Fraud unravels all

The recent ruling by the UK Supreme Court to allow divorce settlements to be revisited by ex-spouses may yield more business for practitioners in its wake.

Family law solicitors, will writers, probate practitioners and estate planners alike should take note of this recent ruling. Following recent cases of widely reported will disputes within families, these new cases now bring to the forefront potential issues raised by the former spouses of your clients.

Arguably the rulings in both Sharland v Sharland and the Gohil v Gohil have heralded a new era of equality in divorce proceedings. For both women in this case, as victims of their ex-spouses’ non-disclosure, the Supreme Court’s decision granted them not only a fairer financial settlement, but also demonstrated that fraud within divorce proceedings will not be taken lightly.

Ros Bever, who acted on behalf of both appellants, spoke of her support of the Supreme Court’s verdicts, which she believes demonstrated that ‘it is no more acceptable to lie there [in the Family Court] than it is in any other court’.

The individual facts varied in both cases, however the basis of the legal concerns were the same. Were the two appellants able to challenge their settlements when it was subsequently found that they accepted a lesser amount as a consequence of their ex-spouses’ fraudulent activities and non-disclosure? Originally, the Court of Appeal declined overturning the orders for both women, however, the appeals were subsequently allowed by the Supreme Court.

In Gohil, the wife appellant sought to challenge the settlement offer she had previously accepted during her divorce. The reasoning for re-opening the divorce settlement was based upon her ex-husband’s previously wrongly valued assets and his ensuing conviction for fraud and money laundering.

The case of Sharland also involved a misevaluation of assets. The valuations of Mr Sharland’s company were based upon it not being sold, however, evidence later proved that this was his overall aim. He subsequently floated the company on the stock market, increasing its net worth from millions of pounds to a figure that was closer to a billion.

Harriet Errington of Boodle Hatfield notes that although there were prominent variations in both outcomes, the overall message from the Supreme Court is that ‘dishonesty in legal proceedings will not be tolerated.’ This reflects Lady Hale’s comments in Sharland regarding upholding the general principal of fraud in a normal contract case; the victim should not be left in a worse position than before, and should not bear the burden of proving otherwise.

These landmark decisions are not to say that all consequential applications to overturn previous settlements will be accepted. Rather, it places a more secure legal footing for those who fall foul of non-disclosure based on fraud.

Tom Farley-Hills of Harbottle & Lewis commented on the Supreme Court’s verdicts, succinctly summarising the legal milestone: ‘The lie does not have to be a big lie for the court to dispense with the order, but it does need to have been big and material enough for the court to be sure that if the lie had not been told, the basis of the agreement would have been different to the one reached.’

These cases mark a warning to all future divorcees who do not lay all their cards upon the table from the outset that fraud unravels all.

What impact do you believe these cases will have on the future of family law and practitioners? Let us know your thoughts about these cases in the comments below.

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