Sharland v Sharland & Gohil v Gohil – Getting Away with It?
At the time of publication of this article the Supreme Court are in the final stages of reaching a decision in the cases of Sharland -v- Sharland and Gohil -v- Gohil. Both cases involve alleged non-disclosure of assets in ancillary relief proceedings. Mrs Sharland and Mrs Gohill both agreed to settle their financial claims upon the basis of the financial disclosure that had been made by their husbands at the time of the proceedings but both wives went on to discover that they had been misled as to the extent of wealth available.
In Mrs Sharland’s case she 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, which were primarily made up of two thirds of the shares in a company. 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 the company for sale at substantially more than he had valued the company at in the initial Court proceedings. Mrs Sharland produced evidence that the financial press were valuing the company in excessive of £600M. Mrs Sharland took the matter straight to the Court of Appeal and asked that the Court continue 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. The matter is now before the Supreme Court.
In Mrs Gohil’s case, she agreed to accept £270,000 and a car in settlement of her financial claims in 2004. It is worth noting that at the time that Mrs Gohil reached agreement she made it clear to the Court that she did not believe that her husband had given full and frank disclosure and maintained that Mr Gohil’s expenditure and lifestyle indicated that his financial worth was significantly greater than his disclosure suggested. However, Mrs Gohil had difficulty proving her case and an agreement was reached to achieve finality. Six years later, following a Crown Court trial, Mr Gohil was found to have been involved in fraud and money laundering amounting to over $37M. 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 remedy application. Mr Gohil appealed to the Court of Appeal and the Court of Appeal held in Mr Gohil’s 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, particularly as the evidence came from the criminal proceedings and that such evidence was not admissible to the Court. The Court therefore held that it was wrong to set aside the Order.
Both cases are now before the Supreme Court. The Court will need to consider what impact there should be upon Court Orders (Consent Orders) when it is discovered at a later date that there has been fraud within the original proceedings. It is hoped that the Court will offer clear guidance so that fairness can be achieved in cases where it is proved that there has been a failure to provide full and frank disclosure.
The law currently states that it is only possible to set aside Consent Orders where there has been material non-disclosure if the Court would have made a “substantially different” Order had proper disclosure been given. The issue for the Supreme Court is whether this test goes far enough and produces a fair result.
It is not uncommon for a husband or wife to have suspicions that disclosure is not as full as it should be. Divorce is a stressful time for both parties and it is not uncommon for there to be very little trust between a separating couple. Obtaining legal advice at an early stage will help to ensure that assets have been correctly valued and a family solicitor will be experienced in looking for signs of financial irregularities that need further investigation.