Investigating Hidden Assets

It is a fundamental principle when negotiating financial settlements upon the breakdown of marriage or cohabitation, that each person must disclose full details of their financial position to the other.  

Where an application for a financial order has been issued, in a divorce or dissolution of civil partnership, disclosure is provided by each of you completing a detailed document called a Form E, which your respective solicitors will help you prepare. You will be required to attach to the Form E copies of your last 12 months’ bank statements,  documentary evidence of your investments, property valuations and pension statements, along with documentary evidence such as P60s, payslips, tax returns and company accounts to show your income.

Once Forms E have been exchanged, you will be entitled to raise a Questionnaire asking for further information and documentation  in order to prove or clarify their disclosure.  The Questionnaire will be approved or amended by the court, at the first court hearing – the “First Appointment” – and a time limit set for them to provide the information sought.

The court has power to order valuations. Assets such as houses, pension funds and businesses may have to be valued by independent valuers. In such cases the court will determine whether such valuations should be obtained from jointly instructed valuers or whether the parties may instruct their own separate valuers. The court may appoint chartered surveyors, forensic accountants or Independent Financial Advisers as needed.

If you believe your spouse or partner is hiding assets or income, and you can demonstrate that this may be the case, the courts have wide powers to assist you in further  investigating the other person’s finances in order to ascertain their real worth. They can be ordered to provide extensive documentation and persistent refusal to comply can result in the defaulter being in contempt of court.  Alternatively, third parties such as bank representatives, new spouses, employers, accountants  etc., can be ordered to come to court with relevant information and documentation.
In more extreme cases, the court can make “search and seize” orders or can order that assets be preserved pending the outcome of your financial application. However these orders can be difficult and expensive to obtain. It is important at all times to consider what level of investigation is required in each case bearing in mind the need to keep costs proportionate to the amount of money involved and to weigh the likely benefits of any court action against its cost.

Whilst it is tempting to use “self help” when faced with a spouse or partner who you believe isn’t telling the truth, you have to be very careful not to do anything inadvertently  which is illegal and might result in your facing civil or even criminal charges.  For example, you cannot take documents in hard copy or electronically without permission, breaching their right to privacy, nor open their post without their consent, nor access their emails and computer documents, even if you still know their password.  You cannot break into their home office or into their filing cabinets to copy their documents. If you employ a private investigator they will be bound by the same rules and any information obtained in breach of those rules may be excluded by the court and orders for costs made against you.
The law in this area is complex and if you are in any doubt as to what you are allowed to do by law, you should first ask your solicitor for advice.

Deliberate non disclosure is taken seriously by the court. If a person is found to have tried to hide an asset or to conceal its true value, they can be penalised either by being ordered to pay the other party’s costs or by receiving a less favourable settlement.
The court is also entitled to draw “adverse inferences” from your family’s life style if it can be demonstrated by you to be inconsistent with the level of financial resources disclosed. The court can make an order on the basis that there is a certain amount of money available, though such orders may be hard to implement unless there are clear assets against which they can be enforced.  

If there is a danger that assets may be dissipated or removed from the jurisdiction, and you have proof sufficient to convince a court, an application can be made for a “freezing” order or where assets have already been disposed of for an “unscrambling” order. Freezing orders can extend to assets held overseas and in exceptional circumstances foreign courts can be requested to assist by making a “mirror order” freezing assets within their jurisdiction in support of the English proceedings.