What lies beneath
Transparency and full financial disclosure have long been the cornerstones of equitable divorce settlements. But what about when parties withhold or misrepresent financial information? Ciara McLoughlin checks under the iceberg
In 2024, the issues of transparency and financial disclosure were brought into focus in a series of High Court judgments highlighting that, when parties withhold or misrepresent financial information, it complicates judicial determinations, undermines fairness – and often backfires.
The judgments serve to remind both clients and practitioners of the importance of full financial disclosure and to warn of the serious consequences of financial deception.
Family loans
In LJ v PE, the respondent (wife) claimed to have repaid €77,000 in family loans during the separation. However, the timing and documentation of these repayments were a significant issue.
Jackson J expressed concern about the lack of clarity and evidence of the repayments, noting that they were made “on the cusp of proceedings”.
The court found that the respondent’s affidavit of means referenced family debt at a maximum of €62,000. This contradicted the later claim of €77,000 being repaid, which raised doubts about the completeness and accuracy of her financial disclosures.
Further, a payment of €19,000 just prior to the hearing lacked clear explanation and did not align with her stated legal fees.
Jackson J concluded that the respondent likely retained more financial resources than she claimed, estimating her true deposit for purchasing accommodation to be closer to €120,000, rather than the €100,000 that she had stated.
The court noted that the discrepancies, and the vague explanations surrounding the repayments, diminished the credibility of her financial position.
This case highlights the critical importance of full and complete financial disclosure, particularly when large transactions are made near the time of the legal proceedings.
Ultimately, the court’s analysis of the respondent’s loan repayments underscores the principle that vague or poorly supported claims can negatively impact ancillary relief awards in divorce proceedings.
Undisclosed income
RJ v EK involved an application by the respondent (husband) to discharge a spousal maintenance order that had been in place since 2005.
The court ultimately granted the discharge, concluding that the applicant’s financial circumstances had improved significantly and that she no longer required maintenance. However, the judgment also highlighted issues surrounding financial transparency and disclosure on both sides.
The applicant (wife) accused the respondent of having undisclosed rental income and a gambling account, though these claims were not substantiated.
The respondent, in turn, alleged that the applicant had additional income from short-term rentals or student homestays. While the applicant denied continuing such activities, she acknowledged that she previously received income from these sources and accepted that her home had been listed for such rental purposes.
It is clear that incomplete or vague financial disclosures from both parties hindered the court’s ability to fully assess their financial positions.
Despite the lack of concrete evidence, the judge formed the view that “each of the parties has some additional income derived from offering accommodation to third parties”, which underscores the suspicion that neither party had been fully transparent.
This lack of transparency may have influenced the court’s ultimate finding that the applicant’s financial position was sufficiently strong to justify discharging the maintenance order.
RJ v EK demonstrates that, where there is incomplete disclosure, the court is required to fill in the gaps using the evidence it has before it. Like LJ v PE, this case reiterates the fact that unsubstantiated claims and incomplete disclosures not only weaken a party’s credibility, but also risk adverse outcomes in litigation.
Concealed award
In CCK v SLK, the respondent (wife) deliberately concealed a €100,000 personal injuries award by omitting it from her affidavit of means and failing to disclose it during earlier stages of the proceedings.
The award only came to light during the Circuit Court case, where the respondent initially claimed the funds had already been spent. However, this was later proven false, as she failed to account for the majority of the money.
The court included €45,000 of the personal injuries award in the marital pot, despite the respondent’s attempts to conceal it. Jackson J allocated one-third of this amount (€15,000) to the appellant (husband), explicitly linking the allocation to the respondent’s litigation misconduct.
The judgment underscored that non-disclosure disrupts the court’s ability to make equitable determinations.
Jackson J noted that, while litigation misconduct is often dealt with through costs orders, she expressly addressed it in this case by adjusting the allocation of the personal-injuries award, and in her treatment of the joint savings of the parties.
Notably, the appellant also engaged in financial misconduct by failing to disclose a savings account that had a balance of €6,500 before the separation. Although it is unclear what was in the account at the time of distribution, the court awarded the entire amount to the appellant.
Jackson J linked this decision to the wife’s earlier dishonesty, which had undermined her standing before the court.
It should be noted that, while both spouses engaged in litigation misconduct, the respondent’s more egregious concealment of significant assets led to more severe consequences.
Jackson J emphasised that non-disclosure is a particularly serious form of litigation misconduct because it impairs the court’s constitutional duty to ensure proper provision.
This case demonstrates that deliberate dishonesty not only erodes trust in the judicial process but also backfires, often resulting in less favourable outcomes for the dishonest party.
Verifiable evidence
In FF v SB, financial transparency played a central role, as both parties presented conflicting accounts regarding their assets and transactions.
Jackson J repeatedly highlighted the challenges caused by untraceable financial dealings and stressed the importance of verifiable evidence in court.
The respondent (husband) was accused of failing to disclose several accounts and transactions, including a KBC account and savings invested to provide bridging finance to his mother.
Although the respondent claimed the funds were returned, the lack of a full paper trail hindered the court’s ability to verify these claims. Jackson J noted that this lack of documentation “did not help transparency”.
The respondent was also accused of earning significant cash income through building works. While the court accepted that some cash income existed, the judge found that the precise amounts and dates of these earnings were unclear and that she was not informed of same, which made it difficult to quantify the financial impact.
The respondent alleged that the applicant (wife) had undisclosed accounts, including a PTSB term deposit account. Jackson J reviewed these claims, but ultimately concluded that the applicant’s explanations were credible and supported by evidence.
She noted that “while it is most likely that these accounts were merged with others over the years, I simply cannot be certain of this on the evidence before me”.
Jackson J underscored the importance of clearly vouched evidence in financial disputes. She emphasised that vague claims or incomplete documentation undermine the court’s ability to make equitable determinations.
In addressing the respondent’s lack of evidence to support certain claims, she observed that transparency is a prerequisite for credibility in financial matters.
Given the prolonged delays and conflicting accounts, the judge ordered the sale of the family home against the respondent’s wishes. She concluded that the respondent’s claims of having access to sufficient funds to buy out the applicant’s share were “somewhat opaque” and unsupported by verifiable evidence. The proceeds from the sale were to be divided equally.
The judgment in FF v SB reinforces the principle that courts rely on verifiable evidence to adjudicate financial disputes. Parties who fail to provide traceable records risk unfavourable outcomes, as the burden of proof lies with those making the claims.
Financial manoeuvring
Significant deficiencies and inconsistencies in financial disclosure were also central to the decision in BS v SR.
The respondent (husband), while earning a combined income of €2,528.93 per month, failed to disclose certain assets, including a bank account and late-disclosed transactions on a Revolut account. His explanations for cash lodgements on this account were deemed “somewhat unconvincing”.
The respondent’s rental arrangement also raised concerns, as he paid an unusually low rent, and the specifics of this favourable arrangement were not fully explained.
Similarly, the applicant (wife) failed to account for substantial income sources. Despite declaring only €230.20 per week in social welfare income in her most recent affidavit, evidence revealed approximately €19,000 in additional income over a 12-month period.
This income included child-minding earnings and significant financial contributions from her new partner (none of which were evident in her affidavit of means). Furthermore, the applicant omitted earnings from hosting lodgers in her home, a practice she had engaged in previously.
Jackson J highlighted the unusual nature of the applicant’s contention that she was allowing two adults to reside in her home without payment, particularly in circumstances where one of them operated a business from the property.
Ultimately, the court concluded that “the evidence given was most likely understating or misstating the financial circumstances”. This suggests a significant dent in the applicant’s credibility regarding her financial situation.
Both parties’ financial positions were scrutinised meticulously by the court, and it is evident that their lack of transparency damaged their credibility. As a result, the court was tasked with filling in the gaps of an incomplete financial picture.
Parties should be reminded to engage honestly in divorce proceedings to prevent burdening the court and compromising the fairness of the judicial process.
Stark reminder
These recent High Court decisions act as a stark reminder that financial transparency is crucial in divorce proceedings.
Parties who fail to provide full and accurate financial disclosure risk jeopardising their credibility, forfeiting a greater share of their assets, and facing adverse outcomes.
Ciara McLoughlin is a barrister completing her LLM in family law as a Hauser Global Scholar and George Moore Scholar at New York University.
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Ciara McLoughlin
Ciara McLoughlin is a barrister completing her LLM in family law as a Hauser Global Scholar and George Moore Scholar at New York University