Wives Win Supreme Court Cases: Dishonesty will not be tolerated

Both wives’ appeals have been granted by the Supreme Court cases of Sharland v Sharland [2015] UKSC 60 and Gohil v Gohil [2015] UKSC 61.

The cases were heard together as they both concerned the issue of the non-disclosure of the husbands in the case. Facts of the case and full judgments can be found here.

Sharland

In Sharland, Mrs Sharland sought equal division of the financial assets after a marriage of 17 years where there were 3 children. The main asset in contention was the husband’s shareholding in the business AppSense Holdings Ltd. Expert evidence was adduced and during the proceedings the husband gave evidence that there were no plans for an Initial Public Offering (IPO) of the company.

The parties reached a settlement during the course of the final hearing which was approved by the judge. A draft consent order was prepared but before it was sealed Mrs Sharland invited the judge not to seal the order but instead to resume the hearing. Her reason for this was that because she discovered that AppSense was actively being prepared for an IPO. The value of the company was expected to far exceed the value ascribed to it within the proceedings.

By the time of the hearing the IPO had not taken place. The judge therefore ruled that whilst there had been significant non-disclosure on the part of the husband, because the IPO had not taken place, he would not set aside the agreement on the basis that he would not have made a substantially different order during financial remedy proceedings. The Court of Appeal upheld the judge’s ruling.

Mrs Sharland appealed to the Supreme Court which allowed her appeal. The court found that the present case concerned fraud on the part of the husband. The only exception to this preventing a consent order from being set aside is where the perpetrator of the fraud can satisfy the court that the fraud would not have made a significantly different order in any case. It was confirmed by the court that a consent order derives its authority from the court and not from the consent of the parties. The duty of full and frank disclosure by the parties always arises.

Therefore, the consent order would not be sealed and the matter would return to the Family Court for further directions.

Gohil

In the case of Gohil, a settlement was agreed between the parties at the Financial Dispute Resolution Hearing (usually the second hearing in financial remedy proceedings). The agreement provided for Mr Gohil to pay a lump sum to Mrs Gohil together with periodical annual payments.

The order was made in 2004 but in 2007 Mrs Gohil applied to set aside the Order on the ground that the husband had fraudulently failed to disclose his assets. Mr Gohil’s lifestyle and standard of living that he enjoyed could not be supported on the assets and income he disclosed and during the course of criminal proceedings against him Mrs Gohil was able to unravel how the husband really managed his money.

Mrs Gohil was successful in setting aside the Consent Order and the High Court made a new order. Mr Gohil appealed and his appeal was allowed by the Court of Appeal.

The Supreme Court has, however, now overturned that ruling. Following discussions concerning the admissibility of evidence, the court found that the 2012 High Court Order should stand.  The court was satisfied that looking at the totality of the admissible evidence, there was material non-disclosure on the part of the husband.

Comment

Whilst the press may lament that these judgments could encourage more people to look to now set aside their own negotiated settlements, it should be remembered that an order will only be set aside in specific and limited circumstances.

In these decisions, the duty on each party to provide full and frank financial disclosure to each other and to the court has been brought front and centre. The test applied in non-disclosure cases has been clarified and amendments are to be made to the Family Procedure Rules to clarify the relevant procedure.

These judgments must surely stand as reassurance to separating parties that dishonesty in proceedings will not be tolerated.