The last 20 years have seen a radical change in the way family lawyers approach financial cases. The emphasis on constructive negotiation with the aim of achieving a fair outcome has led to the development of new models of dispute resolution. Mediation, collaborative law, neutral evaluation and arbitration are welcome alternatives to litigating family cases through the courts. However, the success of these alternatives and the court process itself is dependent upon full and frank disclosure of all assets, income and liabilities. Without that transparency any attempt to negotiate a fair settlement is doomed to failure.
For most separating couples the stakes are high and the decisions they make will affect their long term financial security. The way that assets and income are presented will determine the outcome of their negotiations or the court application. For some there will be a reluctance to disclose all their financial resources. This is not a risk free strategy.
The recent Family Division case of Young v Young  EWHC 34 (Fam) is a warning that individuals who are determined not to disclose the full extent of their assets can find themselves in contempt of court and at risk of imprisonment.
Young v Young - the facts
The husband said that he was penniless and bankrupt. The wife said that he was a very wealthy man with assets of up to £400m. She claimed that he had hidden his entire resources to avoid his obligations towards her and their children.
The wife obtained an order that the husband provide answers to her questionnaire seeking further information and evidence. The husband gave only partial answers to the questions and the wife applied to the court for him to be committed to prison for contempt. In June 2009 Mrs Justice Parker committed the husband to prison for six months suspended for 92 days on the basis that the information would be provided within that time.
The husband did not comply with the order. His case was that he had been detained under the Mental Health Act for 13 days – shortly before the court deadline - and had not been able to obtain the information and documents required. Then, for a number of reasons the case went cold. The reasons included the ill health of Mrs Justice Parker and difficulties the wife was having in funding the litigation.
In January 2011 Mr Justice Mostyn made an order that there should be no further application to activate the committal to prison without the court's permission. He took the view that the case should be decided on the evidence available and if appropriate, adverse inferences would be drawn against the husband.
The application was listed for trial in November 2012. Shortly before that date the wife applied to adjourn the hearing as the case was not ready for trial. Again the husband was directed to respond to questions from the wife and in particular to produce copies of his tax returns for the years 2004/5 and 2005/6. It was made clear to him that the situation was serious and that if he did not comply with the order there would be an application to send him to prison for contempt. Although he was to provide the information by 10 December 2012 it was not until 10 January 2013, a matter of days before the relisted final hearing, that he provided some limited information. To give a flavour of the deficiencies, the husband had failed to provide any details of income from March 2006 to 10 December 2012.
Mr Justice Moor found the husband's response to be "next to useless". He found the husband to be in contempt of the order for disclosure that he had made in November 2012. When assessing the appropriate period of imprisonment he found that the breaches were serious and a suspended sentence could not be justified. The husband would go to prison for six months. Mr Justice Moor said there had been "a flagrant and deliberate contempt over a very long period". He reminded the husband that at any stage he could apply to purge this contempt but this could only be done by complying with the orders for disclosure.
A special case?
There is no question that this was an extreme case. The proceedings began in 2008 and some five years later the husband had still not provided even basic information about his resources. The court had already imposed one suspended sentence for non-compliance with an order and yet when given another chance the husband had again failed to produce the evidence. It was almost inevitable that the judge would commit him to prison for contempt.
It is rare for the court to impose a term of imprisonment for failing to comply with an order for disclosure because there are other effective sanctions which will usually produce the information. In most cases the threat of imprisonment or an order for costs will be enough but it is important to remember that it is only the court that can impose those sanctions and so if there is a risk of non-disclosure other forms of dispute resolution may not be effective.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at February 2013. Specific advice should be sought for specific cases; we cannot be held responsible for any action (or decision not to take action) made in reliance upon the content of this publication.
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