Sharland and Gohil: Deliberate Non-Disclosure. Is it worth the risk?
Back in June 2015 the Supreme Court were tasked with reaching a decision as to whether two wives, in two separate Divorce cases, should be entitled to have their Financial Orders overturned due to their Husband’s fraudulent non-disclosure of assets. On the 14 October 2015 the Supreme Court gave their ruling, which will serve as a warning to any spouse going through Divorce Proceedings who may be considering deliberately hiding the extent of their wealth from the Court. The Supreme Court ruling may now lead to a number of ex-Spouse’s seeking advice as to whether they have grounds to have their Financial Order overturned.
The facts in Sharland and Gohil
In summary, Mrs Sharland had agreed to accept a lump sum of £10.3M, having been led to believe that this equated to approximately 50% of Mr Sharland’s available assets. It was not until shortly after the Financial Order was made by the Court that Mrs Sharland discovered that Mr Sharland was already involved in active discussions with regard to offering for sale his interest in a company known AppSense Limited, which, at the time of the initial Hearing, had a value attributed to it of between £50M and £75M. Mrs Sharland found out shortly after the agreement was reached that Mr Sharland’s shareholding was probably worth in excess of £600M. Mrs Sharland took the matter straight to the Court of Appeal and asked that the Court continued to hear her initial claim for financial provision on the grounds that the Consent Order had been obtained by fraudulent non-disclosure. The Court of Appeal dismissed her Application, finding that Mrs Sharland would not have secured a “substantially different” award had the true position been known.
In Mrs Gohil’s case, she agreed a settlement of £270,000 and a car during her Divorce Proceedings in 2004. At the time of those Proceedings, Mrs Gohil made it clear to the Court that she did not believe her Husband had given full and frank disclosure, but Mrs Gohil had difficulty proving her case. Simply to see an end to the matter she therefore agreed to accept the £270,000. Six years later, following a Crown Court Trial, Mr Gohil was found to have been involved in fraud and money laundering and to have assets of approximately £25M. He was sentenced to 10 years imprisonment. Mrs Gohil applied to have the final Consent Order set aside on the grounds of alleged serious non-disclosure, fraud and misrepresentation by Mr Gohil. The High Court found in Mrs Gohil’s favour and Ordered that there should be a re-Hearing of Mrs Gohil’s financial settlement. Mr Gohil appealed to the Court of Appeal and the Court of Appeal found in his favour, stating that it was not open to the Court to make a finding of material non-disclosure on the limited evidence that was available. This was because much of the evidence was inadmissible because it came from the Criminal Proceedings.
In both cases, the Supreme Court have unanimously ruled that Mrs Sharland and Mrs Gohil should have their Consent Orders set aside and there will now be re-trial’s for both of them.
The following principles have been established:-
- When dealing with financial claims within Divorce Proceedings, both parties have a duty to make full and frank disclosure to the Court.
- If a Husband and Wife are consenting to an agreement then their consent must be valid. If there is a reason which invalidates a Husband or Wife’s consent e.g. fraud, then this would be good reason for the Court to set aside a Consent Order.
- It would be unreasonable and unfair if the victim of a fraudulent misrepresentation in a matrimonial case was in a worse position than the victim of a fraudulent misrepresentation in an ordinary contract case.
- The Court will not consider an Application to set aside an Order if, at the time when the Consent Order was made, the fraud would not have influenced the terms of the Order.
- One Spouse cannot exonerate another Spouse from the duty to give full and honest disclosure. This may be relevant for some ex-Spouse’s who may have been pressurised into signing a waiver for disclosure.
The Supreme Court has made it very clear that the Court will not tolerate Spouse’s who attempt to hide the extent of their wealth.
Applications to have Financial Orders set aside can be complex and costly and should not be undertaken lightly. The Supreme Court have helpfully confirmed that there is likely to be statutory reform in this area and Lady Hale, who provided the leading Judgement in Mrs Sharhill’s case, helpfully confirmed that an Application to set aside can be made straight back to the Judge who dealt with the case at the first Hearing, rather than by way of an Appeal.
Mrs Sharlandl and Mrs Gohil will now have their cases re-heard and it will be interesting to see what settlements they achieve now that the full extent of wealth is clear.
For further information in relation to this or any other Family Law matters then please contact a member of the Family Law Team at Hansells.