Hidden Assets

Courts in England and Wales are relatively good at finding and locating hidden assets and are familiar with the fact that sometimes a spouse in a marriage will seek to cover up certain funds or payments which are imminently due. To counter this, the courts encourage what is known as a, “cards on the table” approach. In other words, parties are expected to disclose all their assets fully and frankly.

Using Form E to disclose finances

Parties usually disclose in what is known as a “Form E” which is the financial disclosure form which is required most financial proceedings. Form Es are filled out and exchanged between parties. The purpose of the form is to enable both sides to provide the Court with full details of their finances. Bank statements going back 12 months have to be included as do payslips, business valuations and housing valuations. If the form is complete and there are no further material questions left unanswered, then the chances of settling a case improve.

If either party does not fully disclose

If there is a suspicion that someone has not disclosed all their assets it is possible to ask further questions in the litigation process. The usual document for this is a document simply known as a “Questionnaire.” This allows parties to ask questions about the documents disclosed and query specific transactions. The Questionnaire is particularly useful at, for example, querying unusual bank transfers or entries in bank statements that are suspicious. In most cases the Questionnaire usually effectively locates the majority, if not all of the assets and often locates hidden assets. It is also possible to ask for directions for a forensic accountant to be appointed or to raise further questions or queries in supplementary documents.

Deliberate refusal to disclose

In the case someone is wilfully and deliberately refusing to disclose their assets there are penalties which include cost penalties and even imprisonment. In unusual cases, or if it becomes obvious the assets are being dissipated to deprive a spouse of their entitlement, it may be possible to seek further orders such as an “avoidance of dissipation” order or a worldwide Freezing Order which effectively precludes any substantial dealings prior to litigation and/or retains the assets until the parties agree a settlement or the court makes final orders.

If it becomes apparent throughout the litigation process that assets are being hidden for some or all of the litigation, adverse findings may be made against the spouse who has defaulted on what is known as his or her obligations of, “full and frank financial disclosure.” One recent example of this in the media was where the former tycoon, Mr Scot Young, was committed to prison for refusing to answer particularly pertinent questions put by his wife. The full judgment of Mr Justice Moor can be found here. Although the court is rarely required to go to such lengths to enforce the terms of its directions, the case does show that the court and will be prepared to do so in order to make sure assets are not hidden or kept out of reach for a financial settlement. See also our example “problem scenario” below.

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Hidden Assets Scenario

Mrs A has been married to Mr B for over 10 years. The parties have four children.  Mr B is a successful businessman and property developer.  Mr and Mrs A have enjoyed a lavish lifestyle.

In recent years the marriage soured. The parties recently attended mediation which was unsuccessful in resolving their differences. Mrs A believes that Mr B is being secretive about his personal life and about his wealth.

Eventually financial proceedings are filed and Form Es are exchanged. In the Form Es Mrs A notices that there are a number of suspicious bank transactions and she is concerned about these.

Our Solution:
We draft a Questionnaire which asks about the suspicious transactions. Eventually Mr B answers our Questionnaire but provides a vague and misleading answer. We draft a further Questionnaire and Schedule of Deficiencies. Mr B confirms that he does in fact have a separate, tenanted property (worth £400,000) which he has never told Mrs A about.

Eventually the matter settles at the next court hearing but Mrs A receives a much higher settlement as a result of the extra scrutinisation of the assets in this case.

Note: The above scenario does not relate to any individual clients of ours but the facts and the outcomes relate to some similar experiences in our practice.

What our clients are saying:

‘AJ’, London

“I am of course extremely grateful for all your help, it has been the most difficult thing I have ever done and I couldn’t have done it without your guidance and support. Thank you so much.”