Young v Young

In financial remedy proceedings, the court must determine the parties’ true financial positions by applying the statutory factors and making findings on the balance of probabilities. A respondent’s failure to provide full and frank disclosure may justify adverse inferences, but it does not reverse the burden of proof. Lies must be assessed in context and do not, without more, establish concealed assets. Bankruptcy prevents property adjustment orders in respect of assets vested in trustees, but does not prevent a lump sum order, provided the bankrupt’s debts and insolvency costs are considered. Equal sharing remains the starting point where both parties’ contributions are equal. The court must control disproportionate expenditure and expert evidence, and should restrict participation at a final financial remedies hearing for contempt only with great caution and regard to Article 6.

The applicant wife sought financial remedies following a lengthy marriage and alleged that the respondent husband had concealed substantial assets. The husband asserted that he was bankrupt and owed approximately £28 million. The wife also sought enforcement of substantial maintenance pending suit arrears. The court considered extensive documentary, expert and oral evidence concerning the husband’s business activities, alleged hidden assets, debts, non-disclosure and the financial support provided after separation.

The central issues were the husband’s true financial position, the proper use of adverse inferences, the effect of his undischarged bankruptcy, the appropriate lump sum and the application to vary or remit maintenance arrears.

1. Financial remedy and sharing. Applying sections 23 to 25 of the Matrimonial Causes Act 1973, the court had to consider all the circumstances and the statutory factors. The parties’ contributions were equal. Consistently with White v White [2001] 1 AC 596, equal sharing was therefore appropriate, subject to the assessment of the husband’s resources and the wife’s needs.

2. Disclosure and adverse inferences. The burden remained on the party asserting disputed facts, while the husband had a duty to provide full and frank disclosure. Under J v J [1955] P 215, as approved in Baker v Baker [1995] 2 FLR 829, serious gaps in disclosure could justify inferences adverse to the husband. This was not a reversal of the burden of proof. Lies had to be examined in context: a lie was not, by itself, proof of undisclosed assets, and the court had to consider whether an innocent explanation existed.

3. Bankruptcy. Assets owned beneficially or legally at the bankruptcy date vested in the trustees under section 306 of the Insolvency Act 1986. By virtue of Re Holliday (A Bankrupt) [1981] Ch 405, the court could not make property adjustment orders in respect of those assets. It could nevertheless make a lump sum order, following Hellyer v Hellyer [1996] 2 FLR 579, after allowing for the husband’s debts, statutory interest and insolvency costs.

4. Findings. The husband had concealed substantial assets and had failed to explain the discrepancy between his profitable business history and his asserted insolvency. The court found that he had assets of approximately £45 million, against debts of approximately £5 million, leaving £40 million. The wife was accordingly awarded £20 million, payable within 28 days, with interest at the High Court judgment debt rate.

5. Procedure and participation. Unfocused preliminary oral-evidence hearings were generally justified only where they produced findings capable of becoming res judicata, or assisted targeted pre-trial discovery. The approach in OS/DS [2004] EWHC 2376; [2005] 1 FLR 675, together with Khanna v Lovell White Durrant [1995] 1 WLR 121 and Frary v Frary [1992] 2 FLR 696, supported that guidance.

   The jurisdiction recognised in Hadkinson v Hadkinson [1952] P 285 applied in family proceedings, as illustrated by Mubarak v Mubarak [2006] EWHC 1260 (Fam); [2007] 1 WLR 271. However, preventing a litigant in contempt from participating in a contested final financial remedies hearing was disproportionate and risked injustice in the present case.

6. Orders. The application to vary the maintenance pending suit order and remit arrears was dismissed. The arrears were payable within 28 days. The court did not make further findings binding on unjoined third parties.