Why financial remedy orders are being reconsidered by the Supreme Court

There are three main grounds for setting aside an order in proceedings for a financial remedy order ancillary to divorce/dissolution. Family and matrimonial lawyer, John Egan, looks at these and recent cases in the Supreme Court.

At the time the order was made, there must have been either:

  • Fraud
  • Mistake
  • Non-disclosure or misrepresentation of material facts. It is this later ground that has just been considered by the Supreme Court

Generally:

A party has a duty to the court and to the other party to provide full, frank and clear disclosure of all material facts (whether in contested proceedings or otherwise) and to keep such disclosure up to date until the final disposition of the case by the court.

A failure by one party to provide this might allow the other party to challenge a financial remedy order and entitle the court to set it aside even if the order was made by agreement.

Not every instance of non-disclosure will justify setting an order aside. Where a party believes there may be undisclosed assets, and takes a view that it deliberately compromises the issue to reach agreement, it may not automatically follow that the resulting consent order should be set aside.

Only where the court would have made a substantially different order, had it been aware of the non-disclosure, will it set aside the order. In the case of Livesey (formerly Jenkins) v Jenkins [1985] 1 AC 424 the wife did not disclose her engagement and remarriage at the time she entered into a financial order by which her first husband transferred his share of the former matrimonial home to her. This fact undermined the whole basis of the order.

The Supreme Court this week has just been asked to consider a situation where non-disclosure has been alleged on behalf of two wives in the cases of Sharland and Gohil. This case has come through all the different layers of appeal to the highest court in respect of our domestic issues. The court below the Court of Appeal dismissed the wife's appeal against the order refusing to reopen financial remedy proceedings where the husband subsequently admitted non-disclosure. The facts are:

  • During the final hearing, the parties entered into a consent order compromising the wife's financial claims.
  • The husband failed to disclose arrangements being made to float a company in which he was the majority shareholder by way of an initial public offering (IPO).
  • The IPO did not take place, but had it done so, the husband could have realised his shares much sooner than he had estimated during the hearing.

The Court of Appeal reaffirmed that the critical factor was the effect of the non-disclosure on the court's decision embodied in its order. Mrs Sharland had accepted £10.35m in cash and properties from her ex-husband in the settlement but it later emerged that the shares in his company AppSense were worth considerably more than previously revealed.

Mrs Gohil settled for £270,000 plus a car from her former husband, in 2004 but it later became clear that her husband, who was convicted of money-laundering, had not given the court accurate information about his finances.

The Supreme Court has now been asked whether these non-disclosures should affect the orders previously made. Both wives have a good reason for asking the court. If they win, then they will be receiving a greater share than what they previously settled for. If they don’t win then they are likely to be worse off having to pick up the fees and costs of some fairly expensive lawyers.

Whilst the judgement of the Supreme Court might not be given for a number of weeks, and whilst these issues of good faith and honesty go to the heart of what makes the process one that we should be able to rely upon to achieve fairness, the only reason why the court might overturn these decisions is if the original order would have been different had they known about the non-disclosure at the time the original order was made. What the court will want to avoid is a loosening of the rules and circumstances in which financial orders can be set aside. This will only encourage more litigation and in circumstances where they are keen to see litigation brought to an end as quickly as possible.  So if I was a betting man, I would say that Mrs Sharland has a greater chance than Mrs Gohil, not least because the reported circumstances in which Mr Gohil amassed his wealth.

Time will tell.

Need advice?

For more information on divorce settlements and divorce law, please contact Milton Keynes divorce lawyer John Egan on 01908 202150.

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