On Wednesday 14th October, the Supreme Court issued a clear message that dishonesty between parties and the court when negotiating and agreeing the terms of a divorce settlement will not be tolerated.
Alison Sharland and Varsha Gohil have recently brought separate actions in the Supreme Court to set aside their divorce settlements on the basis that their husbands’ deliberately concealed the true extent of their wealth, and have seen their cases being re-opened to allow them to seek larger payouts from their former husbands.
Mrs Sharland accepted a £10.3 million capital sum three years ago from her husband which she believed to an equal share in his wealth before she discovered that her husband’s company, AppSense Holding Ltd was considering floatation on the stock market and had been valued at nearly one $1 billion (£620 million).
Mrs Gohil signed an agreement with her husband to receive £270,000 and a car as part of her 2004 divorce settlement. In 2007, Mrs Gohil applied to the court to have the 2004 Order set aside on the ground that her husband had fraudulently failed to disclose his assets to her and the court. These proceedings were delayed, largely because in 2008 Mr Gohil was charged with serious money laundering offences dating from mid-2005, in excess of £37 million. Mr Gohil was eventually convicted and committed to prison in 2011.
The Court of Appeal had previously ruled in Mr Gohil’s favour on the basis that evidence from his criminal trial could not be used to prove that he had been dishonest in the divorce proceedings.
In Mrs Sharland’s case, despite the fact that Mr Sharland had been found to have been dishonest, no order was made to increase her original payout or a new hearing scheduled by the Court of Appeal, on the basis that it would not have led to a significantly different financial outcome.
The Supreme Court has overruled the Court of Appeal on both accounts, and has unanimously ordered that the original actions are re-opened to allow both women to revisit their financial claims against their former husbands.
In both Scotland and England there is a requirement that both parties make a full and frank disclosure to one and to the court in respect of their assets in order to effect a fair sharing of the total matrimonial property. This is a landmark decision that underpins the importance of mutual trust and confidence between parties when agreeing to a divorce settlement and indeed, the severe consequences if this obligation is deliberately thwarted if wealth or assets are deliberately concealed.