We have had another case again reiterating that each party in divorce financial proceedings must be open and honest with each other and with the court. If they are not, then any agreement that has been reached, even if it has been put into an order, can be set aside. Everything starts again, with full information and the court knowing that one spouse was not truthful.
In the case of EK v DK and others [2023] All ER (D) 112 (May), the court had to decide whether the husband’s disclosure (giving of his financial information) was full and frank, and if not, whether the misrepresentation was intentional.
The wife said the husband had deliberately and dishonestly withheld information regarding the purchase of the property from her and the court as it would likely influence the outcome and he had intended to proceed with the purchase immediately after the parties’ binding agreement was confirmed. He had also not told the court that he could have borrowed up to £3 million and that he could have drawn nine times more than he said he could.
In 2015, we had a couple of cases dealing with these types of issues. The court said the test used in those cases remains the right one. The test the court had to apply was:
- The court has to ask itself whether the husband had been open and honest in supplying all of his financial information – so whether was the husband’s disclosure was full and frank
- If the answer was no, then to ask:
- whether the misrepresentation was intentional and if so, on the balance of probabilities, the burden would be on the husband to prove that proper disclosure would not have led to a different order, or
- whether the misrepresentation was innocent and if so, on the balance of probabilities, the burden would be on the wife to prove that proper disclosure would have led to a different order
In every case dealing with division of financial assets, the first step has to be that there is an open exchange of financial information – financial cards face up. If you are worried about your legal bill, let me tell you that this is where costs can pile up – playing games over financial disclosure and providing financial information.
Now this case had assets in the millions of pounds but this is not the average case. In an average case, there are not enough assets to go around. The main issue in the majority of cases is trying to stretch the assets to meet the needs of each party – and ‘needs’ is a legal definition.
In cases where assets are modest (most of us, sorry!) legal costs being incurred and playing games with financial disclosure is really spending money pointlessly. Imagine spending money to get to an agreement – only for it all to have to be done again because one person was not honest about the money and property that had….. Disastrous.
My message to anyone dealing with splitting finances when you are divorcing is this: be open, honest and forthright about your finances. Anything less could cost you more than you are trying to save by manipulation.
It is only when financial information is clear and complete that parties can confidently move to the next stage – which is the analysis stage and making proposals. Each party really should want to get to that stage as soon as possible.
Do you need help with splitting your finances? Contact us.