In all divorce cases involving financial issues, there is an ongoing Duty of Disclosure. This means both parties have a duty to provide full, frank, clear and verifiable financial disclosure. 

The duty of disclosure is an important legal aspect of divorce and separation to ensure both parties are left in a fair position following the divorce. We hear all too often of spouses who suggest keeping the lawyers out of the settlement and limiting the amount of financial information that will be provided. For example, this is often the case when one of the parties has taken the lead in handling the family finances. 

If you are facing this situation, contact Watson Morris today for a free, no-obligation consultation to discuss the risks and options available.

What is a duty of disclosure? What does it mean?

The duty of disclosure is a requirement for both the husband and the wife to give disclosure of all material facts, documents and other information relevant to the issues in the case. There must be no hidden materials, funds, documentation or information. Full disclosure must be given whether it helps the party’s case or not, and details of any material changes must be provided at the earliest possible opportunity after the initial disclosure has been given. It could even continue beyond the making of the substantive order in circumstances where there are ongoing financial obligations between the parties, such as ongoing maintenance payments. 

Why is it important to comply with this duty?

The duty of disclosure exists because full and frank disclosure is regarded as being fundamental if the parties are to seek to clarify and identify the issues between them, and openness in all dealings is essential. More fundamentally, if the court proceeds to make an order, whether by consent or otherwise, where there has been non-disclosure of a material fact, the order may be set aside. This would be relevant where the court would have made a substantially different order had it been aware of the non-disclosure.

Is it possible for spouses to agree that they don’t want to see each other’s financial disclosure?

In short, the answer is no; a party has a duty to the other party to provide full and frank disclosure in addition to their duty to the court. One party cannot exonerate another party from complying with the duty of disclosure. As the court has ruled in a leading case, ‘it is not for a litigant to judge the ambit of the duty to disclose or the consequences of disclosure; any information which is relevant to the outcome must be disclosed’.

What information must be provided for full disclosure?

‘Disclosure’ relates to all relevant facts and documents. The method adopted in the majority of cases is to use the format of Form E (see Form E Financial statement ( ). This is the standard court form used when the parties are involved in proceedings. The form is comprehensive and must be accompanied by 12 months of bank statements, property valuations, mortgage statements, wage slips, P60s, P11d forms, up-to-date company accounts, details of any liabilities, the existence of any trusts and details of any cash held. It should also include a comprehensive analysis of each party’s future income and capital needs, such as their housing budget, along with an indication of the order they will be asking the court to make. 

Is the standard the same in all cases?

The disclosure should be proportionate to the issues in question and the amount at stake. In many cases, more disclosure than that required by Form E may be required. For example, where the circumstances of the case are particularly complicated. It is also correct that some people have extraordinarily complicated financial resources, often involving tax planning measures, trusts, overseas assets and corporate structures. As a general rule, the more complex a party’s financial presentation is, the greater the duty is for them to explain their position with clarity and to provide all necessary supporting information and documents. 

How is further information obtained?

To fulfil the duty of disclosure in more complicated cases, a detailed questionnaire will be prepared. This will set out details of any outstanding information and request full particulars of any further information or documents required in order to understand the party’s financial disclosure. In cases involving substantial assets or complicated structures, such as corporate assets or trusts, it is sensible to work with a shadow expert, such as a forensic accountant or a business valuation expert. Although this can be expensive, often the stakes are high and the benefits of having a complete understanding of the other party’s financial position and the true value of their assets cannot be overstated. Where further information is required, it is important to ask the right questions, and a shadow expert will help with this.

What happens if non-disclosure is discovered before an order is made?

Non-disclosure may be penalised in costs. The Court of Appeal has also confirmed that the court is entitled to prioritise the needs of a party not guilty of litigation misconduct. Significantly, the non-disclosing party will lose credibility, and the court is entitled to treat all of their evidence with suspicion and draw adverse inferences from their non-disclosure. If the court concludes that funds have been hidden, then it should attempt a realistic and reasonable quantification of those funds and add them back into the matrimonial ‘pot’ when deciding on the financial division.

What if a party refuses to provide information?

As well as facing the likely prospect of an order for costs, a request may be made that a penal notice is attached to the order requiring them to give disclosure. In more extreme cases of non-disclosure, the defaulting party may be held to be in contempt of court. 

In one decided case, the court imposed a sentence of six months imprisonment for contempt of court where the husband had failed to comply with an order requiring him to provide further information in respect of his financial situation.

Working together to achieve a fair outcome.

The duty to give full and frank disclosure is fundamental to achieving a fair outcome. Any failure or reluctance to provide disclosure should set off alarm bells. 

If you are in a situation where your ex-partner is trying to “keep the lawyers out” and handle the separation without full disclosure, then contact us today. There are risks to both parties if the duty of disclosure is not met and failing to take action could mean you are also penalised. We can discuss the options available to you to compel the other party to provide all of the information required. 

Written by Peter Morris

May 24, 2024

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