Full and frank disclosure is one of the most important elements in resolving almost any financial claim arising on relationship breakdown, irrespective of what process has been chosen by the parties to settle their financial matters. Even an agreement reached between parties outside any formal legal process whether it be mediation, collaborative process or full-blown litigation will be subject to scrutiny of some financial disclosure at the stage that the parties invite the Court to make their agreement binding.
The rationale behind the need for full and frank disclosure is the simple premise that people cannot (and should not have to) make potentially life-changing decisions without access to all the relevant information. The extent and nature of the information (and any supporting documents required) will vary by reference to the process that is being used to resolve any dispute, but at the very least there is a requirement to provide “headline” figures for capital (property / savings / investments), income (from all sources), debts and the value of any pension provision.
It is not just a matter of having to honestly answer any questions that are asked, but a matter of having to pro-actively provide information about financial circumstances as they evolve and update over the time it takes to resolve a dispute. It is not a defence to say (if challenged) that “I was not asked about it”.
The duty of disclosure exists even if there is an agreement between parties that certain assets will be excluded from any calculations / negotiations because (for example) one person has inherited a sum of money that they wish to protect for their child(ren) and the other person agrees that this is reasonable. The important issue is that there is transparency between the parties and transparency in dealing with the Court.
This is particularly the case in Court proceedings where people can often think that their duty of disclosure ends at the point that their financial information (Form E) is submitted to the Court or that they only have a duty to each other. The duty of disclosure continues up to the point that a final financial remedy order is imposed or approved by the Court, irrespective of whether specific questions have been raised by one or other party, and the responsibility is not just to each other, but also to the Court.
The format of the disclosure matters significantly less than the actual disclosure, but the most common format of financial disclosure is in Form E (read our recent article on this topic here), which requires various documents to be supplied in support of the figures stated, including bank statements, pay slips, pension valuations, and property valuations. Form E is used in mediation, in voluntary exchanges of information between solicitors and also in Court proceedings.
When parties are inviting the Court to make a decision about their financial claims, the Court cannot rely on guesswork or assumptions and has a duty to the parties to make appropriate and reasoned decisions. This can only be done where the Court has access to all the relevant information, and it is not the responsibility of the Court to make enquiries about the information submitted by the parties.
If there has not been sufficient disclosure or the information provided is wrong, particularly where there has been a deliberate attempt to mislead, and it later comes out that the agreement was founded on an inaccurate representation of the parties’ financial positions, the Court can be invited to “set aside” or “vary” the terms of the agreement. Of course, this remedy is not available forever, and any alleged non-disclosure must be brought to the attention of the Court within a short period (usually no more than 6 months) of the order first being made. There is also a high bar in terms of persuading the Court that there has been enough of a failure to disclose or an unforeseen change of circumstances to either overturn or adjust the terms of a previously approved order.
If you have any concerns about the information being shared (or the lack of information) in any process arising on relationship breakdown, the expert family finance team at Porter Dodson will be happy to assist you and discuss your options. We work with clients across the south-west of England and beyond, you can find more details about our services here.