Financial Non-Disclosure in Divorce

What Is Financial Non-Disclosure in Divorce?

Financial non-disclosure occurs when one party in divorce proceedings fails to fully and honestly disclose their financial circumstances. This includes hiding assets, understating income, or omitting liabilities. In the UK, both parties are legally required to provide full and frank disclosure of their finances during financial remedy proceedings.

Legal Requirement:
Under Form E, each party must disclose all assets, income, liabilities, and financial interests. Failure to do so can result in serious legal consequences.

Why Is Disclosure So Important?

The court can only make a fair financial order if it has a complete picture of both parties’ finances. Non-disclosure undermines the integrity of the process and can lead to:

• Unfair settlements
• Reopened cases
• Adverse cost orders
• Criminal sanctions in extreme cases

Common Forms of Non-Disclosure

• Hiding assets in offshore accounts or trusts
• Transferring property to third parties
• Undervaluing businesses or investments
• Failing to disclose bonuses, pensions, or crypto holdings
• Misrepresenting debts or liabilities

Key Case Law: Sharland, Gohil & Moher

• Sharland v Sharland [2015] UKSC 60: The husband failed to disclose plans for a company flotation. The Supreme Court set aside the original order.
• Gohil v Gohil [2015] UKSC 61: The wife successfully reopened her case after discovering her husband had hidden assets.
• Moher v Moher [2019] EWCA Civ 1482: The Court of Appeal upheld a significant award despite the husband’s refusal to disclose his wealth, stating the court would not become a “cheat’s charter.”

How Courts Respond to Non-Disclosure

If non-disclosure is proven, the court may:

• Infer wealth based on lifestyle and circumstantial evidence - the courts are likely to draw “adverse inferences” about the non-disclosing party
• Award a greater share to the honest party
• Impose costs or sanctions on the non-disclosing party

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. 

Need Expert Help?

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 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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