The headlines yesterday (and blog posts today) are all about the Supreme Court cases of Gohil and Sharland. The judgments make clear the risk to a party who decides against providing full and frank disclosure of their assets upon divorce.
Mrs Gohil finalised her divorce from Mr Gohil as far back as 2004 on the basis that the family had modest assets and income. However, following divorce it became clear that his standard of living was entirely at odds with the financial disclosure given within the divorce proceedings.
It took until 2012 for Mrs Gohil to have a “family” hearing in the High Court. This was because Mr Gohil was embroiled in “criminal” proceedings in which he was convicted of money laundering offences.
The High Court set aside the 2004 agreement, thus enabling her to make a claim against the assets hidden at the time. Mr Gohil appealed to the Court of Appeal and was successful in that on the basis that the High Court had applied the wrong legal test and the new evidence was inadmissible.
The Supreme Court found in favour of Mrs Gohil and restored the order of the High Court setting aside the 2004 agreement.
In July 2012 Mrs Sharland reached an agreement with Mr Sharland upon the division of the family assets. The agreement was approved by a High Court Judge and a consent order was drawn up reflecting their agreement but was never sealed by the Court. This was because Mrs Sharland became aware that Mr Sharland was preparing to sell shares in his company – having previously given evidence that there were no plans to do so – and she asked the court not to seal the order. The High Court declined her application as did the Court of Appeal.
The Supreme Court found favour with Mrs Sharland’s argument and remitted the matter back for hearing before the High Court.
Even if an order settling financial arrangements is made by consent both parties are under a duty to make full and frank financial disclosure.
Any attempt by a party (attempting to hide assets) to prevent future claims by their spouse or civil partner to set aside the order are likely to be ineffective.
How does this impact agreements reached in mediation?
Simply put, if an agreement is reached in mediation and affirmed by the court by way of consent order that agreement is always susceptible to attack if there has been non-disclosure of assets.
The core message is that full and frank financial disclosure is an absolute must when discussing how family assets should be divided upon divorce.