DIVORCING COUPLES FACE DAWN RAIDS

MISCHON DE REYA

IN 177 carefully crafted paragraphs the Court of Appeal has rewritten the rules of engagement in matrimonial finance cases.

Previously, spouses seeking divorce were permitted a certain amount of leeway when gathering financial information. Put simply, the courts turned a blind eye to one spouse helping themselves to financial information by rummaging through the marital home in order to find, copy and share documents detailing the other’s assets.

The case, which involved Vivian Imerman, Lisa Tchenguiz and her brothers Robert and Vincent, has brought an abrupt end to this practice. Self-help is no longer any help. An individual’s privacy is paramount, whether or not they are believed to be concealing financial information. The consequences of this decision are that spouses of (potential) non-disclosers will have three courses of action available to them.

FULL AND FRANK

First, if it can be proved that full and frank disclosure has not been given, they can ask the court for an enhanced award from the identified assets. What remains to be seen is how anyone will know whether disclosure has been full and frank when the self-help documents proving the opposite can no longer be safely scrutinised by the lawyers or forensic accountants.

The second option, the Appeal Court judges said, was to have faith in a system that is “sophisticated in detecting and dealing with dishonest disclosure” and which ensures that “assets are now daily uncovered in the family courts despite the most ingenious efforts of their owners to cover them up”.

Leaving to one side that this will see many more families having to litigate to fully contested final hearings, the fundamental difficulty is that the receiving party will often have no personal knowledge of the existence of assets that have been salted away.

Regardless of how sophisticated the courts may be, in the absence of a paper trail leading to the pot of gold, for judges to make findings that assets have been hidden seems a stretch. Without those findings, tracing assets and enforcing the resulting court orders will be nigh on impossible.

Finally, and most controversially, there is seize, freeze and squeeze.

Applying for and carrying out orders to search and seize is no mean feat; even satisfying the evidential burden necessary to obtain such an order will generally require the prior engagement of investigators and forensic accountants. Add to this the emotional burden for families and the process becomes extraordinarily complex and distressing.

SCENE SETTING

Picture the scene. The suspected non-discloser answers a knock on the door of the family home. Enter stage left a battery of lawyers and IT experts armed with raid boxes. Exit stage right any last vestiges of civility.

True, such orders are frequently made in commercial disputes, but the breakdown of a marriage (particularly where there are children involved) gives rise to radically different issues.

The potential for calamity is huge as family lawyers across the country are going to have to navigate this new legal terrain. Co-ordinating forensic, legal and IT expertise will require a specific skill set new to many law firms. This is not the murky world of corporate espionage: this is people’s lives.