On 14 October 2015, the Supreme Court made rulings in two family cases (Sharland v Sharland  UKSC 60 and Gohil v Gohil  UKSC 61) whereby the husband in each case had deliberately failed to disclose the extent of his assets.
The Supreme Court gave useful guidance on the way in which Courts should deal with such cases. The underlying rule in divorce is that each spouse must provide full and frank disclosure of all their financial resources wherever such resources exist. This extends not only after proceedings have started, but also before, where spouses are trying to reach an agreement in relation to their financial affairs. If one spouse fails to disclose their assets, and it is subsequently discovered that what has been presented is deliberately misleading, the Court will cancel (set aside) the existing Order and reopen the case. This is subject to such deliberate non-disclosures being ‘material’ or where it is found that had the disclosure been provided beforehand, it would have made a difference to the outcome.
In the case of Gohil, the husband was a solicitor who had fraudulently failed to disclose his assets and was charged with serious money laundering offenses dating from mid-2005. In the case of Sharland, the husband was an entrepreneur who had a substantial shareholding in a software business and had failed to fully disclose the value and manner of distribution of his shareholdings. In the Judgment given by Lady Hale in the case of Sharland, she said:
“It would be extraordinary if a victim of fraudulent misrepresentation, which had led her to compromise her claim to financial remedy in a matrimonial case, were in a worse position than the victim of a fraudulent representation in an ordinary contract case, including a contract to settle a civil claim...”
“The only exceptions where the Court is satisfied that, at the time when it made the Consent Order, the fraud would not have influenced a reasonable person agree to it, nor, had it known then what it knows now, would the Court have made a significantly different Order, whether or not the parties had agreed to it”.
These two cases set out criteria for how Courts will now deal with ‘non-disclosure’ in relation to divorce. In particular:
- A deliberate non-disclosure creates a presumption that the non-disclosure is material (i.e. that it would have made a difference).
- Where there is fraud and deliberate non-disclosure, the burden is on the party who deliberately failed to disclose to show that in fact it does not affect the outcome.
- In cases where there is negligent or accidental non-disclosure, the burden remains upon the party seeking to challenge the Order to show that it would have made a difference to the outcome.
Following these landmark cases, The Supreme Courts have given a clear message to spouses withholding financial information; they will not be allowed to get away with it.
As a consequence of these decisions, we anticipate there will be an influx of new cases brought before the Courts, as spouses seek to reverse decisions made in previous Orders based on the deliberate non-disclosure of the other spouse.
Download Non-disclosure in divorce proceeding.