In November 2012, I wrote about Non-Disclosure inFinancial Remedy Proceedings. The question I was posing was whether the family
courts were doing enough to discourage parties in financial remedy proceedings
from failing to provide financial disclosure. The cases I looked at, which
included Young v Young  EWHC 34 (Fam), Petrodel Resources Ltd& Ors v Prest & Ors involved the Courts having to make
decisions in contested hearings. Two recent decisions of the Supreme Court look
at what the correct approach is when a settlement is reached outside of court
and non-disclosure is discovered at a later date.
In my previous post I set out the basis for the obligation to
provide full and frank disclosure and set out some of the consequences for
those parties who refused to comply:
The duty to provide full and frank disclosure is an inherent
part of UK family law and is set out in the pre-action protocol annexed to Practice Direction 9A – Application
for a Financial Remedy of the FPR 2010. If a party
fails to provide such disclosure, particularly if they have been specifically
ordered to do so by the Court, then in addition to adverse inferences being
drawn, that party could also face imprisonment, a fine, a costs order against
them, inability to proceed with their application (Hadkinson Orders) or they
might even face criminal consequences under the Fraud Act 2006.
Supreme Court’s decisions in Sharland v Sharland  UKSC 60 and Gohil v Gohil UKSC 61,
confirms that there is a further consequence to non-disclosure. Both cases involved
wives who had given up their entitlement to a full hearing of their financial
claims and had instead reached an agreement with their respective husbands as
to how much they would receive. It later emerged that both husbands had
fraudulently withheld information that was relevant to their financial position
at the time those agreements were reached and considered by the Court. In
both cases the Supreme Court ruled that the original orders should be set
The cases also confirmed
that the duty to provide full, frank and honest disclosure is not only central
to any agreement being valid but is a duty owed to the Court which cannot be
eroded or vitiated by agreement or subsequent events.
In any event, it would
seem that the massage from the Supreme Court is clear. Non-disclosure will not
be tolerated in financial remedy proceedings!