The UK’s top court has ruled in favour of two wives whose husbands hid the extent of their wealth when settling their divorces, setting a precedent which the wives’ lawyer says will lead to a rise in challenges in divorce settlements.
A panel of seven Supreme Court judges unanimously allowed the appeals of Alison Sharland and Varsha Gohil, who went to the UK’s top court to argue their divorce settlements with former husbands Charles Sharland and Bhadresh Gohil should be revisited, after the husbands hid their true worth.
Sharland had accepted £10.35m in cash for her divorce in 2010 from and received 30% of the proceeds of shares held by the company her husband had founded, AppSense Holdings, when he sold them, believing it was half of his wealth.
However he had lied about the value of the company, and contrary to what he told the court, intended to list it on the stock exchange. Instead of being valued at between £31m-£47m, Appsense was reported in the financial press as being ready to float at a value of $1bn.
Gohil had accepted £270,000 and a Peugeot car as settlement when she divorced her husband in 2002. However at his criminal trial for money laundering evidence revealed he hid his true wealth during the divorce proceedings.
The Court of Appeal had ruled the misleading evidence would not have led to a significantly different divorce settlement.
However in a judgment delivered by Lady Hale in the Sharland case the Supreme Court said the duty of full and frank disclosure always arises.
‘On the facts of this case it is clear that the judge would not have made the order he did, when he did, in the absence of Mr Sharland’s fraud, and the consent order should have been set aside.’
The case now goes back to rehearing with the potential for the ex-wives to increase their settlements.
The appeals were heard before Lord Neuberger, Lady Hale, Lord Clarke, Lord Wilson, Lord Sumption, Lord Reed and Lord Hodge.
The pair’s lawyer Irwin Mitchell partner Ros Bever said she was pleased the judges took the opportunity to state clearly that spouses cannot mislead the courts.
‘It’s inevitable that other wives, husbands or civil partners who feel that they too have been misled during divorce proceedings will seek to bring their cases back to court, and we can expect to see a significant rise in the number of challenges to existing divorce settlements,’ she added.
Read the full decisions here.