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Wives' Successful Appeals - A Reminder of the Importance of Financial Disclosure

on Thursday, 05 November 2015.

Prior to the appeals brought in Sharland [2015] UKSC 60 and Gohil [2015] UKSC 61, the law was not clear as to when a lack of disclosure was enough to set aside an agreement in the context of financial remedy proceedings.

Sharland

In Sharland, the husband and wife agreed to split their assets 50/50.  As part of this, the wife agreed to receive 30% of the net sale proceeds of her husband's Company shares whenever a sale took place, together with other assets.  The valuation of the Company was based on the assumption that the Company would not be sold to the public in the foreseeable future, however, the wife later became aware that the husband had been preparing to float the Company on the stock exchange for a far greater amount.  As a result, the wife applied to the Court requesting that the consent order should not be sealed and that she should be entitled to resume her claim on the basis of the husband's non-disclosure.

The Supreme Court allowed the wife's appeal.  This decision highlights the importance of the parties' duty to provide full and frank disclosure to one another in financial remedy proceedings.  Without this information an informed decision could not have been made about what constituted a fair financial outcome.

Gohil

In Gohil, the parties had reached a financial agreement in 2004.  The husband was then convicted of money laundering and was sent to prison for ten years.  The wife applied to have her divorce settlement varied on the grounds that the husband had failed to fully disclose his assets at the time and in 2012, the High Court agreed and held that she should have the right to overturn the original settlement.  However, the Court of Appeal concluded that it should be upheld on the basis that material adduced in a criminal trial was inadmissible in civil matters, and so could not be used as evidence of the husband's dishonesty.

The Supreme Court allowed the appeal, in light of the findings in admissible evidence, Mr Gohil would have been found guilty of material non-disclosure in the financial remedy proceedings.  The original order was therefore set aside.

What next?

These recent decisions may open the floodgates for further challenges to financial settlements.  However, careful consideration should be given by those seeking to apply to have their original consent order set aside because a lack of disclosure and a successful appeal may not result in an increased award.

We regularly advise clients in respect of financial matters following a relationship breakdown to ensure that a fair outcome is achieved.


For more information, please contact Sally Rushtonon 0117 314 5329.

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