The press and social media were going overtime last month with the announcement of a long awaited judgement from the Supreme Court on the high profile ‘Sharland and Gohil’ cases.
Both women said that they had been misled by their ex-husbands, who were alleged to have hidden the full extent of their wealth during divorce proceedings, leading to ‘unfair’ financial settlements.
The decisions by the High Court are a stark warning to any one involved in financial settlement cases, even if the settlement is agreed by both parties, that all sides must abide by the clear duty to make ‘full and frank disclosure’ of his or her financial positions. This is a fundamental principle and forms the bedrock of the divorce system.
It is clear now that dishonesty will not be tolerated - make your true financial situation plain and you have nothing to worry about, but hide your money or concoct a web of deceit to disguise your real assets then you could be back in court. Any finalised settlement could be reopened and you would be expected to pay up.
Whilst these decisions come from big money settlements, there is likely to be significant impact on smaller cases – those being the ones that arise from most divorces. Having the opportunity to be awarded a share in assets that have been hidden is likely to make a greater difference to an ex-spouses financial position when there is less money involved. These two cases serve to remind us all of the power of the court and the fact that it retains jurisdiction over a marriage even if ‘Decree Absolute’ has been pronounced. It can look again at a financial settlement if an ex comes back with a fresh application or wants to appeal because they feel there has been dishonesty and an unfair outcome.
The moral here is that it is no more acceptable to lie in the Family Court than it is in any other court.
So, will these two cases lead to floodgates opening to overturn settlements by ex’s wanting more money? Time will tell.
The ex-wives in Sharland and Gohil have been fighting about their settlements for around a decade. They argued their husbands had deliberately misled them and the court about the extent of their wealth. The expense – financial and emotional – must have been immense.
Mrs Gohil had accepted a relatively modest financial settlement back in 2004. She believed that her former husband’s financial position was significantly greater than he was disclosing, but the picture he presented to his former wife and the court was that he had no assets and only a modest income. As a result she agreed to accept £270,000.00 and some maintenance for herself and the children.
Having settled the case, she quickly became suspicious and concerned about the true financial position because of the life her ex husband was leading. It seemed very different to the financial information he had given to the court. Mr Gohil has since been convicted of money laundering offences and subsequently jailed for 10 years. It was during his trial that Mrs Gohil started to understand the complicated measures that he had gone to, to move money around the world and to hide it.
In 2012 she was successful in attacking the original order from 2004 which allowed her to claim on the assets that had been hidden but her husband wasn’t going to lie down and he appealed that decision and won.
Mrs Sharland had originally agreed a 50/50 share of assets - sounds reasonable doesn’t it? She got millions in her original settlement, but her ex-husband had misled the court about the true value of his business and his plans with it. Instead of being valued at between £31m and £47m it was reported to be valued at $1bn.
The Court of Appeal agreed that her ex-husband had been fraudulent, but despite this, the Court of Appeal decided that she could not overturn her original settlement because she could not prove her settlement would have been any bigger if her ex-husband has made ‘full and frank disclosure’. So she carried on her fight.
The Supreme Court said that the Court of Appeal had been wrong in placing the burden on ‘the innocent victim’ to prove she would have achieved a significantly different outcome. If it is now found there has been an intentional failure to disclose assets the court will presume that full and frank disclosure would have led to a different financial order being made unless her ex-husband can prove otherwise.
These two couples now face further litigation. The court has finally opened the door to enable them to re-examine their original settlement. But both are going to be involved with the court and their ex-husbands for some time to come and the eventual outcome is still some time away.