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Dishonesty in financial disclosure will not be tolerated by the family courts

Oct 19, 2015   ·   3 minute read

This is the clear message given by the Supreme Court on 14th October in their decision to set-aside the financial settlements entered into by two ex-wives (Mrs Sharland, and Mrs Gohil), on the basis that their former husbands had deliberately misled both them and the court about the true extent of their wealth.

Throughout financial proceedings in divorce there is an ongoing duty to provide full and frank financial disclosure. This duty exists equally when the decision is made by the court, and when the husband and wife reach an agreement themselves.

Mrs Sharland and her husband had agreed on the division of the marital finances during the final hearing of their case. A court order was drawn up by their lawyers and approved by the judge. It was only after the order was approved that Mrs Sharland read in the financial press that her husband’s shareholding in his IT company was worth vastly more than he had informed the court.

Mrs Gohil had also agreed upon a settlement with her husband on the basis of the information he disclosed: a modest income and no assets. However she had suspected during their marriage that he had accrued a large amount of wealth from his law firm. She started the lengthy battle to overturn the divorce settlement in 2004 after it had become apparent to her that his lifestyle could not be supported by the assets and income he had disclosed. He was later convicted of fraud and money laundering, and the ensuing evidence in criminal proceedings enabled Mrs Gohil to pursue her claim.

Fundamentally, the Supreme Court judgment in both cases makes it clear that if a husband or a wife in divorce proceedings intentionally keeps financial information from the court, then the court will presume that a different financial order would have been made if the hidden evidence had been made available at the time. Deliberately misleading the court can therefore invalidate a divorce settlement, meaning a new order will have to be made.

The Supreme Court’s decision has paved the way for many other spouses – who have either been duped into accepting an unfair settlement, or who have had such an order imposed upon them by a court which has been misled by their spouse’s evidence – to have their cases re-examined.

If you think this decision applies to you, please call us. We will be happy to carry out a initial review of your case for free.