Wealth

Prison risk of concealing assets in divorce

Divorcing spouses are continuing to hide the full extent of their assets, according to our 10th annual Matrimonial Survey. But the price of being found out can be costly.

One of the key issues highlighted in Grant Thornton’s Matrimonial Survey 2013 [ 1353 kb ], published last week, is the continuing concealment of assets and non-disclosure.

The survey canvassed the opinions of 85 of the UK’s leading family lawyers based on their client work in the 2012 calendar year. Results showed that in recent years and months there have been a number of cases where one of the parties has attempted to mislead the proceedings by failing to provide full disclosure of assets. 

Being found out brings the threat of adverse inferences by the judge, or even prison for contempt of court – although whether this is sufficient deterrent to misconduct remains to be seen following a number of recent cases.

Caught out in court

The recent judgment in M-v-M, in which the wife was awarded £54 million, was the largest court award in UK matrimonial history – and perhaps provides a fitting landmark for our 10th matrimonial survey report. Aside from the high value of the settlement, the judge was highly critical of the husband in the proceedings for his failure to provide full financial disclosure. 

Other recent (or ongoing cases) such as Prest-v-Petrodel and Scot and Michelle Young also record instances of misconduct by the husband, with Scot Young having been jailed for contempt of court for failing to provide the ordered financial disclosure.

In both M-v-M and Prest-v-Petrodel, adverse inferences were drawn against the husband as a result of his lack of financial disclosure.

How prevalent is concealment?

Only 9% of family lawyers said they had had no cases that revealed concealed/missing assets, compared with 20% in 2012 and 2011. While concealment of assets is likely to continue, the majority (88%) of those polled did not think it had increased from 2012.

Deterrent or ‘cheat’s charter’?

The majority of our UK family law respondents didn’t think that the imprisonment of Scot Young would act as a deterrent to people considering deliberate concealment of assets or information. In a recent case, a divorce settlement was set aside by Mr Justice Coleridge due to non-disclosure of assets.

It is too early to assess whether more recent rulings including M-v-M, when combined with the treatment of Mr Young and with the disparaging comments from various judges on the issue of non-disclosure in these cases, will have more of a deterrent effect on potential non-disclosers. This is an issue to revisit in next year’s survey.

Chris Clements, Partner, Forensic and Investigation Services, Grant Thornton UK LLP said:

“Concealment is clearly a major issue as is illustrated by the recent public cases of Prest v Petrodel and the ongoing Young v Young matter. The key issue in detecting concealment is that you don’t know what you are looking for. In a post-Prest world, concealment, particularly in corporates, will require detailed analysis of the financial records in order to confirm the true position.”

Download the 2013 Matrimonial Survey

Grant Thornton’s annual Matrimonial Survey looks at the key issues in the family law arena, as well as reviewing the issues that have arisen consistently over the 10 years in which we have been undertaking our survey. In addition to current issues and statistics, the report focuses specifically on the economy, concealment of assets and cohabitation, and considers the next 10 years of family law.

Read the full report: Matrimonial Survey 2013 [ 1353 kb ]

Image: (CC) Annie Pilon/Flickr