The importance of full disclosure in divorce

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Court of Appeal judgment has reaffirmed the position that full disclosure is essential for a ‘full and final’ divorce settlement to be binding.

The couple, who were teachers, married in 1984, and four years later the husband started a sportswear business, operating out of the garage at the former matrimonial home. He incorporated the business that year, with 100 shares split between him and his wife at a ratio of 99:1. In 1990, the husband stopped teaching to work fulltime on the business. The wife, meanwhile, continued to teach and looked after the couple’s children. The couple separated in 2002.

After long negotiations, a decree absolute was granted in 2005. In 2006, the husband paid the wife £150,000; in 2007, the wife became the sole owner of the former matrimonial home; and in 2008, she transferred her share in the business to the husband. There were no orders made to conclude their financial affairs.

In 2013, the wife launched financial remedy proceedings (an application for a financial settlement after divorce), and the judge had to determine whether the arrangements the former couple had already made constituted a full and final settlement. He concluded that there had not been a full and final settlement, as, among other things, the husband had not given his wife full disclosure, which his wife had said at the time would be needed before she agreed a final settlement. In 2015, the judge made a financial remedy order, under which the husband had to pay the wife a lump sum of £1.6 million in four instalments, and transfer to his wife 25 per cent of his pension, the policy and his shares.

The husband appealed, arguing that an appropriate order would be for a lump sum of £500,000. The court then had to decide whether a) the original judge had been wrong to conclude that the parties had not previously reached a full and final settlement; and b) whether the judge had given due regard to the wife’s delay in bringing the claim without clear explanation. The appeal failed on all grounds.

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