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News

15th October 2015

 
 

Wives win legal battle to have their divorce settlement reconsidered

Fraud and non-disclosure unravels all...

Divorcing couples have been reminded of their duty to disclose all financial information to each other and the court.

The eagerly awaited judgments of Sharland and Gohil were handed down yesterday by the highest court in the family division, the Supreme Court. Both cases were considered at the same time by the court and the Justices considered whether the final financial orders following divorce should stand, or be set aside and proceedings reopened.

In the case of Sharland the wife had agreed to receive approximately £10m in the first instance, which she thought was exactly a half share of the available assets. She would also benefit from a sale of shares in Mr Sharland’s business and other terms. Two expert reports were ordered in the case to value the shares which reflected the agreement reached between the parties. However, shortly after reaching an agreement, Mrs Sharland discovered that her husband’s company was in the process of being sold for a reported £650m. She made an application to the court to prevent the final order from being perfected. The case was heard at Court of Appeal stage and she was unsuccessful, the court ordering that the order should stand. She took her case to the Supreme Court who considered;

“What is the impact of fraud upon a financial settlement which is agreed between a divorcing husband and wife, especially where, as will almost always be the case, that agreement is embodied into a court order? Does "fraud unravel all.."

Lady Hale sets out that both innocent misrepresentation, material non-disclosure and fraud are all factors that can set aside an order. It is clear that all must be ‘material’ to the decision that the court made at the time i.e. would the decision approved by the court at first instance be any different, if that information was presented at the time of the judgment.

Throughout the judgment Lady Hale makes references to the duty of each party to make full and frank disclosure of all material facts to the other party and the court.

It is a principle enshrined in family law that parties to a divorce must provide full and frank disclosure; otherwise they could be faced with finding themselves in further litigation.

In the case of Gohil, the wife accepted approximately £270,000, along with other terms and later discovered that her husband had been convicted of fraud and had assets worth approximately £25m. She sought to set aside the order and re-open proceedings and at the first hearing Moylan J agreed with her. However the Court of Appeal then allowed husband’s appeal and the original order would stand. The Supreme Court disagreed and have now said that husband’s material non-disclosure was sufficient to set aside the original decision and the court must again decide what the parties should receive following divorce.

These decisions highlight the importance to all parties following a separation that they have a duty of full and frank disclosure and if they do not fully discharge this duty, they may find themselves back in court, many years after the original decision.

If you think you might have a similar case and need advice, or need any general legal advice concerning a family matter, please ask for our family department and speak with Lachlan Donaldson or Robert Green on 01622 759051 or by email - lachlan.donaldson@gillturnertucker.com and robert.green@gillturnertucker.com

 

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Family

 
 

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