Penalties for Non-Disclosure in Divorce

What Is Non-Disclosure in Divorce?

In UK family law, non-disclosure refers to a party’s failure to provide full and frank financial information during divorce proceedings. This includes:

• Hiding assets or income
• Failing to submit Form E
• Misleading the court or the other party
• Refusing to comply with disclosure orders

Non-disclosure undermines the fairness of financial settlements and is treated seriously by the courts.

What Penalties Can the Court Impose?

The court has several powers to penalise non-disclosure. Here is a summary table containing some of the tools that could be used:

Summary Table

1. Contempt of Court

If a party deliberately obstructs proceedings - by hiding assets, ignoring orders, or making false statements - they may be found in contempt of court. Penalties include:

• Fines
• Imprisonment (up to 2 years) in serious cases
• Seizure of assets

Contempt proceedings may be initiated under Part 37 of the Family Procedure Rules 2010. A party may apply to the court to request that it consider an allegation of contempt of court by submitting a Form FC600. In these circumstances, the burden of proof is on the applicant and the standard of proof is the criminal standard - beyond all reasonable doubt. Alternatively, the court may bring contempt proceedings on its own initiative. 

2. Hadkinson Orders

A Hadkinson order, taking its name from the eponymous case Hadkinson v Hadkinson [1952] P 285 CA, is an unusual order, but it can be vital in the right circumstances.

This order prevents a non-compliant party from participating in proceedings until they comply with court orders. This means they may be barred from:

• Making applications
• Presenting arguments
• Defending their position

The breach of an order is contempt of court. As well as being fined or imprisoned for contempt, a Hadkinson order will mean that the court can refuse to hear from a party who is in contempt. This will stop them from advancing their case through bringing additional applications, or even from arguing their case in hearings. 

Given the extremity of a Hadkinson order, in that it prevents a party accessing the court, it is treated as a last resort. The case of De Gafforj v De Gafforj [2018] EWCA Civ 2070 helpfully summarised the five necessary conditions to justify the making of a Hadkinson order: 

“1. The respondent is in contempt. 

2. The contempt is deliberate and continuing. 

3. As a result, there is an impediment to the course of justice. 

4. There is no other realistic and effective remedy. 

5. The order is proportionate to the problem and goes no further than necessary to remedy it.” 

3. Adverse Inferences

If a party fails to provide full and frank disclosure, the court can draw adverse inferences in relation to their assets. This means it can infer that a non-disclosing party has significantly more financial resources than they have disclosed or admitted. As such, the court may justify ordering the non-disclosing party to pay a sum which is more than they allege to be able to afford. 

In NG v SG (Appeal: Non- Disclosure) 2011 EWHC 3270 (Fam), Mostyn J summarised the approach he believed the court should take if it is satisfied that a party’s disclosure has been “materially deficient”: 

• The court must consider whether funds have been hidden by drawing adverse inferences. 

• Inferences must be properly drawn and reasonable. The Court would be wrong to infer that a party has assets, when based on the evidence, it is satisfied they do not have such assets. 

• If the Court concludes that funds have been hidden, it should try to provide a “realistic and reasonable” estimation of those funds. 

• When determining the amount hidden, the Court will consider direct evidence first e.g. documentation and observations made by the other party. The Court will then consider the party’s business activities and lifestyle. Vague evidence of the non-disclosing party’s reputation or the opinions or beliefs of third parties is not admissible. 

• The non-disclosing party should not be able to get a better result from their non-disclosure than if they had told the truth. 

However, as clarified in Moher v Moher [2019] EWCA Civ 1482, the court is not required to provide an estimation of non-disclosed assets where there is insufficient evidence to do so.  

Need Expert Help?

Vardags’ team of top divorce lawyers delivers a bespoke legal service to HNW and UHNW individuals, their families, and businesses.  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. 

If you are a high-net-worth individual going through or considering a divorce, it is crucial to have an accurate valuation of all your spouse’s assets. Whether these assets are held in complex international trusts, hidden within investment portfolios, or concealed through intricate share structures, they must be identified and considered for a fair settlement. 

If you suspect your spouse is hiding assets or has failed to disclose their finances, our team of elite divorce lawyers and forensic experts can help. We offer a free initial consultation to qualifying individuals.

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