Disagreements are not uncommon in divorce. If a separation is acrimonious, one spouse may try to deprive the other of their share of assets. In some cases, a party may hide bank accounts or assets as part of an effort to evade an equitable distribution.
How do we deal with financial matters upon divorce?
The Supreme Court will take into consideration a number of factors when determining what a fair financial settlement should be in any divorce. Those factors are set out in section 27 of the Matrimonial Causes Act (1974). Usually, the first consideration for the Court is the welfare of any children of the family. The remaining issues will then be considered to determine a fair distribution of the marital assets. The needs of both parties will also have to be met.
The starting point, in most cases, is an equal division of the matrimonial assets.
If assets have been hidden, how can we reach a fair settlement?
Depending upon the facts of each individual case, the allegations made, and the evidence filed, the Court can do a number of things:
- make an Order to set aside a transaction made by one party in an attempt to hide assets
- make an Order to add the asset back into the matrimonial assets pot for division
- treat the asset as being back in the asset pot, and belonging to the other party, and adjust the division accordingly.
To grant an order setting aside a transaction, the Court has to be satisfied that one party deliberately took steps to try and defeat the other party’s claim. Funds may be added back into the assets pot if the Court is satisfied that one party has irresponsibly spent money or disposed of funds. This will mean the monies are effectively put back into the asset pot for division.
The Court can also draw something called an Adverse Inference, if the evidence filed in the divorce demonstrates that one party has not complied with their duty of full and frank financial disclosure. In situations like this, the Court may be able to determine that one party has failed to disclose all of their assets and the settlement awarded would be reflective of this.
It is important to note that each party has a duty to provide full and frank disclosure of their assets, income and liabilities during divorce proceedings. Each party has a legal obligation to be honest and this is an ongoing obligation during any proceedings.
In most cases, parties will provide full and frank disclosure. However, if one party has moved assets or not disclosed certain assets, the Court may:
- make a “Search Order” to discover what assets one party has, sometimes using experts
- make costs orders for the other party to pay legal costs.
Experts who specialise in asset tracing can also be instructed. Sometimes the experts have experience of tracing assets on an international scale. They can use all legal means available to track down assets owned in Bermuda and across the world. Even if an expert cannot locate a specific asset, they may be able to provide enough information to enable a party to convince the Court that there are hidden assets and that this should be taken into account in the case.
If one party is about to transfer or hide an asset, the other party can apply to the Court for a Freezing Order. This is an injunction to prevent the disposition of assets. This application can be made urgently if there is evidence that a transfer is about to happen. Action has to be taken quickly.
Reopening a final financial settlement
If a matter has settled, but it comes to light that your former spouse failed to disclose some of their assets whilst you were negotiating that settlement, the financial settlement can be reopened in some circumstances.
In the event that one party is hiding assets in anticipation of a divorce or during divorce proceedings, it is vital you obtain specialist advice. Reach out to your usual Conyers contact or to the author to help find the right solution for your unique situation.