This week the Supreme Court has been getting its teeth into some family law. Seven judges have spent the last few days hearing the appeals in the cases of Sharland v Sharland and Gohil v Gohil. Both cases feature issues which arise from non-disclosure of financial information in divorce and financial remedy cases.
The appeals have been heard by Lord Neuberger, Lady Hale, Lord Clarke, Lord Wilson, Lord Sumption, Lord Reed and Lord Hodge. Not all are family law specialists, so it will be interesting to see how they deal with these two cases, which have been joined together for hearing before the country’s highest Court.
So here is a brief bit about both the cases, and the issues the seven justices will be wrestling with having heard argument from counsel for all parties over the last three days.
The Sharland case stems from an agreement which the couple (Alison and Charles Sharland) had reached, which turned out to be based on inaccurate information. Mr Sharland founded, and retains a large shareholding in, a company called AppSense which provides remote access software to businesses across the globe. The settlement had been reached based on the assumption that AppSense was worth between £31.5m and £47m, with Mr Sharland’s shares being worth £7million. He told the court that he had no immediate plans to float the company. However, shortly after agreement was reached, it emerged that the company was worth significantly more (press reports said up to £600m) and that, contrary to Mr Sharland’s evidence during the hearing, an initial public offering was being prepared.
On discovering this, Mrs Sharland sought to set aside the agreement as neither she nor the court had been aware of these facts when the agreement was reached and approved. In a ruling which many family lawyers found odd (to say the least), the judge refused to set aside the agreement as he said even had the true picture been known, the court would not have made a substantially different order from the agreement that the parties reached. Mrs Sharland appealed this decision to the Court of Appeal, by which point it was clear that AppSense was no longer about to be floated. Two of the three judges upheld the decision not to set aside the order, saying although Mr Sharland’s non-disclosure had been deliberate and dishonest, it was not “material” to the outcome of the case because Mrs Sharland would have received a similar amount to that agreed upon even if the truth had been known.
The Supreme Court will consider: (1) the impact of fraud on an agreement reached to settle financial remedy proceedings, and on a consent order made following that agreement, (2) whether the family law position differs from other civil proceedings, (3) what remedies are available when fraud has been discovered, (4) whether the court’s refusal to rescind the order following discovery of fraud impacts upon the right to a fair trial.
In the Gohil case, Varsha Gohil had grave misgivings about her husband Bhadresh’s disclosure throughout their financial remedy case, and although they reached agreement in 2004, she recorded on the court order her belief that he had not given full and frank disclosure but confirmed she had compromised her claims to achieve finality. Six years after they reached agreement, Mr Gohil was found at a Crown Court trial to have been involved in fraud and money laundering amounting to over $37 million. Following this, Mrs Gohil applied to have the order set aside on the grounds of alleged serious non-disclosure, fraud and misrepresentation. In the High Court, the judge gave significant weight to the evidence used in the criminal trial, and it was decided that the husband had failed to give full disclosure in the family proceedings, (an unsurprising result!) and the judge set aside the clean break part of the order and ordered a rehearing.
Mr Gohil appealed and although he was described as an “out and out rogue”, the Court of Appeal decided that the High Court could not simply set aside the consent order by finding that there had been material non-disclosure. Rather there should have been a full fact finding hearing regarding the non-disclosure, and furthermore the evidence from the criminal trial (on which the wife relied) was not admissible in family proceedings. So Mr Gohil walked away from the Court of Appeal a happy man.
Mrs Gohil appealed to the Supreme Court, which will be determining the correct approach to an application to set aside a final order in financial remedy proceedings on the basis that there has been material non-disclosure by the other party.
Family lawyers are hoping for some guidance and certainty, and a tough approach to dealing with those who mislead the court, and with it their former spouses. The result will not be known immediately, but we are keeping our fingers crossed for some common sense and straight talking from the Supreme Court. We will, of course, bring you the wisdom and decision of the justices when it is handed down.
In the meantime, if you have any questions about disclosure or any other aspects of family law, you can make an appointment with Gail, Simon, Adam, Sue or Tricia by calling 01223 443333.