Once upon a time a Husband or Wife could go through the other’s documentation and download from their computer taking any copies they thought would be useful for their case in divorce proceedings.
A major change was the case of Imerman where it was made clear this could not be done and the Wife’s lawyers were ordered to deliver the files of documents to the Husband’s lawyers without retaining copies. If a Client brings to a solicitor documents that belong to their spouse the immediate question is whether those documents have been freely and knowingly provided to the Client by the person to whom they belong. If not, they cannot be read and must be returned to the owner or the owner’s lawyer.
The Court of Appeal has now made it clear that the spouse will be committing a criminal offence (theft, burglary and offences under the Computer Misuse Act 1990 and the Data Protection Act 2018, together with breach of confidence and trespass to goods).
In divorce proceedings documentation is either provided voluntarily or pursuant to a Court Order.
Pensions are a particularly complex area and it is becoming more and more usual for divorcing couples to obtain advice and reports on pensions. Investment advice may also be needed on the complexities of one or both party’s assets, including their liquidity. It is particularly relevant in divorce to know what is available to encash, often to provide for housing, and how risky all or any of the investments are. It would be unusual for a Court to leave one party with illiquid or risk laden investments unless there was good reason to do so. Divorce lawyers therefore work closely with other financial advisors.
Since the GDPR came into effect, what is the lawyer’s position if he wants to send those documents to a third party? It may be an accountant, an independent financial advisor, a forensic accountant, tax accountant, valuer or other professional. It is easy to suggest that consent is obtained from the owner of the documents. However, this fails to recognise that in divorce proceedings emotions run high and the level of hostility can prompt either party to refuse any such request just for the sake of it. Whilst an application can be made to the Court this can be a lengthy and costly approach.
Under GDPR, solicitors either in litigation or in contemplation of litigation can send such documentation to third parties providing they have a legal basis for doing so. If the solicitor cannot obtain explicit consent, they will need to establish another lawful purpose for processing data. This will often be in order to comply with a legal obligation. A legal obligation includes directions under a court order. The processing might be required either alternatively or additionally as part of a contractual obligation between the solicitor and their clients.
However, solicitors should be careful to consider whether documents are confidential or not before examining or handling them. In practice this is a tricky decision for solicitors to make. As the Court of Appeal stated: “A solicitor who receives, reads, and passes on such documents, particularly knowing that they have been taken from the claimant unlawfully, may well be an appropriate defendant.”
Solicitors may consider the documentation that has been provided to them by their clients is not confidential and pass them on to third parties, for example, to professional advisors. It is unclear whether third parties would be deemed “data controllers” or “data processors” under the GDPR and this is very much fact sensitive. This should be established before the data is shared between the parties to ensure appropriate contractual documents are in place. No matter what kind of relationship exists, personal data must be handled in accordance with the GPDR and it is likely that there will be mutual responsibility between the parties. The sanctions for breaching data protection laws have become much more stringent under the GDPR, which parties should be mindful of. Where possible, evidence of compliance should be recorded. This includes recording the lawful basis for processing data, how the data is secured and how long it will be retained for.
Relevant other considerations under the GDPR are that of data security and data minimisation. Professionals need to be familiar with GDPR requirements in that regard, and build into their terms and conditions of business suitable provisions to ensure compliance. Professionals must ensure that they maintain confidentiality in relation to the information they have access to, to limit their processing of personal data to that which is necessary as part of their contractual duties, and not to retain such data for longer than is necessary.
In addition to GDPR and for professionals becoming involved in divorce proceedings, if they are unfamiliar with this type of work they will need to establish right at the beginning if they are instructed by one party, or if they are jointly instructed. If they are jointly instructed as an expert they have to comply with Practice Direction 35 – Experts and Assessors under Procedural Rules of the Civil Rules of Practice Directions. They should expect a copy to be sent to them when they are instructed. It is usual if there are two solicitors for one or other to be the lead solicitor, but all communications should be copied to be both. If the expert needs more information a request should be made to the lead solicitor but copied in to the other solicitor.
The expert who is jointly instructed would need to avoid any discussions with just one or other party. If one party contacts the expert he or she should make a detailed note of the conversation. This may arise, for example, if a forensic accountant has to visit business premises to examine financial documentation in paper form, or more often nowadays, on a firms’ computer system. It may be the business premises of either the husband or the wife, and it may be necessary for that spouse to be present. Questions may need to be asked to access the computer systems or clarify the way data is presented. A jointly instructed expert can raise with both solicitors whether the other party will also be there and this may be the best way. Solicitors are not usually present. If the level of hostility is too high for both spouses to be present, or this cannot be agreed, the expert should keep discussion with the party present to that which is necessary to obtain the information for the report, and to keep a detailed note to produce to both solicitors after the visit.
If an expert is instructed by just one party it may be in the context of being an expert in Court proceedings. The expert should then check whether the Court have made an Order for a single expert as it is more usual now in family proceedings for a joint expert to be appointed. A joint expert can save days of Court time, when a Court are under considerable time pressure, in hearing conflicting expert evidence and making decisions.
It is quite usual for one or other party to seek their own individual expert advice. This can be very useful at the commencement of a case and can save time and costs. For example, an accountant can provide advice that the accounts do not show misappropriation of funds and can, at that early stage, avoid the extensive costs that go with detailed enquiries which might be fuelled by anxiety rather that sure grounds to suspect hidden funds.
Financial advisors can also be very useful in identifying anomalies in financial information provided by the other party. They can advise, or provide reports, and can frame questions to be asked in Questionnaires being drafted as part of the process of a financial application in divorce. In that situation the advisor can speak freely to the solicitor and to their client. Often a meeting or a telephone conference with the financial advisor, solicitor and client, can provide the financial advisor with the answers to a lot of questions at the first stage. The advice subsequently provided can then be much more focused and therefore more helpful to the solicitor than the advisor giving alternative options, because the information sent initially did not have all the details the advisor needed.
Solicitors will have reasons for the expert financial advice they are seeking and it helps for all to understand this as early as possible. For example, a solicitor may be seeking a valuation of a business to form the basis of financial negotiations in divorce when the starting point for the court is that matrimonial assets are shared equally. It may be sufficient to establish the value of the business to offset that against other assets being retained by the other party if it is not disputed that one party will retain it. In addition liquidity of the business and its ability to raise money to buy out the other spouse’s share may be key. Performance of the business may be a major factor, with historical income, and future income being pertinent to payment of maintenance; it could, for instance, be a major factor for one party to know whether there are good grounds to believe the business is capable of paying certain sums. If there are doubts, alternatives may be considered as part of resolution of matrimonial finances.
The working relationship between the professional advisor and the solicitor is important and for the client there are significant cost and time benefits. It isn’t a good start for a financial advisor to receive a detailed letter of instruction from a solicitor with a list of documents, and to respond by sending out a generic questionnaire which asks for information much of which has already been provided. If the advisor prefers to work with his or her questionnaire being answered in that particular format it is preferable to raise this right at the beginning.