Most separating couples will sort out the fair division of their assets on divorce by agreement however this is not always the case for everyone. Unfortunately, there are situations where an individual considers hiding or disposing of their assets, in an attempt to minimise the resources that they must share with their spouse. Unsurprisingly, the law says that the parties to a divorce must be totally honest and transparent when disclosing the full extent of their resources because, without all the facts, it is impossible to determine a truly fair financial settlement.
If a spouse is tempted to hide assets and not disclose them during negotiation of a financial settlement, the family courts have wide powers to ensure that there is full financial disclosure. If one party is found to have hidden an asset, then the courts take this very seriously and can penalise that party, awarding a less favourable settlement, perhaps, or ordering the party to pay the other party’s costs (or in some cases an element of the costs relating to the non-disclosure).
The court’s powers also extend to preventing assets from being transferred elsewhere or to getting them back after they have been transferred, if the motive is to seek to frustrate the fair sharing of resources as part of a matrimonial claim. If you think this might be the case in your circumstances, you will need to act quickly and take legal advice.
At Cambridge Family Law Practice, we can advise and assist you should you be required to make an application for an injunction either to prevent the disposal of assets, a freezing order, or to require assets already disposed of to be transferred back, or both. You will be required to evidence that a disposal has happened or is likely to happen and that an order is necessary. A court will not act on a vague suspicion. Where it can be shown that the intended or actual disposition of assets would defeat your claim for an equitable division of the resources on divorce, the court will look very closely at whether there is an intention to frustrate a matrimonial claim. If the court is satisfied that this is the case, it has the power to make an order to impede the other party from disposing of asset/s or to set aside dispositions of assets which have already been made.
A freezing order will prevent the disposal of assets but does not provide a permanent solution, in itself. Instead, it provides an interim measure to preserve a party’s assets until a financial settlement has been reached. Freezing order applications are generally heard at High Court level. The resulting judgement can then be enforced against the assets that have been frozen, for example against funds held in a frozen, off-shore bank account or against a property but can also include valuable paintings, jewellery, stocks and shares and vehicles. Freezing orders can be obtained against assets within the jurisdiction of England and Wales (a domestic freezing order) or against assets situated outside the jurisdiction (a worldwide freezing order or Mareva injunction). Applications such as these are almost always made in an emergency and without notice to the other party. They are invariably expensive due to the nature of the application and so there must always be a cost-benefit analysis before making such an application. At Cambridge Family Law Practice, we are experienced in dealing with emergency applications and have the expertise to guide you in the process as well as advise you when less expensive courses of action would be more suitable to your circumstances.
In more extreme situations, search orders can be extremely effective in getting information about assets that have been hidden. They can be costly to obtain, and implement, and, in reality, are rarely used but they are likely to be appropriate in cases where there is a lot at stake and there has been very serious non-disclosure. Historically known as Anton Piller orders, these orders tend to be made in conjunction with a freezing order and allow the one party to enter the other party’s premises to search and preserve evidence that may otherwise be disposed of or destroyed and which would then likely form the basis of the freezing order.
Finally, the courts also have the powers to restrain a party from leaving the jurisdiction where that party may leave the jurisdiction with assets or avoid complying with an order. Such an application is most likely to be considered in cases with an international aspect where the assets are significant in value and the facts required to satisfy the application are likely to be exceptional.
Although time is of the essence with these applications, care must be taken when following up your suspicions. The 2010 case of ‘Imerman’ (which we wrote about in our blog) provided guidelines that identify the level of investigation of another party’s personal information that is permissible, and which can be relied upon in a court application. Imerman makes it clear that if you obtain evidence or documentation in the wrong way you may be committing a criminal offence and may not rely on that information in the proceedings. Something as simple as opening or intercepting your partner’s mail (even if it was accepted practice during the marriage) is not permitted. While the family courts are keen to ensure people are not allowed to get away with hiding their assets you and your legal team must operate in accordance with the general civil law as well.
In the implementation of a freezing order there are no grey areas at all. If on the receiving end, you must comply with it to the letter. The freezing order will likely contain a penal notice which means that any breach could be held to be in contempt of court. The penalty can be a fine, asset seizure or imprisonment.
If you are facing the prospect of a freezing order or other injunction or if one has already been made, it is important to be open and transparent with the other party as to the nature and extent of your assets, providing full, frank and clear disclosure at the earliest opportunity. You could offer to provide an undertaking not to dispose or dissipate assets in dispute and you could even consider depositing a sum of money as a security to be held to joint order by the solicitors with an agreed third party such as a bank. The most appropriate course of action will depend on your individual circumstances.
If you have any questions about assets and reaching an equitable split over your finances or any other family law issue, you can call us on 01223 443333 and make an appointment to speak to Simon, Adam, Tricia, Sue, or Gail.