The Supreme Court is in the second day of hearing cases brought by Alison Sharland and Varsha Gohil in which the court has to decide whether lying to a court in divorce proceedings about your financial circumstances, should automatically result in any financial settlement reached being reopened.
It may come as a surprise to most people that the question even has to be asked. I imagine that most people would expect that if one party misleads the divorce court as to the extent of their assets or income that there would be consequences. Not so.
Mr Sharland , in his divorce proceedings, estimated his company assets to be valued between $50 million and $75 million. Mrs Sharland accepted £10m from her husband. It subsequently transpired that Mr Sharland had failed to disclose that he had been in preparations for an IPO (initial public offering) and there was media speculation that the company was worth between $750m and $1bn . Quite an oversight on his part!
Mrs Sharland appealed . The Court of Appeal had no difficulty in concluding that Mr Sharland had deliberately misled the court but failed to overturn the agreement reached as the non disclosure was not “material”. The court’s approach was, and for some time has been, that non disclosure is only “material” if it would have resulted in a different outcome had the truth been known. The lies in themselves were not enough to upset the agreement reached.
Worryingly one judge actually commented that she considered that the court system might grind ever more slowly if every fraudulent misrepresentation permitted a case to be reopened.
So, are we saying that it is ok to mislead, indeed lie to, the divorce court?
Let’s turn to Mrs Gohil who accepted £270,000 and a car as a settlement when she divorced her husband.
Subsequently Mr Gohil was convicted of money laundering and at his criminal trial, evidence revealed he had failed to disclose his true wealth during divorce proceedings.
Mrs Gohil appealed as you might expect but the Court of Appeal ruled that information that emerged at his criminal trial could not be used to revisit the couple’s settlement.
I frequently have clients express their concerns that their soon to be ex spouse may not tell the whole truth about their financial circumstances. How worrying for them to hear that, if their concerns are legitimate and the truth is discovered, it may make no difference at all. What message does this send to the public about the need for full and honest financial disclosure within divorce proceedings?
Along with many other divorce lawyers I hope that the Supreme Court takes the opportunity to send a strong message to those tempted to lie about their worth when divorcing. What I hope for is a decision that a lie in and of itself, irrespective of whether or not it is considered “material”, is enough to overturn any settlement or court order based upon the misleading information. The decision won’t be known until later in the year.
0 Comments