Honesty really is the best policy
In a recent case a business tycoon who lied about his wealth has been told he may have to pay more money to his former wife than the £1.8m original settlement.
Judge Sir Paul Coleridge has ordered that the original order be set aside, effectively ripped up, after the wife challenged her original financial settlement in divorce proceedings upon discovering assets belonging to her former husband that he had not previously disclosed.
At the time of the original settlement the wife did not have the benefit of legal advice and she was keen to move on quickly after the relationship between the parties broke down. Perhaps a case where the old adage – more haste, less speed should have been applied.
The parties originally divorced in 2009. At that time the husband told the wife that he was an employee and the company was not trading and had a nil value. The wife accepted this explanation. Subsequently she discovered documentation that the businessman had shares worth £740,000 in one company with a turnover of £50 million.
It also emerged that he had a further £800,000 investment not previously disclosed.
Judge Sir Paul Coleridge sitting in the High Court said the husband had been “deliberately false” and called for the settlement to be re-negotiated with the possibility that the wife may receive a further capital payment.
Even with these new assets now in the melting pot for potential distribution the main question for the wife and her lawyers will be whether they, even now, have a true picture of the husband’s finances. How can he ever be trusted again when he signed a Statement of Truth on a financial disclosure document?
If the parties fail to reach agreement with these additional assets the wife will no doubt ask the Court to consider her former husband’s deceit as a conduct issue which is a factor under section 25 of the Matrimonial Causes Act 1973 that allows the Court to depart from equality. Conduct is a often raised by client’s as a reason to move the balance of settlement in their favour. Rarely is it as clear cut as in this case.
The Court could decide to financial penalise the husband in any subsequent settlement for his conduct in the initial negotiations.
This case should act as a warning for both sides following a marital breakdown. For the party with the assets; a note of caution that the truth will often prevail and you risk losing a greater share of your assets than you may otherwise have done if you had been honest from the start. For the party seeking to secure assets; getting legal advice from the outset could possibly avoid the need for an Order to be set aside and renegotiated.
In this case the wife wanted to move on quickly. She thought she was doing that by agreeing a settlement directly with her husband. Even now, some 4 years after the divorce, matters are still not concluded and she can not move on properly until they are.