When to unravel the web of deceit in divorce

Posted 19/11/2015 By: Stephen Williams

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.

Stephen explains: “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.

He adds: “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.