eprivateclient

How to be sure of disclosure in the virtual world

Matthew Brunsdon Tully, partner, Forsters, 13/05/2020

Most couples, when their marriage or civil partnership ends, are able to agree both what they have, and what each of them should receive out of what they have, which is referred to as computation and distribution. Of those who cannot reach overall agreement, many at least agree what they have, albeit not how it should be divided up.

For example, one party will argue (usually without success) that they have made some "special contribution" to the marriage justifying some greater proportion. Or they will seek to rely (much more likely to be successful) on a nuptial agreement which defines that they should receive more than the other.

There are myriad ways in which litigants have argued, with varying degrees of success, for a "departure from equality". In recent times it has become fairly settled law that when one is talking about equality, or departures from equality, this means equality of division of whatever has been accumulated during the marriage. So, that which has been obtained other than via the marriage (so for example that which was brought in, or inherited, or received after its end) should be treated differently.

So far, so good. But in some cases, the parties can't even agree what they have. They might have different ideas about how their assets should be valued, which assets should be valued, or one party might have gambled away the offset account. Or they might be being even more difficult, lying about what resources they have for the purposes of the decision about who should get what. This is called "non-disclosure". When deliberate, it is highly likely to be material and relevant, even if only to the procurement of consent.

If an agreement is reached by parties, and/or an order is made by the court, based on an incomplete picture, that order will never be truly final. It will always be liable to be set aside one day on the basis that it was procured by some skulduggery.

That is one of the many (sometimes criminal) risks a non-discloser takes. But many will continue to take these risks out of spite or for financial gain. Or, someone might be lying about what they have after the order has been made, and claim that in fact those assets are illiquid, owned by others, or just don't exist.

The court can, if necessary, claw back assets frittered away (after joining the third party to the litigation) under s.37 Matrimonial Causes Act 1973. It can also find that the true owner of the assets in question is the spouse accused of non-disclosure – with the resources held by a nominee or on bare trust (Petrodel v Prest) – and transfer assets to the spouse alleging the non-disclosure.

It is impossible to know how often people fail to fully disclose their resources and get away with it. But we do know from experience that plenty try.

The court has various weapons at its disposal to secure both full disclosure of a party's resources at the computation stage and full enforcement after the distribution stage. But getting a...


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