How would Stallone’s alleged misconduct sit with the Courts of England and Wales?

Sylvester Stallone hit the headlines once again recently, after news broke that his wife of some 25 years, Jennifer Flavin, had filed for divorce. In his latest blog post, George Wilson takes a closer look at how Stallone’s alleged misconduct would sit with the Courts of England and Wales.

The divorce suit was filed just days before a video emerged of Stallone, now 76 years old, covering up a tattoo of Flavin on his bicep with a picture of Butkus, the bull mastiff from the Rocky film franchise. Although Stallone was not shy about disclosing the video to the world at large, it has been alleged by Flavin that he hasn’t quite disclosed things he should have and has hidden marital assets within the divorce proceedings. Flavin’s legal team further state that the Stallone has:

“engaged in the intentional dissipation, depletion and/or waste of marital assets which has had an adverse economic impact on the marital estate”

Naturally, Stallone’s solicitors have denied any sort of misconduct.

How would Stallone’s alleged misconduct sit with the Courts of England and Wales?

In the jurisdiction of England and Wales, all parties to financial remedy proceedings within divorce owe a duty of full and frank financial disclosure to the Court and, in turn, their spouse. Essentially, parties within the proceedings must disclose all of the available information about their assets and income, by way of detailed financial disclosure, usually on the standard document used for such disclosure, Form E. Such disclosure will include evidence of the value of properties parties have an interest in, copies of bank statements linked to bank accounts in their name, evidence of their income and income needs, evidence of other assets such as investments and ISAs, valuable chattels such as artwork, jewellery, and watches, and motor vehicles.

Parties will also need to provide evidence of dividend counterfoils, company accounts, tax returns, and any liabilities they might have against their name. This list is by no means exhaustive, and parties are often shocked at how much detail they are required to provide within their financial disclosure. A blank Form E can be found at this link for ease of reference.

If parties to a divorce refuse, or fail to provide the required disclosure, the consequences (and remedies available to the Court and their spouse) are very serious. The court is likely to draw “adverse inferences” about parties who fail to provide the required disclosure. Essentially, this means that the Court can, and will, assume a spouse has something to hide and can make robust assumptions about the trust value of their assets and level of their income. Furthermore, if the divorce (and financial remedy proceedings) has concluded and one spouse believes that their ex-spouse had hidden assets, it may be possible to reopen the case. The court can reopen any case if it finds there has been deliberate and fraudulent non-disclosure of assets by one spouse.

Such assets, now visible and disclosed, will come under scrutiny, and the court can decide as to how the same should be divided. Perhaps the worst outcome of being found ‘guilty’ of non-disclosure, is the Court finding that a spouse has been in contempt of court and if the contempt has been deliberate, then the guilty spouse can be fined or even have a custodial sentence forced upon them. It is therefore of paramount important to work with a solicitor to ensure that the disclosure you provide is full and frank.

Stallone has also been accused of dissipating marital assets. Dissipation of assets occurs when one spouse has used, given away or otherwise transferred, converted, wasted, mismanaged, or adversely affected assets that would have been subject to division and distribution. Dissipation of assets may be in the form of the quick sale of assets such as property, stocks and shares, or other chattels such as artwork. Dissipation can also be more subtle and can be in the form of significant ‘gifts’ to friends and family, substantial cash withdrawals, gambling, or other unusual and possible reckless purchases. The court will see such dissipation of assets as an act of litigation misconduct.

Under the Matrimonial Causes Act 1973, it is possible for one spouse to apply to freeze certain assets belonging to the other, to reduce the risk that they are dissipated. In such circumstances, it is essential to act quickly, with the assistance of solicitor, should you suspect that your spouse intends to dissipate assets, as it is much more difficult to deal with the assets once they have been dissipated.

My Spouse Has Hidden Assets – What Can I Do?

Separating from a spouse can be daunting and overwhelming, especially when there are children and financial matters to consider. Most people hope to have a respectful and amicable divorce but what do you do if you suspect or know your spouse is trying (or has succeeded) in moving or hiding assets? You are likely to be very worried and be wondering what your options are. Here Brigid O’Malley discusses the role that hidden assets can play on a divorce and what you can do if you find yourself in this situation.

How are financial matters dealt with upon divorce?

The court will take into consideration a number of factors when determining what a fair financial settlement should be. Those factors are set out in section 25 of the Matrimonial Causes Act (1973). The first consideration is the welfare of any children of the family and the remaining factors will be considered by the Court in order to determine what is a fair distribution of the marital assets in order to meet the needs of both parties. The starting point is an equal (50/50) division of the assets.

It is important to note that each party has a duty to provide full and frank disclosure of their assets, income and liabilities in financial remedy proceedings. This means each party has a legal obligation to be honest and disclose everything they own. This is an ongoing duty throughout the proceedings.

It may be that your fears are alleviated after considering your spouse’s disclosure and they have indeed disclosed all assets you believe they have. However, it may also become apparent from considering the disclosure filed in the case by your spouse that they have moved assets or not disclosed certain items. In such circumstances the Court can:

Make costs orders for your spouse to pay your legal costs.
Make a “Search Order” to discover what assets your spouse has but this is expensive and not a frequently used order of the court.

What can I do if my spouse has hidden assets – how will the Court determine a fair settlement?

The court can draw something called an Adverse Inference if the evidence filed in the case strongly demonstrates one party has not complied with their duty of full and frank disclosure. Effectively, a court may be able to determine one party has failed to disclose all their assets and the settlement awarded would be reflective of this.

Depending upon the facts of each individual case, the allegations made, and the evidence filed, the Court can do a number of things:

Make an Order to set aside the transaction.
Make an Order to add the asset back into the asset pot for division.
Treat the asset as being back in the asset pot, and belonging to your spouse, and adjusting the settlement accordingly.

In order to grant an order to set aside a transaction the court has to be satisfied that your spouse deliberately took steps to try and defeat your claim and that if the transaction was to be set aside you would be granted financial relief, or a different financial remedy order would be made.

The court can “add back” funds to the asset pot if they are satisfied your spouse has recklessly spent money or disposed of funds. This will effectively mean the monies are put back into the asset pot for division.

Sometimes, even if the court is satisfied the transaction was completed in order to dissipate/reduce the assets, an order to set aside that transaction or an order for the asset to be “added back” to the pot will not be made. This might be where there are enough assets in the case meaning a fair order can be made, without the need to set aside the specific transaction.

What can I do if I think my spouse may be about to transfer or hide assets?

If this is the case, an application can be made to Court for a Freezing Order which an injunction to prevent the disposition of an asset or assets. This application can be made urgently if there is evidence that a transfer is imminent. Therefore, you may need to act quickly, and we would encourage you to get immediate legal advice.

If your spouse has already taken steps and disposed of assets, then the Court may grant Orders to either set aside those transactions or “add back” the funds to the asset pot for division.

All of these actions require careful consideration of the allegations, the evidence and the relief that may be sought. Applications of this nature can be expensive, but it is vital you obtain advice immediately if you are concerned your spouse may have hidden or disposed of assets or be in the process of doing this. It may be that an urgent application is needed and the sooner you act, the better.