Amanda Melton, a legal expert, discusses a recent landmark divorce case ruling and its implications.

Following the recent landmark ruling in the Imerman v Tchenguiz divorce case, Amanda Melton, partner in the Family, Contentious Trusts & Probate group at Matthew Arnold & Baldwin, discusses some possible repercussions.

To have and to hold…..

This was, prior to the recent decision in the matrimonial case of Lisa Tchenguiz and her husband Vivian Imerman, a safe bet for wives seeking to issue divorce proceedings and having little knowledge of their husband’s financial circumstances. If she was holding the documentation as to her husband’s finances she would be in a safe arena.

Before this ruling the husband, learning of his wife’s intention to divorce, would be asked to provide financial disclosure. Were he looking to hold back on that disclosure (maybe seeking to try and enforce a self help pre-nuptial agreement – too little too late) he would need to think twice – no doubt being advised by his legal team that non-disclosure, quite apart from putting the order at risk of being set aside later, would also result in the possibility of the trial judge finding against him on other issues - once satisfied of his desire to mislead the court.   

In the Imerman case the wife had, with the assistance of her family, obtained information about her husband’s finances by accessing his computer and downloading files without his knowledge. Prior to this case a wife with documents suggesting her husband had assets which had not been disclosed could produce the documents in her possession to bring those missing assets to the court’s attention. This would often lead to a situation where the eventual trial judge may draw adverse inferences against the husband.

The risk for the husband was not only that the assets he had failed to disclose might come to light but more importantly that it might make his situation even worse.  Any arguments on other issues would stand a far greater chance of being decided in favour of the wife whose credibility by this stage would be far better than his. Needless to say husbands, in full knowledge of these facts, rarely had the stamina to take on the risk.

The recent study by Grant Thornton suggests there is a feeling within the legal profession that this decision will lead to husbands taking their chances more frequently than they might otherwise have done. But is this really the case?  

The judgment in Imerman precludes wives from using such documentation, going so far as to prevent either the wife or her legal team from referring to it within the proceedings. Ultimately, advice to wives now must be that they must not obtain documentation concerning their husband’s finances as the risks are too great.

What are those risks? The court may decide that the information cannot be brought into the court arena at all which means those assets are then excluded – the situation goes from being a simple non-disclosure which on cross-examination might still become apparent, to a situation where the court refuses to hear anything about these assets at all.

More importantly, if the wife hands over the documents to her legal team it is possible the court may say that this team is precluded from continuing to represent her. While there remain arguments about how the wife came into the possession of the documents, it does seem that the risk has now passed from the husband to the wife. Quite apart from the consequences outlined above, a wife is likely to find herself the subject of civil proceedings or even criminal proceedings for breach of confidentiality laws.

So, does the wife have any other options or must she just give up at the first hurdle? There are still other options available to wives. The courts advocate the use of an alternative procedure, namely an order to search the husband’s premises. This process involves additional expenditure which the wife can often ill afford – the exact same reason wives were attracted to the easier and cost-free option in the first place. Beyond this there is the question of how successful such a claim would be.

To make the application there is a requirement to have at least some information about what assets the wife is looking for. The court is highly unlikely to grant such an order if there is no credible reason to do so. A "fishing expedition" is not an option – the judge will not grant it and the wife will not want to take the risk of incurring the expense without a fairly good chance of success, not least because she will be asked to meet any damages occasioned to the husband by her actions.

As lawyers, we are in the vast majority of cases not going to be in a position to provide the guarantee of success they seek.  There is nothing to suggest such applications will be considered favourably, although it will be interesting to see how the court decides these cases post-Imerman. If the courts endeavour to make search orders easier to obtain then the situation may change again.  

Are there other options? These are probably even more costly but include freezing orders to prevent the husband from dealing with his assets or in extreme cases asking the court to appoint a receiver to take control of the husband’s assets. As you can imagine these proceedings would only be proportionate in the most extreme of cases.

For the time being the Imerman judgement significantly reduces the risks to those husbands seeking to preserve certain assets – especially if they are fairly confident their wives will not know about those assets. How is she going to find out? Even if she comes across paperwork he can assume that the wife will not be able to use that. Arguably there is the prospect of wives being placed in a position where they know that the husband is withholding disclosure but are powerless to do anything about it. They may have, they may hold, but this is no longer sufficient.