Trudi Featherstone comments on the Supreme Court’s decisions in Sharland and Gohil

Yesterday the Supreme Court handed down its landmark judgement in the cases of Sharland and Gohil. Both appeals have been allowed and the wife’s financial claims are to be reheard despite being settled by agreement within contested proceedings. Alison Sharland and Varsha Gohil claimed that due to the deliberate financial non-disclosure of their respective husbands in their divorce cases that they settled their financial claims for far less money than they were entitled to and as such have been denied proper access to justice. In the course of their evidence both suggested that material non-disclosure is rife in high net worth divorce cases and the family courts do little to address this widespread problem. The decision sends a clear message to husbands (and wives) that the duty of full and frank financial disclosure in financial remedy proceedings is paramount and the bedrock of the family court justice system.

Both cases involved financial non-disclosure which only came to light after each wife had agreed a settlement with their respective husbands.

In the Sharland case the settlement was reached during the course of the final financial hearing. The trial judge approved the agreement and a financial consent order was drawn up. However before the order was sealed by the court Mrs Sharland discovered that her husband’s Manchester software company was worth many millions more than he had claimed it was worth at the trial.

In the Gohil case a financial consent order had been approved and sealed by the court in 2004 in which Varsha Gohil settled for £270,000 and a car. In the recitals section to the order it was recorded that she did not believe her husband had provided full and frank disclosure but she wanted to compromise her claims to achieve closure to the proceedings. In 2007 and after her ex husband had been convicted and jailed for fraud and money laundering sums of £37 million she applied to set aside the order based on fraudulent non-disclosure. The appeal court found that Bhadresh Gohil was an “out-and-out rogue involved in financial criminality on an eye-watering scale”.

Until now it has always been extremely difficult to reopen or set aside financial remedy agreements and consent orders where misleading or fraudulent disclosure is discovered after the case has settled. The Court of Appeal commented that the reluctance to reopen these cases stems in part from an increasingly overloaded judicial system which would grind to a halt if all non-disclosure cases were reheard. Alison Sharland’s counsel argued that a fear of the floodgates opening where thousands of divorced couples seek to reopen their divorce cases should not constitute legal grounds to refuse her appeal

Mr Justice Mostyn commented that that non-disclosure is “the bane of our judicial system” which strikes at the very integrity of our judicial system because it means people are denied access to justice.

Non- disclosure in the family court and divorce cases should not be tolerated. Criminal charges for perjury might be needed to ensure the financial disclosure duty is followed in each and every case. At present the sanctions for non-disclosure are minimal and rarely used by the courts. In many cases husbands (and wives) often consider that non-disclosure is a risk worth taking. This makes a mockery of the judicial system. This case has exposed these flaws in the system and we await further guidance from the court on these types of cases.

The judgments can be found here and here.

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