Fraud, Floodgates and First Wives Club – Will the Supreme Court Set Aside the Sharland Divorce Order?

by Emma Flood Curated Media on June 15, 2015

sharland-divorce-law-order-moneyDivorcee Alison Sharland received £10m from her ex-husband Charles when they divorced under the belief that this was half his fortune. However, she later ascertained that his Manchester software company was worth many, many more millions. Mrs Sharland argues that she should have received significantly more as part of her settlement and opened her case with the Supreme Court on Monday 8th June.

Mrs Sharland brings her case in conjunction with another allegedly wronged ex-wife, Varsha Gohil, who also believes her husband hid the true value of his assets. Gohil settled for £270,000 and a car from her former husband, Bhadresh with it later becoming clear that her husband, who was jailed for fraud and money-laundering sums of up to £37m, had not provided the court accurate information about his finances.

The Supreme Court is now examining these claims for significantly larger pay-outs in an extended three day hearing. In the Sharland case the Judges have been asked to consider :

What is the impact of fraud on:-

an agreement to compromise ancillary relief proceedings; and/or a consent order made following such agreement?

Is it different from, or the same as, it would be in other civil proceedings?

(2) In proceedings for ancillary relief, does fraud give rise to separate remedies to those available in other instances of non-disclosure?

(3) Where either fraud and/or material non-disclosure is established, does the refusal by the court to rescind the order (and so reinstate the trial process) wrongly derogate from the victim’s right to a fair trial?

In the Gohil case the Court will determine the correct approach to a party’s application to set aside a final order made in ancillary relief proceedings on the grounds that there has been material non-disclosure by the other party.

The effects of the judgment could have a substantial impact on divorce law and divorce settlements – the pair argue that all ex-spouses should be entitled to reopen negotiations in a concluded divorce agreement where fraud has occurred, however this is not currently the approach of the courts.

So, will the Supreme Court rule in favour of the wronged ex-spouses and when should divorce cases be re-opened?

When should a divorce order be set aside?

Courts normally do not want to overturn orders – finality of litigation is usually in the best interests of all parties involved. However, there are limited circumstances under which a court order will be set aside.

Court Orders are made on the basis of certain facts and assumptions – one such assumption is that each of the parties to a divorce has provided a compete and accurate disclosure of finances, and made a truthful statement about their present and anticipated future situations.

Where this assumption is incorrect and it can be demonstrated that one of the parties has lied about their financial situation, there may be potential for the order to be set aside as the basis for the order may be undermined. The court will only set aside the order however, if the inaccurate financial disclosure has resulted in a different order being made to that which would have occurred had they been truthful.

The original authority on this situation is Jenkins v Livesey (1985) AC 424 HOL where the wife in the case failed to disclose that she intended to remarry. The court set aside the consent order, on the grounds that this greatly affected her financial position and a different order would have resulted had the disclosure been made.

Furthermore, in Rose (2003) 2 FLR 197, a case resolved at Financial Dispute Resolution (FDR) stage, evidence was revealed after settlement of the wife’s affair and purchase of a property with her boyfriend. The husband used this in an attempt to set aside the FDR agreement and consent order. However, the court determined that it was unlikely to change the order made even if it had been disclosed during FDR.

The Court of Appeal made clear that not every non-disclosure will allow an order to be set aside. Only where the omission makes a “substantial difference” to the order actually made, will an order be set aside.

This was the rationale behind the Court of Appeal decision in Sharland (2014) EWCA 95 – The Court did not set aside the consent order as they held that the award made to Ms Sharland, would not have been substantially different had the court been aware of the true value of Mr Sharland’s assets.

This decision is surprising given the deliberate nature of Mr Sharland’s deceit and the vast difference between the value of his business disclosed and the value later alleged. The “substantial difference” hurdle seems to be one which would be determined by such a difference in value which in both the Sharland and Gohil cases is a vast sum of money. Whilst it is important that this doctrine is strictly maintained to avoid a floodgate of litigation from ex-spouses who merely feel unhappy with an order, sure in these cases such large disparities and deceit must be accounted for?

Emma Flood Curated Media

Emma Flood Curated Media

Legal Content Writer and Marketing Assistant at Curated Media
Emma Flood is a first class law graduate based in Scotland. Legal Content Writer and Marketing Assistant at Curated Media, Emma and the team write bespoke legal content for law firms in Scotland and across the UK and can help you make the most out of the Internet through effective content marketing. Tel: 0141 811 0286 to find out more.
Emma Flood Curated Media

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