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Divorcees Who Lie About Their Assets Have Nowhere to Hide

Deceitful spouses who lie about the extent of their assets in divorce proceedings will not get away with it following a Supreme Court ruling. In two test cases, women who agreed to financial settlements with their dishonest ex-husbands were permitted to re-open their cases.

In the first case, a former couple had agreed a settlement after the husband stated that there were no imminent plans to make a stock market offering of his substantial shareholding in a software business. It was agreed that she would receive 30 per cent of the net proceeds of sale whenever the shares were sold.

However, she soon afterwards discovered that the company was being actively prepared for the market and argued that the husband’s shares were likely to be much more valuable than had previously been assumed. A judge found that the husband’s earlier evidence had been dishonest but nevertheless refused to allow the wife to re-open her case. That ruling was later confirmed by the Court of Appeal.

In allowing the wife’s appeal against the latter decision, the Supreme Court emphasised the husband’s duty to make full and frank disclosure of his assets prior to the settlement. The wife was a victim of the husband’s fraudulent misrepresentation and, had the judge been aware of the true facts, he would not have approved the settlement.

In the second case, a wife reached a settlement with her husband, a former solicitor, on the basis that all his ostensible wealth was in fact held on behalf of his clients. She applied to set aside the settlement three years later but the proceedings were delayed by criminal proceedings and the husband’s ultimate conviction and imprisonment for serious money laundering offences.

A judge set aside the settlement after accepting that the husband had materially failed to disclose his assets. However, that ruling was subsequently overturned by the Court of Appeal on the basis that there was no admissible evidence on which the judge could have reached that conclusion. Evidence which had been obtained from sources outside the UK in connection with the criminal proceedings was inadmissible.

In upholding the wife’s appeal, the Supreme Court found that there was sufficient admissible evidence on which the judge was entitled to conclude that the husband was guilty of material non-disclosure.

The Court set aside the divorce settlements in both cases and remitted the matters to the High Court Family Division for reconsideration of the wives’ financial entitlements.