Legal Briefing

Divorce and the media: the courts, the pay-outs and the speculation

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Technology, Media and Telecoms | 01 February 2010

The rising divorce rate and some well-publicised settlements running into tens of millions of pounds have focused attention on a growing issue in divorce cases: just how far can spouses go to obtain information about their partner’s financial affairs?

Uncertainty about legal outcomes adds to the temptation for well-heeled spouses to disregard their obligation to provide full and frank disclosure in divorce and ancillary proceedings. Meanwhile, the ease of copying electronic data from a partner’s laptop or accessing online bank accounts is prompting some spouses to actively hunt evidence that their estranged partner has the wherewithal to fund a sizeable settlement.

BE AWARE

Yet those contemplating separation and divorce must tread a careful line. The boundary between harmless duplication of confidential financial information belonging to an estranged spouse and wrongful interference with their property is not very elastic. As battles intensify over assets, courts are starting to provide firmer indications of what is – and what is not – acceptable in the search for convincing evidence.

The need for greater clarity on acceptable behaviour in the search for evidence in divorce cases comes against a background of rising distrust between wives and husbands whose relationship is on the rocks. Unmarried couples are also behaving with increased caution. Marriage rates in England have fallen to their lowest since records began.

Matrimonial law, and therefore the rules governing spousal settlements, is famously discretionary in England. This delights the British press, which can revel in endless speculation about the likely size of a celebrity’s financial pay-out in the wake of a split. But for the real parties of a failing relationship, the lottery of possible financial settlements is unfathomable and perplexing.

MARRIED OR UNMARRIED: DIFFERENCES WHEN SEPARATING

It is little wonder then, with the law in a state of flux, that many couples are simply spurning marriage for what bygone generations termed living in sin. They may have one set of keys, one mortgage, shared expenses and even a child or two. From the outside, an unmarried couple’s relationship can have all the features of a marriage, but without the ties and without what many perceive to be the mire of divorce proceedings should their relationship collapse.

In the face of divorce, a married couple may treat it as law that the former marital home and all marital assets will automatically be subject to the principle of sharing, irrespective of the financial contributions made by either party to the marriage.

A cohabiting couple, by contrast, faces fewer certainties. Today, British courts continue to exercise their discretion to make an order according to the circumstances. There must be some evidence from which to infer a shared intention by the separating couple that, irrespective of financial contributions, each party has a beneficial share in what was formerly their joint home. In the absence of this, each party is entitled to that share that the courts consider fair, having regard to the entire course of dealings between them. In the case of one party to the relationship, this may be nothing at all.

Uncertainties like these have troubled policy-makers. Many hope that the draft Cohabitation Bill, discussed in the House of Lords in May 2009, will promote some change in closing the gap between financial settlements drawn up in the aftermath of relationship breakdown between cohabiting parties and their married counterparts.

For those who have taken the leap and subscribed to until-death-do-us-part, the shackles of wedlock make for different options when a marriage begins its demise. Different options, but limited ones. And in the face of limited options, galvanised by fear and panic, parties often find themselves resorting to duplicity and subterfuge.

DISHONESTY: NOT THE BEST POLICY

Some parties plan ahead, seeking to put their financial affairs in order ahead of divorce proceedings. In this context, forward planning doesn’t necessarily mean honest husbandry and good housekeeping. More often than not it describes a brand new bank account in Liechtenstein, inter-company transfers and the rapid dissipation of marital assets. Such tactics shape a landscape that is increasingly common to divorce lawyers, but one that is no longer impossible to navigate. We like a challenge.

Disclosure is a term that tends to provoke discomfort. Social etiquette, good breeding and plain propriety make many of us shift uncomfortably in our seats at the thought of sharing chapter and verse about our finances with anyone – whether husband, wife, lover or bank manager.

This habitual lack of candour often becomes all the more pronounced in the context of divorce proceedings. Parties often become highly selective in their beliefs as to which assets they really ought to disclose and those assets that are for their eyes only.

But within the context of divorce proceedings, financial disclosure is not the legal equivalent of a trip to the pic’n’mix store. It is compulsory, and full and frank disclosure is a legal obligation incumbent on both parties to divorce proceedings.

WHERE DOES LEGISLATION COME IN?

Be that as it may, however plainly the principle is made clear by lawyers and financial advisers within the context of a divorce, many clients fail to take heed. Fear among parties to divorce proceedings that the spouse will not fully disclose assets is widespread. It has become quite common for one spouse to scour documents belonging to the other. Parties will rifle through drawers, search correspondence, and hack into e-mail accounts, hard drives and office databases. Some even hire private investigators to do the dirty work for them.

Up to a point, this is legal. It is a long-established principle within the context of matrimonial cases that the retention of one spouse’s financial documents (known as Hildebrand documents, afterHildebrand v Hildebrand [1992]) by the other is permissible, as long as the originals are returned swiftly and copies are made available to the owner of the documents during the course of proceedings.

Courts in this country will not penalise the taking, copying and immediate return of documents. But equally, they will not sanction the use of any force to obtain the documents, the interception or retention of documents, nor the removal of any hard-disk recording documents electronically. Yet the information contained in the documents, even those wrongfully taken, will be admitted in evidence because there is an overarching duty on the parties to give full and frank disclosure.

RECENT EXAMPLES

However, in the wake of two very recent cases, it seems that the courts are setting new boundaries and imparting a very clear message to parties in matrimonial proceedings as to what behaviour is simply unacceptable.

White v Withers LLP & anor [2009]

Late last year, the Court of Appeal reversed a High Court ruling from 2008 that struck out a claim made by a renowned chef, Marco Pierre White, against the law firm Withers, which acted for his former wife. White had alleged that Withers instructed his estranged wife to take a large number of his personal documents to support her case for his non-disclosure of assets within their divorce proceedings. At the appeal hearing, it emerged that among the documents taken by White’s former wife and retained by Withers was an extremely poignant letter from his daughter, which had been intercepted so that White had been unable to respond to it. The appeal judges could find no good reason why such a personal letter was included among the documentation retained by Withers, nor why any of the documentation had been retained by the law firm for so long. The judgment made by the Court of Appeal is significant, not least because it armed White with the ammunition to bring proceedings against Withers for breach of confidence, wrongful interference with property and misuse of personal information.

Stealth is employed and applied on different scales and with varying repercussions in each and every matrimonial case. In White approximately 40 documents were involved, as well as the letter that caught the attention of the appeal judges.

Imerman v Tchenguiz & ors [2009]

In Imerman the seizure of documents was unprecedented in its scale, and bears witness to the ability of digital technology to both store and replicate vast amounts of information in ways that can be easily transported. The data that was seized and copied from the claimant’s (Vivian Imerman) computer via memory sticks ran to thousands of pages. Among what was copied were documents protected by legal privilege, and therefore not for public consumption and certainly not for the eyes of any estranged spouse, nor their legal team. Imerman duly brought civil proceedings outside the remit of the Family Division, in which matrimonial proceedings were already under way, seeking injunctive relief to prevent disclosure of the copied material to any third party. Rather boldly, Imerman sought the restraining injunction on a summary basis and he succeeded. Eady J, a seasoned Solomon in affairs of this kind, was unequivocal in delivering his judgment that Imerman was entitled to have the documentation returned and that any circulation of the seized documentation was prohibited. Eady J went on to suggest that any data found on a computer to which access required a password ought to be treated as confidential material. As to whether or not the seized documentation would be admissible within the context of matrimonial proceedings in the Family Division is yet to be seen. What is plain is that with the dawn of an electronic age in which access to hard drives and confidential data no longer demands the key to a locked briefcase, but often simply the flick of a button, new rules are emerging.

ELECTRONIC DATA

Courts will not sanction the use of any force to obtain documents or data, nor the manipulation of any hard drive or the wholesale copying of electronic documentation. Documents and communications protected by legal professional privilege are not for duplication, nor for consumption by any other party.

In many ways, electronic data is far more troublesome than traditional paper documents. With paper, an estranged spouse might contend they found the documentation lying on the dining room table. That is hardly the case with digital data. Cracking a password is also off limits as it is akin to computer hacking. The breach of any of these rules leaves the transgressor vulnerable to a civil claim for damages and also criminal charges that could lead to imprisonment.

MEDIA INTEREST

Celebrity divorces

The uptrend in divorce and the battles over assets that so often accompany cases have recently been accompanied by a significant rise in media interest in cases involving public figures. Ironically, while the law of privacy has never been stronger, a marked increase in press coverage of relationship breakdown and divorce has been made easier, since April 2009, by a change in the law that allows the media to attend court hearings in divorce and child contact cases. Historically, such hearings have been held in private.

While reporting restrictions prevent the press from identifying children involved in contact cases, current restrictions do not prevent them from publishing details of a couple’s finances or allegations made about the parties’ conduct during the marriage, which they may learn from attending court hearings. Unless prevented from doing so, the press are therefore free to report details of sexual antics, financial details – such as income and spending – and the extent of a couple’s debts and liabilities.

It is unsurprising, therefore, that individuals are increasingly seeking ways of resolving matters without recourse to legal proceedings to avoid unwanted media attention.

We want pre-nup!

One way to avoid this media attention is to enter into pre-nuptial or post-nuptial agreements to settle financial arrangements in advance. Couples can also resolve disputes privately outside the court arena by:

  • employing structured, confidential negotiations, mediation or binding arbitration; and
  • by using court-assisted conciliation hearings (which are closed to the media) if court assistance is required.
Exclusion orders

Where possible, if court hearings are unavoidable, media targets should obtain an order excluding the media. If there is media interest or a threat of publication, swift preventative action is needed and a privacy injunction can be obtained. However, judges must balance the right to publish such information, though personal, in the public interest, against an individual’s right to privacy as enshrined in article 8 of the European Convention on Human Rights. Arguably, since the media now has a clear right to attend court hearings, this balancing act is all the more challenging in the context of matrimonial proceedings that unfold in the Family Division.

COMMENT

If only one message can be distilled from the developments in recent case law, it relates to knowing how far is too far. Often, instinct is the best moderator in establishing how far to go and which actions have gone far enough. The bank statements of a partner that cascade across the dining room table would certainly invite the eyes of any disgruntled spouse, with no repercussions. So too would any information that sits quietly on a shared home laptop that might be stumbled on without recourse to frenzied searching or investigation. So far, so good.

But gaining entry to the office of a former spouse, searching through their online bank accounts, downloading data marked for their attention only, and printing off e-mail communications between them and their legal team is too far.

Suspicion often takes on a life of its own. Rather than ordering a moratorium on arguably one of the most basic of human sensibilities, the judiciary not only condone it, they actively invite it – provided that it brings to light information in ways deemed legal – as distinct from those protected by measures designed to ensure their privacy.

There are better and more lawful ways to obtain information to ensure settlements are just. A case brought by a party to matrimonial proceedings who contends that there is a real need for seizure of the other party’s electronic data can achieve just that by obtaining a court order. If an applicant’s attempt to gain such an order is granted, then the dirty work is quite literally carried out for them – lawfully – and without any need to resort to duplicity or subterfuge.