Faced with a recalcitrant husband, the court in LFL v LSL (McKenzie Friends: breach of court orders)  EWFC B62 offered a reminder of the impact of litigation misconduct in family proceedings.
The husband was 60 and the wife was 62. They had been married for nine years and had assets of approximately £400,000. The husband’s total disregard for the Family Procedure Rules and court orders had had the effect of forcing the wife to a final hearing, which was heard by District Judge Nichols in the Family Court at Basingstoke.
At the hearing, the wife made two complaints in relation to the husband’s litigation conduct: the first was that he had failed to provide proper or adequate financial disclosure; secondly, he had failed to comply with the court rules and court orders. In his judgment, District Judge Nichols offers a helpful reminder of the consequences of these two different strands of litigation misconduct, although this article focuses only on the husband’s non-disclosure.
The husband was described by the judge as a “serial non-discloser”. At the time of the First Appointment hearing, the husband had failed to complete a Form E, which resulted in the hearing being abortive. He was given a second chance to do so but again failed to produce a Form E or any of the supporting documents.
In order to try to remedy the position, the judge at the Financial Dispute Resolution hearing insisted that the husband complete his Form E at court. The long-awaited document was described by the Financial Dispute Resolution hearing judge as being “indecipherable”.
Following the Financial Dispute Resolution hearing and without the court’s permission, the husband voluntarily submitted a second Form E, which was described as being “as indecipherable as the first”. In particular, neither Form E included details of the income the husband received from his swimming pool cleaning or minicab businesses, both of which the husband admitted in evidence he was operating illegally and in respect of which he had not declared any income for tax purposes. The husband also failed to provide any supporting documentation with his Form E or to provide any responses to the wife’s questionnaire (which he had been ordered to do by the court).
District Judge Nichols reminded the court of the devastating effect of non-disclosure, which forces the court to rely on “inference and guess work within an exercise which inevitably costs a fortune and which may well result in an unjust result to one or other party” (as per Mr Justice Mostyn in NG v WG (appeal: non-disclosure  EWCH3270 (FAM)). He provided helpful guidance on the ambit of the court’s discretion when faced with a non-discloser:
- The court should not make assumptions that because of the non-disclosure the husband had squirreled away vast assets, if there was no evidential basis for doing so
- The court was not required to put a precise figure on the scale of the hidden assets or to identify what they are or comprise
- However, the court must also be concerned to see that the inferences drawn did not result in too conservative an estimate.
District Judge Nichols concluded therefore that whilst there was no evidence to enable him to calculate the husband’s actual earnings, in view of the fact that he had managed since separation without financial assistance from anyone else, he was adequately able to cater for his own income needs. On this basis, District Judge Nicholls awarded the wife 55.37% of the assets.
Lessons to be learnt
Stewarts’ partner Emma Hatley says of the judgment:
“This case offers a cautionary tale to parties who are tempted to engage in litigation misconduct, either by failing to provide full, frank and timely disclosure or through breach of the court rules and orders.
The court has a broad discretion to achieve fairness between the parties and will take a dim view of those who seek to thwart the proper exercise of its discretion.
The court also has wide-reaching powers to assist parties seeking to locate and preserve assets in financial proceedings (both in this jurisdiction and abroad), which can be highly effective in ensuring that a party provides full disclosure of their worldwide assets.”