Sadly, it is all too common for one party after a divorce to find out that their ex-spouse has not been completely honest about their financial position during their case. Sometimes, the ex-spouse will have failed to disclose the extent of their wealth including accurate values for their capital or pensions or the true extent of their income. Other times, significant assets are simply not disclosed.
The law surrounding this issue is far from simple. The Supreme Court recently considered the issue in 2 separate cases, Sharland v Sharland and Gohil v Gohil which both involved wives trying to set aside the financial settlements from their divorces. In both cases each husband was accused of failing to disclose the full details of their financial affairs and each wife argued that the financial settlement would have been different if these details were made available during negotiations or court proceedings.
Each application was considered by the Court of Appeal and it was accepted in each case that the husband had failed to disclose material information relating to his financial position. However, the Court of Appeal dismissed both of the wives’ applications on the basis that there was insufficient evidence to suggest that the non-disclosure by each husband would have substantially changed the outcome of the case. Indeed, the Court of Appeal affirmed the previous decision of Livesey v Jenkins where Lord Brandon stated that a financial settlement would only later be set aside:
“…when the absence of full and frank disclosure has led to the court making, either in contested proceedings or by consent, an order which is substantially different from the order which it would have made if such disclosure had taken place…”.
However, following the Court of Appeal decision, The Supreme Court was asked to consider the matter on appeal and in October 2015 they handed down their Judgement and overruled the Court of Appeal decision in order to allow Mrs Sharland and Mrs Gohil to revisit their financial claims. The decision has been made on the basis that both wives have been denied a fair hearing on the issue of matrimonial finances as a result of their respective husbands’ fraud. Following this decision, many people who may otherwise have been advised not to revisit their financial settlement as a result of non-disclosure may now wish to do so.
It is still too early to tell whether the threshold for setting aside a financial settlement has been lowered significantly but, either way, the Supreme Court’s decision should encourage both spouses to provide full and frank disclosure in divorce proceedings if they wish to secure an agreement which cannot then be re-opened at a later stage.
If you would like to discuss this issue or any other family related matter, then please contact our Family team to make an appointment.
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