The Hidden Truth: Uncovering the Failure to Disclose in Financial Remedy Proceedings

If you’ve ever suspected your spouse is playing hide and seek with their assets or income, you’re not alone. 

A common frustration for those going through financial remedy proceedings, is that their spouse isn’t being totally honest about their finances. Whether it’s conveniently “forgotten” bank accounts, a sudden salary reduction or mysteriously vanishing assets, it can feel like you’re being left in the dark. So, what can you do if you believe your spouse isn’t playing fair?

First things first - proceed with caution. In the case of Imerman v Tchenguiz [2010 ], the court clarified that it is the responsibility of each individual to be open and honest about their own financial circumstances. This shuts down the idea that you can go snooping through your ex’s files to unearth a golden ticket to their multimillions. As tempting as it may be, doing so is contrary to the legal rules and could well land you in hot water, redirecting unwanted attention your way.

So, what is the alternative?

• Often there are clues in the disclosure your spouse has provided already. Your family lawyer, albeit not a qualified detective, is a dab hand at analysing your spouse’s disclosure and well equipped to ask the right questions to unravel any ambiguities in the disclosure. Be sure to raise any concerns with your lawyer early on.
• You may seek the assistance of a Forensic Accountant to help trace hidden accounts or undisclosed assets. Most experienced family lawyers work with specialist forensic accountants who have particular expertise acting for spouses in divorce and financial remedy proceedings.
• In some circumstances, it may be appropriate to apply for a Third-Party Disclosure Order. If successful, the court can order a third party, such as a bank or pension scheme administrator, to produce the documentation sought. The catch here however is that you must be able to clearly define the disclosure you are seeking – you won’t get very far on a hunch.
• What about throwing the book at them with contempt of court, or even jail time? In theory, yes. In practice? Not so much. Sending your spouse to prison in the middle of financial proceedings is typically going to make things worse - especially if they’re the one earning the money or if there are children in the picture.
• You can invite the court to draw an adverse inference about your spouse’s failure to disclose. Effectively, this is a fancy way of saying: “if they’re not telling me everything, it’s probably because they’ve got something to hide”. This is not necessarily a slam-dunk. Whilst a judge may draw an adverse inference, the extent to which that inference impacts on the outcome of your case can vary. 

If you’re dealing with your spouse’s non-disclosure, it’s all about building a strong case, staying within the rules, and ensuring the judge has enough information to work with to draw the right conclusions.

The court cannot magically uncover hidden assets, but it can make educated assumptions based on the evidence available at the time (or lack of evidence). That might mean a judge giving one party a bigger slice of the pie to account for what may be hidden by the other party. In some cases, it could mean the judge penalising the non-disclosing spouse by making a costs order against them. 

That all said, it’s important to remember that the Court has discretion and judges walk a fine line. Whilst it may be tempting to argue that a dishonest party should get nothing, the court must still apply a proper legal process when determining what the financial outcome should be, including a full analysis of the factors under Section 25 of the Matrimonial Causes Act 1973 and an assessment of what is fair overall.