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Liar Liar: The effects of untruths in divorce

Liar Liar: The effects of untruths in divorce

The recent case of US v SR [2014] EWHC 175 (Fam) related to a fact finding exercise concerning alleged misconduct and non-disclosure.

Within that judgment Mrs J Roberts QC sitting as a Deputy High Court Judge gives a useful summary of the law where it is clear that one party (or both parties) have deliberately misled the other party and the court. To put the case factually into context the husband had failed throughout voluntary disclosure and the process of court disclosure and until a third witness statement filed by him to disclose that he was still working and earning an annual fee of US $650,000 net which he had been channelling to accounts in Dubai and Jersey (also undisclosed). He had also (rather worrying given that most people now produce computer prints of their bank statement sheets as part of disclosure) produced some bank statement sheets which it emerged had been doctored using a computer programme.

There were also allegations about the wife’s conduct in relation to a number of properties. I will not repeat the details here but I should be clear that that the judge found both parties guilty of some wrongdoing. The judge refers back to the judgment of Mostyn J in NG v SG (Appeal; non-disclosure) [2012] 1FLR1211 which says that where the court is satisfied that disclosure has been materially deficient then:

I. The court is duty bound to consider by the process of drawing adverse inferences whether funds have been hidden.

II. Such inferences must be properly drawn and reasonable. It would be wrong to draw inferences that a party has assets which, on an assessment of the evidence, the court is satisfied he has not got.

III. If the court concludes that funds have been hidden then it should attempt a realistic and reasonable quantification of those funds, even in the broadest terms.

IV. In making its judgment as to the quantification the court will first look to direct evidence such as documentation and observations made by the other party.

V. The court will then look to the scale of business activities and at lifestyle.

VI. Vague evidence of reputation or the opinion/beliefs of third parties is inadmissible in the exercise.

VII. The Al-Khitib Masry technique of concluding that the non-discloser must have assets of at least twice what the claimant is seeking should not be used as the sole metric of quantification.

VIII.The court must be astute to ensure that the non-disclosure should not be able to procure a result from his non-disclosure better than that which would be ordered if the truth were told. If the result is an order that is unfair to the non-discloser it is better that than the court should be drawn into making an order that is unfair to the claimant.

In terms of how any non-disclosure should be reflected in the settlement the judge reminded of the need to separate out the issue of quantification of settlement (which may be affected by matrimonial misconduct as a section 25 factor) from the issue of costs to be awarded for litigation misconduct.

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