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Divorce victory for ex-wives in Supreme Court battle

Date:14 OCT 2015

Unanimous judgments send out message that dishonesty will not be tolerated by the courts

Lawyers representing two women who challenged their divorce settlements at the Supreme Court after their husbands were found to have misled them over their wealth say the unanimous judgments handed down today send out a clear message that dishonesty will not be tolerated.

 Both Alison Sharland and Varsha Gohil asked the Supreme Court to set aside their divorce settlements on the basis that their husbands were dishonest and deliberately misled them and the courts during the original hearings.

 Their specialist divorce lawyer Ros Bever at Irwin Mitchell said the two women believed they were duped into accepting ‘unfair’ divorce settlements, based on knowingly false information provided by their ex-husbands.

 Their cases were heard at a three-day hearing in June this year and now seven Supreme Court judges have unanimously ruled in the ex-wives’ favour.

 It is the first time in a generation that the highest court in the land has heard cases on the issue of non-disclosure in divorce proceedings. Specialist divorce lawyers at Irwin Mitchell, representing both women, say they are pleased that judges have taken the opportunity to state clearly that spouses cannot mislead the courts.

 Ros Bever said:

'This judgment sends out the clear message that dishonesty will not be tolerated. Both women found themselves in an unfair situation where they were duped into accepting a smaller settlement than they may have been entitled to.

 Both husbands denied their dishonesty and hid behind highly technical arguments to avoid the consequences. In both cases, the Supreme Court has seen through those arguments to expose the true picture.

 These cases were about a matter of principle and justice for both women and the issues raised in the Supreme Court will have implications in many other cases, including those with less money at stake.'

 'It’s inevitable that other wives, husbands or civil partners who feel that they too have been misled during divorce proceedings will seek to bring their cases back to court, and we can expect to see a significant rise in the number of challenges to existing divorce settlements,' she added.

 'But at the heart of these cases is a simple message: if you want finality in your divorce settlement (whether you agree it, or whether it is imposed by the court), don’t lie.

 Our clients feel vindicated. Dishonesty in any legal proceedings should not be tolerated. We are thrilled that Supreme Court has confirmed that the Family Court is not an exception to the general rule and that it is no more acceptable to lie there than it is in any other court.'
Alison Sharland, 48, from Cheshire, said: “I am relieved and delighted that the Supreme Court judges have ruled in our favour. I hope that their decision sends out a message to everyone going through a divorce that they cannot lie in the family courts and get away with it.

 'My legal battle has never been about the money, it has always been a matter of principle. I entered into an agreement with my estranged husband thinking that it was a fair one. I believed that the net result was an equal division of our assets which had accrued during our marriage and so, in my opinion, fifty per cent was fair. Unfortunately, the evidence was manipulated by my estranged husband and it was not therefore possible to rely on the evidence of either of our accountants when considering the value of what I believe was and is the most valuable asset.'

 The proceedings have dragged on and, at times, I have considered whether it was the right thing to do to continue my appeal, especially as there has been criticism about my pursuing the appeal because of the amount of the award which I originally received. However, I know that there are potentially others who are not in the same position as me financially, those who cannot afford to pursue a principle, and I wanted to pursue my appeal to ensure that they too are not faced with a situation where their spouse tells lies which potentially affects the outcome and interferes with achieving a just and fair settlement for either their husband or their wife and their family.

 The courts have at last demonstrated that the English legal system will not allow dishonest spouses to mislead the court or their former partner. I believe that justice has been done.

 I hope that I can now begin to move on with my life safe in the knowledge that my future divorce settlement will be based on the true value of our assets.'
Varsha Gohil, 50, from London, said:

 'There are absolutely no winners in divorce and more than a thought has to be given to the children of families locked in this type of litigation. The price they pay is a very heavy one. The emotional strain of it is huge on everyone, the drain in financial resources is enormous and none of it serves the family.

 The court process is unfortunately geared towards those with financial means and I consider myself fortunate that to have been able to conduct most of my case on my own.

 I am also particularly grateful to Ros Bever, Sally Harrison QC, Sam Hilla’s and Sheena Cassidy and all of the team at Irwin Mitchell who have believed in me and my case and at the eleventh hour they gave up their time to put in the tremendous hard work they have.

 All spouses subject to deceit and deliberate financial skulduggery in a divorce owe a huge debt of gratitude to the tireless efforts of the legal team here today.'
Toby Hales, the lawyer who represented Varsha Gohil at both Court of Appeal hearings, and is a Partner in the Family Team at law firm Seddons, comments as follows:

'The Supreme Court has reinforced today, in two joined appeals, that in family proceedings people have a duty to disclose, fully and frankly, all details of their financial circumstances. Procedural and evidential technicalities will not be allowed to enable deliberate dishonesty.

The Court emphasises that this duty is owed by the litigant to their spouse but also to the Court itself, even if the parties have, ostensibly, reached agreement about their matrimonial affairs. Agreement reached on the basis of lies, misrepresentation and deception is no agreement at all, and will not be allowed to stand.

Today’s decision represents some welcome and long-overdue clarity in what is, ultimately, a complex and convoluted process. It reflects the feelings of most practitioners, and is an example of the Supreme Court taking a common sense approach to these complex issues, which will be welcomed and understood by most people who have occasion to come into contact with the family justice system.

For the individuals involved, however, the sense of relief may be fleeting. As the Court’s judgment makes clear, there are still enormous obstacles ahead of Varsha Gohil before she is able to achieve a fair outcome to her case. Having struggled for over a decade to achieve some measure of justice, while bringing up two children alone while their father was in prison, Varsha will now have to begin her claim again from scratch, without the help of legal aid, in proceedings that may stretch to four or five different legal jurisdictions.

Hopefully, these decisions will act as a warning to people to think twice before intentionally failing to disclose their assets. Justice has – quite rightly – been upheld.'

Sharland case background

Alison Sharland, 48, from Cheshire, agreed what she believed was a 50/50 split in her divorce settlement after 17 years of marriage. But it later became apparent that her ex-husband Charles had misled her and the courts over the value of his business and his plans for a future IPO flotation. Instead of being valued at between £31 and £47m, his Appsense business was reported in the financial press as being ready to float at a value of $1bn.

 At the Court of Appeal, the judges agreed that his non-disclosure had been fraudulent but two of the three believed they should not overturn the original settlement because, although his evidence was 'seriously misleading', Mrs Sharland could not show that it would not have led to a significantly different outcome.

 The Supreme Court has today confirmed that the Court of Appeal was wrong to place such a burden on Mrs Sharland, who was the innocent victim of her husband’s fraud. It was for him to show that his fraud would not have influenced a reasonable person into agreeing the settlement, and he could not do so. Both Mrs Sharland and the court had been deceived and Mrs Sharland was entitled to set aside the order and to ask the court to look at her claims afresh.

 Barristers Martin Pointer QC from 1 Hare Court and Peter Mitchell from 29 Bedford Row represented Mrs Sharland during the hearing.

Gohil case background

In 2004, two years after her divorce, Varsha Gohil, 50, from London, found out that her husband Bhadresh had not fully disclosed his finances during their divorce, in which she had agreed to accept £270,000 and a car as a settlement. He was convicted of fraud offences and jailed for 10 years in 2010 and during the course of the criminal trial, further evidence of the extent of his intentional non-disclosure in the original divorce proceedings emerged.

 In June 2012, Mr Justice Moylan, sitting in the High Court, ruled that her husband had failed to disclose his financial circumstances properly and agreed to scrap the settlement. However, her husband’s lawyers then took the case to the Court of Appeal which ruled in his favour, saying that Mrs Gohil’s evidence to establish non-disclosure was inadmissible.

 The Supreme Court has overruled the Court of Appeal. Describing its judgment as 'a rare aberration'; it held that the duty to make disclosure which is full and frank is absolute and cannot be avoided by the parties by agreement. Where there is evidence that the duty has been breached, it is not appropriate to exclude that evidence by operation of principles about evidence on appeals which exist for a different reason. The High Court was right to find that there was evidence of non-disclosure, and to allow Mrs Gohil to ask to revisit her claims.

 Barristers Sally Harrison QC and Samantha Hillas, both from St John’s Buildings represented Mrs Gohil at the Supreme Court.