Adverse Inferences: The Court’s Approach to Valuing Overseas Assets Without Disclosure

This article will consider the court’s approach to adverse inferences in cases where there has been no, minimal or seriously deficient disclosure from one party, particularly in relation to overseas assets. Valuing overseas properties and businesses can be particularly challenging where there has been no engagement and/or no disclosure by the party in control of the overseas asset and the other party has little information about the asset.

Within this article, particular consideration will be given to the following cases:

• AF v SF (Dynastic Trust: Needs Based Award) [2019] EWHC 1224 (Fam).
• XO v YO & Anor [2022] EWFC 114.
• Mahtani v Mahtani (Adverse Inferences) (No 2) [2025] EWFC 35 (Fam).

In all three cases, the court drew inferences as to the value of overseas assets on the basis of limited documentary evidence, resulting, in two of the cases, in significant sharing (or quasi-sharing) based awards in favour of the compliant party.

The law

Parties in financial remedy proceedings are subject to the duty of full and frank disclosure of their resources. Where there has been non-disclosure, the court is entitled to draw adverse inferences against the non-disclosing party.

The court’s duty to consider making adverse inferences can be traced back to the decision of Sachs J in J v J [1955] P 215, [1955] 3 WLR 72 and has been applied in numerous cases since. More recently, in one of Mostyn J’s ‘pulling the threads together’ judgments, NG v SG [2011] EWHC 3270 (Fam), he gave the following guidance at [16]:

‘Pulling the threads together it seems to me that where the court is satisfied that the disclosure given by one party has been materially deficient then:

i) The court is duty bound to consider by the process of drawing adverse inferences whether funds have been hidden.

ii) But such inferences must be properly drawn and reasonable. It would be wrong to draw inferences that a party has assets which, on an assessment of the evidence, the court is satisfied he has not got.

iii) If the court concludes that funds have been hidden then it should attempt a realistic and reasonable quantification of those funds, even in the broadest terms.

iv) In making its judgment as to quantification the court will first look to direct evidence such as documentation and observations made by the other party.

v) The court will then look to the scale of business activities and at lifestyle.

vi) Vague evidence of reputation or the opinions or beliefs of third parties is inadmissible in the exercise.

vii) The Al-Khatib v Masry technique of concluding that the non-discloser must have assets of at least twice what the claimant is seeking should not be used as the sole metric of quantification.

viii) The court must be astute to ensure that a non-discloser should not be able to procure a result from his non-disclosure better than that which would be ordered if the truth were told. If the result is an order that is unfair to the non-discloser it is better that the court should be drawn into making an order that is unfair to the claimant.’

The most significant case on adverse inferences remains Moher v Moher [2019] EWCA Civ 1482, in which the Court of Appeal considered an appeal brought by the husband from an order based on the inference that he had sufficient funds to pay the order. The husband submitted that the first instance judge had erred by failing to adequately quantify the undisclosed assets (per NG v SG at [16(iii)], above). The appeal was dismissed.

At [86]–[91] Moylan LJ set out four principles to be applied in cases of non-disclosure:

(i) The court should seek to determine the extent of the financial resources of the non-disclosing party.

(ii) The court will be entitled to draw such adverse inferences as are justified having regard to the nature and extent of the party’s failure to engage properly with proceedings.

(iii) The court is not required to determine a specific figure or bracket for the undisclosed resources. There will be cases where this will not be possible.

(iv) The court is entitled, in appropriate cases, to infer that the resources are sufficient or are such that the proposed award represents a fair outcome. It is better that an order may be unfair to the non-disclosing party than is unfair to the other party.

In relation to the second principle, Moylan LJ stated at [88]:

‘When undertaking this task the court will, obviously, be entitled to draw such adverse inferences as are justified having regard to the nature and extent of the party’s failure to engage properly with the proceedings. However, this does not require the court to engage in a disproportionate enquiry. Nor, as Lord Sumption said, should the court “engage in pure speculation”. As Otton LJ said in Baker v Baker, inferences must be “properly drawn and reasonable”. This was reiterated by Lady Hale in Prest v Petrodel Resources Ltd [2013] UKSC 34, [2013] 2 AC 415, [2013] 2 FLR 732, at para [85]:“… the court is entitled to draw such inferences as can properly be drawn from all the available material, including what has been disclosed, judicial experience of what is likely to be being concealed and the inherent probabilities, in deciding what the facts are.”’

In relation to the fourth principle, Moylan J stated the following at [90]–[91]:

‘[90] (iv) How does this fit within the application of the principles of need and sharing? The answer, in my view, is that, when faced with uncertainty consequent on one party’s non-disclosure and when considering what Lady Hale and Lord Sumption called “the inherent probabilities” the court is entitled, in appropriate cases, to infer that the resources are sufficient or are such that the proposed award does represent a fair outcome. This is, effectively, what Munby J did in both Al-Khatib v Masry and Ben Hashem v Al Shayif and, in my view, it is a legitimate approach. In that respect I would not endorse what Mostyn J said in NG v SG (Appeal: Non-Disclosure) [2011] EWHC 3270 (Fam), [2012] 1 FLR 1211, at para [16](vii).

[91] This approach is both necessary and justified to limit the scope for, what Butler-Sloss LJ accepted could otherwise be, a “cheat’s charter”. As Thorpe J said in F v F (Divorce: Insolvency: Annulment of Bankruptcy Order) [1994] 1 FLR 359, although not the court’s intention, better an order which may be unfair to the non-disclosing party than an order which is unfair to the other party. This does not mean, as Mostyn J said in NG v SG, at para [7], that the court should jump to conclusions as to the extent of the undisclosed wealth simply because of some non-disclosure. It reflects, as he said at para [16](viii), that the court must be astute to ensure that the non-discloser does not obtain a better outcome than that which would have been ordered if they had complied with their disclosure obligations.’

Peel J applied the guidance provided by Moylan LJ in Moher in Ditchfield v Ditchfield [2023] EWHC 2303 (Fam) and Hersman v De Verchere [2024] EWHC 905 (Fam). In the latter case, at [25], Peel J made clear that a court is entitled to draw adverse inferences from a party’s deliberate failure to attend a hearing or be represented in addition to their non-disclosure, provided those inferences are properly drawn.

Case examples

AF v SF (Dynastic Trust: Needs Based Award) [2019] EWHC 1224 (Fam)

In AF v SF, the husband failed to engage in proceedings. He filed a deficient Form E and no updating disclosure. In the latter stages of the litigation, he was found to lack capacity and was represented by the Official Solicitor. The court made various non-party disclosure orders to obtain details of the husband’s resources in the United Kingdom. Due to the husband’s failure to engage in the proceedings (despite maintaining capacity to handle his financial affairs), there was no evidence as to the value of the parties’ holiday home in South America. The wife could do no more than guess the value of the property at £750,000.

Moor J stated at [63]:

‘It has been said that it is up to the respondent to financial remedy litigation to open the cupboard door and show that the cupboard is bare. If he or she does not do so, the court can draw the inference that the cupboard is not bare. As explained in Baker v Baker [1995] 2 FLR 829, this is not an improper reversal of the burden of proof. It remains for the applicant to prove his or her case. A failure by the respondent to discharge the duty of providing full and frank disclosure can, however, lead the court to draw inferences that are appropriate.’

Moor J proceeded on the basis that the South American property was worth what the wife believed it to be worth without the need for documentary evidence (£750,000). The court also found that the husband retained £325,000 in his Monaco account which he said was in it in his Form E and had not provided updating disclosure for, and that there was an additional £723,018 in the husband’s Monaco account. The majority of the husband’s assets were non-matrimonial, and the wife’s needs claim exceeded her sharing claim. The wife was awarded a generous needs-based award.

XO v YO & Anor [2022] EWFC 114

In XO v YO, HHJ Hess (sitting as a Deputy High Court Judge) considered how to value the parties’ assets in circumstances where the husband’s disclosure had been ‘very obstructive and unhelpful’. The main assets available were a large number of businesses owned by husband in Nigeria. The husband had confirmed ownership of the companies but failed to provide any information as to their value. Neither the husband nor the main business (which was joined to the proceedings) attended the final hearing. The only documentary evidence available was some outdated information as to the turnover of one of the companies included in a staff handbook from 2010.

The husband was on notice as to the wife’s position that the husband was likely to be earning £1m per annum and had assets in the hundreds of millions of pounds, as her position was detailed in her MPS statement and the court’s judgment of 6 December 2021. The husband had not submitted any evidence to challenge the wife’s position.

The wife’s evidence of the value of the husband’s businesses was based on her previous role as Group Managing Director for the business, her knowledge of the family’s spending during the marriage and the information she had been told by people in the businesses. Her position at the final hearing was that the Nigerian businesses were worth approximately £200m. HHJ Hess noted at [51(i)]:

‘Thus, the wife has more information than many wives in her position might have and this information, although not obviously of the quality which one might expect from an independent SJE accountant, is still helpful in the context of an otherwise blank canvass and, of course, the husband has not done what he could and should have done if he thought the wife was over-egging her claims, come to court and cause the wife to be cross-examined about what she was saying. He had the opportunity to do that; but chose not to take it.’

Although the husband did respond to the wife’s assertion that his businesses were worth £200m, he failed to provide any evidence to support his position or provide any alternative valuation for the businesses.

In the absence of any evidence from the husband, HHJ Hess accepted the position advanced by the wife that the Nigerian businesses were worth c. £200m less 10% representing disposal costs (£180m net). In coming to this conclusion, he noted the following at [53]–[54]:

‘53. Mr Warshaw accepted that there was no mathematical calculation behind this figure. It is rather a broad assessment, taking into account all the matters I have set out above. He suggested that, if the husband had really believed that this was an outrageously high figure, he would have engaged with the court process to prove that he was correct. It is, he suggests, broadly consistent with the lifestyle of the parties during the marriage and the relatively small pieces of information which we do have. He has suggested that, applying the “cheat’s charter” principles discussed above, this value should be accepted by the court.

54. I should say, before reaching a conclusion on this, that in his email to me of 20th September 2022, the husband strongly took issue with Mr Warshaw’s valuation suggestion, saying: “According to the applicant the total assets in the case is worth £196,000,000 (without even scant documentation or proof). I am perplexed as to how many businesses in Nigeria are worth even £5,000,000. I shall neither admit nor deny whatever assertions the applicant may have cooked up from her imagination”. The difficulty for me in placing any significant weight on this assertion is that it is made by somebody who has chosen to ignore and/or obstruct almost all of my disclosure and valuation directions and chosen not to come to court to cross-examine the wife or challenge any of her assertions in the proper way. He is absolutely the obstructive non-discloser that the judgments set out above on adverse inferences were designed to meet. He only has himself to blame if he considers the assessment to be incorrect.’

The parties also owned a holiday home in Miami, which the parties estimated in their Forms E was worth $3,105,695 (wife) and $4,567,143 (husband), respectively. Without providing documentary evidence, the wife stated in her section 25 statement that she had been recently told by an estate agent that the property was worth $9,000,000. The court accepted the wife’s evidence of her proposed valuation on the basis that it was the ‘best evidence’ available and because it was probably against the wife’s interest to for the property to be over-estimated in value.

XO v YO shows that where one party has failed to comply with their disclosure obligations, the court is entitled to rely on the other party’s estimated value of the non-compliant party’s assets, even where their estimation is ‘rather a broad assessment’ with ‘no mathematical calculation behind [it]’, provided the non-compliant party has had the opportunity to respond to the evidence and failed to do so.

The total net assets were found to be £195m, the main asset being the husband’s businesses. The wife accepted that there was a non-matrimonial element to the husband’s businesses, which he had inherited (though W had been contributed to them by virtue of her role within the business) and sought 30% of the total assets. HHJ Hess discounted the husband’s business assets by 50% in recognition of their non-matrimonial source and awarded the wife a total of £51m, representing her share of the matrimonial assets. To reach this sum, the husband was to pay the wife a lump sum of £39m, in addition to £150,000 worth of costs and an additional sum for unpaid costs, maintenance and legal service orders.

Mahtani v Mahtani (No 2) (Adverse Inferences) [2025] EWFC 35 (Fam)

In Mahtani, the husband failed to engage at all in financial remedy proceedings and, before that, in proceedings brought by the wife for non-recognition of an Indonesian divorce. The court had no evidence or correspondence from the husband. The husband had breached orders to pay the wife MPS and an LSPO. The court was satisfied that the husband had been properly served with the court papers, including the bundle for the final hearing and notice of the final hearing by way of emails for which delivery had been confirmed. The husband had been warned on the face of the previous order of the consequences of not attending the final hearing. The court was therefore content to proceed with the final hearing in the husband’s absence.

The husband was a businessman from a prominent family in Indonesia. The wife had lived in London with the parties’ two children since the parties separated in 2016. The parties enjoyed a high standard of living in Indonesia during the marriage, living in luxurious properties, taking weekend trips to their luxury holiday homes, travel, staff, etc. The wife reported that the husband had continued to enjoy a luxurious lifestyle since separation. Meanwhile, the wife and the parties’ children were living on benefits in unsuitable rented accommodation.

The husband provided no evidence as to his assets. The wife asserted that the husband owned two properties in Jakarta, which they had lived in during the marriage, and two holiday villas in other areas of Indonesia, which they had used regularly during the marriage and therefore were matrimonial. The wife estimated that the properties totalled $38m (c. £30m) in value, based on internet research and conversations she had had with friends and neighbours in Indonesia. In the absence of any evidence from the husband to challenge his asserted ownership of the properties or the estimated property values put forward by the wife, the court accepted the wife’s proposed valuations.

James Ewins KC, sitting as a Deputy High Court Judge, noted that the wife was hampered in any attempt to seek her share of the husband’s business assets as a result of the husband’s non-disclosure. The wife estimated that the husband’s business interests and bank account contents totalled some $100,000,000 (c. £81m), however, this estimate was speculative and not capable of forming a specific adverse inference.

In considering whether to accept the wife’s estimated valuation for the husband’s non-proprietary assets, James Ewins KC considered the second and fourth principles outlined in Moher, at [49]–[50], as follows:

‘I was, in effect, invited to adopt the rationale that the respondent “would have hastened to put forward affirmatively any facts, had they existed, establishing the more favourable alternative”.

Before acceding to that attractive submission, however, I remind myself that I am not required “to make a specific determination either as to a figure or a bracket” and that there are cases in which “the court is ‘unable to quantify the extent of his undisclosed resources’’’. I am permitted to draw inferences “to the degree of specificity or generality deemed fit” and, where appropriate, not to alight of a specific figure, but instead “to infer that the resources are sufficient or are such that the proposed award does represent a fair outcome”. In doing so, I “must be astute to ensure that the non-discloser does not obtain a better outcome than that which would have been ordered if they had complied with their disclosure obligations”.’ (original emphasis)

James Ewins KC did not consider it necessary to determine the specific extent of the husband’s wealth beyond his properties in light of W seeking only 50% of the net value of H’s properties (£13.9m). In relation to the husband’s other assets, the court accepted that he did have business assets which were likely to have significant value and generate a significant income, such that the highest award sought by the wife of £13.9m would not be unfair to the husband.

The court considered that a lump sum of £7.4m would be needed to meet the wife’s needs. The wife’s quasi-sharing award of £13.9m was higher than her needs award. James Ewins KC therefore awarded the wife a lump sum of £13.9m on a sharing basis. The husband was also ordered to pay the wife’s costs on an indemnity basis and a worldwide freezing order made to assist with enforcement of the court’s orders.

Conclusion and analysis

AF v SF, XO v YO and Mahtani all show that where there is no other evidence as to the value of international assets, the court can rely on the compliant party’s estimated value for the given asset, even where it is based on little or no documentary evidence. It will be important to ensure the non-compliant party has had the opportunity to see and respond to the other party’s evidence as to the estimated value of the assets. The assumption will be that the non-compliant party had the opportunity to produce evidence in response and failed to do so, so cannot truly disagree with it.

As can be seen in XO v YO and in Mahtani, adverse inferences as to overseas assets may form the basis of very significant sharing (or quasi-sharing) claims. It is not open to the non-disclosing party to complain about the extent of these awards in circumstances where they have failed to participate in the computation process. As HHJ Hess said in XO v YO: ‘He only has himself to blame if he considers the assessment to be incorrect’.

The wives in XO v YO and Mahtani sought different outcomes in relation to their husbands’ overseas business assets, which may be explained by the different situations they found themselves in. Mr O had accepted ownership of a number of business assets in his Form E and Mrs O had knowledge of the income generated by the businesses for the family during the marriage, had knowledge of the business from her work as Group Managing Director and had access to some (albeit outdated) documentary evidence as to the business’ turnover. Mrs Mahtani had none of that information, there being no evidence as to the turnover of or income from any of the companies Mr Mahtani is involved with. Although Mrs O’s valuation of her husband’s companies was ‘broad’ and without mathematical calculation behind it, it was based on more than speculation, and therefore sufficient to lead to an adverse inference properly being drawn.

The result was that Mrs O was able to obtain an order for an award based on her receiving a 25% share of the husband’s businesses (some £45m), while Mrs Mahtani was not, as to do so would be ‘impermissible speculation’.

The next issue facing both of these wives whose husbands have placed themselves outside the reach of the English court is how they enforce payment of a lump sum in the millions of pounds when the payer and their assets are overseas in non-friendly jurisdictions. That issue is beyond the scope of this article.