Adjourning capital claims: a weapon in the arsenal when dealing with a dishonest spouse

Finality is one of the core principles of financial remedy litigation.  It is therefore an unusual case where capital claims are left open for 10 years. That was the order made in the recent decision of HHJ Edward Hess in X v. Y [2022] EWFC 95 and published here.

It was a rather common case of non-disclosure, involving repeated adjourned hearings, and “disorderly material” served by the husband at the last minute. The case was set down for final hearing when the husband failed to attend the third attempt at an FDR hearing, claiming to be in South America and having arranged no representation.

What sets the case apart is the finding by the judge that the husband falsified a bank statement during the marriage. The husband had provided the wife with a bank statement showing an £8 million deposit, which he used to persuade her to move herself and the family from their home abroad to the UK.  In reliance upon that document (which she retained), the family moved to London. Investigations during the final hearing showed that the document had been falsified.

This fitted with the husband’s assertions during cross-examination that photographs he put on the internet showing his lavish lifestyle (weekend breaks in Paris, trips to the Monaco Grand Prix, use of a private plane) were photo-shopped. Of the husband’s evidence, HHJ Edward Hess said that it was “dishonest and unreliable”.

The wife’s position was clear: she had no assets, £300,000 of commercial debt and was reliant on State benefits. Upon separation the wife and children had been forced to leave the £10,500 per month rented family home, and the children left their private schools, when the husband ceased paying for either.

The difficulty for the judge was that he was unable to ascertain the husband’s financial position due to (i) lack of disclosure and (ii) being unable to place any reliance upon the husband’s assertions about his earning capacity. The fact that the husband was resident abroad only exacerbated the difficulties.

It was in those circumstances that the judge acceded to the wife’s request to adjourn her capital claims. HHJ Edward Hess helpfully sets out at paragraph 19 of the judgment the authorities which supported his conclusion. He highlighted recent authorities which illustrate the ability to leave claims open even where there is “not necessarily…a real possibility of capital from a specific source becoming available in the near future”. He concluded that “there are hard cases where fairness and justice must prevail over the normal desirability of the finality of litigation”.

He summarised at paragraph 20:

if I dismissed the wife’s claims now because she has been unable to establish the existence of assets which, if the husband had given proper disclosure might very well have been established, and which leaves the wife in considerable debt and in a country to which she was tricked by the husband into moving, then I might well be doing the wife a considerable injustice”.

The judge left open the capital claims for 10 years, during which time the wife can investigate the husband’s financial position and bring any necessary claim. After 10 years the capital claims will stand dismissed. The judge made a spousal periodical payments order in wife’s favour for £5,000 per month (rising to £7,000 in 9 months’ time) to run for the same period.

One has to question how realistic it is that the wife will see any spousal maintenance or future capital award, given that the husband is resident abroad and clearly intent on defeating her claims.  It is also difficult to see how the judge could have done anything else, given the scant financial information before him. It remains to be seen what becomes of the case. However, the judge specifically chose to publish the judgment to “draw wider attention to the ability of dishonest parties to manufacture bank statements (and other documents) which, for all practical purposes, look genuine, but which are in reality not in that category”. He cited an article in the Financial Remedies Journal called Dodgy Digital Documents: Where are we now? Where are we going? by Helen Brander [2022] 2 FRJ 139. I highly recommend it to all FR practitioners.