The Supreme Court sets new precedent for non-disclosure of resources in matrimonial proceedings

The Supreme Court has unanimously reinforced the fundamental principle that, in financial proceedings following divorce, both spouses have a duty to the court to make full and frank disclosure of their resources.

The Supreme Court’s decision concerns two appeals, the first by Mrs Sharland in Sharland and Sharland [2015] UKSC 60 and the second by Mrs Gohil in Gohil v Gohil [2015] UKSC 61, to set aside a financial order made in matrimonial proceedings. The two cases were heard together, as both raised similar issues of fraudulent non-disclosure of assets and resources and whether such justifies setting aside the original order.

The parties in both cases had agreed a financial settlement. In Sharland, the point of dispute primarily concerned the value and manner of distribution of the shareholdings in the Husband’s company, AppSense Holdings Ltd. However, the parties managed to agree a value for the purpose of negotiations and the financial agreement reached was based on such valuation. It later transpired that the Husband had knowingly misled the expert valuers involved in the case and his evidence at the original hearing had been false. The shareholdings were worth significantly more. Lady Hale said that the Husband’s failure to provide full disclosure was one of fraud and fraud unravels all. It was determined that, based on the facts of this case, the Judge at first instance would not have made the Order he did, when he did, had he been aware of Mr Sharland’s fraud, and therefore the consent order should have been set aside. It was decided that Mrs Sharland’s application for a financial remedy will be transmitted back to the High Court in London for further directions.

Similarly, in Gohil, the Wife had made an application to set aside a financial order on the ground of the Husband’s fraudulent non-disclosure of resources. Lord Neuberger drew particular attention to the discretion afforded to judges to draw inferences. He cited Lord Sumption in Prest v Petrodel Resources Ltd [2013] UKSC 34, who stated that “judges exercising family jurisdiction are entitled to draw on their experience and to take notice of the inherent probabilities when deciding what an uncommunicative husband is likely to be concealing”. The Husband was found, on the balance of probabilities, guilty of non-disclosure of resources. The result of which, is that, the original order was reinstated and the Wife’s application to set aside the order is to proceed with a rehearing.

Ros Bever of Irwin Mitchell, who acted for both Wives, commented that:-

“These cases were about a matter of principle and justice for both women and the issues raised in the Supreme Court will have implications in many other cases.

Our clients feel vindicated. Dishonesty in any legal proceedings should not be tolerated. We are thrilled that the Supreme Court has confirmed that the Family Court is not an exception to the general rule that it is no more acceptable to lie there than it is in any other court”.

These two, successful, appeals act as a careful reminder that if both the spouses do not comply with their duty to make full and frank disclosure to the court, “the court is disabled from discharging its duty under Section 25(2) of the Matrimonial Causes Act 1973 and any order, by consent or otherwise” (Lord Neuberger, paragraph 22). The duty cannot be exonerated by the other spouse. Non-disclosure is taken extremely seriously in the Family Courts and such can have a significant impact on any settlement reached, whether by consent or otherwise. It is simply not a risk worth taking.

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