The Supreme Court, in its role as arbiter of the most taxing legal questions of our time, is only rarely troubled by the subject of divorce. This is because of the wide discretion that family courts have when making decisions about the allocation of wealth when a marriage breaks down, and the clear necessity of tailoring each individual court order to the particular family and its circumstances. No two families are alike, which means that it is difficult successfully to appeal a family court judgment, unless it is very clear that the judge has made a mistake in fact or in law.
Only matters of important public principle ever make it to the Supreme Court, and the vast majority of these in divorce law have been settled for a long while. However, in the joined cases of Sharland and Gohil in which decisions have been handed down today, the court was faced with the question of whether a divorce settlement should ever stand if one of the spouses has lied during the process and the other feels disadvantaged by the lie(s).
We wrote about these cases previously here, but let’s quickly recap.
Mrs Sharland accepted £10.35m in cash and properties from her ex-husband in their divorce settlement three years ago. It later emerged that shares in his company were worth considerably more than he revealed, and that he had actively been dishonest in order to conceal their true worth during the divorce negotiations. Nevertheless the Court of Appeal refused her application to have the settlement overturned, saying she would have been unlikely to have received more if the true value of the shares had been known.
Mrs Gohil accepted a small lump sum and a car from her former husband when they divorced in 2004, recording on the face of the order that she did not believe he had fully disclosed his wealth. In a subsequent criminal trial he was found to have significant personal assets that had not been revealed during the divorce negotiations, but the Court of Appeal rejected Mrs Gohill’s attempts to have the divorce settlement reopened in the family court, saying that the evidence for doing so was insufficient and/or inadmissible.
Both women appealed to the Supreme Court. They were looking for a firm rejection of any incentive to those involved in family court proceedings to lie about their financial positions. They got it: they won, and both settlements will now be reconsidered.
In Mrs Sharland’s case, the court found a clear fraud perpetrated upon her by her former husband during their negotiations. On the facts of this case it was clear that the judge would not have made the order he did when he did, if Mr Sharland had been honest about his wealth. Further, the appeal judge had misinterpreted the law and in making his decision on the limited evidence before him had deprived Mrs Sharland of a full and fair hearing of her claims. The case has been sent back to the lower courts for reconsideration of the correct level of settlement on the basis of all the evidence.
In Mrs Gohil’s case, the court made it clear that she had not given up any rights in her acknowledgement that she did not consider the husband to have made full disclosure: the husband owed a duty to the court to make full and frank disclosure of his resources, and one spouse cannot exonerate the other from complying with this duty. The Court of Appeal had got the law wrong when they overruled the High Court judge who allowed her claim to reopen the settlement; even discounting the fact that he heard inadmissible evidence from the criminal proceedings, there was plenty of other evidence on which he had based his decision. Therefore the lower courts would hear her case too, and decide afresh the appropriate level of award.
To us, this feels like justice: both women have access to a fair hearing of their divorce claims, which they were previously denied due to deception by their former husbands and errors in the court process. It’s worth remembering that the final outcome of their divorce hearings is now wide open – they may not, at the end of the hearing, come away with more than they had before. On the other hand, considering the evidence that came to light during the previous hearings it looks rather likely that they will. In any event, at least they might feel that the process from here is a fair and just one.
Mr Sharland has, it seems, not taken the court’s judgment well: the BBC reports that he is “bitterly disappointed that his family will continue to be locked in litigation for the foreseeable future”. Of course, litigation is not the only way from here. We very much hope that this former couple are able now to find a process that allows them to settle their dispute without further recourse to the court, whether that takes the form of negotiation, mediation, a series of meetings, or whatever it takes. Settlement outside the court process may be more difficult for Mrs Gohil, whose former husband remains in prison since his conviction for money laundering offences.
We applaud this strong judgment from the Supreme Court that honesty is the best policy in financial proceedings on divorce. If you would like to speak to us about family finances on divorce, or any other family law matter, do give Gail, Simon, Sue, Tricia or Adam a call on 01223 443333 to make an appointment.