A financial settlement on divorce depends on both parties providing an honest and complete picture of their finances.
The duty of full and frank financial disclosure sits at the heart of financial remedy proceedings. Where one party breaches that duty by concealing assets, misstating income or understating the true value of a business, the resulting financial order may be vulnerable to challenge, however long ago it was made.
Not every omission will justify reopening a settlement. The central question is whether the non-disclosure was material and whether the missing information could have affected the outcome.
What Is Material Non-Disclosure in Divorce?
Both parties in financial remedy proceedings are required to disclose their financial position honestly and completely. This applies whether the case is proceeding towards a contested hearing or is being resolved through a consent order.
However, not every mistake, omission or gap in disclosure is sufficient to unravel a financial order.
The key issue is materiality: would the information that was not disclosed have changed the outcome?
Examples of potential non-disclosure can include:
- Bank accounts, investment portfolios or cryptocurrency assets kept off the radar,
- A business or property deliberately undervalued,
- Income, bonuses or dividends omitted from the financial picture,
- Interests routed through offshore structures or trusts,
- A new relationship with financial consequences left undisclosed, where relevant to needs-based claims,
- Assets transferred to third parties shortly before proceedings began.
Related article: How are Complex Assets or Business Handled in a High net-worth Divorce?
What Does the Law Say About Hiding Assets in Divorce?
The governing authority is the Supreme Court’s joint decision in Sharland v Sharland and Gohil v Gohil [2015] UKSC 60/61.
The decision established fraud as a valid ground for setting aside a financial order and rejected any requirement for the court to speculate on what order it would have made had it known the truth.
Once fraud is shown to have induced the applicant’s agreement, it falls to the non-disclosing party to prove that the fraud would have made no difference to the outcome. That is a difficult bar to clear.
Related Article: Outdated Fairness? Rethinking How Courts Weigh Conduct in Financial Settlements
What Can You Do If You Suspect Your Spouse Is Hiding Assets?
The options available will depend, in part, on whether the financial order has already been made.
Before the Financial Order Is Made
If there are genuine concerns about financial disclosure, it is important not to leave those suspicions until the final hearing.
There are several ways in which potential non-disclosure can be addressed.
Interrogate the Form E
Declared income and assets can be tested against lifestyle, business accounts, directors’ loans and connected-party transactions. Where appropriate, targeted questionnaires can be raised to clarify inconsistencies or obtain further information.
Related Article: What is Form E?
Third-Party Disclosure
FPR 21.2 allows applications for disclosure against third parties, including banks, accountants and business associates.
Freezing Orders
Where there is a risk that assets may be dissipated, section 37 of the Matrimonial Causes Act 1973 or the court’s inherent jurisdiction can be used to restrain the disposal of assets.
Adverse Inferences
A party who fails to provide proper disclosure risks the court drawing adverse inferences and concluding that the true position is worse for them than the picture they have presented. This approach can be seen in NG v SG [2011] EWHC 3270.
Judgment Summons or Committal
These remedies may be available in cases involving serious breaches of disclosure orders.
Can You Challenge Non-Disclosure After a Financial Order Has Been Made?
Yes, although this is the more difficult route.
How a financial order may be challenged depends on the way in which the original order was reached.
Consent Orders
A consent order can be challenged through a fresh set-aside application.
This may be based on the fraud principles established in Sharland/Gohil, or the longer-standing Livesey v Jenkins [1985] test concerning material non-disclosure that would have resulted in a substantially different order.
Orders Following a Contested Hearing
Where the financial order was made following a contested hearing, an appeal will usually be the appropriate mechanism, although a set-aside application remains available in the right circumstances.
Barder Events
Barder v Barder [1988] provides a separate and narrower jurisdiction where a later unforeseen event undermines the basis upon which an order was made.
It is not the natural route for a non-disclosure claim, but may be relevant where the timing of the issues overlaps.
Related Articles:
- How are Financial Settlements Dealt with in No Fault Divorce?
- KvK: A Reminder of the Importance of Finality in Financial Settlement Agreements
How Quickly Should You Act If You Discover Hidden Assets?
Act quickly.
Delay can count heavily against an applicant. Sitting on evidence of potential non-disclosure may ultimately result in losing the remedy altogether.
Evidence and timing are therefore particularly important where concerns about hidden assets arise after a financial settlement has already been approved.
Can Hiding Assets Affect Legal Costs?
Financial remedy proceedings generally begin from a “no order as to costs” position.
However, litigation misconduct, including non-disclosure, is specifically excepted under FPR 28.3 and may justify a costs order against the offending party.
At the more serious end of the spectrum, non-disclosure can amount to contempt of court and, in extreme cases, has resulted in criminal prosecution for fraud.
The Strategic Reality of Challenging Non-Disclosure
Suspecting that assets have been concealed and successfully challenging a financial order are not the same thing.
Set-aside applications can be expensive, evidentially demanding and far from certain to succeed, even where suspicions appear strong. Courts place considerable importance on the finality of litigation and are cautious about satellite proceedings that seek to reopen settled matters.
A successful challenge therefore depends on identifying precisely:
- What was concealed,
- Why the missing information mattered,
- What evidence supports the allegation,
- Whether the likely benefit of pursuing the application justifies the cost.
Early forensic accounting can also be important where the financial circumstances require more detailed investigation.
Suspect Assets Were Hidden During Your Divorce?
If you believe your former spouse concealed assets, undervalued a business or misled the court when your financial settlement was reached, evidence and timing are critical.
Our family law team in Kingston upon Thames advises clients on complex financial remedy proceedings, including concerns about non-disclosure, business assets and applications involving existing financial orders.
If you are concerned that you were not given the full financial picture, contact Rose & Rose Solicitors LLP for a confidential review of your position and the options available to you.
This blog post is not intended to be taken as advice or acted upon. If you are seeking legal advice, please contact our team of solicitors.
Frequently Asked Questions
Material non-disclosure occurs where financial information has not been disclosed and that missing information could have affected the outcome of the financial settlement.
Potentially. Consent orders may be challenged through a set-aside application where the appropriate grounds are established, including fraud or material non-disclosure.
Before an order is made, potential non-disclosure can be challenged through measures including targeted questionnaires, third-party disclosure applications, freezing orders and, where appropriate, adverse inferences.
Non-disclosure may amount to litigation misconduct and can justify a costs order. In more serious cases, it may constitute contempt of court and, in extreme circumstances, has led to criminal prosecution for fraud.
The original blog does not specify a fixed time limit, but makes clear that delay can count heavily against an applicant and that action should be taken quickly once evidence of non-disclosure emerges.
