When a financial remedies application is made on divorce both parties have a duty to make full disclosure of their means, both to the court and to the other party.
And if they do not do so then the other party may ask the court to order them to make full disclosure.
But of course one party may not always know whether the other has failed to make full disclosure. The case may then proceed, and the court will make a final order without taking into account any assets that a party has failed to disclose.
What if the other party subsequently finds out that full disclosure has not been made? What is their remedy?
The answer is that they may apply to the court to have the order set aside, as happened in a recently-published case that took place in the Central Family Court in London in 2021.
Set aside application
The case concerned a financial remedies order that was made in July 2017, at the conclusion of contested financial remedy proceedings.
The order provided for the matrimonial assets to be divided equally.
The court had found that the assets totalled some £6,475,583, including the husband’s interest in a company, which had been valued at £3,887,538.
Accordingly, each party was to receive £3,237,791.
But two events occurred after the order was made, which led to the wife applying to have the order set aside.
Firstly, in early 2018 the parties’ children’s shareholdings in the company were transferred from them, some of which were then acquired by the husband, thereby increasing the value of his interest in the company. The wife alleged that this took place at the conclusion of a deliberate process engineered by the husband which began prior to the order being made, and was contrary to the husband’s stated intentions at the final hearing.
Secondly, in October 2018, the company was sold for £12,448,500, more than double the value attributed to it at the final hearing, in circumstances where: (a) the husband had argued at court that his shareholding was illiquid and that he could not sell it; (b) the trial judge found that the husband had no intention of selling the company for a few years until retirement; and (c) it was alleged that the husband failed to disclose steps taken in respect of a potential sale prior to the order being made.
In 2019 the wife applied to have the order set aside, arguing (amongst other things) that there was misrepresentation/non-disclosure on the part of the husband in respect of his intentions concerning the company, the children’s shares in the company, and the value of the company.
The husband denied any non-disclosure or misrepresentation.
Hearing the wife’s application, the judge found that prior to the order being made the possibility of a sale of the company was ‘very much’ on the husband’s mind, contrary to what he had told the court.
The judge further found that the husband had deliberately failed to disclose to the court that he was considering a sale of the company. The husband also failed to establish that the court would not have made a different order had he made the disclosure which he was under a duty to make.
The judge also found that the husband had failed to disclose to the court his intentions regarding his acquisition of the children’s shares in the company, and that that fact would have been considered material to the wife and the court.
Accordingly, the wife’s application to set aside the order was successful.
The husband was therefore ordered to pay to the wife the additional sum of £2,081,618, which had the effect of bringing her award up to one half of the assets, taking into account the amount received by the husband upon the sale of the company. In addition, the husband was ordered to pay the wife’s costs of her application.