One of the most common worries we hear from clients going through a divorce is: “I know my ex is hiding money. What happens if they don’t tell the truth about their finances?”
It’s an understandable concern. A fair financial settlement depends entirely on both parties putting their full financial picture on the table. When one person hides assets, understates their income or “forgets” about a bank account, the other person can be left feeling powerless.
The good news is that the family courts in England and Wales take non-disclosure extremely seriously. While the court’s main aim is to reach a fair outcome rather than to punish, a spouse who fails to disclose their finances properly can face significant consequences. This article explains what those consequences are and what you can do if you suspect your ex is not being honest.
The duty of full and frank disclosure
In financial remedy proceedings, both parties are under a legal duty to give full, frank and clear disclosure of their financial circumstances. This duty was confirmed by the House of Lords in the leading case of Livesey v Jenkins [1985], and it remains the cornerstone of every financial case today.
In practice, disclosure usually happens through Form E, a detailed financial statement covering property, bank accounts, pensions, investments, business interests, income, debts and future needs. Form E must be signed with a statement of truth, confirming that the information is complete and accurate. The duty also continues throughout the case. If circumstances change, such as a new job, an inheritance or the sale of an asset, that must be disclosed too.
The duty applies whether the case is decided by a judge or settled by agreement. A settlement reached on the basis of incomplete information may not be safe.
What can happen to a spouse who hides assets?
1. The court can draw “adverse inferences”
This is the most common and often most powerful consequence. If the court is satisfied that one party has not been honest about their finances, it does not simply accept their figures. Instead, the judge can draw inferences about what the true position is likely to be.
The Supreme Court confirmed in Prest v Petrodel Resources Ltd [2013] that family judges are entitled to draw such inferences where a party has failed to provide proper disclosure. In Moher v Moher [2019], the Court of Appeal explained that the court should make a realistic, reasoned assessment of what undisclosed resources exist, based on all the evidence available.
In simple terms, a spouse who hides money may find the court concludes they have more than they claim, and divides the assets accordingly. Attempting to conceal wealth can therefore backfire badly.
2. Costs orders
The general rule in financial remedy proceedings is that each party pays their own legal costs. However, the court can depart from that rule where one party’s conduct during the proceedings has been unreasonable. Failing to comply with disclosure obligations, providing misleading information or forcing the other side to spend money uncovering hidden assets are all classic examples of litigation misconduct.
A spouse who drags out the process through non-disclosure may be ordered to pay some or all of the other party’s legal costs, which can amount to a substantial sum.
3. Contempt of court
Signing a Form E or witness statement with a statement of truth while knowing it to be false is a serious matter. Under the Family Procedure Rules, proceedings for contempt of court can be brought against someone who makes a false statement in a document verified by a statement of truth without an honest belief in its truth.
Similarly, where the court has made a specific order requiring disclosure (often carrying a penal notice), breaching that order can amount to contempt. The potential consequences include fines, seizure of assets and, in serious cases, imprisonment.
4. Settlements and orders can be set aside
If non-disclosure only comes to light after an order has been made, all is not necessarily lost. In the landmark cases of Sharland v Sharland [2015] and Gohil v Gohil [2015], the Supreme Court confirmed that where a financial order was obtained through fraudulent non-disclosure, it will generally be set aside unless the party who hid the information can show the court would have made the same order anyway.
This means a spouse who deliberately hides assets cannot assume they are safe once the case is over. The case can be reopened.
5. Criminal consequences in serious cases
In the most serious cases, deliberate dishonesty in court proceedings can potentially give rise to criminal liability, for example under the Fraud Act 2006 or perjury legislation. Prosecutions are rare in the family context, but the possibility underlines just how seriously dishonesty is viewed.
Is it really “punishment”?
It is worth being clear about how the family court approaches this. The court’s primary purpose in financial remedy proceedings is to achieve a fair outcome for both parties and any children, not to punish one spouse for bad behaviour.
That said, the practical effect of the consequences above can feel very much like punishment for the person who has been dishonest. A spouse who conceals assets may end up with a worse settlement than if they had been truthful, a large bill for the other side’s costs, and potentially contempt proceedings. Honesty is almost always the better strategy.
What can you do if you suspect your ex is hiding assets?
If you believe your ex has not provided full disclosure, there are several steps that can be taken:
- Raise a questionnaire. After Forms E are exchanged, each party can ask targeted questions and request further documents to fill gaps in the other’s disclosure.
- Apply for specific disclosure orders. The court can order a party to produce particular documents, often with a penal notice attached. Our guide to using a D11 application and unless order explains how this works.
- Seek disclosure from third parties. In appropriate cases, the court can order banks, employers or other organisations to provide information directly.
- Instruct experts. Forensic accountants can trace money, value businesses and identify unexplained transactions.
- Apply for a freezing order. If there is a real risk your ex will dissipate or move assets to defeat your claim, the court can make an order preventing them from doing so.
A word of caution: you should not take matters into your own hands by accessing your ex’s emails, devices or private documents without permission. Doing so can be unlawful and may damage your own case. Always speak to your legal adviser about the right way to raise your concerns.
How Puna Family Law can help
Suspecting that your ex is hiding money can be stressful and frustrating, but you do not have to deal with it alone. We regularly support clients in financial remedy cases where disclosure is in dispute. We know how to scrutinise financial statements, ask the right questions and use the court’s powers to make sure the full picture comes to light.
Whether you are at the start of your divorce, part way through proceedings, or have discovered something new after a settlement, we can help you understand your options and protect your financial future.
Contact Puna Family Law today to arrange a confidential consultation.
This article is for general information only and does not constitute legal advice. Every case is different, and you should seek advice tailored to your circumstances.
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