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Sharland & Gohil: Supreme Court Confirms No Tolerance for Non-Disclosure

June Reid

On Wednesday (14th October 2015), the Supreme Court handed down the much awaited judgments in the cases of Sharland v Sharland and Gohil v Gohil. The wives in both cases were granted the right to challenge their divorce settlements after the Supreme Court unanimously found that their husbands misled the courts in the original hearings.

The Supreme Court confirmed that both claims would return to the High Court. Previously, the law had been unclear about when a lack of disclosure is enough to set aside an agreement regarding the finances reached between parties in divorce proceedings.

Sharland v Sharland

The case of Sharland considers the impact of fraud on an agreement to compromise financial proceedings and/or a consent order made following such agreement. Mrs Sharland believed the £10 million settlement she accepted in her 2010 divorce from her husband represented half of his wealth. As part of the settlement Mrs Sharland was also to receive 30% of the proceeds of shares held by her husband in his company when he sold them. It transpired that Mr Sharland he had lied about his company’s value. The financial press estimated that the company was worth about £600 million. The value put forward by Mr Sharland in divorce proceedings was only £47 million.

Gohil v Gohil

Gohil looked at the correct approach to a party’s application to set aside a final order made in financial proceedings, on the basis that there has been material non-disclosure by the other party. Mrs Gohil, accepted a car as well as £270,000 as a settlement when she divorced her husband in 2002. In 2010, Mr Gohil was convicted of money laundering and jailed for 10 years. Evidence, revealed at his criminal trial, showed that he had failed to disclose his true wealth during divorce proceedings.

What the Supreme Court Has Said

In the case of Sharland, Lady Hale said that the case was one of fraud, “It would be extraordinary 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, including a contract to settle a civil claim”. She further said it was clear that the Judge would not have made the order he did in the absence of Mr Sharland’s fraud, and the consent order should have been set aside.

 

The judgments will have implications for many other cases, including those with less money at stake.

Please Note: W. Davies Solicitors have now closed their Family Department.

No new appointments are being made.

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