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Wife granted permission to appeal divorce agreement at Supreme Court

Date:5 SEP 2014
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Sharland divorce case to be heard in June 2015

Alison Sharland has been granted permission to take her divorce case to the Supreme Court next June after it was found that her husband misled both her and the High Court over the value of his company.

The Supreme Court has confirmed that the case raises a point of law of general public importance and will hear her appeal against the decision of Court of Appeal, which refused to set aside an agreement she had entered into with her former husband on divorce, despite his fraudulent misrepresentation.

Ros Bever of Irwin Mitchell, who is representing Mrs Sharland, says the Supreme Court will need to consider whether the original decision was unjust due to Mr Sharland’s dishonesty.

Mr and Mrs Sharland separated after 17 years of marriage. During the final hearing in the High Court to determine the division of their assets, Mr and Mrs Sharland reached an agreement whereby Mrs Sharland would receive £10.355m of cash and properties and Mr Sharland would have £5.64m of cash and properties. Mr Sharland would also retain a significantly larger proportion of the profit received on sale of the shares in his company, which had been valued in the proceedings at between £31.5m and £47.25m. The judge, Sir Hugh Bennett, approved the agreement.

However, shortly afterwards, and even before the order was sealed, it emerged that the company might be worth significantly more (financial press reports suggested up to $1billion) and that, contrary to Mr Sharland’s evidence during the hearing, an initial public offering (IPO) was being prepared. Mrs Sharland sought to set aside the agreement as neither she nor the court had been aware of these facts when the agreement was reached and then approved.

Sir Hugh Bennett found that Mr Sharland had knowingly concealed information from and had lied to the court. But he refused to set the agreement aside because he said the court would not have made a substantially different order from the agreement that the parties had reached. Despite Mr Sharland’s dishonesty, the court accepted his evidence that plans for an IPO had been put on hold.

Two of the three Court of Appeal judges upheld Sir Hugh’s decision. They held that although Mr Sharland’s non-disclosure had been deliberate and dishonest, in the event it proved not to be 'material' to the outcome of the case. They accepted Mr Sharland’s argument that Mrs Sharland would not have received a substantially different award had the court been in possession of the truth.
Lord Justice Briggs disagreed. In his judgment, the husband’s fraud undermined the whole agreement and he should not have been given the opportunity to bring his affairs into line with his original misrepresentation (ie delay the IPO that had been imminent at the time of the agreement) or to hold his wife to her agreement against her wishes. Lord Justice Briggs was concerned that as a matter of public policy the court's processes must be protected from fraud, and this was more important than economy and speed.

Despite describing Mr Sharland’s conduct as ‘deplorable’ and that his deceit had been ‘deliberate and dishonest’, the Court of Appeal went on to order Mrs Sharland to pay Mr Sharland’s costs of the appeal.

Irwin Mitchell has now successfully sought permission from the Supreme Court to appeal on behalf of Mrs Sharland.

Ros Bever, said:

'We are very pleased that the Supreme Court has agreed that this is a case which requires consideration at the highest level.
Alison Sharland entered an agreement in the belief that she was receiving approximately half of the value of the matrimonial assets which would have been a fair result. In fact Mr Sharland knew that the company was potentially worth many times the sum that he had led her, the expert accountants and the court to believe and that the shares could be realised much sooner than he had represented.

Despite his argument to the contrary, the deliberate and calculated nature of his fraud underlined the importance of it in his own mind. The entire basis of the agreement was undermined.

Mrs Sharland agrees wholeheartedly with the sentiments of Lord Justice Briggs that it is contrary to the most basic principles of justice to uphold an agreement entered into on the basis of a fraudulent misrepresentation. Had this been a contract rather than a judicially approved agreement in proceedings ancillary to divorce, the principle that fraud unravels everything would have applied. We think that this is anomalous, unjust and sends out entirely the wrong message.

Dishonesty in any legal proceedings should not be tolerated; the family court should not be an exception.

There are numerous legal arguments to be had before the Supreme Court but we hope that ultimately justice will be done and will be seen to be done.'
The case is the latest in a long line of recent high-profile family law proceedings including the Radmacher pre-nups case and divorce proceedings including Michelle and Scott Young and Mr and Mrs Prest in Prest v Petrodel.