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In reality are there really any consequences for failing to provide full and frank financial disclosure during proceedings for a financial order?

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A question along these lines is one I am frequently asked after I have explained the procedure that is usually followed for divorce and financial matters arising on divorce. Clients are understandably looking for reassurance that their spouses will disclose all of their financial information and assets and that the information given will be accurate. My answer refers them to the Financial Statement (Form E) used in proceedings for a financial order which gives clear warnings about the consequences of such action, specifically that any order the court makes may be set aside, that criminal proceedings for fraud may be brought against them, and that they may be in contempt of court. I then explain that these warnings should hopefully be sufficient to encourage their spouses to give full and frank financial disclosure.

However, sometimes judging by the responses of my clients, I am not sure how reassuring this is for them and this is perfectly understandable particularly in cases where their trust and faith in their spouses has been abused.

I was therefore interested to hear in the news about a husband being imprisoned for 6 months as a result of failing to disclose financial information and documentation and thereby being in contempt of court.

Does this represent a change in the way judges will deal with a spouse’s refusal to cooperate?

It is currently unclear whether this case reflects a change in the judiciary’s attitude towards spouses who fail to give accurate and complete financial disclosure or whether it was simply a case where the particular facts warranted the adoption of an unusually firm stance.

The particular facts of this case are rather unusual. The background was that the husband was bankrupt and claiming poverty yet his wife believed he was very wealthy and worth in the region of £400 million. The wife’s position was that her husband must have hidden his assets in order to try to defeat, or at least limit, her financial claim against him for the benefit of herself and their children. The husband then failed to answer questions put to him using the usual method, despite numerous orders being made setting deadlines for him to do so. As a result of this failure the husband received a 6 month suspended prison sentence in 2009. The husband then continued to fail to provide financial information for the next 3.5 years, during which period further orders were made requiring him to provide the information and documentation requested by specified deadlines. Consequently the wife made 2 applications to the court essentially with the aim of committing the husband to prison. The judge dealing with the applications, Mr Justice Moor, took the view that it was only necessary to deal with 1 of the wife’s applications and therefore dealt with the application to commit the husband to prison for contempt of court in relation to the most recent order.

The long history of the husband’s non-compliance was clearly a factor in the judge’s decision to imprison him as was the judge’s finding that he had deliberately been in contempt of court. It may therefore be that in a case where both of these factors do not apply, a judge would not reach the same decision as Mr Justice Moor did in this case.

Mine and my colleague’s experiences support this conclusion as sadly, we have experienced cases where our clients’ spouses have not disclosed assets and whilst this has been the subject of judicial criticism, we have not been involved in a case where failing to provide full, honest, clear and frank disclosure has resulted in a custodial sentence.

Only time will tell what impact this case will have on the consequences of failing to disclose full and frank financial information during proceedings for a financial order.

If you would like information about financial matters arising on divorce, please do not hesitate to contact me at justine.osmotherley@clarionsolicitors.com or on 0113 336 3323.
 

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