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Case law: Failure to make full and frank disclosure meant divorce settlement could be re-opened years later

Divorcing spouses must provide full and frank disclosure of their assets when negotiating their financial settlement, otherwise the court may decide the amounts negotiated are not in full and final settlement, and the settlement can be re-opened, following a recent ruling.

Legal Alert

This update was published in Legal Alert - May 2017

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

A husband and wife (H and W) married in 1984 and separated in 2002. During that time, H set up a business, with W helping out in addition to her other job and their three children.

On their divorce, there was no formal financial order but W received a lump sum of £150,000 in 2006, and the matrimonial home in 2007; and gave up her share in the business to H in 2008. H's business went on to become very successful and he became much wealthier.

In 2013, W went back to court and asked for half of his assets. Her right to do so had never been formally dismissed. However, H argued that the lump sum and matrimonial home had been offered to W in 2006 and 2007 in full and final settlement of her claims, and she had accepted them on that basis.

The Court of Appeal found that W had made her acceptance conditional on H having made full and frank disclosure of all his assets at the time. However, he had failed to do so. This meant W did not have all material information when deciding whether to accept H's offer and could not have taken proper advice on whether to accept the offer without it. The condition in W's acceptance had not been met by H so the transfers had not, therefore, been in full and final settlement of her claims.

H was ordered to pay W £1.6m, and to transfer 25 per cent of his pension policies and shares to her. This represented around 30 per cent of H's assets – the court applied a discount because of her delayed application.

Operative date

  • Now

Recommendation

  • Divorcing spouses should ensure they provide full and frank disclosure of their assets when negotiating a financial settlement, or the court may decide that the amounts negotiated are not in full and final settlement, and the settlement can be re-opened

Case ref: Briers v Briers [2017] EWCA Civ 15

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.