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Are we set for a flood of reassessed divorce deals?

TWO SUPREME Court rulings in cases where husbands had hidden the true extent of their wealth from their wives are unlikely to open the floodgates for a raft of divorce cases to be re-heard, according to a leading law firm.

Family law experts at Ward Hadaway say that while the rulings in the cases of Sharland and Gohil change the landscape when it comes to financial settlements in divorce cases, they do not open the way for the courts to be inundated with demands for previous agreements to be revoked.

In the Sharland case, Ms Alison Sharland originally accepted £10m in her 2010 divorce from her husband Charles, a software entrepreneur.

Under the settlement, she would also receive 30% of the proceeds of shares held by her husband in his company, when he sold them.

She believed that represented half of his wealth, but it later transpired he had not revealed his company’s true value, as well as plans to float it on the stock market.

The company was valued for the purposes of the proceedings at £60m. However, after the agreement, reports appeared in the press that its true value was about £600m.

Ms Sharland sought to re-open the agreement – an application which was turned down by a Judge and by the Court of Appeal but has now been granted by the Supreme Court which said that had Mr Sharland’s true circumstances been known, a different outcome would have resulted.

In the Gohil case, Ms Varsha Gohil accepted £270,000 and a car as a settlement when she divorced her husband in 2002.

In 2010, Mr Gohil was convicted of money laundering and jailed for 10 years and at his criminal trial, evidence revealed he had failed to disclose his true wealth during the divorce proceedings.

The Supreme Court has now ruled that the original divorce order can be re-opened as there has been sufficient evidence of that Mr Gohil failed to disclose important material facts about his wealth.

Jonathan Flower

Jonathan Flower

Jonathan Flower, Partner and Head of Family Law at Ward Hadaway, said the rulings demonstrated that the courts were prepared to look again at divorce settlements if important facts had been concealed at the original hearings.

He said: “These rulings make it crystal clear that divorce settlements should be based on the true value of the assets of the parties involved.

“They are under a duty to make full and frank disclosure of all relevant information to one another and to the court and, in the wake of these rulings, if this does not happen, any settlements can be revoked and reassessed – there is now clear guidance as to how hidden wealth in divorce settlements will be treated.

“However, it appears the Supreme Court’s intention is not to open the floodgates for all cases where there has been non-disclosure because it makes clear that orders are not to be set aside on the ground of non-disclosure if the disclosure would not have made any substantial difference to the order which the court would have made.”

Sarah Crilly

Sarah Crilly

Sarah Crilly, Associate in the Family Law team at Ward Hadaway, added: “We as family lawyers are not likely to be inundated with enquiries from former clients seeking to re-open Orders.

“We believe this will only occur in those few cases where significant wealth has been hidden which, had it been known at the time, would have resulted in settlements to the other spouse being significantly higher.

“What constitutes ‘significant’ will be relative to the facts of an individual case so it is difficult to comment on a particular figure – again, this is likely to be something which is tested in the courts in the future.”

Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.

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