Setting Aside Transactions in Divorce

What Does “Setting Aside a Transaction” Mean?

In UK divorce law, setting aside a transaction refers to the court’s power to reverse or undo asset transfers made by one spouse with the intention of defeating the other’s financial claim. This is governed by Section 37 of the Matrimonial Causes Act 1973.

If your spouse has moved assets - such as transferring property to relatives or placing money in trusts - to reduce the pool of matrimonial assets, the court can intervene to protect your entitlement.

When Can the Court Set Aside a Transaction?

The purpose of Section 37 is to give the court the power to prevent a party from taking action that will diminish the assets of the family which would otherwise be available for redistribution

The court may set aside a transaction if:

• It was made within three years before financial remedy proceedings began
• The transfer was intended to frustrate or defeat a financial claim
• The transaction was not made for genuine commercial reasons or in good faith

This power can be used if your spouse has moved money into trusts, given it to friends or to relatives. 

If the transfer occurred within three years, the court presumes wrongful intent, and the burden shifts to the transferring party to prove otherwise

Legal Tools Available to the Court

To investigate and reverse suspicious transactions, the court may use:

• Avoidance of Disposition Orders
• Freezing Orders to prevent further asset movement
• Third-party disclosure orders to compel banks or associates to reveal information
• Search Orders for physical or digital evidence

These tools ensure that the financial settlement reflects the true value of the matrimonial estate.

Case Law Insight: AB v CD & Ors [2025] EWFC 958

Following their separation in 2019, CD transferred his shares in a family-run caravan park business equally to his mother and brother. His estranged wife, AB, claimed the move was a deliberate attempt to undermine her financial claims in the divorce.

Initially, CD supported AB’s position. However, on the morning of the trial, he changed course, backing his mother’s assertion that the shares had always been held in trust for her. The judge, noting the conflicting accounts and evident family tensions, described the evidence as “shifting sands.”

Judge Williams applied the legal framework under Section 37 with precision:

1. The share transfers were clearly a form of disposition.
2. Despite CD’s last-minute change in stance, the judge found enough evidence to conclude that the transfers were intended to frustrate AB’s financial claim - especially given the timing and context.
3. Even though the shares were not highly valuable at the time, the court held that the transfer still hindered AB’s potential award. The judgment clarified that “defeating” a claim isn’t limited to concealing valuable assets - it also includes actions that complicate enforcement or reduce the pool of assets available for distribution.

 FAQs

Q: Can the court reverse a transaction made before divorce proceedings?

Yes, especially if it occurred within three years and was intended to defeat a claim.

Q: What if the asset was sold to a third party?

If the buyer acted in good faith and paid market value, the transaction may stand. Otherwise, it could be reversed.

Q: Can I recover assets hidden in trusts or offshore accounts?

Yes, with the right legal strategy and court orders, these can be investigated and potentially reclaimed.

Speak to a Specialist Divorce Solicitor Today

If you suspect your spouse has transferred assets to avoid a fair financial settlement, don’t wait. 

We are the only HNW family law firm with an in-house Financial Forensics department. Our team specialises in identifying, tracing, valuing, and forensically reviewing assets, including businesses, property, and investments. 

Contact Vardags for expert advice on setting aside transactions and protecting your financial future. Our team specialises in complex and high-value divorce cases, and we’re here to help you secure what you’re entitled to.

Free initial consultation for qualifying individuals. 

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