Tracey Dargan,
Associate, Irwin Mitchell LondonThe subject
of disclosure is currently a hot topic in family law, particularly as a result
of the Court of Appeal decision in the case of
Sharland v Sharland [2014] EWCA Civ 95, [2014] 2 FLR 89. In this case, the
husband had failed to disclose either before the final hearing or during his
oral evidence that preparations were underway for an IPO of his company. The
wife compromised her claims during the course of the hearing based on the
valuations of the expert accountants who were also unaware of the IPO, but
sought to reopen the case when she discovered the truth. The judge refused her
application concluding that the husband had been dishonest but that on the
facts as they now stood he would not have made a different order. The Court of
Appeal upheld the decision by a majority and Mrs Sharland has now obtained
permission to appeal to the Supreme Court, which is expected to be heard in
June 2015.
The duty of
financial disclosure is the foundation of financial remedy proceedings and
derives from common law. The general rule is that a fair trial demands that the
court makes its decision on the basis of all available relevant evidence. The
duty falls on both the litigant
and
practitioner and it is important to understand the standards expected of both
you and your client and at what point the duty ceases to exist. A summary of
the position is set out below.
- The
litigant has an absolute duty to provide full, frank and clear financial
disclosure whether within the context of informal and voluntary discussions and
negotiations or as part of financial remedy proceedings. If a party is in
breach of the duty, whether by failing to disclose certain relevant facts and
circumstances or actively presenting a false case then the court may set aside
the substantive financial order and make a costs order against that party. However
despite Mr Sharland’s deliberate and dishonest non-disclosure the judge and
subsequently the Court of Appeal, by a majority, decided not to set aside the
order in the circumstances. Macur LJ pointed out that other sanctions could
include a criminal prosecution or civil contempt proceedings.
- For
a litigant, the duty of disclosure continues until the court makes a substantive
order and therefore there is an obligation on the litigant to volunteer
disclosure of any new information that would affect the courts exercise of its
function in determining the financial provision to be made. The other party
does not need to ask for it. It should be volunteered.
- The
litigant has a duty to ensure that disclosure is up to date when trying to
negotiate a financial settlement. Any material change in financial
circumstances must be communicated to the other party.
- The
litigant should not cherry pick what he or she wants to disclosure – to do so is
likely to result in a breach of the duty to provide full and frank disclosure.
- The
practitioner has a duty to
make an objective assessment of what information needs to be disclosed and must
not allow his client to provide only such disclosure as his client thinks fit.
- The
practitioner has a common law duty
to the court to supervise and investigate the disclosure process and to see
that the disclosure process has been complied with. The practitioner is
required to take reasonable steps to ascertain the truth of the disclosure.
- If
there is new information that materially affects the disclosure provided by his
client then the practitioner is duty
bound to let the court and other party know.
- Any
material changes that occur after the
substantive hearing and before judgment has been handed down must be
disclosed. The change should be brought to the court’s attention at the
earliest opportunity. If this is not done then the court may be misled into
making a decision on incorrect facts. It may be that the client has a change in
fortune or a run of bad luck, either way it should be disclosed so that the
court has full and accurate information.
If
a client refuses to accept his lawyer’s advice to provide disclosure then the
lawyer cannot continue to act.
The views expressed by contributing authors are not necessarily those of Family Law or Jordan Publishing and should not be considered as legal advice.
10 APR 2025
