Moving or hiding assets on divorce
Thu 5 January 2023
What can I do if my husband/wife is about to or has already moved assets?
These types of matters often need specialist urgent legal advice and are usually very complex both factually and legally. It is important you take legal advice if you suspect your husband or wife is going to get rid of or has already got rid of assets.
There are two types of applications you can make in this instance which are discussed briefly below:-
Application to prevent a disposal/removal of property
If the court is satisfied that the other party is about to make any disposition or transfer out of the jurisdiction or otherwise deal with any property, they have the power to make such order as it thinks fit for restraining the other party from doing so.
This is a type of injunction, and it must be emphasised that it is a form of prohibitory injunction. This means that its effect is to prevent somebody from doing something. This type of injunction is not limited to a disposal to a third-party, it can restrain a party from mortgaging or charging land. The Order can only be made against the other party to the proceedings and not against a third-party.
For the Court to make an Order there must be a relevant claim for financial relief e.g. lump sum order, property adjustment order. The Court must be satisfied that a disposal is about to take place. Raising suspicion alone will not suffice. The Applicant must prove the matter on the balance of probabilities. It must also be shown that the disposal is about to be made with the intention of defeating a claim for financial relief.
Applying to set aside a transaction that has already taken place
If the other party has already disposed of the asset, then the Court have the power to set aside the transaction/(s). It must be shown that the disposition was made with the intention to defeat the other party’s claim for financial relief. Applications under this section also carry with it a statutory presumption. If the disposal was made within 3-years of the financial relief application, it will be presumed the transaction was made with the intention to defeat the applicant’s claim for financial relief. (Section 37(5) of the Matrimonial Causes Act 1973).
This a powerful tool because it has the effect of reversing the burden of proof and means the party who has disposed of the property must prove the disposal wasn’t made with intention to defeat your claim.
A potentially grey area and one where there may be substantial dispute is whether the transaction was made for valuable consideration and in good faith (section 37(4) of the Matrimonial Causes Act 1973). Any disposition is reviewable unless it was made for ‘valuable consideration’. Generally speaking, if the transaction was made at less than market value, the Court will more readily infer that the person receiving the property had notice that it might be capable of legal challenge.
Even if a transaction may have been for valuable consideration, this does not mean in was done in good faith. Therefore, if the disposal has been made to a family member/friend, it may raise further doubt as to the validity of the transaction.
You may also need to consider not only making an application against the respondent but a freezing application against third parties to prevent a further disposal.
In conclusion, the Court have the power to assist in situations where a party is about to dispose of property and where property has already been disposed of. As above, there are many statutory factors and case law principles to consider when making applications of this nature. It is essential you consult with a specialist financial remedy lawyer if you are faced with either of these situations.