Early in the year we wrote about the importance of parties in financial proceedings making full and honest disclosure of their financial assets.  This was on the back of Mrs Sharland and Mrs Gohil being given permission to apply to the Supreme Court to set aside the Consent Orders made to settle financial matters between them and their husbands, by reason their husbands had been dishonest about the extent and value of their assets.

These two cases have now been decided by the Supreme Court.

The facts of the both cases leading up to the hearing in the Supreme Court make interesting, if testing, reading. Terms of a consent order were agreed in each case.

Sharland Case

In Sharland, before the order was sealed by the court the wife discovered her husband had lied about the value of his business AppSense and had falsely denied any intention to sell it.  The the court refused to reopen the case despite finding Mr Sharland had been dishonest. It was held that as the AppSense had not been sold, the agreement reached was not substantially different from the order he would have made if full and honest disclosure had been made.  Confusingly however, he said he would have adjourned the case if he had found out about the dishonesty before the consent order had been agreed.  Unsurprisingly, Mrs Sharland was not happy and made an application to for permission to make an application to the Supreme Court to have the consent order set aside.  Permission was granted.

When the matter came before the Supreme Court very recently, Baroness Hale wasted no time in indicating the decision she had made I the second sentence of her long judgement.  She said there would need to be “some special magic” if the husband’s argument was to succeed.  The magic was denied.  He lost his case.

The words substantially different were considered key by the Supreme Court – echoing the ruling in the case of Livesey v Jenkins where it was considered the wife’s none disclosure of her impending re-marriage was very important and had led to the making of an order which was substantially different from the one that would have been made if the court had known about her re-marriage plans.  In the Livesey case order was therefore set aside.

Baroness Hale’s view was that the trial judge’s comment that he would have adjourned the case to see what happened to AppSense if he had known about it at the hearing, was enough to satisfy the “substantial difference” test.

Was the non-disclosure “material” to the case?  The none-disclosure was considered to be fraudulent and therefore easy to infer that therefor it was “material”.  Baroness Hale observed “why would the husband lay a false trail if what was sought to be suppressed was immaterial?”

Mr Sharland tried to argue against this by claiming the longer it took to sell the business the lower percentage share should be awarded to his wife – as the asset would become more distant from the marriage by the passing of time – and therefore meant it became “less material”.  However the court adopted the view in the Livesey case, in that “material” was to be measured at the time of the none-disclosure, not at some future date. His argument therefore failed.

Gohil case

In the Gohil case, problems had arisen over the admissibility of evidence – a topic which I am confident will bemuse those not in the legal profession, and also sometimes lawyers.  Mrs Gohil had agreed terms of settlement at an early stage in the proceedings, although she was suspicious about her husband’s honesty.  She made an application to set the consent order aside when Mr Gohil was prosecuted for money laundering on a large scale, and presented to the family court evidence of Mr Gohil’s serious non-disclosure from the criminal proceedings, and from her former father in law.  Straight forward?  No. It took her multiple interim hearings over 3 years and an 8 day hearing to achieve the setting aside of the consent order.  That was not the end of the matter.

Mr Gohil’s appeal to reinstate the consent order succeeded.  The appeal court found that the evidence she had relied on regarding her husband’s improprieties should not have been placed before the family court as it had been “fresh” evidence and did not fulfil the necessary criteria of being “influential, apparently credible and not obtainable with reasonable diligence for use at the trial”.

Thankfully for Mrs Gohil’s sake, the Supreme Court overturned that decision, since it did not consider the evidence fell into that category:  it held there had never been a trial, since matters had been settled early in the proceedings, and therefore no first opportunity to adduce the evidence had arisen.

Outcomes

The outcome of these cases are important as they settle the question as to what is to be proved in order to set aside an order based on material non disclosure by one of the parties.  However on the point of admissibility of evidence highlighted by the Gohil case, The Supreme court did not rule on what would have been the outcome should Mrs Gohil have tried to admit the evidence of her husband’s non disclosure after a fully contested hearing.  Nevertheless, these case should provide confidence to those who feel vulnerable of being duped by the dishonesty of their spouse when it comes to presenting evidence of the extent and value of their income and assets.  It should also give a clear warning those who feel they are being “smart” by trying to mislead the court and their spouse in order to cheat a fair are now likely to be held to account even if they thought a “once and for all” final order had been made regarding financial matters.

The documents leaked from the (now famous) Panama law firm, Mossack Fonseca, comes hard on the heels of the Sharland and Gohil cases.  The publicity cannot be a bad thing.  It spotlights how some wealthy spouses try to hide their true wealth, and how this has probably affected hundreds of divorce settlements.  The leak may well prompt other ex-wives or ex-husbands to reopen cases if the evidence reveals they may well have been misled.  In any event the leak should warn any divorcing party to think very carefully before trying to hide or mislead their spouse about their financial position.

Reopening of a financial settlement

If anyone contemplates the reopening of a financial settlement, it should be taken into account that it would not necessarily be a straight forward application and if cogent evidence of non-disclosure is not readily available, expert detailed analysis would have to be undertaken.  However, nothing ventured, nothing gained?

How we can help.

If you wish to speak to one of our Family, Children & Divorce team about any aspect of Family Law, please do not hesitate to contact us. Please contact our Boston, Grantham, Lincoln, Newark, Spalding or Sleaford offices.

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