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Sharland & Gohill - "Fraud Unravels All"

Author: Tyne Harman

In the recent cases of Sharland and Gohill, the Supreme Court ruled that Mrs Sharland and Mrs Gohill could re-open their financial cases on the grounds of their ex-husbands’ fraudulent disclosure of their respective finances.

Background

In the case of Sharland, the dispute related to the disclosure given by the husband as to the value of AppSense Ltd. and the husband’s shareholding in it. Due to the disagreement as to the value of the Company the parties instructed separate experts to value the Company on the basis that there were no plans for an Initial Public Offering (IPO) i.e. an opportunity for the public to invest in the Company, as stated by the husband.

The parties came to an agreement and a Consent Order was drawn up. However, before the Order was sealed, reports appeared in the press indicating that AppSense was being actively prepared for an IPO, and the value of the Company was much higher than originally indicated. Furthermore, documents subsequently disclosed by the husband showed that the earlier evidence he had given could “only be categorised as dishonest”.

The facts of Sharland had a common basis with the facts of Gohill –fraudulent non-disclosure of finances by one spouse. In the case of Gohill, the parties came to an agreement in 2004 as to the division of the matrimonial assets. However, as a result of criminal proceedings against Mr Gohill, where he was found guilty of money-laundering and conspiracy to defraud (with the disclosure from the CPS), it came to light that the extent of wealth available was far greater than Mr Gohill had originally disclosed to the family Court.

Judgment

In Sharland v Sharland, it was stated that “it is in everyone’s interests that matrimonial claims should be settled by agreement rather than by an adversarial battle in court but nevertheless, in family proceedings, there is always a duty of full and frank disclosure”. Taking into account this principle, and due to the intentional and material non-disclosure in this case, this would have led to a different Order being made had the true position been known.

Mrs Sharland had been deprived of a full and fair hearing of her claims; the Consent Order agreed was not made on the basis of full and frank disclosure. Valid consent formed part of the reasoning behind the Judgment as Lady Hale stated that “the court cannot make a consent order without the valid consent of the parties. If there is a reason which vitiates a party’s consent, then there may also be good reason to set aside the consent order.”

As a result, Mrs Sharland was entitled to re-open the case, when she might seek to negotiate a new settlement or a rehearing of her claims when all the relevant facts were known.

Similarly, in the case of Gohill, as her ex-husband had fraudulently failed to disclose his assets, Mrs Gohill’s appeal was allowed to set aside the final settlement Order made in her financial proceedings within her divorce.

What does this mean for you?

There is now the possibility to re-open a case on the grounds of your ex-spouse’s fraudulent or inaccurate disclosure. Further disclosure could be ordered, with the possibility of a new settlement being achieved by consent or a rehearing. However, it must be noted that this may, or may not, prove to be a more favourable settlement, and the issue of proportionality is an important aspect to be borne in mind. It is also essential that you can demonstrate that at the time of the original hearing the Court made an Order on the strength of clearly inaccurate disclosure.

If you have a query on this, or any other family related matters please contact a member of our Family Department.