Closethorntonbanner
Close Thornton

Landmark Judgement For Divorce Settlements

Landmark Judgement For Divorce Settlements

Two wives who alleged they were misled by their ex-husbands in their divorce settlements have won a Supreme Court fight to have their financial orders set aside, referring their cases back for re-trials. However, will this lead to widespread claims to re-open financial orders on the grounds of non- disclosure or fraud?

Alison Sharland and Varsha Gohil, alleged their ex-husbands hid the extent of their wealth when the financial agreements were made. The Court of Appeal refused to set aside the final financial order on divorce following their ex-husbands fraudulent non-disclosure. However, Mrs Sharland and Mrs Gohill were granted leave to Appeal to the Supreme Court.

The unanimous judgement of the Supreme Court was that dishonesty or fraud involving failure to disclose financial assets are grounds for the order to be set aside. It is a hugely significant ruling which means that a division of the parties' financial assets must be based upon a "valid agreement". If one of the parties is dishonest, if they mislead the court regarding the extent of their assets, the other party may be able to apply to court to have the agreement set aside and the matter referred back for a re-trial.

Ms Sharland, from Wilmslow in Cheshire, believed the £10m settlement she accepted in her 2010 divorce from her ex-husband Charles, a software entrepreneur, represented half of his wealth. It later transpired that he had lied about his company's value (which the financial press estimated to be worth about £600m), when the value he alleged in the divorce case was £50m. He also lied about plans to float the company on the stock market.

Under the original settlement Ms Sharland would also receive 30% of the proceeds of shares held by her ex-husband in his company when he sold them. She said she wanted to move on "safe in the knowledge that my future divorce settlement will be based on the true value of our assets".

Giving the judgement of the court, Lady Hale said Ms Sharland had been "deprived of a full and fair hearing" because of "her husband's fraud".

Ms Gohil, 50, from north London, accepted a car as well as £270,000 as a settlement when she divorced her ex-husband in 2002. In 2010, Mr Gohil was convicted of money laundering and jailed for 10 years. At his criminal trial, evidence revealed he had failed to disclose his true wealth during divorce proceedings.

These recent decisions may encourage many people to try and renegotiate historic divorce settlements. It emphasises that the court can dispense with an agreement between divorcing couples regarding their finances, even if the court had previously approved it, if the basis of that agreement is subsequently found to have been reached on a false premise, namely that one of the parties lied to the other about the value, or potential value, of an asset.

However, not all cases of non-disclosure will result in financial orders on divorce being set aside. In order for the court to set aside the order, the non-disclosure needs to be material to the order made by the court to be sure that without it, the basis of the agreement would have been different to the one reached.


For more information about this or any other aspect of divorce and family law, please contact Katie-Lee Pearson on 01325 466461 or email katie-lee.pearson@close-thornton.co.uk

Close Thornton