The importance of honesty in financial negotiations during divorce

ALISON DUKES, a Family Law specialist with AMD SOLICITORS, comments on the proper approach to financial disclosure if parties to a divorce want any agreement they reach to be final.

When a marriage breaks down and the parties are attempting to reach a financial settlement one of the first steps that they need to take is to exchange financial disclosure. Quite often this will be within what is known as a Form E which is quite a lengthy form prescribed by the court for use in Financial Remedy Proceedings, which are issued where parties are unable to reach an agreement through negotiation, mediation or using the collaborative process.

The end of the form includes a “Statement of Truth” and a warning that “Proceedings for contempt of court may be brought against a person who makes or causes to be made, a false statement”.

Clearly parties need to be able to rely on the information that their former spouse discloses and to make an informed decision about any settlement offer that is made. What happens then when parties reach an agreement after one of them has deliberately hidden or undervalued one or more of their assets?

In 2015 the Supreme Court considered two cases brought by ex-wives to re-open their claims for financial provision against their husbands because they had been misled by them at the time that they reached their financial settlements.

In both these cases the amounts involved were substantial and the Supreme Court found that the husbands had both been misleading and fraudulent in their approach to financial disclosure and that this had been material to the outcome of the respective settlements.

In one of the cases the court set aside a previous financial consent order and in the other a draft order agreed between the parties was not sealed by the court.

All parties involved in divorce proceedings have a duty to make a “full and frank” disclosure of their financial circumstances. If they deliberately mislead their former spouse then a court will consider the non disclosure to be material and it will be presumed that proper disclosure would have led to another outcome unless the party at fault can show, on the balance of probabilities, that it would not have done so.

The test when non disclosure is inadvertent is different. There is no presumption that the failure to disclose is material and it will be up to the other party to show that proper disclosure would, on the balance of probabilities, have led to a different order.

In order to ensure that the terms of settlement on divorce are final, it is essential that there has been honesty on both sides. Otherwise, a court order based on fraudulent misrepresentation is likely to be set aside if evidence of the fraud emerges later. Parties to a divorce should be careful to ensure that their financial disclosure is accurate, as even an inadvertent failure to disclose an asset or its real value can lead to the terms of a previously agreed order being set aside.

For advice on divorce, financial provision or any other family law issues contact Alison Dukes on 0117 9621205 or email Alison is based at our office at 100 Henleaze Road, Henleaze, Bristol BS9 4JZ.

Copyright AMD Solicitors

This article is provided for general information purposes only and represents our understanding of the relevant law and practice as at the date of uploading. This article should not be relied upon as legal advice pertaining to any specific factual situation. Legal decisions should be made only after proper consultation with a legal professional of your choosing.

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