Full and frank disclosure — when does the duty end in the financial remedy process after divorce?

In the realm of financial remedy proceedings following divorce, the duty of full and frank financial disclosure is a long-established principle. This duty begins from the date at which Forms E are due and continues until the conclusion of the proceedings. 

However, the case of ON v ON (2024) EWFC 379 brought to light a nuanced issue regarding the extent of this duty following the conclusion of the arbitration process but prior to the terms of the arbitral award being encompassed into a court order.

Here, Debbie Heald explores the facts of the case and outlines three key points about disclosure in the financial remedy process.

Facts of the case

The case involved a long marriage with four children, where both parties were in their 50s at the time of the proceedings. They had agreed to an arbitrated financial remedy process. One of the main issues was the valuation of the husband’s business interests. The husband contended that the assets available for distribution were £4.6m, while the wife argued that the available assets totalled £7.3m. 

The arbitrator determined the assets to be worth £4.8m. Following the award of the arbitrator but before approval of a financial remedy order reflecting the same by the Court, the accounts for the husband’s business were finalised which resulted in the wife arguing that there had been fraudulent non-disclosure by the husband, which was material to the arbitral award. She sought to set aside the arbitral award on the basis that the husband had failed to provide full and frank financial disclosure.

The wife’s complaints

The wife’s complaints centred around the husband providing incomplete and misleading information to the single joint expert, resulting in an incorrect valuation of his business. 

She asserted that the husband had misrepresented the performance of his business, which was supported by company accounts filed after the arbitration process. Additionally, the husband had failed to disclose that he’d activated a previously dormant company to facilitate a development intended to profit his business.

The husband’s case

The husband denied any attempt to mislead the wife or arbitrator. He argued that he disclosed what he knew at the time of the arbitration hearing and that the improved performance of the business was due to good fortune, which was too late to impact the arbitral award.

Did the husband deliberately mislead?

The judge determined that the husband had indeed misled the wife and arbitrator. The husband was aware of the settlement progress of various disputes that would significantly alter the profitability of the company. 

The Judge found that the husband’s failure to disclose this information was deliberate and amounted to fraud, stating:

“He decided he was not going to share what he regarded as his good fortune with his wife. In my judgment, that amounts to fraud once I have established that his duty of full and frank disclosure continued throughout the process and continues to this day. Such a finding was inevitable, given the decisions the husband made, not to disclose anything further”.

As a result, the wife was awarded an additional £1.16m, along with a  costs order of £200,000.

Key takeaways

The judge in this case set out three key points at the end of the judgment:

1. The duty of full and frank disclosure continues beyond an arbitral hearing/award until the court has approved an order reflecting the arbitral award.
2. Any application to set aside an arbitral award needs to be focused, realistic and confined to matters that make a material difference.
3. The approach to costs in these circumstances is likely to mirror that of an appeal, where a party will only recover costs on issues they succeed in and are at risk of being ordered to pay costs on issues where they lose.

This case underscores the importance of full and frank disclosure throughout the entire financial remedy process — including post-arbitration — until a court order is made. It serves as a reminder that any attempt to withhold information can have significant legal and financial repercussions.

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