Undisclosed financial information in divorce and the power to draw adverse inferences

Case report: Rabia v Rabia [2014] EWCA Civ 1767 in the Court of Appeal, regarding a divorce financial settlement where the calculations were disputed after the husband refused to make full disclosure regarding his assets.

Linda Pope (at a previous firm) acted for the husband, who was the respondent in a financial relief application brought by wife after their 14-year marriage had ended.  This was a second marriage for the husband who ran a successful international training business which had been established soon after the couple had met.  In addition to the matrimonial home (which was funded from the money the husband had retained from his first marriage), the assets included a few rental properties as well as an occupational pension, most of which the husband said was accrued pre-marriage

The initial hearing was substantially prolonged as the husband failed to provide adequate financial disclosure.  He attempted to persuade the court that he had no personal interest in the company, which was a family business (and the profits supported the family), or a flat the title of which had recently been transferred to his brother.

The wife was able to provide sufficient information and evidence for the judge to determine a fair settlement and, as a result of the husband’s conduct in court, costs were also awarded against the husband.

In the case before the Court of Appeal, the husband sought to challenge the distribution of assets, on the basis that the judge had assumed further undeclared wealth in the region of £300,000.

However, in the face of consistent non-disclosure of financial information, the court has the power to draw adverse inferences against the person who is refusing to disclose all the required information. The court can do this by introducing a balancing figure, as was done in this case.

The judge made clear that:

Anyone … “who chooses to approach the litigation in the way that this husband did has to run the risk of inferences being made against him.”

For more information on divorce and financial settlements, please contact Linda Pope on 020 7426 0400 or email lp@milesandpartners.com.

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.