Nowhere to hide? Supreme Court rules that non-disclosure of financial assets on divorce can result in settlements being reassessed

The Supreme Court ruled yesterday in the cases of Sharland and Gohill that 2 wives may have their financial awards on divorce reassessed as a result of non-disclosure by their husbands.  Whilst the cases themselves are very different, with Sharland involving assets in the millions and Gohill much more modest sums, the message was unanimous: if you fail to provide full and frank disclosure during the course of reaching a settlement on divorce, you risk having such settlement overturned.

In the case of Sharland, an agreement was reached during the course of a trial on the basis that there were no plans for the floatation of the husband’s business.  It later transpired that such plans were actively being pursued at the time of the trial.  In allowing Wife’s appeal, the Court highlighted the following points:

  1. The duty to disclose all relevant facts continues after the agreement has been reached until the court itself has made its order;
  2. The power to set aside arises when there has been fraud, mistake or material non-dislcosure;
  3. Where there is innocent or negligent non-disclosure, it is for the person seeking to set aside the order to show that, had that non-disclosure not occurred, the court would have made a substantially different order from that which it did make.  However, in the case of fraud, it is assumed that the victim will be entitled to have the order set aside unless the perpetrator of the fraud is able to establish that the fraud would not have influenced that person and the court would not have made a significantly different order, whether or not the parties had agreed to it.

As Mrs Sharland had established fraud, she was entitled to re-open the case and look to negotiate a new settlement.  The proceedings themselves did not need to start from the beginning and the court retained flexibility and discretion to deal with those issues relevant to the outcome.

In the case of Gohill, the husband had, subsequent to the agreement between the parties, been convicted of money laundering and sent to prison.  There was sufficient evidence to find that the husband was guilty of material non-disclosure and that therefore her claims could be reconsidered.

Therefore, if it becomes clear following financial settlement that there was fraudulent non-disclosure of assets during the course of negotiations, and indeed until a final order has been made, an application may be made for such settlement to be set aside and reassessed.  Care needs to be taken to ensure that any reassessment would indeed be beneficial, but it is anticipated that there will be many who ask for their cases to be reconsidered in the light of the Supreme Court decision.

The law and practice referred to in this article or webinar has been paraphrased or summarised. It might not be up-to-date with changes in the law and we do not guarantee the accuracy of any information provided at the time of reading. It should not be construed or relied upon as legal advice in relation to a specific set of circumstances.

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