I Ask: "Disclosure?"​, You Say: "Non!"​

I have (so far) had two truly jaw-dropping moments in my litigation career. The first was writing on the off-chance to a bank with a jumble of numbers on a torn piece of paper, scrawled by an elderly and vulnerable client, hoping it might be an account number. The helpful response from the bank filled in the blanks and revealed an undisclosed joint account with hundreds of thousands of pounds in it. The second followed years of difficult litigation laced with fierce denials that concluded with the respondent abruptly admitting to millions of dollars hidden abroad. In both cases the money was life-changing, and in both cases the respondents had indulged in obfuscation over a lengthy period to avoid sharing their marital spoils almost to the bitter end. Each respondent could and should have faced criminal sanctions, but their respective spouses are clearly more generous than yours truly and were just grateful to get a cheque and a conclusion.

Financial disclosure is the most necessary part of a divorce, and rarely the easiest. It is necessary because it helps pull together a full picture of the marital asset base (which may be better known by one spouse than the other). Disclosure also enables lawyers to provide the fullest and most detailed advice to clients about how the assets can be shared fairly to move life forward. Fully understanding assets and liabilities allows nuanced and tailored advice for future planning. Just as relationships start with three (loving) little words, disclosure also starts with three little words: ‘full and frank’.

Unfortunately, this requirement continues to be widely interpreted by those unwilling to take it literally. Despite the court being focused on fairness, differing versions of ‘fair’ mean that some will only accept an outcome that suits them. They will therefore massage the edges of disclosure (and sometimes lie outright) to produce their ‘fair’ outcome. It is always surprising that people think they are the first to try and hide assets or liabilities. What few realise is that, with the increasing use of plastic rather than cash, bank and credit card statements often tell a full and colourful story of expenditure and transfer and money trails are clear to see.

Memory loss is a common symptom of the disclosure process; fortunately, recovery is instant when challenged with irrefutable proof of undisclosed assets. The court assists those with shaky recollections by spelling out the consequences on the front of the Form E document required within litigation, and often also used for voluntary disclosure. Failing to come to court with ‘clean hands’ can be punishable as contempt of court by fine or imprisonment and this is clearly stated on the front page of the Form E. Every Form E concludes with a statement of truth, and so reminders are present at the start and end of the form. And yet.

As tech improves, so too the opportunities for faking documents - either by subtle amendment or omission. Sometimes a lawyer’s most powerful weapon is simply instinct (and Google). If something looks wrong, it probably is. I have seen some very convincing fake documents, but nearly always something feels ‘off’. Internet searching to double-check names and places sometimes throws up real gems. The benefit of the internet is that most people use it, and the internet records and stores events in real time forever, making track covering increasingly difficult. What someone claims in disclosure may easily be discredited with an internet post made some years previously when they weren't trying to be sneaky. Another helpful trick is to send a document back to an organisation for verification. A rogue colleague might write an email purporting to support a divorcing mate, but it is highly unlikely anyone else in the company will compromise their professional reputation for the sake of another’s divorce.

Costs Orders are rare in financial litigation cases, but if made they invariably reflect litigation misconduct. That is, obfuscation, failure to file financial documents on time, failure to attend court, and fraud. Such costs Orders tend to be wasted costs Orders, ie, the spouse chasing for information is wasting legal costs unnecessarily and this is directly reflective of the litigation conduct of the other person. As costs Orders are usually paid from assets, all that is achieved is precisely what the errant spouse strived to avoid, only more expensive.

So what happens if a divorce concludes based on false information? The consequences of financial Orders can be avoided for genuine mistake or fraud, but not for failing to check the facts. If a person chooses not to do financial disclosure and finds out afterwards that their other half has won the lottery and not told them, they may only have themselves to blame. The consequences of dishonest, avoidant and fraudulent conduct in divorces can be far reaching, long-lasting and rarely, truly, pay off. Co-parenting with someone determined to be dishonest is challenging at best and leaves a bitter taste from which it can be difficult to protect children. Proceedings are invariably unnecessarily drawn out increasing expense for all involved. Any opportunity to divorce with courtesy and dignity is lost. Determined fraudsters are fortunately few and far between, but where they do exist they might be wise to give the divorce courts a wide berth.

Georgina Rayment
Partner, Head of Family, Mediator