Dishonesty in divorce

Tim AmosTim Amos QC considers dishonesty in financial proceedings on divorce, and whether collaborative law can ever be appropriate where there is a suspicion of dishonesty.

The cases of Mrs Sharland and Mrs Gohil have been much in the media recently. For those who have not seen the coverage, these two women were both financially hoodwinked in different ways by their respective husbands during divorce proceedings. Because of this, at the time both settled for less than they would have been entitled to, had they known the truth. Now the truth has been revealed, the Supreme Court has clarified the law to ensure that both of their settlements can be reopened and they can reach a fair resolution at last.

Due to the publicity, it is likely that more people will ask the Family Court to reopen settlements that they now know to have been built on deceit. Of course, the court has always had that ability: these cases were clarifying technical legal points that had held these two particular women back. There is a firm principle that on divorce, to get a final and binding order from the court regulating financial provision, each person must give full and frank financial disclosure. Anything less – and certainly any overt deception – means a settlement or court order cannot be considered truly final. It can always be open to attack on the discovery of evidence that the real situation was not as it was put across.

It is difficult to know to what extent financial dishonesty is prevalent in divorce. Where legal advisers – solicitors or barristers – are involved, one of their jobs is to request, collect and assess the appropriate evidence to advise the client of their legal position. When things don’t ‘add up’, they are queried – sometimes they are clarified, and sometimes not. If not, there may be court proceedings where the evidence is tested by cross-examination. However there are other ways for testing evidence, and the collaborative law and mediation processes are interesting alternative options.

One might think that collaborative practice and mediation are less rigorous processes for assessing the veracity of financial disclosure because they are less combative, gentler options for resolving disputes. However, I do not believe this is so.

The supportive atmosphere of collaborative law does not mean that it is soft on disclosure. As both participants are accompanied by their solicitors, there can be a frank discussion of disclosure matters, face-to-face, which often leads to insight not available through the arms-length processes of solicitor negotiation or court. An independent barrister brought in to discuss settlement parameters can also raise questions, and the former couple also has the opportunity to question valuation experts directly on their methodology and conclusions. Because the collaborative setting is less positional, there is more opportunity for people to react flexibly and realistically rather than being tempted to “stick to their guns” at all costs, which sometimes still happens in the court process. Potentially therefore, the questioning about financial disclosure during collaborative practice can be more intense than in a court situation, meaning mistakes and misrepresentations are perhaps more likely to be rooted out.

Likewise, a strong mediator will ask questions to ensure he or she fully understands the disclosure made, and will allow each person to ask the questions they feel necessary to be satisfied that the truth is out there. If they are not satisfied, they may withdraw from the process and seek a solution through the courts or otherwise. It is always sensible to take legal advice from a solicitor outside the mediation process, and this provides yet another safeguard against being deceived.

When it comes to financial disclosure, mediation and collaborative law are not easy options. Although it may perhaps be too late for Mrs Sharland or Mrs Gohil to take advantage of alternative ways to resolve their disputes with their husbands, for those just starting to consider the best way to get to the truth, collaborative practice and mediation are worth investigation.