The importance of providing full and frank disclosure in financial proceedings was highlighted by the High Court in late 2016 in the case of James Goddard-Watts, who has been ordered to pay a further £6 million to his former Wife Julia, despite the parties’ divorce being finalised in 2010. The question of why such a significant sum has been ordered has a simple but important answer: Mr Goddard-Watts did not fully and honestly disclose his true financial position at the time of the original agreement seven years ago. It transpired that Mr Goddard-Watts had set up two trusts with the intention of concealing the true extent of his assets. Mrs Goddard-Watts appealed the agreement on this basis, and after the appeal was allowed, the Court reassessed her claims and ordered the further £6.4 million to be paid.
The obligation to provide full and frank disclosure is well-established in law, and originates in the case of Jenkins –v- Livesey (1985), which held that the parties in financial remedy proceedings ancillary to divorce must make full and frank disclosure of all material matters in order for the Court to lawfully and properly exercise its discretion to make orders compromising each party’s claims against one another. For the Court to assess what the most “fair” outcome is in a given case, the parties must provide all the necessary information to the Court that will enable them to make that decision. In the case of Jenkins, the non-disclosure was not financial, nor was it considered by the Court to be fraudulent in nature. It did however fulfil the requirement to satisfy the Court that a significantly different order may have been made had the Court had all of the material facts available at the time of making the order. That is, the non-disclosure must be “material”. This is an important factor for a former spouse to consider should he or she suspect that there has been non-disclosure, as the Court process to follow is extremely costly.
It is the parties’ duty to provide this disclosure, and as one might imagine, it is in the interest of the party considering hiding his or her true position, financial or otherwise, to avoid the expense and embarrassment of such non-disclosure being brought to light. The risks to the non-disclosing party also include the possibility of being convicted of a crime under the Fraud Act 2006. Clearly, any perceived benefits of hiding assets from the Court are outweighed by the serious risks of being caught.
Lauren is a paralegal in the family team in Exeter. If you would like to contact Lauren about the content in this article, then please call 01392 210700 or email family.exeter@stephens-scown.co.uk.