Financial non-disclosure in divorce

Fraudulent non-disclosure is where one spouse intentionally conceals or withholds financial information relevant to the divorce proceedings; and does so intending to deceive the other spouse.  

Some examples are: 

• Hidden assets – bank accounts, property, investments, other valuable assets. 

• Underreporting – misrepresentation of income or bonuses, either by failing to disclose certain sources of income or by undervaluing the actual income earned. 

• Undervaluing – intentionally undervaluing the worth of income or bonuses 

• Inflated expenses/debts - inflating expenses or creating fictitious debts to reduce the apparent income available for property division 

IN CASES OF NON-DISCLOSURE  

If one party repeatedly fails to provide disclosure, the other party may apply for a penal notice which acts as a specific order confirming that if the spouse does not provide the outstanding disclosure within a reasonable time, they will be held in contempt of court (and may be fined, ordered to carry out community sentence or even imprisoned). Additionally, if one party successfully obtains a penal notice, they can usually recover the costs from the other party. 

During proceedings, if a party has not given full disclosure, then the courts are likely to draw “adverse inferences” about them. This means assuming that if a person is being evasive, it is because they have something to hide and making robust assumptions about the true value of their wealth. 

If your divorce has finalised, but you believe that your partner hid assets, it may be possible to reopen your case. Following the decisions in Sharland v Sharland and Gohil v Gohil, the court can now reopen any case if there has been deliberate and fraudulent non-disclosure. This means that where assets have been deliberately hidden, the court can reconsider the case and review how the assets were divided – and it is important to note that there are no time limits on claims being re-opened.  

What happens when the case is reopened very much depends on the specific facts. If you believe that your settlement was tainted by non-disclosure, it is important to act quickly in trying to issue your appeal. Generally, where the non-disclosure is material, then the settlement order may be set aside and costs may be recovered by the aggrieved party. 

In addition to this, failure to make proper disclosure can amount to contempt of court. If their contempt is deliberate, then they can be fined or even sent to prison. 

Indeed, there have been high profile divorce cases in which prison sentences have been handed down for one party’s failure to provide disclosure. Most famously, in the divorce of Scot and Michelle Young, Vardags took over the final hearing and acted for Michelle Young. In this case, Scot Young – the billionaire entrepreneur who refused to provide disclosure or comply with the court – was sentenced to 6 months imprisonment. 

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

We are the only 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’re considering or going through a divorce and suspect that your spouse is not fully disclosing his or her financial situation, we can help. Click below for a free initial consultation with one of our expert divorce solicitors. 

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