Friday, 16 October 2015

UPDATE: Non-Disclosure in Financial Remedy Proceedings

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 [2013] 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.

The Supreme Court’s decisions in Sharland v Sharland [2015] UKSC 60 and Gohil v Gohil [2015]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 aside.

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!

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