When it comes to divorce or the ending of a civil partnership and a business which is owned by one or both parties one of the questions is the extent of the information which needs to be disclosed. The answer is full and frank disclosure and the courts have been active in upholding the principle.
Full and frank disclosure
The financial assets of both parties need to be disclosed and full and frank disclosure applies to assets both in the UK and also to those abroad.
Voluntary disclosure, proceedings and form E
The best way to start is through voluntary disclosure of assets and it might be that this proves sufficient to be able to bring about a fair settlement. But if not then once proceedings have been brought the parties then fill out what is called a Form E. In effect this provides a financial statement for each party.
Once the Form E has been completed either side can raise questions which if approved by the judge then need to be answered by the other side. If there is a specific issue with any item of the disclosure then a party can apply to the court for directions and the court would have the power to order any such disclosure if it considered it relevant.
There are all sorts of documents which can help to provide a clear picture of a party’s financial position. Much will depend upon the particular circumstances of each case. When there is a business asset the court will not only look at the personal documentation such as tax returns, accounts, bank statements and the like but also key documents within the business itself. This might include business accounts and other documents which could affect the value of a business such as its assets and projections as to its profitability into the future.
There have been numerous cases in which the principle of full and frank disclosure has been tested and very much affirmed. Some recent examples which have reached the Supreme Court are the following.
In Prest v Petrodel Resources Ltd
 UKSC 34 the issue in dispute was whether Mr Prest was the beneficial owner of properties owned by Petrodel Resources Ltd. It was held that he was indeed the beneficiary under a resulting trust and therefore the courts had power to transfer a share of the properties to Mrs Prest under section 24 of the Matrimonial Causes Act 1973.
In Sharland v Sharland
 UKSC 60 the husband had a large shareholding in a company and a financial agreement was made following argument as to its value. However, after this and before the draft consent order had been sealed it transpired that the husband had, contrary to his earlier evidence, in fact been preparing to sell the company and at a much higher value than that which had led to the draft order. The Supreme Court held that this was sufficient reason to set aside the draft order.
Finally, in Gohil v Gohil
 UKSC 61 an order was made in relation to the financial settlement in 2004. However, in 2007 the ex-wife applied to have the order set aside on the ground of material non-disclosure. There were then delays caused by criminal proceedings against the ex-husband during which he was sentenced to ten years in prison for money laundering and conspiracy to defraud. The Supreme Court held that there had indeed been non-disclosure and that the original order should be set aside.
As these cases demonstrate, the courts will robustly uphold the principle of full and frank disclosure. Given the importance of disclosure in financial settlements it is an area which can potentially offer particular benefit from obtaining specialist legal advice.
Campions Solicitors have substantial experience of these issues.If you would like further advice or wish to discuss in general please contact our Director Daniel Priest on DPriest@campions.co.uk.