When parties separate, they will often seek the advice of an experienced family lawyer to help agree the terms of financial settlement – either by Consent – out of court – or in the midst of court proceedings.
Very often, one party may be kept in the dark, either partly or totally, about the other’s true financial circumstances. Disclosure is thus not only a helpful safeguard but also a mandatory one.
Statement of Information
The burden of disclosure is different depending on whether the terms of settlement have been consensually agreed between the parties or if an application to court has been made. If an agreement is reached out of court, full and frank financial disclosure is required by the completion of what is known as a Statement of Information, which is filed at court alongside a Consent Order – the document that details agreed settlement terms.
The Statement of Information ensures that both parties, in broad terms, are aware of the other’s financial circumstances such as capital, income and pension provision before they sign off on terms of settlement. It also assists the court in determining whether the terms of settlement are fair – as they can also see what position the terms of settlement will place the parties in once implemented.
If the parties engage in Court Proceedings, then the disclosure requirement is more significant. Again, the requirement is for full and frank financial disclosure, but this is an ongoing duty throughout proceedings.
‘Form E’ and supporting documents
It is initially covered by the completion of what is known as a Form E. The Form E must be accompanied by a number of supporting documents – for example bank statements, property valuations, mortgage statements, payslips, tax returns. This is to enable parties and their lawyers to assess if there has been any non-disclosure. In comparison, if a Statement of Information is completed, this does not have to be accompanied by supporting evidence.
Non-disclosure is frequently encountered – this is where a party does not comply with the duty of full and frank financial disclosure and documents or information is missing. It may be as simple as a missing bank account but could be more complex such as an undisclosed interest in a business or a property.
In this instance, the court process and the raising of questionnaires after the completion of a Form E enables a robust and forensic investigation of these issues. This allows the court to elicit all of the key assets, liabilities and pensions that exist.
A vulnerable party may worry that their partner will not comply with the disclosure duty and may lie to the court – but this is, in reality, very challenging for them to do successfully and fraught with risk. If a party does not frankly disclose assets by the time of a contested Final Hearing, the court has the power to draw adverse inferences against the non-disclosing party and the consequences of such inferences can be serious. In reality, honesty is always the best policy!