Calculating the wealth of a party who fails to make full disclosure

Divorce|August 28th 2019

It is, of course, the case that any party to financial remedy proceedings must make full disclosure of their means. Failure to do so without good cause is a clear breach of the rules. The only exception to this is the so-called ‘millionaire’s defence’, whereby a wealthy litigant excuses him or herself from the requirement to make full disclosure, on the basis that they can afford to meet any reasonable order that the court is likely to make. As I have indicated here previously, I am a little uneasy that we have one such rule for the rich, but that is not what I want to discuss here.

What I want to discuss is the question of what the court should do in the face of non-disclosure. I am not referring to any ‘punishment’ that the court may impose, for example in costs, but rather how the court should proceed with the financial remedy application. Clearly, the court must take into account the means of the parties when making a financial remedies order, but how does the court do that when a party has failed to disclose details of their means?

This was the issue that fell to be determined in the recent Court of Appeal case Moher v Moher. As Lord Justice Moylan, who gave the leading judgment of the Court of Appeal, said, the husband in the case “had comprehensively failed to comply with his obligation to give disclosure of his financial resources.” Notwithstanding this, the court had made an order that the husband pay a lump sum of £1.4 million to the wife. Aggrieved at this, the husband appealed, to the Court of Appeal (it always amuses me when litigants want to use the system when it suits them, but not when it doesn’t – part of me wonders whether a party who has failed to comply with the rules should even be entitled to appeal the order that the court then makes).

The husband’s particular grievance was that when making the award the judge had not given “a sufficient evaluation of the husband’s financial resources nor a sufficiently reasoned explanation for the award”.

Before I come to the Court of Appeal’s decision on that point, a few background facts. The parties married in 1995 and separated in 2016. They have three children, all of whom remain financially dependent. During the marriage the husband was a businessman and, it appears, owned and ran a company which imported goods.

At the financial remedies hearing the wife maintained that what the husband had disclosed was likely to represent a significant undervalue of the true extent of his assets. This was accepted by the judge. The wife sought a lump sum of £1.5 million, and the judge was satisfied that there were resources available to meet that payment. However, the judge reduced his award to £1.4 million largely because of the incomplete picture in relation to “the assets”, and to the husband’s “income generating capability”. The judge did not set out in detail what was comprised within his award of £1.4 million.

On appeal, it was argued on behalf of the husband that a judge is required to provide a figure for, or a bracket of, the financial resources in every case, even when confronted by non-disclosure. Lord Justice Moylan did not agree. It depended upon the evidence. Where the evidence was such that it was quite impossible for the court to be sure as to what financial resources the husband had, the judge could hardly have then gone on to provide a specific figure or a bracket. Further, to place the court under the obligation to provide a figure or a bracket would be “to place it in a straightjacket which would be inconsistent with what [has been said previously], namely that the court must be astute to ensure that a non-discloser should not be able to procure a result from his non-disclosure better than that which would be ordered if the truth had been told”.

In this case the judge acknowledged that he should make some attempt to evaluate the extent of the assets, but must have decided that he could not undertake that exercise in this case, because the extent of the husband’s non-disclosure disabled him from doing so. In Lord Justice Moylan’s view the judge undertook a sufficient determination of the extent of the husband’s resources, having regard to the deficiencies in the evidence caused by the husband. The judge was entitled to conclude that there were sufficient resources both to meet the wife’s needs at the level of the proposed award and to meet the husband’s needs. The husband’s appeal was therefore dismissed.

The full judgment can be found here.

John Bolch often wonders how he ever became a family lawyer. He no longer practises, but has instead earned a reputation as one of the UK's best-known family law bloggers.

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Comment(1)

  1. David BURROWS says:

    Your ‘part of me wonders whether a party who has failed to comply with the rules should even be entitled to appeal the order that the court then makes’ raises an important point for debate…

    Another angle is provided by Hadkinson v H commented on recently in the CtApp a note of mine of this reads:

    Gafforj v Gafforj (Appeal: Hadkinson Order) [2018] EWCA Civ 2070 (20 September 2018) – husband’s appeal to the Court of Appeal dismissed if he did not pay arrears of legal services order and costs of £140,000 (£165,561 including arrears of periodical payments claimed) by 4 October 2018; and W’s divorce could then go ahead. All conditions for a Hadkinson order (after Hadkinson v Hadkinson [1952] P 285 CA) were present (see [9]-[15]).

    Of all this, Lord Justice Peter Jackson said, before reciting the conditions for a Hadkinson order: [9] The nature of the Hadkinson order was described in this way by Sir Ernest Ryder in Assoun v Assoun (No 1) [2017] EWCA Civ 21, [2017] 2 FLR 1137 at [3]: ‘Such an order is draconian in its effect because it goes directly to a litigant’s right of access to a court. It is not and should not be a commonplace. As developed in case law, it is a case management order of last resort in substantive proceedings (for example for a financial remedy order) where a litigant is in wilful contempt rather than a species of penalty or remedy in committal proceedings for contempt.’ To this I would add that it is not a species of what has been described in one of the cases as ‘enforcement by the back door’.

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