Disclosure of assets is fundamental to financial remedy proceedings. How can the court decide on the correct settlement if it only has half the picture? The law is clear: you have a duty to give a full, frank and clear 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. A recent Court of Appeal case, Moher v Moher shows just how the courts deal with non-disclosure in practice – unsurprisingly the husband who failed to disclose the extent of his wealth did not come out of proceedings well.
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.
It was 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 assets available. 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.
A YouGov survey from a few years back suggested as many as a third of us would hide assets during divorce if we could get away with it. Recent 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.
The Moher case also suggests there’s little to be gained from arguing against a decision that has made a non-disclosing spouse less well-off than if he or she had been more 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.