Will the Supreme Court’s consideration of non-disclosure in divorce cases open the floodgates?

The Supreme Court is considering two legal cases from Ms Alison Sharland and Ms Varasha Gohil, to determine whether they should be granted the right to appeal their divorce settlements, as they allege their ex-husbands failed to disclose all relevant financial information. Although the decision is reserved, and not expected for some time, there are concerns that if the UK’s highest court finds in their favour, the floodgates would open to allow all former partners to subsequently appeal concluded divorce agreements.

“A plain case for equal sharing”

The two women, Ms Sharland and Ms Gohil, have both appealed their earlier divorce settlements on similar grounds, namely alleging that their former husbands had concealed the true extent of their assets and as a result, the agreements had been based on fraud and had “shortchanged” them. Both separately progressed through the High Court and Court of Appeal, with their cases now appearing together before the Supreme Court, to determine if they should be granted the opportunity to reopen their hearings into the settlements.

Ms Sharland was awarded £10.35 million in a settlement with her ex-husband, Charles Sharland, in 2012. Mr Sharland, an IT entrepreneur from Cheshire, is accused of failing to disclose talks about the possible flotation of his company, AppSense, when the judge was considering the award that should be made on the couple’s separation. Had this been disclosed, the value attributed to the business would have been much higher, which Ms Sharland argues would have significantly increased her entitlement.

While the court was told that AppSense was worth between £31 million and £47 million, the figures placed on the flotation saw the company valued at closer to £656 million. As resource built up during the marriage, Ms Sharland’s QC, Mr Martin Pointer, has argued that the true value of the business should have been accounted for and that this represented “a plain case for equal sharing”.

Conversely, Ms Gohil accepted a Peugeot car and £270,000 as a lump sum when she divorced her solicitor husband Bhadresh Gohil in 2004, on the understanding he had modest means. However, Mr Gohil was later sentenced to 10 years imprisonment after admitting a series of criminal offences, including money laundering valued at more than £20 million.

Ms Gohil argued that there was undisclosed material at the time of the settlement and in 2006, she successfully overturned the consent order for their settlement on the basis of inaccurate financial information. However, due to the ongoing police investigation into her ex-husband’s activities, her case was stayed. The Court of Appeal then declined to reopen the case and while Lord Justice McFarlane expressed sympathy for her situation, he said it was not possible for the court to find non-disclosure eight years after the initial award was made.

The decision could pave the way for more people to litigate post-divorce

Previously in similar cases, the courts have expressed sympathy towards former spouses who may have been duped, with dishonest behaviour condemned, but until now, they have refused to overturn any settlements. However, the Supreme Court is now considering whether the two women were deprived of a fair hearing and a fair outcome.

The cases raise serious questions about how the courts should handle cases where one party has provided false or incomplete information. If the appeals are refused, it is argued that the court is in effect sanctioning spouses taking steps to avoid disclosing certain information, which would affect their partner’s entitlement. Supporters of Ms Sharland and Ms Gohil argue that dishonesty in any legal proceedings should not be tolerated – and that dishonesty in the family courts should not be an exception. The threat of perjury charges may become necessary in order to ensure that couples make full and frank financial disclosure in order for an appropriate settlement to be made at the time of divorce.

However, there are concerns that if successful, the cases of Sharland and Gohil could change the legal landscape and pave the way for more people to litigate post-divorce if they are unhappy with their settlement. It is argued that this could result in a lack of certainty, with unending litigation and cases being reopened because of the failure to disclose something that may not, in reality, make a material difference to the amount awarded.

The decision is reserved and not expected for several months, but the need to strike an appropriate balance between ensuring honest disclosure of assets in divorce proceedings and upholding the legal certainty of settlements will be paramount.

Family break-ups are traumatic for adults, and children in particular. At IBB Solicitors, we’re here to help you resolve divorce and separation issues as swiftly and sensitively as possible with caring, compassionate advice and representation.

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