The conundrum of hidden assets

by Andy Osborne on

How many times are we faced with clients who believe their spouse has assets but they are unable to provide any detail. There is of course a duty on all parties to produce what is called full and frank disclosure of their assets but many spouses will still seek to hide assets to prevent their spouse getting hold of them.

When a couple decide to divorce the finances can be complex. They may include several properties, complicated portfolios, pensions, overseas assets, trusts etc. It is likely that a spouse may not know about the assets or be able to keep track of them. It is obviously a concern that if the assets cannot be traced then a fair settlement is unlikely to be achieved.

From a practical point of view there are things that a spouse should be thinking about. An analysis of lifestyle is very useful. If one can show the spending then there must be income or capital to support it. A spouse may have a safe deposit box with money hidden, he may have delayed pay rises or receipt of income from employment. A very common trick is to allege debt is owed to family members or a spouse may be a collector of art or antiques and money could have been used to buy hidden items. Shares or investments could have been transferred to family members or put into the names of children. These are just a few examples of things to look out for.

However, a spouse who suspects her husband is hiding assets cannot just go and raid his computer or copy documents or open his post because this could get her into trouble. In fact there has been a lot of case law on this very topic over the last few years.

The original case dealing with this issue was that of Hildebrand v Hildebrand in 1992. In this case the husband had managed to get hold of the wife’s documents without her knowledge or permission and whilst the husband was ordered to disclose all the documents he had copies they were also admissible in the proceedings despite the manner in which they had been obtained.

The law changed significantly in 2010 when the case of Inerman v Tchenguiz came before the court. Once again documents were obtained without the permission or knowledge of the husband. The court held that obtaining documents in this way was a breach of confidence and was not admissible. The court said that it was open to the wife to issue proceedings by way of injunction to obtain this information and also said that the court would in any event be able to detect dishonesty and make appropriate findings.

This has left matters in an unsatisfactory state. Whilst it is open to a party to seek a search or freezing order this is an expensive remedy and many cases will not justify the cost on the basis of proportionality. In order for the court to draw inferences it would have to have sufficient evidence to do so and it seems therefore that we are going to have to wait for another case to come before the appeal courts to clarify and simplify the position.

By family law solicitor and mediator, Gillian Davies

 


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