Court clarifies duty of disclosure in financial remedy arbitration

Background and Context

In a significant ruling, the Family Court at Blackburn, presided over by His Honour Judge Booth, addressed the issue of disclosure obligations in financial remedy proceedings following arbitration. The case involved a long-term marriage, financial remedy proceedings, and allegations of fraudulent non-disclosure by the husband.

The Core Issues

The court was tasked with determining whether there had been fraudulent non-disclosure by the husband, whether such non-disclosure was material to the arbitral award, and what adjustments should be made if the non-disclosure was found to be material. The case also examined the timing of the duty of full, frank, and clear disclosure in the context of arbitration and subsequent court proceedings.

Representation and Evidence

Ms Harrison KC represented the wife, while Ms Bennett represented the husband. The court considered extensive documentation, including nine lever arch files, and evidence from both parties. The husband's businesses, involved in building and property development, were central to the dispute.

History of the Case

The parties married in 1996 and separated in 2019, with divorce proceedings issued in 2020. Financial remedy proceedings followed, leading to arbitration. The arbitrator's award, based on a valuation of the husband's business interests, was contested by the wife, who alleged non-disclosure of relevant financial information.

The Arbitral Award

The arbitration determined the asset base at £4.8 million, divided equally. However, the wife contended that the husband's businesses were undervalued due to non-disclosure. The court found that the husband had failed to disclose significant financial information, impacting the award's fairness.

Legal Principles and Judgment

The court reiterated the duty of full and frank disclosure in financial remedy cases, extending until a court order is sealed. Judge Booth concluded that the husband's non-disclosure was deliberate and amounted to fraud, necessitating a reassessment of the award.

Outcome and Implications

The court adjusted the award to reflect the true value of the husband's businesses, granting the wife an additional £1.16 million and £200,000 towards her legal costs. The judgment highlighted the importance of disclosure and the potential consequences of non-compliance in financial remedy arbitration.

Lessons Learned

This case serves as a reminder of the ongoing duty of disclosure in financial remedy proceedings and the need for realistic and focused applications when challenging arbitral awards. The ruling underscores the court's role in ensuring fair outcomes in family law disputes.

Learn More

For more information on resolving financial disputes in family law, see BeCivil's guide to UK Family Law.