The high-profile divorce of millionaire businessman Vivian Imerman and Elizabeth Tchenguiz could set a precedent for protecting the secrecy around the assets of high net worth individuals (HNWI) in the UK.
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The UK Court of Appeal ruled that millions of pages taken by Iranian-British entrepreneurs Robert and Vincent Tchenguiz from Imermans computers were inadmissible in the divorce proceedings.
The key issue decided in this case was about a persons right to confidentiality.
It questioned whether a spouse has a right to full and frank financial disclosure in divorce proceedings from a spouse who was not willing to give it. Controversially, the spouses right to confidentiality won.
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By GlobalDataLondon: the divorce capital
London remains the divorce capital of the world for the weaker financial party making it a potential trap for HNWIs either residing or non-domiciled in the UK. It could, however, make it easier for private banks to prevent their clients assets being known.
It will now be even more difficult to establish and prove the accuracy and reality of a persons finances where those assets are well hidden. This is especially the case in big money cases or when a partys finances are complex.
Up until July 2010 the advice family solicitors often gave a spouse was to learn as much as they could about their spouses finances and take copies if they suspected their spouse would not disclose fully and frankly.
Family courts did not penalise the person taking the information as long as a computer was not hacked into or the documents were not taken by force and the information was disclosed to the spouse from whom they were taken. The means justified the end.
Confidentiality prevails
The Court of Appeals Imerman vs Tchenguiz ruling has decided that a spouses right to confidentiality prevails and where a breach of confidence has occurred, an injunction to restrain passing on or using the information may follow.
If documents have been taken, they and all copies must be returned. The claimants rights triumph against the third party if the information has been given to a third party.
Some family lawyers have called the judgment a cheats charter and it is certain that it will now become more difficult to obtain financial information on divorce from someone who resists giving it.
The judgment considers the nature of what is confidential as each case turns on its own facts an open bank statement lying on a kitchen table may be less confidential than a wifes open diary on her dressing table.
Seize and search orders
The Court of Appeal remarked that spouses may be subpoenaed to give evidence and the outcome of this case now means that injunctions may be obtained to freeze assets, prevent someone dealing with assets, or to seize and search orders if the information and documentation didnt appear forthcoming.
However, these orders are predicated on a spouse already knowing what there is. These legal remedies to force disclosure are not only complex but extremely expensive and are obtained with difficulty.
It will be interesting to see whether, politically, the decision will be successfully appealed. The Family courts may continue to turn a blind eye to assist a spouse uncover the truth of another spouses finances. For the moment, the pendulum seems to be swinging back in favour of secrecy.
Richard Collins is a partner at Charles Russell LLP
