This is going to be not so much a post about a case as a post inspired by a case.
All family lawyers have come across divorce cases where the parties have enjoyed a high, or reasonably high, standard of living but where when the marriage breaks down the assets or wealth of the party that were used to pay for that living standard suddenly disappear. Apparently, it seems that it’s a fairly common phenomenon that assets mysteriously evaporate simultaneously with marriage breakdown.
The case is KC v RC & Another. This was the final hearing of a financial remedies claim following divorce, heard by His Honour Judge Booth in the Family Court at Manchester last year (the judgments were only published on Bailii last week). Judge Booth summarised the main issues in the case as follows:
“The essential questions I have to resolve involve me deciding whether, as the husband alleges, he has invested in a housing development opportunity that has gone horribly wrong so that he now has nothing and whether what might have been left has been all spent on legal fees fighting this case so that the ultimate position is one where there is only debt.”
Now, I’m not even going to attempt to summarise the convoluted complexities of the parties’ financial arrangements in the case (that exercise would run to several posts), but suffice to say that Judge Booth was:
“…satisfied that the husband has lied throughout these proceedings and colluded with his family to put their interests ahead of the needs of his wife and children.”
Ouch. Judge Booth went on to draw various conclusions and inferences regarding the husband’s finances and was:
“…satisfied that the husband has the resources to pay a sum sufficient to meet the housing needs of the wife and children. He can afford to pay £500,000, the sum needed to allow her to purchase a suitable home.”
And that was the sum that he ordered the husband to pay.
Now, as Judge Booth pointed out, the fact that he had found that the husband had lied did not mean it was open to him to make an order to punish the husband – he could only make an order that on the basis of the evidence, or on inferences he could properly draw from the evidence, he was satisfied the husband could pay. That may make it appear that the husband had ‘got away with it’. However, he had not – the lump sum that he was ordered to pay included at least £150,000 in respect of the wife’s costs.
The costs penalty, and the reason for it, was made clear by Judge Booth in a second judgment, in which he said:
“The starting point in financial remedy proceedings is that both parties will pay their own costs. [The husband’s] litigation misconduct and dishonesty are more than sufficient for me to take the view that that starting point is rapidly left behind and that there should be an order which effectively means that he pays a substantial proportion of [the wife’s] costs.”
That was the end of the matter for the husband in this case. In a worse case, there could, of course, be more serious consequences. Although unusual, lying to a court can result in a criminal charge of perjury.
As I indicated at the beginning of this post, many parties to financial remedies proceedings following divorce are tempted to try to defeat a claim against them by falsely pleading poverty. As we have seen, this is a strategy that is unlikely to get past an experienced judge, and is therefore likely to make things considerably worse, rather than better. The moral is: don’t be tempted!