What Is The Penalty For Hiding Assets In Divorce?

Duncan Lewis & Co Solicitors


Duncan Lewis Solicitors is an award-winning and Times 200 ranked law firm offering expert services in 25 fields, including family law, business immigration, high net divorce, personal injury, commercial litigation, property law, motoring, education and employment.
Ensuring full and frank disclosure is crucial in divorce proceedings.
UK Family and Matrimonial
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Ensuring full and frank disclosure is crucial in divorce proceedings. Concealing assets not only breaches this fundamental rule but can also lead to severe legal consequences. Honest disclosure protects parties from accusations of non-disclosure and subsequent set-aside applications. It also facilitates effective negotiation, increasing the likelihood of reaching a settlement outside of court or before a final hearing.

Why Is Disclosure Necessary within Financial Remedy Proceedings?

A financial agreement between divorcing parties, those undergoing a judicial separation, or dissolving a civil partnership cannot be finalised and sealed by the Court without complete disclosure. This process involves exchanging Form E - Financial Statements during Financial Remedy Proceedings, through mediation, or via voluntary disclosure, whether independently or through solicitors. For agreements reached outside of court, both parties must complete, sign, and exchange a Statement of Information (D81) form to obtain a Consent Order.

What if a Party has Failed to Provide Full and Frank Disclosure?

Failing to provide full and frank disclosure or misleading the Court can be considered contempt of court and lead to significant consequences. Both the party and their solicitor, who has a professional duty not to mislead the Court, must heed the words of Robert J in AB v CD: "it is not for a litigant to judge the ambit of the duty to disclose or the consequences of disclosure; any information which is relevant to outcome must be disclosed" (para [165]).

Grounds for a Set-Aside Application

Under FPR r. 9.9A(1)(b)(ii), "set aside" means rescinding or varying a financial remedy order pursuant to section 31F(6) of the 1984 Act. The principal grounds include:

  1. Fraud or Misrepresentation: As Lady Hale stated in Sharland v Sharland [2015] UKSC 60: "Fraud unravels all."
  2. Inadvertent or Negligent Non-Disclosure: If the undisclosed facts would have significantly altered the court's order (Jenkins v Livesey [1985] A.C. 424).
  3. Mistake: The applicant must prove the order wouldn't have been made in its terms had the true facts been known and that the omission wasn't their fault nor could they have reasonably discovered the true facts.

How to Succeed with a Set-Aside Application?

Following Mostyn J's restatement in BT v CU [2021] EWFC 87, the grounds for challenging a financial remedy order are:

  1. New Events: Must invalidate the basis of the original order and be unforeseeable.
  2. Timing: Should occur shortly after the order is made, typically within a few months.
  3. Prompt Application: Must be made reasonably promptly.
  4. No Prejudice to Third Parties: Should not adversely affect third parties who have acquired interests in good faith.
  5. No Alternative Remedy: Applicant must show no other relief is available to remedy the unfairness.

If successful, the Court will decide whether to exercise its discretion to set the order aside.

Procedure for a Set-Aside Application

Applications are made under Part 18 using Form D11, supported by evidence outlining the application's basis.

Cost Consequences

Unlike other family law matters where each party typically bears their own costs, Set-Aside applications may result in cost orders against the party at fault. Thus, the costs versus proportionality of such applications must be carefully considered.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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