The Supreme Court has unanimously allowed the appeals of two ex-wives in the landmark cases of Sharland v Sharland and Gohil v Gohil.
In these two cases, the Supreme Court has made it clear that there will be zero tolerance for non-disclosure or indeed, dishonesty in financial proceedings arising from the breakdown of the marriage. In both of these cases, the former wives were seeking to have their divorce settlement set aside on the specific grounds of non-disclosure or dishonesty by their former husbands.
In particular, in the Judgement of Sharland v Sharland, Lady Hale, Britain’s most senior female Judge, said that this was a case involving fraud. She then went on to explain that it would be extraordinary if a victim of a fraudulent misrepresentation in a matrimonial case was in a worse position than the victim of a fraudulent misrepresentation in an ordinary case of contract. She further considered that the general principle that “fraud unravels all” should lead to the setting aside of a Consent Order procured by fraud. A Consent Order is the final Order which is made in respect of the parties’ finances in a divorce.
Lady Hale further pointed out that the only exception to this should be where the Court is satisfied, at the time the Consent Order is made, that the fraud would not have influenced a reasonable person to agree to it nor, had it known then what it knows now, would the Court have made a significantly different Order, whether or not the parties had agreed to it. The burden of establishing this has to lay with the perpetrator of the fraud; it is wrong to place upon the victim, the burden of showing that it would have made a difference. One must, however, consider in a practical sense, that where there has been significant misrepresentation or non-disclosure, that essentially, one would need to show that the other spouse has been materially disadvantaged.
Both of these cases involved couples with extremely large assets but essentially, the significance of the cases is that the principle will apply equally where the assets are more modest. Meanwhile, commentators have pointed out that these are cases of grasping ex-wives going back for more. However, what these cases revolve around is the lack of honesty by the ex-husbands in failing to properly disclose their financial assets. In a financial matrimonial case, there is a duty by both parties to provide full and frank disclosure of all their assets and the Supreme Court in granting the joint appeal of Mrs Sharland and Mrs Gohil, is sending a clear message that there should be zero tolerance in relation to non-disclosure in financial proceedings arising from the breakdown of the marriage.
The same Solicitor represented both the Appellants and has stated that these cases were actually about a matter of principle and justice for both women and the issues raised in the Supreme Court will therefore have implications in many other cases. Certainly, this landmark ruling by the Supreme Court, could result in a floodgate of cases involving former spouses applying for their divorce settlements to be re-opened. The critical thing will be to take advice at an early stage to ascertain if this ruling could make a significant difference to the outcome of the financial settlement on YOUR divorce.
A very important lesson to learn from these cases, is that if you require final closure in the financial settlement on your divorce, being dishonest or failing to disclose your finances, could seriously backfire on you and we now know the only way you can be sure of financial closure, is by being honest about your financial assets. The message from the Supreme Court is that Courts will not tolerate fraud or dishonesty in divorce settlements and if you have any concerns or indeed, want to consider what happened in a past settlement, then contact us now.
