A warning to those who don’t provide full financial disclosure

A final order in financial remedy proceedings usually dismisses all future capital and income claims that a spouse has against the other. However, in the recent High Court case of X v Y [2022] EWFC 95, His Honour Judge Hess made an order adjourning the wife’s capital claims for 10 years because of the husband’s dishonest disclosure in the proceedings.

The husband had failed to provide full and frank financial disclosure. He was found to have dishonestly and falsely manufactured a contract for the sale of his company. This document’s purpose was to mislead the wife into giving up work and relocating to the UK.

This case should act as a warning to those parties who think they can get away with not providing full and frank financial disclosure in financial remedy proceedings, or those that try to mislead a party by providing false disclosure.

By way of the background, in 2014 the husband was running a substantial business abroad. He wanted to relocate to London with his family, but his wife wanted to stay where they were. To persuade the wife to relocate, he showed her a document which appeared to be a legitimate draft contract for the sale of his company for £8m. He led her to believe that the family would be better off if they relocated. After seeing this, the wife gave up work and agreed to relocate to London with the children, which they did in 2015.

Throughout the proceedings, the husband maintained that the draft sale contract was genuine, however his bank statements from the time did not show receipt of any such funds. The judge was satisfied that the husband had dishonestly and falsely manufactured the contract in order to persuade the wife to relocate, although the judge was not able to make a finding on that because of the husband’s late disclosure of his bank statements. Due to the husband’s dishonesty and falsification of disclosure documents, the judge adjourned the wife’s capital claims for 10 years, to allow the wife the possibility of restoring the proceedings if she needed to within that 10-year period.

This judgment is unusual because, in the normal course of proceedings, when a final order is made, the parties’ capital and income claims are dealt with in the order and all other claims are fully dismissed immediately or, upon a determining event (the sale of an asset, for example) concluding. This provides much needed certainty for the parties and concludes their financial claims against one another. However the striking feature of this judgment is that that finality cannot be guaranteed due solely to the husband’s disclosure failings. This leaves the husband vulnerable to further capital claims asserted by his (ex) wife for the next 10 years. Far from an ideal outcome for him.

For advice about your financial settlement on divorce, or anything else to do with family disputes, contact Kate Newton or call our Family Law team on 020 3811 2894.