Honesty in the First Instance 18/01/16

Divorce is often fraught with uncertainty for a myriad of reasons, care of dependants, financial settlement and imagining life post-divorce among them. The Court system seeks to mitigate this uncertainty by requiring full and frank disclosure from all parties so that reasonable provision can be made in line with an individual’s circumstances. In a recent landmark ruling, the Supreme Court has highlighted the importance of disclosure by overturning two Court of Appeal decisions.

Alison Sharland and Varsha Gohil, who accepted £10million and £270,000 in their respective divorce settlement agreements, have both been backed by the Supreme Court in re-opening the hearings to seek fair settlement. This is following evidence that has come to light suggesting that the husbands had been fraudulent in their disclosure. In the case of Ms Sharland, the hearing had been conducted on the basis that Mr Sharland’s company was valued at £47m – rather than the £600m estimated by the financial press.

It wasn’t until after both Ms Sharland and her estranged husband had given evidence at the final hearing and a consent order had been drafted, that Mr Sharland’s dishonesty was discovered. However, when applying Livesey v Jenkins [1985] FLR 813, the Judge found that in all circumstances the husband’s non-disclosure was not material and that proper disclosure would not have resulted in an order substantially different from the unsealed consent order that had been drafted. The Court of Appeal endorsed this decision.

In 2007 Ms Gohil issued an application to set aside a consent order drafted three years prior, on the basis of material non-disclosure, fraud and misrepresentation. Her evidence was obtained from attending at Mr Gohil’s Crown Court Trial, during which he faced criminal proceedings for fraud, and as such the evidence had not been presented to the Family Court. The Judge allowed the application to be re-opened; an order which Mr Gohil appealed against. This appeal was allowed on the basis that there are two key stages to a Livesey v Jenkins application to set aside: 1) establishing whether material non-disclosure has taken place and 2) determining whether the original order should be set aside, meaning that the Judge should not have accepted new evidence and moved to drafting a set-aside order without any fact-finding or evaluation of the fresh evidence.

The Supreme Court overturned both Court of Appeal decisions.

With both Court of Appeal decisions being overturned in favour of the Applicant wives, the Supreme Court has set a clear precedent for the importance of honesty in the first instance.

If you have a family matter you would like to discuss further, please contact us now to speak with someone in our family department: southampton@jaspervincent.com.