The importance of financial disclosure In divorce: The Kimber Factors

The recent case of HKW v CRH [2024] EWFC 358 (B) concerned the Husband’s purported loans and/or gifts to the children of the marriage and pre-marital cohabitation. The case was a modest asset case with the parties owning property abroad. 

The applicant (person who brought the proceedings to Court) was the wife and the respondent (the person responding to the application) was the husband. The parties married in March of 2007 but had cohabited for some years prior to the date of their marriage. Pre-marital cohabitation can have a significant impact on a financial settlement, and therefore parties’ recollections can vary according to what works best for them. 

In this case, the wife (‘W2’) asserted that they had lived together since 1993, but the husband said that they began cohabiting in 2004, after his divorce from his first wife (‘W1’) in 2002. The husband and W1 separated prior to making an application for divorce. The husband confirmed that there was no overlap in his two relationships. Therefore, the Judge drew the obvious conclusion, that the parties began living together somewhere between 1993 and 2002. 

In concluding this, the Judge had regard to the ‘Kimber’ factors which were established in the case of Kimber v Kimber [2000] 1 FLR 383. Briefly, the Judge outlined different factors that may determine whether cohabitation is taking place. These factors include but are not limited to the following: 

1.Shared residence. 

This is a bit of a giveaway, but a Judge will look at whether the couple live together in the same household. 

2.Financial Arrangements. 

Whether or not the couple have a joint bank account or pay for bills together, such as rent or a mortgage.

3.Public perception. 

We must consider how the individuals present to their friends and family. Social media is a good indicator as to whether someone is in a relationship. 

4.Sexual relationship.

This could be quite intrusive to establish.

5.Stability and Duration. 

This relates to the length and permanency of the relationship.

6.Children. 

Whether or not the couple share children is an indication of cohabitation. This was a significant indication in HKW v CRH.

7.Domestic arrangements.

Cohabitation could be implied if the couple shared domestic tasks.

In relation to the instant case, the husband and W2 agreed that they initially separated in April 2021. During the marriage, the parties had two children together, born in 1994 and 1996, before the parties supposedly began their relationship, according to the Husband The parties’ divorce was issued, and they were granted conditional Order on 01 June 2023 (please see our BL blog for information about Conditional Order and Final Order)

Following  W2’s application to Court on 06 October 2022, asking the court to make financial orders in her favour, the Husband suddenly stated that he had to deal with W1’s outstanding financial claims, before being able to participate in the current proceedings. The Husband made an adjournment application to Court in these terms. The Judge described the Husband’s application as ‘deceitful’ and that it had been made ‘entirely to derail the current proceedings’.

There was a stark difference between the couple’s incomes. W2 earned a net income of C. £22,238 per annum, as a Property Manager and the husband earned approximately £82,734 per annum working as a contractor on overseas contracts within the nuclear power industry and so full and frank disclosure was crucial, as it is in any case, to ensure that both parties would be able to meet their own needs once the financial settlement was finalised. 

There were also significant differences in how each party perceived the gifts that the husband had supposedly given to his children. In December 2022 H allegedly entered into a loan agreement with one son for £80,000. The sum was paid in three separate instalments. The Husband also transferred £26,000 to the parties’ other son. W2 was unaware of this transaction until after the event. Vehicles were also transferred into the children’s names. It was put to the Husband that these funds were marital assets and were dissipated without W2’s knowledge or consent. The husband disagreed as they were gifted post separation and therefore it was a ‘post-separation transfer’. The W1’s representative directly asked the husband whether the children were merely holding the funds whilst the proceedings were ongoing and they would be returned to him upon final financial Order, in an attempt to diminish the marital pot. The Court deemed these transactions to be deliberate attempts to unfairly reduce the assets available for division and therefore the Court added these ‘gifts’ back into the marital pot. Overall, the Judge found W2 to be truthful in evidence in the witness box, in so far as her evidence aligned with the documentation she provided throughout proceedings but found the husband’s evidence to be ‘fractious, obstructive and he failed to answer simple questions.’ The Judge ultimately decided that their relationship began in 1993 when they started cohabiting. 

Costs

Costs are not often awarded in family proceedings. However, Part 28.3(6) of the Family Procedure Rules allows the Court to make an Order requiring one party to pay the costs of another party at any point in the proceedings where it considers appropriate to do so, as a result of a person’s conduct within the proceedings. In the case at hand, the Judge awarded W2 her costs due to the ‘delays, and the unreasonable and deceitful conduct’ on the part of the Husband. 

What can we learn from this case? 

We need to establish an accurate timeline of events in relation to when the relationship began, when cohabitation began and when the parties married. This is particularly important for divorces that involve the ‘Kimber’ Factors. 

It is vital that each person provides financial transparency; you must supply all financial disclosure as required by the Form E unless ordered or agreed otherwise. Please refer to BL’s blog on how to complete your Form E for further information. In the event that a party fails to give complete disclosure or attempts to conceal assets or dissipate marital assets, the Court may order that person to pay the other’s costs. Ultimately, this case highlights the Court’s dedication to a fair outcome in financial remedy proceedings.  

If you are contemplating making an application Court for financial relief, or have already made, or even be on the receiving end of an application, please do not hesitate to get in touch to speak with a member of our team