As anyone in the matrimonial legal world and anyone going through the difficult process of divorce will note, there has been a significant development in the case law surrounding disclosure of finances during the divorce process.
The ex wives of Messrs’ Sharland and Gohil have been locked in a lengthy legal battle to have their financial settlements re-visited, so that they can have the figures re-examined and (hopefully) a more favourable outcome reached. They have done so based on the deliberate non-disclosure of information which would have had a material impact on the settlement, had it been known at the time. There had been appeal after appeal, all the way up to the Supreme Court, the highest court in the land.
On the 14th October, after a 3 day hearing and deliberations, the Supreme Court overturned the Court of Appeal decisions which dismissed the appeals of the women to have their consent orders unsealed and the matters returned to the High Court for re-consideration. They are now able to do so.
In the case of Sharland, although the husband and wife had come to an equal division of the matrimonial assets based on what was disclosed, the husband had purposefully misled the court as to the value of his company shares. He had told the court that he had no intention of floating the company on the stock market and therefore the shares were worth some £750 million. Unfortunately for Mr Sharland, Mrs Sharland later found out that he had been in talks, just one week after the Final Hearing, with professionals who had advised him on going ahead with floating the company, meaning that the shares would be worth some £1billion. Mrs Sharland, having become aware of this information, applied to the Court of Appeal to prevent her consent order detailing the settlement from being sealed and to allow her to re-visit the settlement.
However, upon hearing Mrs Sharland’s case, the Court of Appeal had ruled that although the Husband had ‘deliberately and dishonestly’ concealed information relating to his company shares, as this information (had it been known at the time) would not have had a substantial affect on the order reached (as the company float never took place) Mrs Sharland was unable to re-visit the settlement terms. The Court of Appeal deemed that Mrs Sharland did not therefore have sufficient grounds to appeal.
The Supreme Court overturned this decision and stated that ‘fraud unravels all’ and that the burden of proof should lie with the perpetrator of the fraud and not the innocent party. The Court also stated that an individual subject to a fraud ‘should not be left in a worse position’ than someone who had been the victim of fraud in a contract case. Therefore as the company evidence was highly material to the settlement outcome, the Supreme Court ordered that there should be a re-hearing of the case, with all available material facts.
Now for Mrs Sharland, this would seem to be a great victory. A potential slice of the £1billion fortune should have a substantial impact on her re-visited settlement, albeit in the form of additional shares and a potential fortune, as opposed to an immediate and significant windfall. However, the case of Mrs Gohil is slightly more complex.
Mrs Gohil reached an agreement with her husband in 2004 as to a split of matrimonial assets, despite having aired her concerns that Mr Gohil was not disclosing all of his assets. Mrs Gohil was concerned that Mr Gohil was living a luxurious lifestyle that did not fall in line with the income he had disclosed. Despite this, she entered in to a consent order to finalise matters, but with her trepidations recorded in the recital to that order.
In 2006 Mrs Gohil sought to appeal the consent order reached, and again in 2007, she applied to have the order set aside on the basis of the husband’s fraudulent non-disclosure. Mrs Gohil had come across information uncovered in the Husband’s criminal trial for fraud (running to some £25 million) and had made the application based on such information. In 2012, full disclosure of the CPS’s information was ordered by the Court in the First Instance, but in 2013, the Husband’s appeal against that decision was successful and Mrs Gohil was unable to use the information held by the CPS, although she was successful in her application to re-visit the consent order.
Mr Gohil lodged an appeal against this and the Court of Appeal stated that as the Wife had relied on evidence that could not be disclosed, as a direct result there was no evidence proving the material non disclosure. It followed therefore that the Husband’s appeal was successful.
At the Supreme Court, that decision was overturned on the basis of the principles set down in Lad v Marshall in that there must be new evidence that was not available at trial (in Mrs Gohil’s case this was correct), that the evidence is credible (again this criteria was fulfilled) and that it is likely to have made a material difference on the outcome of the trial.
Therefore, Mrs Gohil is able to re-visit the settlement, but as her husband is currently incarcerated for fraud, (for 10 years), there will be a long and difficult journey in unravelling further assets in other jurisdictions, to determine what assets are viable for division and which are the proceeds of his criminal activity. An exercise which could take years, further to the original 10 year battle to get to this stage.
Maya Bhatiani
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