In two landmark cases decided yesterday (14 October 2015), Courts can allow financial consent orders to be renegotiated if it emerges later that the spouse was hiding assets intentionally.
Sharland v Sharland
In Sharland, a settlement agreement was agreed on the basis of the husband’s disclosure at that time, awarding her some £10.3 million in cash and properties. At the time, the husband had a two thirds share of a successful company and agreed to pay the wife a deferred lump sum out of the proceeds of any disposal of the shares he had in that company. After the agreement was made (but before the court order was sealed by the court), the wife discovered that the husband was making arrangements to float the company on the New York stock exchange by way of an initial public offering (IPO).
The wife applied to have her claim for financial relief reopened. The husband was ordered to file an affidavit in response to the wife’s allegation that there had been non-disclosure. Exhibited to that affidavit were documents which demonstrated that discussions for an IPO were concrete, and the husband was even at that time still meeting with banks to invite them to pitch for the role of banker to the IPO.
High Court decision
Mr Justice Bennett held that the non-disclosure of the husband’s IPO discussions was material and might have affected the outcome of the wife’s financial claim as the IPO could have had a dramatic impact on the value of the company and therefore an impact on the value of the shareholding. However, the IPO did not take place as planned and therefore, Mr Justice Bennett had to consider if the order already made would have been “substantially different” than the previous order in light of this new information. Given that the IPO did not proceed, he decided that the financial order would not have been substantially different and the wife’s application was dismissed.
Court of Appeal decision
The wife appealed to the Court of Appeal. Lord Justice Moore-Bick, relying largely on the judgment of Livesey v Jenkins (1985) again dismissed her appeal. It was held, similarly to Mr Justice Bennett that it would only be in cases where the absence of full and frank disclosure had led to the court making an order “substantially different from the order which it would have made if such a disclosure had taken place” that a case for setting aside the order could be justified.
Supreme Court decision
On 14 October 2015, the Supreme Court overturned the decisions of the High Court and the Court of Appeal. Giving the leading judgment, Lady Hale likened the case to one of fraud and thought it extraordinary that any victim of fraudulent misrepresentations in a matrimonial setting would be in a worse position than a victim of fraudulent misrepresentations in an ordinary contract claim. The wife’s appeal was therefore allowed and the matter was to be returned to the Family Division of the High Court.
The full judgment can be found here.
Gohil v Gohil
In Gohil, the wife claimed for financial relief and a consent order was agreed between the parties on 30 April 2004. However in 2008, the husband was charged with offences of money-laundering to the value of approximately £60 million and was sentenced to prison for 10 years. The investigation into the husband’s dealings began in mid-2005. In July 2007, the wife applied to set aside the agreed consent order on the grounds of non-disclosure, fraud and misrepresentation as she claimed that, during the criminal trial, evidence emerged which demonstrated that he had not provided full and frank disclosure of his asset.
High Court decision
Mr Justice Moylan found that the husband had failed to give full and frank disclosure of his true financial position during the proceedings. In coming to that decision, he considered documentation from the criminal trial and allowed the wife to relay evidence of what she heard during the criminal trial. He granted the wife’s application to rehear her claim for financial relief and asset aside the order that had been agreed on 30 April 2004.
Court of Appeal decision
The husband successfully appealed the order. The Court of Appeal were satisfied that Mr Justice Moylan did not have jurisdiction to set aside the consent order agreed on 30 April 2004 solely on the existence of new evidence.
They also decided, in a separate hearing, that the documents obtained from the criminal trial were not necessarily admissible in other proceedings, such as this. They therefore concluded that Mr Justice Moylan relied on evidence which was not admissible in the matrimonial case.
Supreme Court decision
The wife appealed the decision of the Court of Appeal to the Supreme Court. The Supreme Court concluded that even if Mr Justice Moylan had considered only the relevant admissible documentation, he would still have found that the husband was guilty of material non-disclosure. The Court also satisfied themselves that, on the basis of that admissible evidence only, there had been material non-disclosure. The wife’s appeal was therefore allowed.
The full judgment can be found here.
If you think you have been cheated into a financial order on the basis of your ex-spouse’s lack of disclosure, then please contact Chris Corney or Lisa Ginesi.
