The Supreme Court, in financial remedy ruling, unanimously holds that full and frank disclosure is required of all parties

The highest court in the United Kingdom has ruled that the appeals of Alison Sharland and Varsha Gohil, in respect of financial settlements arrived at upon divorce will be allowed.

In Sharland v Sharland [2015] UKSC 60, Lady Hale held that the consent order drafted during a trial in the High Court in 2012 will not be sealed. The agreement had been approved in 2012, after Mr Sharland gave evidence confirming that there were no plans for an Initial Public Offering (IPO) of a software business he developed and had a substantial shareholding in. Valuers had been instructed to provide valuations of the company on that basis. However, before the order was sealed, Mrs Sharland discovered that the business was actively being prepared for an IPO, which in effect, would value the company at a figure in excess of the valuations provided.

Mr Sharland had been dishonest in failing to disclose the plans for an IPO. Lady Hale therefore held that Mrs Sharland’s application for a financial remedy should return to the High Court for further directions. This gives a clear message that misleading the court, by failing to disclose relevant information, which may have the effect of depriving the ex-spouse of achieving a more favourable financial outcome, will not be accepted.

It is evident from the judgment in Sharland that the court is of the view that it is beneficial for families, for matrimonial claims to be settled by agreement rather than adversarial battles in court. This gives parties the power to arrive at an agreement of their own volition, which the courts can then make into an order unless they have reason to believe that it is unfair or that there are circumstances into which it should inquire.

However, such agreements differ from ordinary civil proceedings in that the authority of the consent order is derived from the court, rather than the consent of the parties. The duty of full and frank disclosure arises of all financial assets held worldwide.

Lady Hale commented that it would be ‘extraordinary’ if the victim of a fraudulent misrepresentation in a matrimonial case was in a worse position than the victim of a fraudulent misrepresentation in an ordinary contract case. This lack of tolerance for dishonesty by the Family Court is indicative of why the English justice system is so well respected internationally. The English courts have earned a reputation for arriving at fair outcomes and this means that they are often the jurisdiction of choice in terms of issuing financial remedy proceedings upon relationship breakdown, depending on the circumstances of the person.

In Gohil v Gohil [2015] UKSC 61, which was heard at the same time as Sharland v Sharland [2015] UKSC 60, the Supreme Court re-instated an order abandoning the financial settlement arrived at, which had previously been set aside on the basis that there was no admissible evidence to support the conclusion that there had been material non-disclosure.

In this case, Mrs Gohil sought to have a settlement order set aside, 3 years after it was finalised at a Financial Dispute Resolution Hearing on the grounds that Mr Gohil had fraudulently failed to disclose his assets. In 2011, Mr Gohil was convicted of money laundering offences and sent to prison. The High Court, in 2012, agreed to discard the settlement, but a later hearing in the Court of Appeal ruled in favour of Mr Gohil, holding that the courts were not allowed to use evidence from the criminal trial, which had been obtained from sources outside the UK and held inadmissible.

However, the Supreme Court has now found that reliance only on the admissible evidence would nevertheless have led to a finding that Mr Gohil was guilty of material non-disclosure. The 2012 order, setting aside the agreement reached in 2004, has therefore been re-instated.

These cases demonstrate that the English courts retain jurisdiction over a marriage even after it has been dissolved and statute enables them to vary, suspend, rescind or revive any order made in matrimonial and family proceedings if a spouse has been dishonest. These cases are of great public importance as they remind us all that in order to achieve finality in financial remedy proceedings, it is imperative to behave honestly and with integrity, disclosing all relevant information in respect of one’s financial position.

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