26 February 2013
Tackling the problem of a non-disclosing spouse
When former property tycoon Scot Young was jailed for six months in January for failing to comply with a court order for financial disclosure as part of divorce proceedings, the case hit the headlines. According to his wife, he was worth over £400 million and she has battled for nearly five years to obtain information and documents relating to his wealth. In turn, he claims to have lost it all, be penniless and bankrupt.
Going to prison is clearly a drastic measure, yet every day there are parties in divorce or other family proceedings who ignore court orders and directions, either producing no documents, or ones which are inaccurate or misleading.
Laura McSherry, associate in the family law team, outlines the options available to a spouse and the court when faced with an uncooperative husband or wife.
Penal notice – when financial proceedings are instituted, the court sets a deadline by which documents and information should be produced. There is a degree of flexibility and judges may grant an initial extension. If however, the failure appears to be a deliberate attempt to avoid producing documents or if a second order isn’t complied with, the judge can be asked to attach a penal notice to a new court order with a new deadline. If this still isn’t met, an application can be made to have the defaulting party punished for contempt of court.
Sanctions for contempt of court – if the court is satisfied, beyond reasonable doubt, that the person has not complied with the court order, the judge may impose a fine or suspended prison sentence. As the main objective is always to obtain the required information, a judge may offer a further chance to produce documentation. Imprisonment is usually the last resort.
Third party disclosure orders – instead of pursuing a non-disclosing spouse, it can be possible to obtain information from a third party, such as a trustee or employee of a private company or bank. This can be particularly useful if one party has transferred assets or attempted to shelter them during divorce proceedings. We have successfully obtained disclosure orders, although it is usually down to the individual seeking the orders to pay the costs.
Adverse inferences – an alternative is to invite the judge at the final hearing to draw adverse inferences against a spouse whose disclosure is incomplete. In a recent case where the husband refused to participate in court proceedings, a wife produced documents to show her husband had owned land and had an additional bank account previously. In the absence of an explanation from the husband, the judge included these assets in the final decision.
“There is no excuse for attempting to hide assets or refusing to provide information or documents ordered,” said Rebecca. “There may be good reason to argue that some assets should be treated differently and not regarded as “matrimonial property”, but at all times all resources must be disclosed.
“Those attempting to non-disclose will usually be found out and punished, a lesson Mr Young has discovered the hard way.”