News

Supreme Court victory for wives against fraud and deceit over divorce assets

  • October 16, 2015
  • By Hunters Law

Family law tries to promote the idea of drawing a line under a dispute between spouses on divorce, both as to the marriage and the financial links. If one spouse cheats, and does not give full and frank disclosure of all relevant financial information, that is likely to be a problem.

For Mrs Sharland and Mrs Gohil, the situation was plainly unfair. Both of their husbands had withheld relevant financial information, and when it came to light, both men refused to deal fairly with their wives in sharing the family assets.

Deliberate cheating is not hard to spot sometimes, but it can be if the circumstances are a bit uncertain or complicated. Any evidence of a spouse hiding assets is a good reason not to use mediation, as the exchange of financial information is voluntary in mediation and you might well want the powers of the court to help you to get hold of documents.

Mr Sharland is an entrepreneur, and his company value was not agreed by either his accountant or the accountant for Mrs Sharland. Shortly after they reached an agreement, which was about to be made a binding order of court, Mrs Sharland learned that he had not been honest in the information about the company value, and that it was likely to be worth many times as much as he had said. The first two courts to hear her application for a new hearing refused, but the Supreme Court decided in her favour. His duty to the court to make full financial information available had been breached. Fraud mistake or material non-disclosure are all likely to lead to the same result, which is that the court has to reconsider the facts.

Whilst people might not feel sorry for Mrs Sharland in respect to her wealth (the original deal had been that she got £10 million plus 30% of the company value due to Mr Sharland when it was sold) it cannot be right that his fraud let him get away with lying.

Mrs Gohil was not in the same financial position. Her deal with her husband was done in 2004, under which she got £270,000. But in 2010 Mr Gohil had been convicted of money-laundering. As a result of information arising from evidence during the criminal trial, Mrs Gohil learned that there was much more money available to Mr Gohil than he had said. His lies meant that the Supreme Court again overturned the two earlier courts to whom Mrs Gohil applied, and agreed that she should be able to ask the court to reassess the financial settlement.

The process will not mean a whole new financial application, with all its stages, for either case. The judge who now considers the two applications from the wives has a lot of information and can shortcut some of the procedures.

In the Sharland case, Mr Sharland actually produced to the court evidence of his own fraudulent assertions when he was trying to prevent his ex-wife from changing the agreement they had reached. Mrs Gohil could use evidence from a criminal trial. Neither of those circumstance is likely to arise for most people.   It is not likely that many people can afford to go to court to have a rehearing of their financial issues on divorce. Those who can still have to provide sufficient evidence, and a suspicion of non-disclosure is not going to be enough. This is where our colleagues who work in forensic accountancy, and asset tracing are very helpful.

Hazel Wright

Hunters

@hkw1981

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