Court to determine her capital claim.

If a litigant engages in conduct, which may include full or partial non-disclosure, which causes the court to conclude that a once-off division of capital now is likely to cause unfairness and injustice to the other party then the court, in exception to the normal practice, has a discretion to decide that the normal desirability of finality in litigation should be overridden to preserve the possibility of a fair outcome for the parties.