Family Law: The importance of full disclosure and conduct in financial remedy proceedings

October 6, 2020

Each party has a duty to provide to the other party full, frank and clear disclosure of facts, information and documents as part of financial remedy proceedings, to enable the parties to negotiate and try to reach an agreement.

When the parties reach the final hearing in financial remedy proceedings, the judge will be making a decision about the division of assets between the parties and they will take into account a range of factors included in section 25 of the Matrimonial Causes Act 1973 (“MCA”).

In the recent case of OG v AG [2020] EWFC 52, the wife pleaded the husband’s poor conduct as a ground for reducing his financial award, which was a factor to be taken into account under section 25(g) of the MCA. This was on the basis that he had not provided full disclosure about his financial assets and had covertly set up a new company in direct competition with the family company.

The court noted that there were four types of conduct:

• Gross and obvious personal misconduct requiring a financial consequence if it is to be reflected in the award.
• Wanton and reckless dissipation of assets leading to add-back.
• Litigation misconduct leading to a costs order.
• Non-disclosure leading to inferences being drawn about the extent of the assets.

The funds used to establish the new company were added back, which meant that they were added back to the total assets to be shared between the parties as if they had never been spent by the husband. However, the court refused to draw inferences about the husband’s assets, in that he may have been hiding the full extent of his assets which may have caused the judge to reduce his award further, as he had eventually provided full and clear disclosure, although it was provided late.

The court noted that the husband’s litigation conduct involved sustained non-disclosure and dishonesty, including refusing to acknowledge that he owned the new company. Therefore, the husband was ordered to pay 45% of the wife’s costs, although her costs were reduced because a costs order had previously been made against her for unreasonably refusing to negotiate.

The wife sought a two-thirds division of the assets in her favour to further reflect the husband’s poor conduct. However, the court did not agree to this as it would be arbitrarily penalising the husband for immoral conduct.

This case is a reminder about the importance of disclosing all of your assets and providing full details about them as part of financial remedy proceedings. It is important to note that if you do not do so, the court is likely to reduce your share of the assets in comparison to what you may have been awarded if you have provided full and frank disclosure and it is likely to order that you contribute towards the other party’s costs.

Wallace Robinson & Morgan is happy to help if you would like advice about agreeing a financial settlement or beginning financial remedy proceedings. If you would like to discuss your matter, please call and ask to speak to a member of the Family law team on 0121 705 7571.

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