The recent Supreme Court decision in the case of Wyatt v Vince in which a Wife has claimed a financial settlement from Husband some 23 years after separation reminded both lawyers and litigants that time is no barrier for a claim in matrimonial proceedings and the only way to ensure that finality is to get a binding order from the court.
In that particular case no financial order was made at the time of separation but Wednesday’s Supreme Court decisions in Sharland and Gohil show that even if a settlement is agreed and formalised by way of a Consent Order approved by the court, it will be open to review and reconsideration if the basis on which it was settled is shown to be fraudulent.
Mrs Sharland and Mrs Gohil both discovered that their husbands had not been open and honest with their disclosure to court and sought for the settlements that had previously been agreed by the parties and approved by the Court to be set aside. They argued that these orders were entered into on the basis of false information and should not be binding as a result.
In both Sharland and Gohil , it was held that the respective Husbands’ failure to provide full and frank disclosure in the original proceedings was deliberate and the question for the Supreme Court was whether this should automatically enable the Wives to have the orders set aside.
In a previous decision from the Court of Appeal, much consideration was given as to whether the non-disclosure was “material” or likely to impact on or alter the overall settlement. In the case of Sharland where it was suggested that the new information would not have significantly altered the eventual settlement terms, the Court of Appeal cited this when declining to re-open the proceedings or set aside the orders made. (Notably, the Husband had lied about the value of his company, AppSense Holdings Ltd, failing to disclose that there was a potential IPO which would have dramatically increased the company value from an estimated £60m/£80m to something in the order of £500m/£670m. The IPO did not take place so the Court of Appeal felt the non-disclosure had no actual impact on figures and refused to set aside the original Order.)
The Supreme Court rejected this approach and gave a clear indication that deliberate non-disclosure creates a presumption that the non-disclosure is “material”. The Wives in Sharland and Gohil were deprived of the right to make a fully informed decision when entering into the agreements. Therefore, their consent to the settlements was “vitiated” or nullified by fraud and the orders must be set aside.
It is each party’s duty to provide full and frank disclosure not only to their spouse but also to the Court and any agreement reached on the basis of deliberate omissions or misrepresentations will not stand. The basic principle that “fraud unravels all” has now been shown to apply to matrimonial proceedings, just as it does in other aspects of civil law.
The Court of appeal has sent out a message that deceit will not be tolerated and the decision is likely to have huge ramifications in family law from the ultra high net worth cases so beloved of the British tabloids right down to more modest assets cases where every penny counts.
This common sense approach is to be welcomed For some time family lawyers have raised concerns that the repercussions of non disclosure have been inadequate and the fairness of financial proceedings has been called into question as a result.
Lawyers expect to see a rise in the number of challenges to existing divorce settlements but the challenge of finding actual evidence of non disclosure is likely to limit the number of cases that make their way to Court. Only if new information comes to light will there be a chance to overturn the original consent order and this may still prove a major hurdle for many frustrated ex spouses.
If you believe that you may have grounds to review or challenge a previous settlement then we would be happy to discuss this with you.
Alternatively if you are going through a separation and would like to ensure that the settlement you reach is binding then our experienced team of specialist family lawyers can help you through this process.
Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.