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The Price of Dishonesty in Divorce – Part 2

A landmark decision handed down by seven Supreme Court Justices has enabled two divorcees to have their cases re-opened. This to allow them to seek larger payouts as a result of their former husband’s dishonesty when disclosing financial information in their divorces.  The telegraph reports on this here.

In 2004, Mrs Gohil accepted £270,000 and the family Peugeot from her ex-husband after divorcing him for alleged adultery and unreasonable behaviour. However, it later transpired that not only had Mr Gohil accrued significant wealth that he had not disclosed to his wife but that he was actually fully involved in a money laundering scam with Nigerian politician James Ibori in which together they stole over £50million from the oil-rich region Ibori governed. In 2012, following the discovery of this, and Mr Gohil’s subsequent incarceration, Mrs Gohil pursued a claim emerging victorious in the High Court with an Order in tow stating that the divorce settlement was to be scrapped due to non-disclosure. However, Mr Gohil successfully appealed the decision. Lord Justice McFarlane, sitting in the Court of Appeal, offered Mrs Gohil his sympathy but reiterated that a) she had no right to the money if it was ill gotten and b) that it was “simply not open to the court” to decide in 2012 about an issue discussed in 2004.

Concurrently, Mrs Sharland contested her divorce settlement in which she garnered £10.3 million from her ex-husband’s computer software company AppSense. His assets, initially valued at £7 million by his accountants and £32 million by her accountants, when discussing the original settlement did not disclose the real net worth of the business. Unbeknown to Mrs Sharland this business was said to be potentially worth £1 billion making Mr Sharland’s shares, those initially disclosed as being worth £7 million, worth £150 million. Mr Sharland openly admitted to seriously misleading his ex-wife. Yet, the High Court and Court of Appeal both concluded that this dishonesty did not make any difference to the finality of the settlement.

The two women looked to the Supreme Court to overturn the decisions against them that point to the finality of settlement agreements. The Supreme Court therefore had to consider whether a failure to provide full and frank disclosure should automatically invalidate a settlement reached or whether that should only be the case if that would have been “material” i.e. would it have made a significant difference to the likely settlement or not?

The Supreme Court unanimously allowed the appeals of both women which can be read here.

In Sharland, Lady Hale giving the only judgement stated that “a party who has practised deception with a view to a particular end, which has been attained by it, cannot be allowed to deny its materiality. Mrs Sharland’s application for financial relief will return to the Family Division of the High Court for further directions. In Gohil, Lord Wilson giving the main judgement held that the “respondent failed to discharge his duty to make full and frank disclosure

Therefore, in both cases the Supreme Court made clear the impact that dishonesty can play in the negotiation and consequent acceptance of financial settlements. The Supreme Court’s view is clearly that dishonesty can invalidate a settlement. This could open the floodgates for a lot of similar cases coming before the Courts. Nevertheless it acts as a strong deterrent to those spouses who are being dishonest and not sharing all the details of their wealth to the courts. Many will feel that these cases were matters of principle and justice for both women involved and all spouses who find themselves in a similar situation.

The full judgement for Sharland can be read here.

The full judgement for Gohil can be read here.

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Paul Lancaster

Family Law
0113 227 9285
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Paul Lancaster Blacks Solicitors LLP