The importance of a thorough financial investigation during divorce

When discussing the issue of finances on divorce, you will probably hear your solicitor refer to “full and frank disclosure”, even if you and your spouse have already agreed terms without going down the route of providing financial disclosure to one another. But it is essential and a legal requirement for both parties who are under a duty to provide full disclosure of their financial positions.  Such disclosure includes investigation and consideration of all material facts, documents and other information relevant to the issues in the case, together with any material changes after initial disclosure has been given thus disclosure will need to be updated throughout negotiations/proceedings.

A particularly helpful form to assist in the disclosure of assets and your legal representatives, is a document known as a Form E.  Form E is a standard court document which essentially is a financial statement completed by both parties with the intention of providing full disclosure of your respective financial positions.  Each party will complete their own Form E and will be asked to provide the necessary supporting evidence.  In turn this is exchanged with your spouse and considered in detail.   An opportunity to raise questions on the disclosure provided will be given, this will be drafted once your legal representative has considered the documents and further documents requested alongside questions deemed necessary to progress the matter.

Whilst Form E is a court document, it can be an extremely useful tool outside of formal court proceedings, as it is clear with its requirements which serve to assist parties in providing full disclosure enabling them to have  full knowledge and understanding of the true value of all assets in capital and income on divorce.  It is not uncommon for individuals to be somewhat surprised of their true financial position and needs in order to live independently from the marriage on consideration of their financial positions.

The advice from your solicitor will rarely change in terms of highlighting the importance of providing full and frank disclosure, to assist with their investigations of your financial positions,  this is so they can be sure as far as possible that they have full understanding and a clear picture of the case.  It can be an extremely worrying time for a party to request financial disclosure from their spouse, but it is essential to do so and here’s some of the reasons why:

• In order for your solicitor to appropriately advise and seek the best outcome for your matter
• You will be able to make more informed decisions as to your financial future
• You will rest assured that you have full understanding of your financial positions and why the financial arrangements have been reached
• You will be able to move on safe in the knowledge that nothing was hidden from you

If your matter was to proceed with an application to the court, the completion of Form E and providing full disclosure of financial positions is compulsory.  It is the first step parties will need to take in the proceedings. Failing to provide disclosure can result in the court making an order for costs against you. Furthermore, Form E includes a Statement of Truth which must be signed to confirm that the information provided is a “full, frank, clean and accurate disclosure of your financial position and other relevant circumstances. Thus, “a failure to give full and accurate disclosure may result in any order the court makes being set aside. If you are found to have been deliberately untruthful, criminal proceedings may be brought against you for fraud under the Fraud Act 2006. The information given in this form must be confirmed by a statement of truth. Proceedings for contempt of court may be brought against a person who makes or causes to be made, a false statement in a document verified by a statement of truth.”

So what if I don’t provide full disclosure?

Ultimately this will delay the matter from progressing, but it is important to note that a failure in doing so will have consequences.  Take a look at this case, for example:

W v S (Committal) [2015] EWFC B130

In this case a party in proceedings failed to complete his Form E, providing full and frank disclosure of his financial position to the court, he further refused to sign the statement of truth, but attached a piece of paper with the wording “The information I have provided is more than adequate”.  The court asked once again for the individual to complete the form property, but he failed to do so.  An application for committal was issued with the Judge hearing the case said “In the circumstances, I am, given the wilfulness of the breach, even though it is a first breach, going to sentence him to a period of imprisonment, but I am going to suspend it to give him a final opportunity to produce what is required.

So what I am going to do is to order that he provide a fully compliant Form E dealing with the matters set out in the schedule of breaches. The next hearing is on 23rd September, so I am going to order that he provide that by 9th September, which is two weeks before that hearing, and, in particular, that must have all the relevant documents appended to it. If he does not comply with the order to file and serve it by 4.00 p.m. on 9th September, then he will serve a sentence of imprisonment of 14 days. I hope that will not be necessary. As I said, it is not the court’s wish or desire to send people to prison; it is the court’s wish and desire to see its orders complied with in the interests of the child, in this case.”

Without proper investigation of your financial positions, it may be possible for one party to essentially conceal or misrepresent the true value of assets or income which can have dire consequences for any outcome.  If on consideration the disclosure and via taking instructions it may come to light  that  a party has not been honest with their disclosure and real concerns arise as to hidden assets or income.  If this is the case, the court will take robust action with their wide range of powers which can be used to assist in investigating  the true value. Arguably the most extreme power of the court in such cases is a search and seize order.  Another option available, for example if there is concern that assets have been removed from the jurisdiction a court may be persuaded to grant a freezing order.

In conclusion, it is imperative that a thorough investigation of your respective financial positions is undertaken, before any order is drafted.  Failing to do so will limit the advice your solicitor, you will have no true understanding of what you have agreed to and whether the agreement is fair meeting your future needs.  As we have seen from this article, disclosure is a compulsory step within court proceedings and a failure of providing disclosure can have serious consequences.  As your solicitors we want to assist you in achieving the right outcome for you and your family and we will simply be barred from doing so without understanding where you and your spouse sit financially.

Article dated: 10.05.24