A national newspaper recently revealed celebrity businessman Duncan Bannatyne provided false evidence during his divorce proceedings as to the extent of his assets and business interests. This area of family law is under increasing scrutiny.
This question was considered in the recent Supreme Court cases of Sharland v Sharland and Gohil v Gohil. wo women, Alison Sharland and Varsha Gohil, said they were misled by their ex-husbands when they entered into divorce settlements.
Both argued their ex-husbands had misled them and hidden the extent of their respective wealths when the deals were made, and the Supreme Court has now ruled that both women will be able to have their cases reheard so that a decision on the division of the assets can be made based on the true wealth of their ex-husbands, Charles Sharland and Bhadresh Gohil.
When Mrs Sharland became divorced from her husband in 2010, she believed the £10million settlement she accepted represented half of his wealth.
Mr Sharland also had shares in a company and had undertaken to pay his wife 30 per cent of the proceeds of those shares once he had sold them. However, it later transpired Mr Sharland had been untruthful about the value of his shareholding. Indeed, the value used as part of the divorce settlement was £47m, but the financial press actually estimated the shares to be worth about £600m. Mr Sharland also had plans to float the company on the stock market and had not disclosed that to Mrs Sharland.
In the case of Mrs Gohil, she had accepted a settlement of £270,000 and a car. Mr Gohil was later prosecuted with money laundering offences, and at his criminal trial evidence was led which revealed he had failed to disclose his true wealth during his divorce proceedings.
Following the revelation that her ex-husband had misrepresented the position, Mrs Sharland sought to bring the matter back to Court to ask for the case to be reheard so a decision on the division of assets could be made based on the true wealth of Mr Sharland. Notwithstanding Mr Sharland’s deliberate and dishonest non-disclosure however, the Court of Appeal initially held that the non-disclosure was not material as it had not resulted in an order significantly different from that which the Court would otherwise have made. The Supreme Court has now ruled the Court of Appeal was wrong in its conclusion, Lady Hale noting that Mrs Sharland had been “deprived of a full and fair hearing” because of “her husband’s fraud”.
Mrs Gohil had an order granted in her favour, effectively allowing her application for financial provision on divorce to be reopened. Mr Gohil subsequently appealed but, despite his appeal having been allowed, the Supreme Court again overruled the Court of Appeal’s decision, possibly paving the way for Mrs Gohil’s divorce settlement to be reconsidered.
In England and Wales at least, in divorce actions the division of the parties’ financial assets has to be based on a valid agreement.
This will mean that, where one of the parties to a divorce settlement has been dishonest or misled the other about the extent of their assets, the other party to that agreement may have the opportunity to go back to Court in a bid to have the agreement set aside and the entire financial settlement reconsidered.
In Scotland, it is ordinarily very difficult for a party to a Minute of Agreement to convince a Court that that should be set aside, and it will be interesting to see what bearing (if any) the cases of Sharland and Gohil will have on Scots law going forward.
• Iain Thomson is a solicitor with Balfour+Manson