Financial disclosure: a cautionary tale

Ask any family solicitor what they find most challenging about their job and the answer will probably surprise you. Onerous as they are, it’s unlikely to include:

• complex technical legal points;
• representing clients at important Court hearings; or
• preparing reams of documents.

Instead, the answer is most likely to be that seemingly straightforward beast – financial disclosure.

What is financial disclosure?

Financial disclosure is a crucial element of any financial settlement. It describes the process where each party provides details of their income, assets and liabilities.

Financial disclosure serves three main purposes:

• First, it enables clients to make informed decisions based on a clear understanding of available assets.
• Second, it enables legal advisers to advise confidently and robustly.
• Third, the exchange of full financial disclosure before reaching agreement makes that agreement much more difficult to challenge later.

In short, the exchange of full financial disclosure allows all those involved to make decisions confidently and with the reassurance that those decisions are unlikely to change.

Frustration

As family lawyers, we know how frustrating financial disclosure can be. It feels intrusive because it is intrusive. And it’s often the last thing anyone has the time or energy to put together, particularly against the backdrop of an already stressful relationship breakdown. Believe me, you certainly won’t be alone if you are reluctant to engage in the process. It is, however, crucial, as the recent case of CC v LC [2023] EWFC 52 demonstrates.

In this particular case, the husband took his reluctance to engage with the Court process to an unusual and extreme degree. His behaviour included failing to comply with Court directions for disclosure and not attending Court hearings, even when ordered to do so under threat of penal sanction.

This case illustrates that whilst the Court will give reasonable encouragement and opportunity for parties to meet their disclosure obligations, its patience is not infinite. An uncooperative litigant can find themselves penalised by having to pay the other party’s wasted costs. But that costs risk pales compared to the likelihood of the Court making assumptions about their finances and reasons for failing to disclose information. As here, such assumptions may culminate in the Court making decisions more favourable to the other party.

CC v LC is a cautionary tale for those reluctant to comply with their disclosure obligations. The decision underlines that the Court will almost always look more favourably on a party producing disclosure openly and honestly and who has otherwise cooperated fully with the Court process.