It is not surprising to any divorce lawyer that when it comes to splitting finances in a divorce, things can become ugly very quickly. Surprisingly, large numbers of cases involve some form of distorting figures. There are currently stories in headline news where there are allegations of hiding business assets and purposefully reducing income to decrease the amount available for a settlement.
MP Andrew Bridgen is currently embroiled in a case against his family regarding the family’s farming business, where his brothers have alleged Bridgen had stepped down as a director as the companies were a ‘financial liability in his divorce’. Once the divorce was finalised, he then requested a return to his position but had been denied.
In the case of Potanina v Potanin, Natalia Potanina claimed that her ex-husband had secreted away his vast wealth in offshore companies, in order to be seen as having nearly no assets.
Natalia Potanina also stated in an interview with Business Insider, that despite her husband serving her divorce papers, in their native Russia, in 2013, he requested that the court backdate the divorce to a particular date in 2007, when he stated he felt the marriage had dissolved.
Mrs Potanina feels this was a tactical move to value his assets as significantly below their actual worth, as this was when “the holding structure of Norilsk Nickel shares changed dramatically”.
Following the Imernan case in 2010, spouses who fear their partners may hide assets in order to reduce a financial settlement, are no longer allowed to submit evidence of the assets if it is considered an ‘improper acquisition’; ‘it was unacceptable to use force, intercept mail or retain original documents.’ Hildebrand however, still remains in stating when an improperly acquired document should be disclosed to the spouse.
Solicitors and courts rely on Form E and the honesty of each spouse to provide full, frank, relevant and continuing disclosure, however this is open to abuse either through deliberately omitting information or by refusing to complete it at all.
Other than solicitors reminding clients that they have a duty to compile all the information needed for the Form E and provide the documents such as 12 months’ worth of bank statements, these reminders can fall on deaf ears.
Parties rational thoughts can disappear, and even the most level headed client can become determined to argue over the smallest and most odd financial details – one solicitor recently tweeted he had been involved in a case where the parties were fighting over the yearly allowance to feed a pet mouse, for example.
It is at this point where courts need to step in and rely on “inference and guess work within an exercise which inevitably costs a fortune, and which may well result in an unjust result to one or other party” NG v WG.
This can be very damaging to the client who has wilfully not provided full and frank disclosure. Clients need to be reminded that the court may use its discretion to penalise the party who has wasted time in not complying. Sanctions can range from the case being set aside, to a prison sentence, as was seen in Young v Young, whereby the husband received a 6-month prison sentence regarding the non-compliance of providing financial information.
Two cases in 2015 also saw the Supreme Court set aside divorce settlements due to being dishonest and misleading in their disclosure of financial information.
The facts of the cases that caused them to become headline news was that the original settlements had been decided 5 and 13 years previously.
It is not a new concept however, the case of Livesey v Jenkins in 1985 became the authority that an order could be set aside if there was a substantial difference from an order that would have been made should there have been full disclosure.
The 2015 Supreme Court rulings went further than the ruling in Livesey v Jenkins by treating Consent Orders the same as Final Orders and that if there has been an intentional failure to disclose assets, it will presume that full and frank disclosure would have led to a different outcome, unless proved otherwise.
“It is essential in these cases that the court retains its power to protect both parties against injustice which may arise from failure to comply with their obligations to disclose.” Robinson v Robinson
With more and more litigants in person, already putting a strain on the courts, there may well be a rise in cases where full disclosure has not taken place. This will put further strain on the courts to ensure either the information is provided, sanction those who repeatedly flout orders to do so, or punish those who dishonestly mislead the court.
What ways could this be helped however? Should it be made a requirement that parties looking to courts to settle financial arrangement, have the information checked and approved before being submitted? This would no doubt further punish those already struggling to afford legal advice however, possibly fuelling more agreements being reached personally which could be very unfair to the weaker party.
