Full disclosure of assets is fundamental to financial remedy proceedings. How can the court decide on the correct settlement if it has an incomplete picture of the family finances? The law is clear: you have a duty to make full and frank disclosure of all your financial and other relevant circumstances. What happens if you don’t?
The consequences of hiding assets can be severe: Whatever settlement was reached without full disclosure may be set aside, and if an individual is found to have been deliberately untruthful there may be criminal liability for fraud. The 2019 Court of Appeal case, Moher v Moher shows just how the courts deal with non-disclosure in practice. There, the husband’s repeated failure to comply with disclosure orders shaped the final order and highly damaging revelations of his behaviour towards the wife entered the public domain.
The Court Won’t Act As A ‘Cheat’s Charter’
In Moher, the husband appealed a decision of a High Court judge to award his wife a lump sum of £1.4million. He argued that the award was defective because there had been no accurate evaluation of his wealth. The husband took his appeal in the knowledge that the lower court had found that he had comprehensively failed to comply with his obligation to give disclosure of his financial resources.
Mr Moher believed that, in the absence of evidence of his wealth (albeit resulting from his own failure to provide that evidence) the court should not have made the order it did.
Dismissing the husband’s case, the Court of Appeal sent out a clear and striking message: where there is obvious non-disclosure judges will make sure that the non-disclosing party doesn’t end up with a more favourable settlement than he or she would have done if they had complied with their disclosure obligations.
The court highlighted that if the court didn’t take steps to prevent a non-disclosing spouse benefitting from their lack of candour, it would in effect be enabling a ‘cheat’s charter’.
Of course the courts should try to make some kind of assessment of a non-disclosing spouse’s wealth. But the point is that if a lack of evidence caused by non-disclosure renders that impossible, the court can instead infer that resources are such that the proposed award does represent a fair outcome.
In Moher the award of £1.4million was appropriate to rehouse the wife on the basis of the available assets. There were other factors at play too that perhaps influenced the judges in their decision making process: Mr Moher had been convicted of assaulting his wife and there was evidence that Mrs Moher was afraid of him. Mr Moher also appears to have tried to frustrate the sale of the family home. All of this meant there was a pressing need for Mrs Moher to be able to live independently in a new home.
Dealing With Non-Disclosure
Financial settlements reached by consent and financial remedy orders made by the court are designed to be final. However, if you subsequently discover that your spouse has hidden assets there are ways to reopen the settlement. But opportunities to undo a previous order are limited, and the courts will require clear evidence of non-disclosure before making any decision to set an order aside.
What if a financial settlement has not yet been reached, and negotiations and proceedings are ongoing? Can you force a non-cooperative spouse to comply with his or her disclosure obligations? The Moher case illustrates the frustrations a spouse faces when their ex refuses to engage in any meaningful way with the disclosure process.
Non-disclosure of assets during financial remedy proceedings can include:
- Failing to declare bank accounts, savings, or investments
- Transferring property or business interests to relatives or friends
- Intentionally undervaluing shares or business assets
- Giving up work bonuses and other incentives until the divorce has been finalised
- Moving assets overseas with the intention of placing them beyond the jurisdiction of the courts here
Form E – A Starting Point
During financial proceedings, each spouse must complete a detailed Form E. This covers your assets, income, liabilities, and outgoings. In many cases exchange of the form and supporting paperwork is a starting point in establishing the true financial picture that will dictate the final settlement.
An experienced divorce solicitor will analyse the form and flag up issues of concern. These may include unexplained withdrawals from bank accounts, missing bank statements and significant or unexplained expenditure. These issues are then followed up with detailed questionnaires to clarify transactions of concern, request any missing documentation and seek full explanations of expenditure. When necessary, the courts can order a spouse to respond to these requests for further information.
In complex cases we work with other professionals like tax experts and forensic accountants. Together we can trace money and assets, identify undeclared assets and income and ensure business assets and other property are valued accurately. Tools at our disposal include:
- Third-Party Disclosure Orders – where there is a concern that a spouse is diverting assets through a business or family member these orders can require banks, employers and others to produce data that has a bearing on the family finances
- Freezing Orders – Orders such as Mareva Injunctions can provide effective protection of assets in urgent cases where there is a real risk that they will be sold or placed outside of the court’s jurisdiction before a final order is made
Comment
In 2024 a survey by Investec indicated that 1 in 4 people have hidden wealth from their spouse during divorce. Cases like Moher demonstrate however that there’s a lot at stake for those who are thinking of being less than frank about their wealth during divorce. Similarly, attempts to transfer assets to thirds parties to reduce the amount available for division between spouses will be viewed harshly by the courts.
The Moher case also suggests there’s little to be gained from arguing that a decision has left a non-disclosing spouse worse off than they would have been if they had been fully transparent in the first place. It’s worth remembering that family court judges have unrivalled experience in cases of non-disclosure. If a lack of transparency by one spouse means it’s impossible for judges to make an accurate calculation of wealth, they have a wide discretion and are astute enough to figure out what is likely to have been concealed – and to draw their own conclusions about the extent of an individual’s wealth.
If you suspect your spouse is not being open about their finances, you should get specialist legal advice immediately. Once an order has been made or you agree to a consent order it becomes more difficult to convince a court that the order should be changed to take account of hidden assets. As we have shown there are a range of legal remedies available during divorce proceedings that can force a spouse to comply fully with their disclosure obligations.