When to unravel the web of deceit in divorce

When to unravel the web of deceit in divorce 

 

Unhappy ex-spouses hoping to get their divorce settlements reviewed following a landmark judgment last month are being urged to check their facts first.

It was predicted that the Supreme Court rulings in the cases of Alison Sharland and Varsha Gohil would open the floodgates to thousands of couples wanting to revisit agreements made under a financial consent order, where one party had deliberately concealed their true financial worth during divorce proceedings. 

In both cases - Sharland v Sharland and Gohil v Gohil - the Supreme Court gave the former wives the right to re-open their divorce settlements on the grounds of fraud, which the two women claimed had led them to accept far lower financial settlements than they otherwise would have done. 

:  “The message from the Sharland and Gohil judgments is the fundamental principle that ‘fraud unravels all’, but before anyone rushes to take their former spouse back to court, they need to be sure as to whether they have just a grumbling dissatisfaction or legitimate grounds.”

Critical to proving misrepresentation will be showing that the ex-spouse lied or deliberately distorted their position when they made the original financial disclosure.  This statement will have set out what each declared to be a full and accurate list of their assets and liabilities at that point, and will be the basis for seeing whether either party has tried to make themselves appear less well off.  It won’t be enough for an unhappy ex-spouse to point to an improved financial position without evidence.  

An example could be where the value of property or a company has increased significantly.  In many cases, it can be very hard to pinpoint whether this was due to deliberate misrepresentation or is simply the result of an unexpectedly good performance on the part of the asset.  Demonstrating fraudulent intent will be clearer cut if someone denied owning a particular asset at the time, or had received an inheritance which they didn’t declare.

Whether or not Mrs Sharland and Mrs Gohil reach a different financial settlement is difficult to predict, but what is clear is that in cases of fraud such as this, an agreed financial settlement will be set aside.  Full financial disclosure is a duty to the Court and the message to anyone currently facing divorce is to recognise that you must be open and honest.  You otherwise risk having the case reopened in future and if that were to happen, you would be the one bearing the costs.

In the case of Alison Sharland, she agreed a divorce settlement with her husband but later discovered that he intended to float his company, making his shares much more valuable. For Varsha Gohil, she had thought her husband was concealing his assets, but lacking the necessary evidence agreed a divorce settlement. When he was later convicted of money laundering, the true picture came to light, and although some of the material obtained in the criminal case was ruled inadmissible evidence in the divorce, there was sufficient enough to support the finding of non-disclosure.

In terms of procedure, both judgments strongly suggest that applications to reopen divorce settlements on grounds of fraud should be made to the family court, which has power to set aside its own financial orders - and not by appeal, or by commencing a new action.

Gohil v Gohil [2015] UKSC 61
Sharland v Sharland [2015] UKSC 60

This is not legal advice; it is intended to provide information of general interest about current legal issues.

Nailing down agreements on divorce

Nailing down agreements on divorce 

A Supreme Court ruling will allow a former wife to make a claim for a share of the fortune amassed by her husband 30 years after they parted, as no binding consent order was made when they divorced.

Kathleen Wyatt has been granted permission to lodge a belated claim against multi-millionaire Dale Vince, who made his fortune through a green energy company founded in the 1990s, which is said to be worth £57m.

The couple met and married in 1981 and had a child in 1983, separating just one year later. The wife became a full time single parent with little income, and had little contact with her ex-husband. 

There is no time limit in the UK within which a spouse must seek an order for financial provision following a divorce and in 2011 the wife put forward an application.  This was dismissed by the Court of Appeal and the application was taken to the Supreme Court to decide whether due consideration had been given to section 25 of the Matrimonial Causes Act 1973.

Having given Ms Wyatt permission to apply, it will be up to the trial judge when the case is heard as to whether any financial order is made. The wife could argue that she cared for the child leaving her ex-husband free to succeed in his business.  

Family law expert Angharad Mullarkey of  our Abergele office explains:  “It is certainly unusual to hear of a claim being made after all this time but without a consent order in place, the opportunity remains open.

“More people are thinking about pre or post nuptial agreements, following media coverage of high profile cases where these have been involved, such as German heiress Katrin Radmacher.  Certainly they are a sensible option for anyone getting married, but they are for use at the start of the relationship to set out what you wish to have happen if things go wrong. They are not legally binding in the UK, but will be a persuasive factor if both parties received independent legal advice at the time. 

“What’s involved here is the way in which a divorce is finalised. Once you’ve reached agreement, you can get the court to make it legally binding, by applying for what is known as a consent order and that’s what was missing in this case.” 

A consent order confirms what has been agreed and can include details on how assets will be divided, including cash, property, pension funds and other investments, and can also include arrangements for maintenance payments, including child maintenance.  Both parties have to agree and sign the draft consent order and a judge will consider the terms to see if they appear fair and reasonable, and if so will approve the agreement to make it legally binding. 

Going through the process of obtaining a consent order should mean that both parties come out with a fair settlement and there will be no surprises some years down the line.

 

WYATT V VINCE [2015] UKSC 14

 

 

This is not legal advice; it is intended to provide information of general interest about current legal issues.