The Price of Dishonesty in Divorce
Permission has now been given to two divorcees to re-examine the issue of dishonesty when disclosing financial information pending a divorce before the Supreme Court. Alison Sharland and Varsha Gohil accepted financial settlements from their former husbands but both turned out to be the subjects of significantly dishonest representations. Now, the Court has the chance to re-examine the impact that dishonesty can play in the negotiation and consequent acceptance of financial settlements and provide needed guidance on whether non-disclosure indeed permeates the sanctity of such agreements with a view to invalidating them. The two women, whose cases will be heard together starting today are both looking to overturn decisions against them that point to the finality of settlement agreements.
In 2004, Mrs Gohil accepted £270,000 and the family Peugeot from her ex-husband after divorcing him for alleged adultery and unreasonable behaviour. However, it later transpired that not only had Mr Gohil accrued significant wealth that he had not disclosed to his wife but that he was actually fully involved in a money laundering scam with Nigerian politician James Ibori in which together they stole over £50million from the oil-rich region Ibori governed.
In 2012, following the discovery of this, and Mr Gohil’s subsequent incarceration, Mrs Gohil pursued a claim emerging victorious in the High Court with an Order in tow stating that the divorce settlement was to be scrapped due to non-disclosure. However, Mr Gohil successfully appealed the decision. Lord Justice McFarlane, sitting in the Court of Appeal, offered Mrs Gohil his sympathy but reiterated that a) she had no right to the money if it was ill gotten and b) that it was “simply not open to the court” to decide in 2012 about an issue discussed in 2004.
Concurrently, Mrs Sharland is contesting her divorce settlement in which she garnered £10.3 million from her ex-husband’s computer software company AppSense. His assets, initially valued at £7 million by his accountants and £32 million by her accountants, when discussing the original settlement did not disclose the real net worth of the business. Unbeknown to Mrs Sharland this business was said to be potentially worth £1 billion making Mr Sharland’s shares, those initially disclosed as being worth £7 million, worth £150 million.
Mr Sharland openly admitted to seriously misleading his ex-wife. Yet, the High Court and Court of Appeal both concluded that this dishonesty did not make any difference to the finality of the settlement.
The Supreme Court will have to consider whether a failure to provide full and frank disclosure should automatically invalidate a settlement reached or whether that should only be the case if that would have been “material” i.e. would it have made a significant difference to the likely settlement or not? If the Court takes the view that any dishonesty invalidates a settlement then we suspect that this could well open the floodgates for a lot of similar cases coming before the Court. The Hearing in the Supreme Court is listed for three days commencing today, although as the Court’s decision is likely to be reserved we may not know the outcome until the autumn.
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Family Law
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Paul Lancaster
