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10th October 2022

Eri Horrocks discusses the risk of imprisonment for failing to pay divorce settlements

Eri Horrocks discusses the risk of imprisonment for failing to pay divorce settlements
Eri Horrocks
Eri Horrocks
Senior Associate

The risk of imprisonment for failing to pay divorce settlements

The risk of imprisonment for those failing to pay court-ordered divorce settlements attracted public attention this year, with Frederick Barclay warned he could be sent to jail after failing to make a payment to his former wife. Yet it is not only in high profile cases that this is relevant we recently acted for the wife in O’Donnell v O’Donnell [2022] EWFC 68, in which an order of imprisonment was made against a recalcitrant husband.

If there are assets in the UK against which the courts can make orders, it is not usually necessary to use the threat of imprisonment to put pressure on a non-payer to comply with a court order. However, where their assets are overseas or hidden, it can be a very useful tool.

Mr O’Donnell, who was based in the Bahamas, had been ordered by the English court to pay our client, his former wife, 82.5% of a sum he was owed by a US-based trust. The date by which he was due to receive the funds passed, and he failed to make any payment to our client. She suspected he had received the funds but lacked evidence; we therefore obtained a court order requiring the husband to clarify the position. He failed to do so; responding to the question of whether the trust had paid him or transferred any assets to him by saying I consider this question is not applicable to my circumstances.

We then applied for Mr O’Donnell to be committed to prison for breaching the order requiring him to disclose the relevant information. He did not attend the hearing even by video-link, although he was represented by a barrister.

Whilst the Family Court generally determines disputed facts on the balance of probabilities whether the facts are more likely true than not a different standard applies to committal applications, in which allegations must be proved to the criminal standard of proof, i.e. the court must be sure. Further, in order to find someone in contempt of court, the court must be satisfied that the defendant was able to comply with the order but that there was nevertheless a contumelious and deliberate breach of it.

The different standards of proof explain why the Family Court found, in the original proceedings in Frederick Barclay’s case, that Sir Frederick should pay £100m to Lady Hiroko Barclay, but in the committal proceedings was ultimately unable to be sure that he had the means to pay. A committal order was made only in respect of a separate sum of £245,000 which the court was sure Sir Frederick could pay, and indeed he subsequently did so, thus avoiding imprisonment.

In our case, the judge was sure that Mr O’Donnell had breached the order requiring him to provide information about his trust interest, as he had definitely not answered the question he had been ordered to answer. The judge held that Mr O’Donnell’s responses were a carefully designed attempt to fail to comply with the court order, and that this was a serious contempt, as he was attempting to prevent our client from receiving several hundred thousand pounds which she was owed. He therefore imposed a sentence of six months immediate imprisonment, operating as a significant deterrent to Mr O’Donnell entering the UK.

This case signals the Family Court’s increasing willingness to use its punitive powers. Here, we could show to the requisite level a breach only of a disclosure order (rather than a payment order), yet the court recognised the breach’s significance and utilised its most serious sanction, sending a powerful message to potential non-disclosers, including those based abroad.