Member Article

Divorce ruling will stamp on financial cheats

Kim Fellowes, partner at Silk Family Law, Newcastle, and a specialist in complex financial cases, on a landmark Supreme Court divorce ruling.

Supreme Court judges have sent a clear message that no one can profit from dishonesty in divorce - paving the way for ex spouses who have lied about their finances to be sent back to court.

Divorcees Alison Sharland and Varsha Gohil won their cases because their husbands were deceitful and deliberately misled both them, and the courts, during the original hearings.

In 2010 Mrs Sharland was awarded a £10 million settlement from her husband Charles on that basis that she believed this was half his wealth. Following their divorce, Mr Sharland’s software company AppSense was valued at £600 million in press reports of flotation plans. Mrs Harland went to the Supreme Court after the Court of Appeal refused her claim for an increased settlement.

Varsha Gohil accepted £270,000 and the family car in her divorce settlement from husband Bhadresh in 2002. In 2010 during a trial for money laundering - for which he was subsequently jailed – Mr Gohil was found to have lied about his finances during his divorce.

In the case of Mrs Sharland, the judges agreed unanimously that her consent to the financial settlement was undermined by her former husband’s deliberate lack of disclosure - this in turn deprived her of her right to a full and fair hearing.

The two ex-wives can now have their divorce cases reopened. Many thousands of other women, and men, who think their ex spouses hid assets, may follow suit.

Although the ruling related to two big money cases, it is just as relevant to couples of more modest means, where one of them has deliberately concealed finances, business interests or pensions.

As the judges said in their unprecedented decision: “fraud unravels all”. Their pronouncement makes it absolutely clear to all separating couples that you cannot profit from lying about your finances in a divorce hearing. In the case of Alison Sharland, she was in complete ignorance of the fact that her ex husband was anticipating a financial windfall – and had she known, she would not have agreed to the original financial settlement.

It is a victory for commonsense that the burden of proof regarding hidden financial assets in a divorce will lie with the perpetrator of the fraud and not with the victim.

The judgement reinforces a longstanding duty of full and frank disclosure in family courts – and is a reminder to all parties that if you lie, you will be found out.

Anyone considering going back to court to challenge a financial settlement should take legal advice to help weigh up the risks and costs of doing so.

This was posted in Bdaily's Members' News section by Silk Family Law .