Most divorcing couples will recognise the importance of exchanging full and frank financial disclosure to achieve a fair financial settlement. There are, however, occasions where one or both parties may fail to disclose all assets, either by hiding or disposing of them, to defeat their spouse’s financial claims.
If there is strong evidence to suggest that a party is hiding their assets or income, then provided proceedings have been issued at court, supplementary applications can be made for the non-disclosing party to provide information or documentation pertaining to the hidden asset or source of income. In the event of their failure to comply with any disclosure orders, the court can be asked to find them in contempt of court, which can result in a fine or in extremely serious cases, a committal to prison.
The court can also be asked to make orders against third parties, including accountants, business colleagues or employers, to disclose information or documentation, which will help to confirm the existence of any hidden assets or source of income. In both cases, costs can also be sought against the defaulting party.
The court can also be asked to draw ‘adverse inferences’ against the non-disclosing party. This would, however, be on the basis that the cost of maintaining their lifestyle is at odds with the level of financial resources that they have disclosed, thus implying that they are not disclosing all assets or sources of income.
If there is a verifiable risk that assets may be dissipated, an application can be made to court for a freezing order. This type of application can be made before financial remedy proceedings, associated with the parties’ divorce, have been issued.
The freezing order will effectively prohibit a party from disposing of or moving assets. Freezing orders can be made in relation to assets held in the UK or abroad, such as bank accounts, property, business assets, investments such as shares or bonds, and motor vehicles.
In this case, an application can be made to court for an avoidance of dispositions order, to set aside a transaction that was made by one spouse with the intention of defeating the other spouse’s financial claim. That intention is presumed if the transaction took place within three years of the date of the application being made, although the party that is the subject of the application can rebut that presumption.
The transaction shall be set aside unless there is a rebuttable presumption of the intention described above, or it can be shown that monetary compensation was exchanged during the course of the transaction and that the third party involved acted in good faith and had no knowledge of a wider intention to defeat financial claims arising from a divorce.
Another request that can be made within subsisting proceedings, that does not involve a separate application, is that the court ‘adds back’ the value of the disposed assets to the deprived party’s share of the matrimonial assets. This would however require there to be sufficient capital resources to draw upon.
Although it may be tempting to use ‘self-help’ and carry out investigations into a spouse’s finances, if there are doubts about the truthfulness of their financial disclosure, certain actions are strictly prohibited. These include the following:
Solicitors that are made aware of these types of actions are duty bound to make the spouse or their solicitors aware of the same, and in doing so provide them with the hard copies, and any further copies, of post or documents taken, as well as any electronic devices that are holding information. A failure to return such items can result in a costs order being made by the court.
If you have concerns that your spouse is not being forthcoming about their finances, or that they may have already disposed of assets, we offer an initial consultation of up to one hour for £50.00 (Incl. VAT), where you can receive specialist advice from a member of our team.
At Tisshaws, we are experienced in resolving contentious issues such as these, both at court and through alternative methods of dispute resolution. To book an initial consultation with us, please contact 01444 472700, complete the form below or email firstname.lastname@example.org.
We know how difficult divorce and separation can be, so we offer an initial one hour fixed fee consultation with a fully qualified lawyer, to help you make an informed decision about how to proceed.
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