Unsettled Settlements

Without full disclosure of assets, divorce settlements are at risk of being reconsidered, says Anne-Marie Hamer, as a recent judgment highlighted.

A divorce settlement is usually a done-and-dusted deal, but a recent ruling by the Supreme Court has made it clear that this is not necessarily the case. A landmark judgment has opened the door for ex-spouses to dispute original divorce settlements and apply to have them reconsidered.

The ruling concerned cases brought by Alison Sharland and Varsha Gohil who had both reached divorce settlements but later found out that, at the time, their ex-husbands had misrepresented the extent of their wealth. The women contended that as their husbands had knowingly provided false information during the original proceedings, they should be entitled to have the amounts reviewed. The two cases are based on the same issue of non-disclosure but are very different in terms of asset value. Alison Sharland believed that the £10 million settlement that she agreed in 2010 represented half of her ex-husband’s wealth. At the time, the court was told that his business was worth £47 million. However, it later emerged that he had lied about the value, with the financial press estimating it to be worth some £600 million.

Mrs Sharland went to the Court of Appeal to have the settlement overturned but was refused. In 2002, Varsha Gohil had accepted a settlement of £270,000 and a car. However in 2010, her ex-husband was convicted of money laundering and in the course of his criminal trial, the evidence revealed that he had failed to disclose his true wealth during the divorce proceedings.

The High Court ruled that the settlement should be overturned on this basis, however her former husband applied to the Court of Appeal, which ruled in his favour and refused to allow it. The two women then took their cases to the Supreme Court. They argued that they had entered into agreements thinking that they were fair, but as their ex husbands had knowingly misled them – and the courts – they should be allowed to have the settlements ‘set aside’ or looked at again. The Supreme Court agreed, and they are now both able to go back to the High Court to have them renegotiated.

Zero tolerance

 The ruling is a highly significant one. It makes plain that dishonesty won’t be tolerated and that the division of financial assets has to be based on full disclosure. “The Supreme Court has reaffirmed that if one of the parties has been deceitful and misled the other about what their assets are, the other party can go back to court to have the agreement set aside and the whole thing reconsidered,” says Anne-Marie Hamer, family solicitor at Mogers Drewett. “The cases show that the same rules apply regardless of the level of wealth involved.” The overriding message from both cases is that the court will not uphold a divorce settlement that is based on false information or a lie from either party.

“They clearly demonstrate that the court will not look kindly on those who don’t co-operate honestly and transparently, and fail to provide information,” adds Anne-Marie. “Parties have a duty to provide full and frank disclosure, and this is a fundamental principle that continues all the way through the proceedings.”

There is little in the news at the moment about when Alison Sharland and Varsha Gohil’s cases will be heard in the High Court, meanwhile the Supreme Court’s ruling could open the floodgates to any number of claims by ex-spouses who suspect that assets were concealed. It will be interesting to see how the issue unfolds over the next 12 months.

Nip it in the bud – Pre Nuptial Agreements

A prenuptial agreement is usually created to resolve issues of support and property division if the marriage ends in divorce or because of the death of one of the spouses. No longer the sole preserve of the rich and famous, such agreements are becoming more commonplace. Especially as people are marrying later and often have pre-marital assets they wish to protect.

A prenuptial agreement properly entered into will be upheld, unless there is a good reason not to, so long as it was entered into by both parties freely and with a full appreciation of the consequences. The agreement needs to: meet the financial needs of both parties and any children; to be contractually valid; to be made at least 28 days before the wedding; to be properly signed; and, crucially, both sides should have given proper disclosure of their resources and both parties received independent legal advice.

Mogers Drewett

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