In financial proceedings within divorce or dissolution of civil partnership, the court is directed to achieve a fair outcome. This is not based on a set formula but by the court considering all the circumstances of the case. In this discretionary system the courts accept that fairness is an elusive concept, and that what may appear fair to one party will not necessarily seem so to the other. So is honesty in divorce the best policy?
You have a duty of full and frank disclosure
In all matters the court requires full and frank disclosure of each party’s assets and liabilities in order to determine fairness. Otherwise the court cannot take into account all circumstances.
Furthermore each party has an ongoing duty to disclose their assets and it is not permissible for a party to say that they were not asked specific questions.
The duty applies in all cases whether decided at a contested hearing or in a negotiated settlement by a consent order.
In the case of Sharland v Sharland the Court of Appeal upheld the High Court decision to decline to set aside a consent order made after dishonest non-disclosure on the part of the husband.
The husband had a significant shareholding in a software company and gave evidence that there were no plans to sell and that the value of the business was £47 million. After a consent order had been drawn the wife then became aware that the company was being prepared for sale with a value of £600 million.
This decision was made on the grounds that the court would not have made a substantially different order had it been put in possession of the true facts despite the finding that the husband had been dishonest in his failure to disclose.
This was heralded by the legal media as endorsing a “cheats charter”.
The judgment of the Supreme Court
Sharland and another case Gohil v Gohil were appealed and in landmark decisions the Supreme Court ruled in favour of both the aggrieved wives.
In the Sharland case the court set aside the consent order and directed that the wife’s applications for financial remedy must be reconsidered by the High Court. In her judgment Lady Hale concluded that it would be extraordinary if the victim of a fraudulent misrepresentation in a family case was in a worse position than in a civil case. She was satisfied that the court would not have made the order in the absence of the husband’s fraud.
In Gohil the court found the husband guilty of material non-disclosure and despite no finding of fraud set aside the order and reinstated the original order.
Dishonesty will not be tolerated
What is abundantly clear from these landmark decisions is that dishonesty in family cases will not be tolerated by the courts. Anything less than full and frank honest disclosure is likely to result in the court setting aside orders and reconsidering such cases. This would no doubt result in considerable further expense to the parties not least in significantly greater legal cost but also in the associated delay and trauma of continued court proceedings.
Parties may suggest that they are unable to give full disclosure because the evidence is commercially sensitive or confidential to third parties. Not so – the court has clarified in the recent High Court case of AB v CD that information disclosed within financial remedy proceedings is subject to a duty of confidentiality which may be protected by injunction. The information disclosed will remain private and confidential as between the parties and the court. There can therefore be no valid excuses.
The Panama Papers
In the light of the leaked documents from a Panama law firm, which spotlight how the wealthy have hidden their assets in complex trust funds, suspicious spouses may be further encouraged to seek to reopen settlements. This is another warning to those tempted to be less than honest about their finances.
Top tips and traps to be aware of:
- Do not try to hide your assets;
- Do not lie or give false evidence as to the value of your assets.
- Be honest, open and frank in your disclosure of information and value;
- Rely on your solicitor to properly manage and present your case to enable a settlement or the court to consider all your circumstances and to determine a fair and just outcome.
For more information about honesty in divorce or any other family law matter, please contact our Family Law team on 0161 475 7676