Supreme Court to hear joint appeal against ‘unfair’ divorce settlements

Supreme Court to hear joint appeal against ‘unfair’ divorce settlements

Alison Sharland and Varsha Gohil claim they were entitled to a higher award in their divorce settlements because their ex-husbands misled the divorce courts about the value of their assets.

A panel of Supreme Court judges is to decide whether non-disclosure during divorce proceedings entitles a claimant to re-negotiate their financial settlement.

The solicitor representing both women said: “This is yet another case in which an unfair settlement has been agreed because of one party being dishonest and not sharing all the details of their wealth to the courts.

“Dishonesty in any legal proceedings should not be tolerated. The family court should not be an exception.”

However, lawyers representing Mr Sharland said the original settlement was “fair and reasonable”, and are confident the Supreme Court will uphold the High Court and Court of Appeal’s ruling.

The hearing is expected to last until Wednesday, with a ruling due later this year.

This is the first time in decades the Supreme Court has looked at the issue of dishonesty and non-disclosure in divorce proceedings. So we expect strong guidance when a definitive decision is made.

If the joint appeal is successful, it could lead to more and more people seeking to re-negotiate their divorce settlements in the future.

The background

Sharland v Sharland

Ms Sharland accepted more than £10m and properties from her ex-husband when they divorced after 17 years of marriage. After the settlement was agreed, it emerged that Mr Sharland’s company, AppSense, was worth more than he had stated and that he had plans to float the company on the Stock Exchange. Ms Sharland appealed the settlement.

The Court of Appeal agreed that Mr Sharland’s evidence was ‘seriously misleading’. But it ruled that Ms Sharland was unlikely to have been awarded a higher settlement even if the husband had disclosed the true value of his financial assets.

Gohil v Gohil

Ms Gohil accepted £270,000 plus a car in her divorce settlement in 2004. Mr Gohil was convicted of fraud and money-laundering in 2010 and was jailed for 10 years. It emerged in his criminal trial that he had not made a full disclosure of his assets during the divorce proceedings.

In 2012, Mr Justice Moylan ruled to scrap the settlement on the grounds that Mr Gohil had failed to properly disclose his financial assets. But Mr Gohil made a successful appeal. The Court of Appeal overturned the ruling, arguing that the court could not use evidence from the husband’s criminal trial to prove he had been dishonest in the divorce proceedings.

What this means for you

The Courts have long had powers to re-open or ‘set aside’ orders. Although, in practice, it’s something that happens rarely.

The main basis for re-opening a court order are where there has been fraud/misrepresentation or there has been non-disclosure. There is a subtle difference between the two.

Fraud/misrepresentation is, in essence, an active process of deceiving the court and the other party. Non-disclosure is a failure or omission to provide the relevant information and/or documentation. However, both of these provide the basis for a court to re-open the order and look at it again in light of new information.

Time is very much of the essence in these cases. A person should act immediately to bring any issue of fraud/misrepresentation or non-disclosure to the attention of the court. A failure to proceed expeditiously may be fatal to the case.

It’s also worth noting that a court will only intervene where the order to be made now would be substantially different to the order that was previously made, taking account of the new information now placed before the court.

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